Blue Water Solutions, Inc

Is your business strategy,

operations and technology

architected to execute in a

world of mass collaboration?

Aviation Wikinomics Innovation through Mass Collaboration

Innovations

2

Bottom Line: Wikinomics is a global effect which, which is altering the most

fundamental theories and assumptions of classical economics and is a defining factor

in the success or failure of corporations in every industry. Complex systems teach us

that resilience is more important than stability; agility is more important than strength

and speed is more important than size. It has become imperative for leaders to

understand the mechanisms of Wikinomics, its applicability to their industry and their

company’s capability to openly, synchronously and collaborate globally.

Innovations: On August 25, 1991, a 21 year old Finnish college student of Swedish

heritage, wrote a kernel for the Intel x86 processor. He posted the code and a note

on a newsgroup website, “I'm doing a (free) operating system (just a hobby, won't be

big and professional like gnu)” and a request for feedback on, “what features most

people would want”. A decade later, the Linux operating system that Linus Torvalds

“gave away” is the dominant open source solution and the cornerstone of multiple

new and established companies who learned how to make money with free products.

Rod McEwen was a fund manager who emerged as the CEO of Goldcorp, Inc.,

following a debt restructuring of a failed gold mine. In-house geologist believed 6M

ounces of gold existed somewhere on the 55K acre property, yet years of seismic

testing and drilling had yielded low results. Mr. McEwen attended a MIT conference

for young CEOs, although 47 years old at the time. One presentation recounted the

story of Linus Torvalds sharing his intellectual property across the globe to a network

of his peers who in tern became a virtual army, intent on collaboratively developing

an open alternative to “for profit / proprietary” OS. Mr. McEwen intuitively recognized

the essence of open sourcing and the mechanism of peering and took his epiphany

back to Ontario. If the in-house geologists couldn’t find the gold, then maybe some-

one else could. As opposed to hiring and firing employees for the next five years or

placing additional capital at risk by hiring additional consultants, maybe the answer

was to open source the analysis by sharing Goldcorp’s geological data with the

world. His idea was received coolly by his employees who doubted that others could

accomplish what they had failed to do and his management team was concerned that

he was breaking a fundamental principle of the mining business - never share IP. In

March, 2000, the “Goldcorp Challenge” was launched with $575K in prize money for

anyone who developed alternative approaches to locate gold deposits and identify

drill sites. The response was overwhelming and included mathematicians, lawyers,

doctors, engineers, computer programmers, graphic artists, musicians, chemists and

a few geologists. Within three years, 8M ounces of gold had been discovered and Mr.

McEwen’s struggling $100M company was transformed into a $9B industry leader.

On June 15, 2007, Apple blogs around the world were all buzzing as the long awaited

iPhone was set to be launched. AT&T had signed an exclusive distribution and

marketing deal with Apple and subscription services were expected to skyrocket.

“Innovation Networks consist of four groups: Inventors, Transformers, Financers and Brokers.

Successful firms use multiple collaboration scenarios to seamlessly source internal and external resources in order to optimize stakeholder value.”

Navi Radjou Vice President, Forrester

Applications

3

“There is a fundamental change taking place in

terms of how corporations create value and arguably

the core architecture of the corporation.

It's the biggest change in a century in the ways that

companies build relationships and interact with other entities in the economy and in society

and arguably, the very nature of the

corporation itself.”

Don Tapscott

On August 24, 2007, George Holtz, a 17 year old high school graduate headed to the

Rochester Institute of Technology, was being interviewed on CNBC for reengineering

his iPhone to work with any cell phone service by simply switching the SIM chip.

Young Mr. Holtz, posted the instructions on his personal blog, the same blog that he

used as a wiki to get help from his peers: fellow hackers. His initial motivation was

simply to just make the cool phone work with T-Mobile’s family plan service that his

parents used, but over time, it became a challenge that he felt obsessed to conquer.

Three months, the desire of one consumer and his social network’s ability to

collaboratively customize a product and service - derailed two years of planning,

negotiating, contracting and marketing by global giants AT&T and Apple.

Welcome to the world of Wikinomics.

The airline industry is facing challenges today that the combination of the dot.com

bust, the post 9/11 recession and SARS did not bring. Fuel costs at $120/bbl, open

skies, excess capacity, low yield, mergers, outsourcing, regulatory compliance, …

are but a few of the issues forcing CXOs to rethink their business models, strategies,

cost structures and investments. Capability rationalization has been ongoing for over

a decade, yet most airlines continue to duplicate processes in areas that add no

value for consumers. As capabilities are sourced to the “best value” providers,

synchronizing operations “outside the four walls” has become the differentiator of

competitive advantage. The cost structure problem is less a function of labor rates as

it is an issue of labor productivity and duplication of processes across the ecosystem.

Advances in aircraft and maintenance management technologies are resulting in

value innovations, significant savings and new revenue streams. For instance, the

days of managing fleets homogeneously or even at the tail level have given way to

component centric configuration management where AD compliance is continuous

and overflys are impossible. CAMP and ATOS SAI inspection check lists can now be

integrated into rules based human centric Business Process Management technology

and services oriented middleware tools which alert managers when the continuous

surveillance system detects change. Autonomic Sustainment combines diagnostics,

prognostics and aircraft health management with lean supply networks and readiness

based sparing that result in higher availability and reliability at lower lifecycle costs.

Software-as-a-Service (SaaS), originated in the airline industry in the 1970’s, has

passed the tipping point of main stream adoption and virtualization is driving the cost

of mass collaboration down significantly. Aeroxchange, Exostar, Boeing’s Goldcare

Global Ops Center, Airbus’ MRO Network and Lockheed’s Autonomic Logistics

Information System (ALIS) are but a few examples of how mass collaboration creates

value innovations via the network effect that benefits the entire aviation industry.

The question is: are your company’s business networks, people, processes and

technologies increasing aircraft availability, reliability and customer satisfaction while

decreasing labor and materiel costs thus creating stakeholder & shareholder value?

George Holtz from CNBC Interview

Blue Water Solutions, Inc. (BWSI) is a professional services firm focused exclusively

on aviation industries: airlines, defense, business jet & air taxi services, 3rd party

maintenance providers, aerospace OEMs, technology and private equity firms.

BWSI is led by Malcolm “Mac” B. Armstrong. Mac’s illustrious forty five year aviation

career includes Senior Vice President, Operations & Safety, at the Air Transport

Association where he represented airline interest before the U.S. Congress, Federal

Aviation Administration and Department of Transportation; Executive Vice President,

Operations, at Delta Air Lines, where he oversaw the regulatory compliance, flight

control, logistics and maintenance of 600 aircraft executing 2000 dispatches per day

by a staff of 30,000; and 31 years in the U.S. Air Force, retiring as a Lieutenant

General and Commander, 21st Air Force, whose mission of air cargo and tanker

services covered half of the globe with a staff of 54,000 for a fleet of 530 aircraft.

BWSI believes that a collaborative partnering approach to addressing client’s needs

and desires yields quality solutions, faster and cheaper than the “one size fits all”

approach of most large generalist consultancies. BWSI leverages peer collaboration

by sourcing deep Subject Matter Experts from a combination of internal professionals

as well as external SMEs from our extensive partner network of niche consultancies

as well as large generalist firms in order to custom fit a team that exactly meets our

client’s specific culture, situation, context and timing.

BWSI performs detailed analytics using comprehensive process models and custom

tools to recognize, decompose, define, measure, analyze and innovate business

issues and opportunities, prior to recommending solution options. Implementation,

training, control, standardization and synchronization of solutions can be governed by

BWSI, or these elements of maturing a capability or transforming a business can be

transitioned to our client’s current vendors or one of our partners with the volume of

resources required to build and sustain a solution. This encapsulation and abstraction

of roles and responsibility enables BWSI full independence of product / service bias

and financial motivations in architecting and delivering solutions. We believe this

open approach allows us to focus exclusively on “helping our clients succeed!”

BWSIs’ mission statement is to:

Provide our commercial and military aviation clients with

value added, innovative yet practical solutions,

to difficult and complex challenges,

focused on short term needs and long range strategic ambitions,

in a collaborative, peering and mutually beneficial manner,

openly and independent of product or service bias,

and at the highest levels of integrity and shared trust.

Blue

Water

Solutions

4

“Commodities only exist in the minds of the inept!

Studies of companies that were successful over multiple business cycles identified “bonding”, not rivalry, as the key concept of business strategy.

Bonding theory focuses on attraction, that is, attracting, satisfying and retaining stakeholders.”

Arnoldo Hax Professor Emeritus, MIT Sloan

Michael Wm. Denis is a Principal of BWSI and Chief Technology Officer. In this

capacity, he leads business strategy, enterprise architecture, capability maturity,

organizational design and technology engagements for our clients and partners.

Mr. Denis has over twenty years managing the operations of defense maintenance

organizations and advising global tier one airlines, regional airlines, aerospace

manufacturers and independent third party MRO companies. His work experience

encompasses corporate strategy, technology architecture, balanced value metrics,

business simulation & modeling; Service Lifecycle Management (SLM) of complex

assets; LEAN / Six Sigma continuous process improvement methodologies; ATOS &

CASS regulatory compliance programs; Reliability Centered Maintenance / Condition

Based Maintenance / MSG-3 maintenance programs; Integrated Capability Maturity

Models (CMM-I); and advanced technology insertions such as remote condition

monitoring, aircraft health management, multi-echelon readiness based sparing,

S1000D electronic content schemes, ISO 10303 standards for the exchange of

product model data / AP 239 product life cycle support and MIMOSA / ISO 13374

diagnostics, prognostics and multi-dimensional configuration management.

His current defense focus is the development of a Joint Autonomic Sustainment

System (JASS) designed to meet the Joint Capability Area - Joint Force Sustainment

requirements of the Net Centric Operations strategy, Sense & Respond Logistics

tactics via the Global Information Grid in order to improve both in theater JFCOM /

COCOM tactical decision support as well as PEO/PM lifecycle management decision

support capabilities that facilitate higher levels of asset availability and mission readi-

ness at lower operational risk and total lifecycle sustainment costs.

His current commercial aviation focus is optimizing investments in Services Oriented

Architectures, leveraging On-Demand / Software-as-a-Service (SaaS) capabilities

and SaaS Integration Platform (SIP) vended solutions in order to realize increased

business networked collaboration ecostructures that improve process and technology

agility at significantly reduced capital investments, speed to value and risk to value.

Mr. Denis began his technology consulting career at Accenture, departing after six

years as the Director, Aviation Maintenance Solutions. Prior to Accenture, he served

twelve years in the US Navy as a Surface Warfare Officer and Gas Turbine Engineer.

Mr. Denis attended the Georgia Institute of Technology earning a Bachelor of Nuclear

Engineering. He also holds a Master of Decision Science from the J. Mack Robinson

College of Business at Georgia State University. He is a member of the Institute for

the Management Sciences and Operations Research (INFORMS) and the American

Society of Quality (ASQ) as well as ASQ’s Six Sigma Forum.

A native of Houston, Texas, Mr. Denis currently resides in Atlanta, Georgia, with his

wife, Jackie, and their son, Kyle, while daughters Ashley and Courtney attend the

University of Georgia and Clemson University, respectively.

Michael

Wm.

Denis

5

“We have to be able to look back at this time and

say we solved the business-model problem.

The continual up and down of concessions and

restructuring has to change.”

Richard H. Anderson CEO, Delta Air Lines

Richard H. Anderson, CEO Delta

Accelerating the future of Aviation Business Services

Blue Water Solutions, Inc 2235 Bent Creek Manor

Alpharetta, GA 30005

O: 678.524.8289

F: 770.777.4759

E-mail: info@avioxi.com

www.avioxi.com