Ideas to innovation idea portfolio management -- pdma portfolio conference 2009 (1)

BOEING is a trademark of Boeing Management Company.Copyright © 2009 Boeing. All rights reserved.

Portfolio Management for New Products & Services Conference Fort Lauderdale, Florida , February 25, 2009

Dr. John LacontoraThe Boeing Company

[email protected]

Scott MathewsThe Boeing Company

[email protected]

Ideas to Innovation: Idea Portfolio Management

Copyright © 2009 Boeing. All rights reserved.

Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer

Abstract

Your employees are a rich source of potentially scores of profitable ideas given the right opportunity. But how can you sort through the hundreds of proposals to uncover the handful of nuggets that will really accelerate your business growth? The Boeing Ideas to Innovation (I2I) process couples a social networking ideation event tool together with an idea portfolio management tool to mature and select the very best strategic opportunities. The presentation will provide an insight into this emerging process on how corporations can implement and manage their innovation pipelines.



Ideas to Innovation (I2I)

Ideas to Innovation (I2I) is a- Systematic approach to transform ideas into a business opportunity

- Means to stimulate the capture and maturity of business ideas for growth

- Streamlined method that integrates well into existing business development gate processes

I2I enables Boeing to…- Rapidly generate dozens of viable business ideas to address our most

vexing business challenges

- Draw upon the best of Boeing’s customer knowledge and capabilities

- Cull rapidly through the ideas in weeks to identify the most promising few…

- Address the biggest hurdles first, be they system concept, technology, business model or market acceptance, and…

- Continuously manage a portfolio of business ideas to mature the best.



Notional I2I GrowthIdea Filer and Maturity Funnel

Customers

Partners

Markets

Scans

Open Source

Business Intelligence

Competitive Intelligence

Internal Database

Staff

Idea Generation

Ideation Events

DataMining

IndividualInput

Initial Screen

andReview

Ideas Portfolio Management Idea Transition

Strategic Fit

MeetsCurrent /Future

CustomerNeeds

CompetitivePosition

Conceptof

Operations

Revenue Potential

FeasibilityandRisk

Analysisof

Alternatives

Investment CostAnd

FundingStreams

Enterprise Capabilities

BusinessPlan

VirtualPrototype

WorthinessPartner

Alignment

Opportunity Pipeline

Business Unit Pursuit

Stage GateProcesses



Idea Development – The Starting Point

Scouted the best of idea development practices and tools from leading innovative companies

Adopted challenge event-based ideas capture methods that target key strategic objectives

Developed a disciplined approach to identify key next generation revenue opportunities…

Operationalized an “Ideas to Innovation” framework the fits with Boeing business processes and culture

Discovering the need for a broader innovation framework



I2I Framework

The I2I framework delivers opportunities to business units

Idea Flow

Opportunity Transition


Strategic IntentStrategic IntentIdea

GenerationIdea

Generation

Idea Portfolio Management

& Learning


& Learning



I2I Idea Generation

Idea activities generation tailored for Boeing’s culture

Initial PrescreeningIdentify Interesting Ideas

with High Potential

Review Team ScreeningIdentify Ideas for

Further Development

Unrefined ideas Limited inputs from

Prescreening questions

Unrefined ideas Limited inputs from

review team questions

Unrefined ideas Limited data (if any)

Boeing Idea Generation process

- Adapt Imaginatik - Idea Central portal

- Process developed through collaboration with help of the business and decision analysis communities

Challenge Event-Based Approach

- Events based

- Executive Sponsorship

- Ideally 10-12 days with a weekend

- Targeted Audience invited

- Review Team

- Define what a good idea looks like

Idea Flow



Strategic Intent

Strategic Intent

Idea Generation

Idea Generation


& Learning


& Learning

“Raw” IdeasParticipants Input Ideas on

IC Idea Form



Manage Ideas as a Portfolio

Two ways for new businesses to succeed

- Doing the right projects = portfolio management

- Doing projects right = project management and gate reviews

- Enriching the right set of ideas = idea portfolio management

More than just best individual ideas

Select right mix of opportunities to achieve strategic goal

Dynamically manage the maturation of ideas and the portfolio

Seamlessly feed business development processes

X



Challenges for Idea Portfolio

Ideas (initially) have little value

- Combine idea “fragments” into viable business ideas Ideas (initially) have little “working” data

- Create a progressive path to mature idea: qualitative quantitative Many ideas aren’t worth pursuing

- Determine rapidly idea’s “worthiness” and “investment effectiveness”

- Eliminate those that don’t measure up Technologists (idea champions) don’t know business methods

- Provide business engineers to guide process- “Business engineers”: engineer + MBA to design path from technology gem to

market value

Strategically comparing apples to oranges

- Identify set of common attributes that apply to all ideas



I2I Idea Portfolio

Idea Portfolio management tailored for Boeing’s culture

Ideas flow into Portfolio

- Ideas screened for strategy alignment

- Idea “fragments” combined into viable business ideas

Ideas matured within Portfolio

-Three phases of maturity

- Idea advance as rapidly phase deliverables completed

-Business engineers provide guidance and validation

Learning PhaseRange of Performance

Quasi-quantitative

Discovery PhaseValue and Investment

Quantitative

Idea PhaseContextualQualitative

Idea Flow



Strategic Intent

Strategic Intent

Idea Generation

Idea Generation


& Learning


& Learning



Portfolio Progression

Idea Phase

Learning Phase

Discovery Phase

START OF MANY IDEAS

MATURE IDEAS

Idea Phase – Qualitative- Business concept- Value proposition- Related trends and technology

Learning Phase -- Ranges- Value ranges- Risks and opportunities- Assumptions and contingencies

Discovery Phase -- Quantitative- Business case- Investments and mitigation- Customers and competition

Continuous strategy refinement

Stage GateProcesses



Learning PhaseRange of Performance

Quasi-quantitative

Discovery PhaseValue and Investment

Quantitative

Idea PhaseContextualQualitative

Idea Flow



Strategic Intent

Strategic Intent

Idea Generation

Idea Generation


& Learning


& Learning

Portfolio Data Validation

StrategistReview

FinanceReview

Business Engineers Review

Data Validation Critical to Portfolio

- Independent review at each phase

Strategist review and filtering

- Validates alignment to strategy

Business Engineer review

- Validates attribute data for each phase

Finance review

- Validates business case before transition to business unit



ValueCalculation

Portfolio Scoring Framework

Magnitude

Uncertainty

Launch Year

Potential Value

Question ScalesContingent

ValueRisk-Averse Probability Value

PV Earnings

MarketMaturity

Market Entry/ Bid Year

Adjacent/future Projects Value

ValueCalculation

ValueCalculation

TimeCalculation

ValueCalculation

M-153413_Portfolio Mgmt | 13

ProbabilityCalculation

ProbabilityCalculation

DiscountCalculation

Leverage

Weight

Magnitude

Uncertainty

PV Investments

TechnologyMaturity

Objectives

ROI

Revenue

OperatingCosts

(Margin)

ProgramInvestments

Timing

NBF, B&P, … Requirement

Platform Potential

Magnitude

Uncertainty

PV Cost

DevelopmentMaturity

Value

Uncertainty



Phase Information Maturation

Project Management Process

Idea PhaseBusiness

Proposition

Learning PhaseRisk & Opportunity

Exploration

Val

ue

Uncertainty/Risk

Discovery PhaseBusiness Value & Investment Targeting

Depth of Understanding

Idea

Por

tfol

io B

ound

ary



Real Options in the Portfolio

“Datar-Mathews Method”, Boeing patent #6862579

timeT0 commercialcash flow

PVT of cash flow @rmPV0 of cash flow @rm

PV0 (X) @ri

pilot R&Dinvestment

X

Ideas evaluated using real options methodsPortfolio process gathers the right information

-Profitability, uncertainty (“volatility”), launch cost (“strike value”), timing (“exercise date”)

Determines appropriate investment balancing value and riskChallenges

-Limited quantitative information

-Complexity of analysisPatented methods

-Simplified “range” information is sufficient

-Provides excellent real option value estimate



Portfolio of Portfolios Concept

IdeaRepository

Recycle

BETTER BUSINESS

OPPORTUNITIES

Division PortfolioReview

Business UnitProject Management Process

SUBDIVISIONIDEA

PORTFOLIOS

Portfolio I Portfolio II Portfolio III

IDEATION



Idea Portfolio Management at Boeing

Progressive structure to mature ideas to opportunities

Reliable results for coherent investment decisions

Best set of ideas that implement strategy feeding into stage gate project management process

Roll-up consistency across portfolios

Idea Phase Learning Phase Discovery Phase• Contextual

• Qualitative

• Business concept

• Range of performance

• Quasi-quantitative

• Risk & Opportunity Identification

• Quantitative

• Value & Investment

• Mitigation

FILTERING VALIDATION

IdeasProject

ManagementProcess

Stage Gate



Summary

“Ideas to Innovation” taps the collective genius of Boeing

Focus on the most important growth challenges

Discipline at the front end of the business- Targeted idea generation- Strategy tailoring and refinement- Strategic portfolio management

- learning, risk identification, selection

More and better business opportunities feeding the stage gate project management process

A Role for Everyone in Innovation

Leadership & Management

Ideas to innovation idea portfolio management -- pdma portfolio conference 2009 (1)