Tools for strategic design

1
Systems Engineering
Approach for Advanced
Materials Application in
Aeronautics
Enrico Viceconte, Stoà - Istituto di Studi per la Direzione e Gestione d'Impresa
A Visual Toolbox for Business
Strategic Design
Enrico Viceconte, Stoà
July 24, 2013
enrico.viceconte@gmail.com

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Systems Engineering
Aeronautics
Our Toolbox
 Generic Competitive Strategies
– Competitive advantage
 Understanding Vertical Integration
– Value Chain & Supply Chain
 Understanding Horizontal Integration
– Product-Market Matrix
 Operations Strategy
– Product-Process Matrix
 Situation Analysis
– BCG, Industry Analysis, SWOT
 Positioning & Strategic Framework

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Systems Engineering
Aeronautics
Visual Thinking (per INCOSE)
 http://www.incose-cc.org/2012/02/
solving-systems-engineering-problems-on-the-back-of-a-napkin/
– 50% of our brain is dedicated to visual processing.
– “Whoever best describes the problem is the one most likely to solve it.”
– Systems Engineers use pictures to get across the problems and their
solutions.
– Functional Flow Block Diagrams, System Boundary Diagrams, IDEF0, Use
Cases, ConOp diagrams, all the DoDAF diagrams like the OV-1, etc.
– All of these “pictures” are used to communicate a design of a solution to a
problem.
– Just look at what the Zachman Framework for enterprise architecture is all
about: it’s a slice and dice of different views of a system.
– And think about how the Systems Engineer become a story teller during
each design review…

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Systems Engineering
Aeronautics

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Systems Engineering
Aeronautics

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Systems Engineering
Aeronautics
Generic Competitive Strategies
AN ESCLUSIVE
RESOURCE AN ESCLUSIVE
CAPABILITY
EFFICIENCY
EFFECTIVENESS

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Systems Engineering
Aeronautics
Mission, Vision, Values
 This Strategic Plan outlines our long-term goals as an agency and describes how
we will accomplish these goals over the next decade or more.
 Our goals cover more than flagship missions and cutting-edge technology
development.
 We are committed to working smarter, doing business differently, and being
transparent in our operations.
 Continuous improvement in our program management, in particular, is essential
to our future success, and we will keep the public’s trust through transparency
and accountability for our actions.
 We will continue to adhere to our core values of safety, integrity, teamwork, and
excellence while we foster the pioneering, innovative, and partnering spirit that
drives us and continues to advance our Nation.

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Systems Engineering
Aeronautics
Mission, Vision, Values

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Systems Engineering
Aeronautics
Vertical integration
Tier NTier N -1Tier N -2 Tier N +1 CONSUMERS

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Systems Engineering
Aeronautics
BACKWARD
FOREWARD

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Systems Engineering
Aeronautics
BACKWARD
FOREWARD

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Systems Engineering
Aeronautics

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Systems Engineering
Aeronautics
Value Chain
0  25 $ 25  50 $ 50  75 $ 75  100 $

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Systems Engineering
Aeronautics

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Systems Engineering
Aeronautics

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Systems Engineering
Aeronautics
0  25 $ 25  50 $ 50  75 $ 75  100 $
25 $
50 $
75 $
100 $
Tier NTier N -1Tier N -2 Tier N +1
PRODUCTCOMPONENTSUB
COMPONENT
CHANNEL
PRODUCTION
VALUE ADDED
SUPPLY
VALUE ADDED
COMMODITIES
VALUE ADDED
DISTRIBUTION/RETAIL
VALUE ADDED

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Systems Engineering
Aeronautics
10 %
45 %
85 %
100 %
PRODUCTCOMPONENTSUB
COMPONENT
CHANNEL
GREAT
BRAND!
PRODUCTION
VALUE ADDED
SUPPLY
VALUE ADDED
COMMODITIES
VALUE ADDED
DISTRIBUTION/RETAIL
VALUE ADDED

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Systems Engineering
Aeronautics
PRODUCTCOMPONENTSUB
COMPONENT
CHANNEL
DISTRIBUTION/RETAIL
VALUE ADDED
SUPPLY
VALUE ADDED
COMMODITIES
VALUE ADDED
PRODUCTION
VALUE ADDED
GREAT
BRAND!
100 %

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Systems Engineering
Aeronautics
100 %
PRODUCTCOMPONENTSUB
COMPONENT
CHANNEL
DISTRIBUTION/RETAIL
VALUE ADDED
SUPPLIER
VALUE ADDED
COMMODITIES
VALUE ADDED
PRODUCTION
VALUE ADDED

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Systems Engineering
Aeronautics
MANUFTier 1Tier 2 AIRLINES
INTEGRATOR -PRIME
MANUFACTURER (OEM)
TIER N-1
TIER N-2
TIER N-3
Tier 3
AIRLINES
100 %
Supply chain

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Systems Engineering
Aeronautics
Horizontal integration

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Systems Engineering
Aeronautics
MARKET
PENETRATION
Product-Market Matrix
NEW PRODUCTS
DEVELOPMENT
NEW MARKETS
DEVELOPMENT DIVERSIFICATION

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Systems Engineering
Aeronautics
Product-Process Matrix
RANGE/MIX
DIFFERENTIATON
HIGH COST PER UNIT
’
STANDARDIZATION
MASS-MARKET
LOW COST PER UNIT
HIGH FLOW
CONINUITY
RIGIDITY
MECHANIZATION/AUTOMATION
CAPITAL INTENSIVE
LOW FLOW
FLEXIBILITY
DISCONTINUITY
LABOR INTENSIVE
Job Shop
Flow Shop

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Systems Engineering
Aeronautics

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Systems Engineering
Aeronautics
Project

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Systems Engineering
Aeronautics
Job Shop
PROCESSO/PRODOTTO
A
PROCESSO/PRODOTTO
B

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Systems Engineering
Aeronautics
Flow Shop

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Systems Engineering
Aeronautics
Continuous Process

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Systems Engineering
Aeronautics
RANGE/MIX
DIFFERENTIATON
HIGH COST PER UNIT
’
STANDARDIZATION
MASS-MARKET
LOW COST PER UNIT
HIGH FLOW
CONINUITY
RIGIDITY
CAPITAL INTENSIVE
LOW FLOW
FLEXIBILITY
DISCONTINUITY
LABOR INTENSIVE
Ford
Production
System

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Systems Engineering
Aeronautics
RANGE/MIX
DIFFERENTIATON
HIGH COST PER UNIT
’
STANDARDIZATION
MASS-MARKET
LOW COST PER UNIT
HIGH FLOW
CONINUITY
RIGIDITY
CAPITAL INTENSIVE
LOW FLOW
FLEXIBILITY
DISCONTINUITY
LABOR INTENSIVE
Toyota
Production
System

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Systems Engineering
Aeronautics
+FLOW
+VARIETY
Flexible
Manufacturing
Systems
RANGE/MIX
DIFFERENTIATON
HIGH COST PER UNIT
’
STANDARDIZATION
MASS-MARKET
LOW COST PER UNIT
HIGH FLOW
CONINUITY
RIGIDITY
CAPITAL INTENSIVE
LOW FLOW
FLEXIBILITY
DISCONTINUITY
LABOR INTENSIVE

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Systems Engineering
Aeronautics
The 787’s Production Process

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Systems Engineering
Aeronautics
Strategic Positioning
A
B
C
D
E
F
G
H
I
L
PRICE
QUALITY
LOW AVERAGE HIGH
A
B
C
D
E
F
GH
I
L
PRICE
INTEGRATION
LOW AVERAGE HIGH
A
B
C D
E F
G
H
I
L
PRICE
INNOVATION
LOW AVERAGE HIGH

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Systems Engineering
Aeronautics
Marketing Mix Coherence
HIGH
LOW
PRODUCT COMMUNICATION CHANNEL PRICE
SELECTIVE HIGHSELECTIVE
MASS MASS LOWCOMMODITY
SPECIALTY
A
B
C
A
B
C
A
B
C
A
C
B
A
PRODOTTO
PRODOTTO
C
PRODOTTO
B

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Systems Engineering
Aeronautics
Strategic Framework (Blue Ocean)
X Y Z W
A
A
A
A
K
B
B
B
B
B
A
C
C
C
C
C
FEATURES:
HIGH
LOW

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Systems Engineering
Aeronautics
Boeing 787 Features

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Systems Engineering
Aeronautics
Boeing 787 Features

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Systems Engineering
Aeronautics
Situation Analysis (SWOT)
Strengths – S
1. …..
2. …..
3. …..
Weaknesses – W
1. …..
2. …..
3. …..
Opportunities – O
1. …..
2. …..
3. …..
Threats - T
1. …..
2. …..
3. …..
SO Strategies
• HARVESTING -CAPITALIZE
• ATTACKING
• LEVERAGING TO ATTACK
WO Strategies
• INVESTMENT
• BUILDING STRENGTHS
WT Strategies
• EXIT
• BUILDING STRENGTHS
ST Strategies
• DEFENSE
• MINIMIZE
• LEVERAGING TO DEFENSE

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Systems Engineering
Aeronautics
Situation Analysis (SWOT)

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Systems Engineering
Aeronautics
Boeing SWOT Analysis
 Strengths
– Innovation and Technical Expertise
– Strong reputation of quality and industry leadership
– Long-standing customer relationships
– International customer base
– Supplier-Component Manufacturer Networks
– Commercial Aircraft is one of six business divisions

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Systems Engineering
Aeronautics
 Strengths
– Innovation and Technical Expertise
– Strong reputation of quality and industry leadership
– Long-standing customer relationships
– International customer base
– Supplier-Component Manufacturer Networks
– Commercial Aircraft is one of six business divisions
 Weaknesses
– Development Costs for new products: $8-10 Billion
– Reliance on Suppliers-Component Manufacturers (both
strength and weakness)

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Systems Engineering
Aeronautics
 Opportunities
– New technologies to build lighter, longer range aircraft
– New airline customers in Asia and Pacific market
– Airline travel pattern changes supporting Boeing product line
 Threats
– Aggressive Airbus Price Discount Practices
– WTO dispute regarding EU subsidies
– Changing economics
– Domestic airline bankruptcies
– Changing governments, politics and business partners based in
those countries
– Example: Dubai Port management controversy
– Air travel vision could be wrong

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Systems Engineering
Aeronautics
Situation Analysis
STRENGTHS = CAPABILITIES
OPPORTUNITIES = DEMAND FOR CAPABILITIES
FIRM’S
CAPABILITIES
MARKET’S
DEMAND FOR
CAPABILITIES
BARRIERS
VALUE FLOW

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Systems Engineering
Aeronautics
volume
time
Market share C
Market share B
Market share A
StartsA
StartsB
StartsCNew Product
MATURITY
GROWTH
INTRODUCTION
COMPETITORS:
A: Innovator
B: Follower
C:Latecomer
Product Lifecycle

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Systems Engineering
Aeronautics
volume
time
StopsA
StopsB
StopsC
MATURITY
DECLINE
DEATH
GROWTH
INTRODUCTION
A: Innovator
B: Follower
C:Latecomer
Product Lifecycle

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Systems Engineering
Aeronautics
ADOPTION
time
MATURITY
ADOPTION
INTRODUCTION
Process Lifecycle

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Systems Engineering
Aeronautics
volume
The Innovator (A)
Starts with a new product

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Systems Engineering
Aeronautics
Industry Analysis
?

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Systems Engineering
Aeronautics
Industry Analysis & Generic
Strategies

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Systems Engineering
Aeronautics
Grazie!

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Tools for strategic design