Toward A Theory of the Evolution of Business Ecosystems: Enterprise Architectures, Competitive Dynamics, Firm Performance & Industrial Co-Evolution
Theodore F. Piepenbrock, Ph.D. Thesis, Engineering Systems Design, Massachusetts Institute of Technology, September 2009.
This dissertation contributes toward the building of a theory of the evolution of business ecosystems. In the process, it addresses a question that has been posed by evolutionary theorists in the economics and sociology literatures for decades: “Why do firms in the same industry vary systematically in performance over time?” Seeking a systematic explanation of a longitudinal phenomenon inevitably requires characterizing the evolution of the industrial ecosystem, as both the organization (firm) and its environment (industry, markets and institutions) are co-evolving. This question is therefore explored via a theoretical sample in three industrial ecosystems covering manufacturing and service sectors, with competitors from the US, Europe and Japan: commercial airplanes, motor vehicles and airlines. The research is based primarily on an indepth seven-year, multi-level, multi-method, field-based case study of both firms in the large commercial airplanes industry mixed duopoly as well as the key stakeholders in their extended enterprises (i.e. customers, suppliers, investors and employees). This field work is supplemented with historical comparative analysis in all three industries, as well as nonlinear dynamic simulation models developed to capture the essential mechanisms governing the evolution of business ecosystems. A theoretical framework is developed which endogenously traces the co-evolution of firms and their industrial environments using their highest-level system properties of form, function and fitness (as reflected in the system sciences of morphology, physiology and ecology), and which embraces the evolutionary processes of variation, selection and retention. The framework captures the path-dependent evolution of heterogeneous populations of enterprise architectures engaged in symbiotic inter-species competition and posits the evolution of dominant designs in enterprise architectures that oscillate deterministically and chaotically between modular and integral states throughout an industry’s life-cycle. Architectural innovation – at the extended enterprise level – is demonstrated to contribute to the failure of established firms, with causal mechanisms developed to explain tipping points.
Joseph Robert Wirthlin, Ph.D. Thesis, Engineering Systems, Engineering Systems Division, Massachusetts Institute of Technology, September 2009.
Large, complex systems development programs in the Department of Defense are finding it more difficult to deliver desired capabilities to the end user on time and on budget than ever before. Evidence exists that almost all developmental programs on record are over cost and schedule, costing the Department and ultimately the U.S. taxpayer billions of dollars more than anticipated. Numerous studies over many decades have addressed various aspects of the problems plaguing these efforts with many recommendations. Unfortunately, most of these recommendations have been ignored or poorly implemented with limited success.
This work embodies an exploratory systems approach to characterize the system of acquiring large, complex, socio-technological systems for the Department of Defense. Through a series of qualitative studies and in-depth interviews with individuals working in the Joint Capabilities Integration Development System (JCIDS), the Planning, Programming, Budgeting, and Execution (PPBE) process, and the Acquisition system, a model of the larger “enterprise of acquisition” or Acquisition System was developed. The model has a scope ranging from the very early beginnings of any program through the conclusion of developmental activities. The methodology used consisted of stringing together the individual pieces of the system defined by probabilistic distributions of time and corresponding probabilistic decision points into a model ideal for discrete-event simulation. An extensive program of verification and validation of the model was carried out to increase confidence in the model and its simulation outcomes. Experimental system interventions, designed to mimic potential policy interventions and/or system changes, were introduced into the model and the corresponding outcomes analyzed. Results show several interventions have varying degrees of influence and suggest no single antidote exists for solving the problems related to Acquisition. Furthermore, many of the outcomes of the system can be described as emergent behaviors versus problems stemming from poor program management, program risk management, or requirements management.
Augustine Tibazarwa, S.M. Thesis, Engineering and Management, System Design and Management Program (SDM), Massachusetts Institute of Technology, June 2009.
Process automation vendors must consider agility as a basis to gain a competitive edge in innovation. Process Automation systems can impact the operating cost of manufacturing equipment, the safe control of large quantities of energy and the safety of dangerous substances used during manufacturing. The manufacturing segment expects greater automation of larger processes, increased capability of process automation systems, and higher quality of those systems. At the same time, business requirements for process automation vendors demand shorter time to market, and greater market return for each dollar invested in product development. Therefore, process automation vendors must determine how to preserve discipline in development processes while adopting process agility necessary to meet dynamic business conditions. Interviews with 9 leaders from 6 companies (2 manufacturers, 2 process automation vendors and 2 automation consulting firms), survey feedback from development personnel and research of literature on state-of-the-art and state-of-the-practice, yielded over 90 findings and observations on process automation business needs, development of automation offerings, and on suitability of agile practices to process automation product development. Agile methods may require changes to manufacturer work processes, but would enable an automation vendor to unlock more of the manufacturer’s production value. Disciplined adoption of agile methods is crucial for agility to take hold throughout an automation vendor’s organization, and to meet the concerns of process automation stakeholders. Rather than dismiss the suitability of agile development to process automation, a prescriptive guidance is provided that integrates an opportunistic riskbased assessment of how much agility is appropriate. The four values and twelve principles of the Agile Manifesto are a good basis for 8 additional agile practices for process automation: transitioning to agile, investing in agile capability, managing criticalsystem parameters, engineering system-robustness, balancing project risk, continuous system validation, assuring domain expertise and clarifying ecosystem role.
Brian Kisby, M.B.A. and S.M. Thesis, Sloan School of Management and the Department of Engineering Systems in Conjunction with the Leaders for Manufacturing Program (LFM), Massachusetts Institute of Technology, June 2009.
As a company grows, more and more effort is needed to control and coordinate operations. Typically, this is accomplished through an evolving collection of systems and processes, such as an Enterprise Resource Planning (ERP) system, but such systems also influence how a company does business, reviews performance, and communicates results. Manufacturing Execution Systems (MES) are often used in conjunction with ERP systems to streamline and enable actual manufacturing processes. A third type of system, the visual management system, is used to take production out of the closed, computerized realm and make it open, intuitive, and efficient. Visual Management, as a lean concept, can be a simple and effective means to efficiently regulate inventory levels and production activities. However, when visual management systems are to be embedded within a broader ERP/MES system, certain conditions and support systems are requisite, the absence of which will render the visual management system ineffective, at best, or destructive, at worst. Furthermore, there are fundamental issues around implementing visual management, be it high-tech or low-tech. This thesis will describe a case study of the process to manage the design and implementation of a visual management system, while addressing various stakeholders‟ needs and refined business objectives. Theories and frameworks of Enterprise Architecting and Change Management are utilized to analyze which functions the visual management system should perform and how to achieve operator buy-in.
Lean Principle Application in an Automotive Product Development Process with Special Emphasis on Peer Reviews
Michael Boren, M.B.A. and S.M. Thesis, Sloan School of Management and the Department of Engineering Systems in Conjunction with the Leaders for Manufacturing Program (LFM), Massachusetts Institute of Technology, June 2009.
Global Automotive, a large US based, global manufacturer of automobiles, has made significant gains in manufacturing competitiveness, in part through application of a lean manufacturing approach to high volume assembly. A similar approach applied to product development can result in significant improvements in product design throughput, speed, cost, design quality, and innovation. With major product programs taking in excess of 36 months and a billion dollars to complete, the potential impact of process improvements is substantial. This thesis examines elements of Global Automotive Product Development Process. Some general guiding principles for Lean product development are also reviewed from the existing literature. Special attention is given to metrics for measuring product development performance at Global Automotive. The thesis focuses on the role of peer reviews in the development process. The analysis is performed using a work order data set for two automotive development programs. Score cards from Peer Review and a survey of the component engineering community are also used to assess the effectiveness and current state of the peer review process. The study found evidence that high scores on peer reviews do not guarantee that late changes will occur, if anything component groups with average lower scoring peer reviews generated led to consistent levels of late stage changes. The objective of peer reviews should clearly be to find as many problems as possible and participants should be encouraged to delivery “low scoring” reviews.
Major System Acquisition Reform in the United States Coast Guard: A Case for the Application of Lean Enterprise Principles
Andrew J. Tiongson, S.M. Thesis, Engineering and Management, System Design and Management Program (SDM), Massachusetts Institute of Technology, May 2009.
During any time of reorganization, it is important to look to processes and practices that have been used and proven effective by other organizations whether those organizations are similar in structure or similar in the transitory environment in which they are operating. For this reason, applying Lean Enterprise principles and practices that have been proven in both industry and governmental organizations can be of great benefit to the Acquisition Directorate of the United States Coast Guard as it reorganizes to improve mission execution. Notwithstanding that when most people hear the words ―Lean Enterprise‖ they immediately think of enterprises involved in manufacturing or supply chain effectiveness, the principles of Lean Enterprise thinking can also be applied in the service and support environments. Therefore, the Coast Guard Acquisition Directorate, a service enterprise, can apply these same principles and practices in an effort to transform the directorate into a Lean Enterprise. In this thesis, the Coast Guard‘s Rescue 21 project was used as an example for the entire Coast Guard Acquisition Directorate. The Rescue 21 project consists of the acquisition of a new advanced command, control and communications system to replace the antiquated National Distress and Response System (NDRS). From the application of Lean Enterprise evaluation approaches to the Rescue 21 project, it was evident that:
- The Rescue 21 project provides low value to its various stakeholders;
- This low value is a direct result of cost overruns and schedule delays;
- Misalignment exists among Strategic Objectives, Stakeholder Values, Key Processes and Metrics;
- The Rescue 21 enterprise architecture has a solid foundation to improve value delivery;
- The Rescue 21 project leadership desires to improve in the area of value delivery to stakeholders.
John Q. Dickmann, Ph.D. Thesis, Engineering Systems Division, Massachusetts Institute of Technology, June 2009.
An emerging requirement for 21st century enterprises is operational flexibility, a requirement particularly important for the U. S. Department of Defense (DoD). To achieve flexibility, most practice and research emphasizes process improvement, robust collaboration and “flattened” or “networked” organizations. Lateral alignment has also been proposed as a means to enable flexibility. Missing from these approaches is an appreciation and understanding of the role of architecture and hierarchy as well how to apply these ideas at the enterprise level of organization. The DoD has embraced information technology as one means to achieve flexibility via these methods. Within DoD the Air Force is a uniquely flexible combat arm, but it has proven particularly difficult to integrate air power at the level of inter-service (Joint) military operations in order to leverage this flexibility. Kometer (ESD Ph.D., 2005) used a complex, large-scale, interconnected, open, socio-technical (CLIOS) systems analysis to examine command and control of the Combat Air Operations System (CAOS), proposing new command and control concepts to gain flexibility. This thesis extends Kometer’s research by using a qualitative architectural analysis to explore the twin ideas of hierarchy and laterality in enabling flexibility. We define lateral interactions as those within the same layer of an enterprise hierarchy. Lateral interactions enable formalized collaboration among peer entities, which can enable more operational alternatives and make these alternatives executable on more responsive timelines than possible with classic hierarchical structures. We identify previously unexamined trends in the operational architecture of combat air operations that are related to flexibility and examine the trade-offs between flexibility and other enterprise properties. We find a pattern of increasing enterprise laterality from beginning to end of the case studies and an association between upper- and lower-echelon laterality, overall system flexibility and strategic coherence. To enrich the analytical framework, an analogous example of flexibility in the New England Patriots football team is developed and presented. We find that our architecture framework provides a rich addition to existing empirical research on combat air power and addresses difficult socio-technical analysis issues in a way that complements other approaches. We also find that traditional perspectives on flexibility, efficiency and effectiveness trade-offs are strongly dependent on hierarchical level of analysis. Our framework lays a foundation for rigorous holistic enterprise design efforts in the area of military operations and other socio-technical enterprises such as health care, disaster relief and large-scale defense acquisition.
The Lean Innovation Roadmap - A Systematic Approach to Introducing Lean in Product Development Processes and Establishing a Learning Organization
Joern Hoppmann, Diploma Thesis, Institute of Automotive Management and Industrial Production, Technical University of Braunschweig, June 2009
The application of lean principles in the field of product development is the subject of a growing number of publications. In the past, significant efforts have been undertaken to identify and describe the practices of a lean product development (lean PD) system. The important question of how these elements of lean PD can be implemented in a company, however, remains underinvestigated. This thesis examines the process of implementing lean PD and makes recommendations for successfully introducing lean principles in product development. This work begins with a review of the basics of lean thinking and product development systems. Existing approaches to lean PD in literature are discussed. Building upon this, a novel and coherent definition of a lean PD system, consisting of 11 distinct lean PD components, is derived. These lean PD components are described in detail and investigated with regard to their interdependencies. The findings of this analysis serve as a basis to derive five major hypotheses on the efficient introduction of lean PD. To test the hypotheses on the implementation of lean PD, the author conducted a comprehensive survey among 113 product development departments of international companies. The survey data was analyzed using descriptive statistics to give an overview of the use of different lean PD practices and measures supporting the process of implementation. Moreover, an exploratory analysis including correlation analyses, a content analysis, and t-tests was conducted to better understand the nature of a lean PD system. The results show that, in concordance with the hypotheses, lean PD must be understood as a system of highly interwoven elements that cannot be implemented independently. The order of implementing the 11 lean PD components follows a certain path dependency because several components measurably facilitate the implementation of others. Furthermore, it can be shown that some of the supporting measures described in the literature, such as value stream mapping, do not have a significantly positive effect on the introduction of a lean PD system. Based on the insights from the testing of the hypotheses and the available empirical data, the author presents a Lean Innovation Roadmap, a suggested path for implementing lean PD. The Roadmap is based on a novel two-step methodology called Adjusted Past Implementation. The resulting roadmap consists of four major phases and shows the introduction of the 11 lean PD components in the form of 11 overlapping implementation streams. For each of the components, four detailed characteristics are defined. The timeing for implementing these 44 characteristics is depicted on the roadmap and gives an idea of when to introduce each of the elements. For companies intending to implement a lean PD system, the Lean Innovation Roadmap can provide valuable guidance.
Dramatically increasing the hourly workforce at a rapid pace to support accelerated product demand in an aircraft manufacturing facility in a short amount of time resulted in: (1) increased rework, and (2) increased part damage during assembly. The majority of rework results from simple workmanship mistakes from the new workforce. The approach used in this thesis to combat the increase in rework involves the design and implementation of a feedback loop on the shop floor of a leading aircraft manufacturer. The loop consists of providing each worker with a list of their discrepant work from the day before and the opportunity for them to perform their own rework. The thesis shows that the percent of discrepancies reworked by the original mechanic increases from 27% to 41%. Paired data is analyzed to show (on average) a 20% decrease in rework when the feedback loop is utilized. Included is qualitative advice on implementing change on the shop floor. During final testing, damaged parts (typically as a result of out of sequence work or workmanship mistakes) are discovered and require immediate replacement. Frequently, there are no replacement parts available at the test site, since the original part was installed by a subcontractor. To meet the immediate replacement need, test personnel remove an already installed part from an aircraft upstream in final assembly at the same location. The thesis includes a case study to demonstrate a binomial demand model to estimate the amount of on hand safety stock required to prevent the unnecessary labor from the redundant part removal and replacement from upstream aircraft. The case study estimates demand based on the probability of finding a damaged part, the takt time of the particular model, the leadtime and delivery quantity of replacement parts. A cost tradeoff is calculated to justify the additional capital investment in inventory. The thesis closes with a leadership case study on whom and how to handoff a shop floor Tip of the Day system for the new workforce to ensure its continued success.
Standardizing and Improving Test Wafer Processes: Inventory Optimization and a Days of Inventory Pull System
David W. Johnson, M.B.A. and S.M. Thesis, Sloan School of Management and the Department of Aeronautics and Astronautics Engineering in Conjunction with the Leaders for Manufacturing Program (LFM), Massachusetts Institute of Technology, June 2009.
Over the past few years, the Intel Fab-17 facility has aggressively pursued lean methodology to reduce the manufacturing costs associated with its aging 200mm diameter wafer process. One area ripe with improvement opportunities is the processes supplying and managing Test Wafers, which are non-production wafers used to verify production tools and operations. With four test wafer types, hundreds of different sequences of operations (defined as routes), and varying consumption trends, thousands of decisions must be made daily to ensure Test Wafers are available on time and with the proper base characteristics. To further illustrate the magnitude and importance of Test Wafer systems, roughly the same number of Test Wafers are introduced each time period into the fab as production wafers. Through direct observation and process mapping techniques, I identified two system level projects, each containing enormous cost and performance improvements to the entire facility.
Project One: Reallocating excess inventory
In analyzing the Test Wafer inventory quantity and consumption rates in primary stockroom, I noticed that certain routes had excess inventory while others were deficient, thus leading to significantly more expensive Test Wafers types to be used instead. In order to maximize realized cost savings, I developed a linear optimization program which distributed excess Test Wafer inventory to areas of need. Different re-allocation costs, initial material specifications, and forecasted consumption needs constrained the quantity and location for this redistribution. Per the optimization program’s recommendations, I led a team to re-allocate the largest excess Test Wafer inventory area to twelve different locations. The savings for this project correspond to over a year’s worth of test wafer inventory now available for these routes and banks.
Project Two: Determining supply decisions from a Days of Inventory (DOI) metric
The previous process for supplying Test Wafers into the fab was complicated, lacked standardization, required significant human intervention, and led to tool performance impacts despite high operating costs. To address these issues, I designed, developed, and implemented a program which prioritized and calculated thousands of test wafer decisions based upon a Days of Inventory (DOI) metric. By prioritizing actions based on the time until stock out, cost-effective decisions were made while ensuring Test Wafers are available at a tool when needed. The program forecasted short term consumption using an Exponentially Weighted Moving Average (EMWA) and pulled real-time inventory and available Test Wafer material to support the calculations and decision logic. After a successful fab-wide pilot, the “DOI Scheduler” program has now replaced the previous test wafer supply process. As a result, internal fab test wafer inventory will decrease by approximately 35% (as of March 2009, inventory has dropped by 15% and continues downward), Test Wafer availability will improve by approximately75%, and 4 to 5 hours a week of labor resources have been saved. Equally important, the prior non-standard process is now standardized, enabling future Test Wafer improvement projects and allowing root cause analysis on previously unsolvable problems.
Accelerating Value Capture of SAP Enterprise Resource Planning (ERP) System: Governance Model and Process
Raytheon produces a diverse range of defense products using a wide range of business systems and tools that are not currently integrated. To achieve the corporate vision of “one company”, in 2005, Raytheon began to deploy its SAP enterprise resource planning (ERP) system, called “PRISM”, focused on planning, sourcing, manufacturing, and delivery processes. After a few single-site PRISM deployments, in 2009, Raytheon launched its biggest deployment yet, to 7,000 users and two business units in California and Texas. This thesis explores effective governance models and post-deployment governance processes necessary to mitigate the anticipated performance dip and accelerate return on investment (ROI) of the SAP system. The desired governance model for multi-business unit SAP ERP system includes comprehensive representation of stakeholders from business functional areas, information technology (IT) areas, user support groups, and SAP system experts. The governance structure consists of integration points among users, system experts, process owners, management, and corporate leadership team to ensure development of corporate system and solutions to address business unit needs. The governance process involves reviewing change requests, assessing changes needed, and deciding on final resolution. The governance structure and its linkages among different groups facilitate the process by involving the stakeholders with the appropriate knowledge and experience to contribute to decision making. The result is a governance structure capable of making just-in-time decisions to implement the “one-company” vision.
Identifying System-wide Contact Center Cost Reduction Opportunities through Lean, Customer-focused IT Metrics
Dell’s long-term success depends on its customers’ future buying patterns. These patterns are largely determined by customers’ satisfaction with the after-sales service they receive. Previously, Dell has been able to deliver high customer satisfaction but has done so at a high expense, further reducing the low margins on their consumer product line. Dell’s Global Consumer Services and Support organization (GCSS) is constantly innovating to lower its operating costs while maintaining customer satisfaction. Their task is difficult to achieve in part because of the broad scope of problems that Dell’s customer service agents (CSAs) tackle and the grey areas of support boundaries. In order to identify and correct the root-causes of these contact-center costs, Dell needs the ability to measure the specific cost of supporting individual customers. Yet, no such customer-centric data framework exists at Dell, or indeed in the contact center industry. However, it is possible to create just such a customer focused data framework by applying an automated value stream mapping (VSM) analysis to a large sample of contact-center activity data from Dell’s data warehouse. The resulting data set is a collection of digital value stream maps representing the end-to-end customer service experience of each contact-center customer. After performing the proposed data transformations, these customer-focused metrics (CustFM) are shown to yield significant insights into previously unidentifiable cost reduction opportunities available across Dell’s global contact-center network.
by Christopher Garrett Glazner, Ph.D. Thesis, Engineering Systems Division, Massachusetts Institute of Technology, June 2009.
Today, the design of business enterprises is much more art than science. The complex structure and behavior of enterprises makes it difficult to untangle cause and effect amidst its components and their relationships. In order for managers to understand how an enterprise‘s architecture affects its behavior, they need tools and techniques to help them to manage the complexity of the enterprise. The practice of enterprise architecting continues to make advances in this area with reference frameworks that can be used to guide the decomposition and communication of enterprise architectures, but it does not provide tools to analyze the potential behavior of a proposed enterprise architecture. This research seeks to extend the practice of enterprise architecting by developing an approach for creating simulation models of enterprise architectures that can be used for analyzing the architectural factors affecting enterprise behavior and performance. This approach matches the content of each of the "views" of an enterprise architecture framework with a suitable simulation methodology such as discrete event modeling, agent based modeling, or system dynamics, and then integrates these individual simulations into a single hybrid simulation model. The resulting model is a powerful analysis tool that can be used for "what-if" behavioral analysis of enterprise architectures. This approach was applied to create a hybrid simulation model of the enterprise architecture of a real-world, large-scale aerospace enterprise. Simulation model analysis revealed potential misalignments between the current enterprise architecture and the established strategy of the enterprise. The simulation model was used to analyze enterprise behavior and suggest relatively minor changes to the enterprise architecture that could produce up to a 20% improvement in enterprise profitability without increasing resources to the enterprise.
by Caroline Marie Twomey Lamb, Ph.D. Thesis, Department of Aeronautics and Astronautics, Massachusetts Institute of Technology, September 2009.
Aerospace systems are among the most complex anthropogenic systems and require large quantities of systems knowledge to design successfully. Within the aerospace industry, an aging workforce places those with the most systems experience near retirement at a time when fewer new programs exist to provide systems experience to the incoming generation of aerospace engineers and leaders. The resulting population will be a set of individuals who by themselves may lack su±cient systems knowledge. It is therefore important to look at teams of aerospace engineers as a new unit of systems knowledge and thinking. By understanding more about how teams engage in collaborative systems thinking (CST), organizations can better determine which types of training and intervention will lead to greater exchanges of systems-level knowledge within teams. Following a broad literature search, the constructs of team traits, technical process, and culture were identified as important for exploring CST. Using the literature and a set of 8 pilot interviews as guidance, 26 case studies (10 full and 16 abbreviated) were conducted to gather empirical data on CST enablers and barriers. These case studies incorporated data from 94 surveys and 65 interviews. From these data, a regression model was developed to identify the five strongest predictors of CST and facilitate validation. Eight additional abbreviated case studies were used to test the model and demonstrate the results are generalizable beyond the initial sample set. To summarize the results, CST teams are differentiable from non-CST teams. Among the most prevalent differentiators is a team's self-reported balance between individual and consensus decision making. Teams that engage in consensus decision making reported stronger engagement in collaborative systems thinking. Another differentiator is the median number of past program experiences on a team. Teams whose members reported more past similar program experiences also reported more engagement in collaborative systems thinking. Data show the number of past similar programs worked is a better predictor than years of industry experience. The apparent enabling effects of qualitative team traits are also discussed. The conclusions of this document propose ways in which these findings may be used to improve training and team intervention within industry, academia, and government.
by Bradey W Rogers, M.B.A. and S.M. Thesis, Sloan School of Management and the Engineering Systems Division, Massachusetts Institute of Technology, June 2009.
Development of new aerostructure designs frequently occurs through a complex process that is difficult to understand and control. Tight requirements for weight, cost, strength, and aerodynamic behavior create many interdependencies in the product design, which translate through to the design process. An increasing fragmentation of the commercial aerospace industry has also added a dimension of complexity to the process – outsourced component designs are often interdependent with in-house component designs, resulting in frequently changing requirements for supplier components during the design process. This thesis offers an analysis of the product development processes of a first-tier aerostructures supplier, Spirit AeroSystems. Although this host company provides the context for analysis, the method is meant to be generally applicable to the development of any complex product. The Design Structure Matrix (DSM) methodology is used to capture the required interaction between tasks of the development of a propulsion structure for commercial aircraft. The task times, time variations, work loads, interdependencies, likelihoods of rework, and learning curves are then quantified and applied to a discrete-event Monte Carlo simulation model which outputs probabilistic completion time and workload of the project. The model is then used to show how changing the customer requirements at different points in the development cycle affect the cost and schedule of development. The failure modes and effects analysis (FMEA) is applied to quantify risks and ensure proper control of their likelihoods and consequences. A holistic industry-level analysis provides insight into the complexities of developing an interdependent product across multiple organizations. Potential recommendations to improve the development process are outlined. Finally, the “Three Lens” methodology is applied to identify implementation obstacles. This paper builds upon product development process simulation theory by introducing process independent externalities into the model to show how changing customer requirements may impact the cost and schedule of development. It also proposes a new framework for optimal staffing based upon the maturity of the customer requirements. Finally this paper shows that a disintegrated, sections-based design process architecture, like that used for the Boeing 787, is sub-optimal for product development, and it proposes a new architecture for developing aircraft.
by Scott Olschewsky, M.B.A. and S.M. Thesis, Sloan School of Management and the Department of Electrical Engineering and Computer Science, Massachusetts Institute of Technology, June 2009.
The Supply Planning Operations team, in a large manufacturing firm, faced a future where their complexity of scope was increasing without an increase in resource levels. As an effort to improve both efficiency and effectively within the organization, they chose to adopt Lean Thinking as a method to streamline and simplify activities, connections and flows. Lean Thinking, while often viewed as a set of tools (value stream mapping, andon cords, kanbans, and others), involves the harmony between principles, culture and the appropriate application of tools. SPO has taken an approach focused on culture and deep understanding of Lean Principles before deploying the tools of Lean. It was important to examine why artifacts succeeded or failed in influencing cultural change. One common theme for successful artifacts was their portability. With a geographically diverse team, it was important that any artifact could be transported electronically. Although not all the actions have been successful in influencing the organization‘s culture, many actions have had a profound impact. Seeing members of the organization write about their personal experiences is just one example of how Lean Thinking has been adopted. By committing to "Rules before Tools," the group embarked upon a journey to change culture. This thesis used an Enacted Systems Analysis to identify Artifacts, Habits of Thought and Habits of Action. Several organizational barriers emerged along with possible levers to promote change. Even though the revolution is only in its infancy, SPO appears to be on a sustainable path toward a Lean Thinking transformation.
An Integrated Real Options Framework for Model-based Identification and Valuation of Options under Uncertainty
by Tsoline Mikaelian, Ph.D. Thesis, Department of Aeronautics and Astronautics, Massachusetts Institute of Technology, June 2009.
Complex systems and enterprises, such as those typical in the aerospace industry, are subject to uncertainties that may lead to suboptimal performance or even catastrophic failures if unmanaged. This work focuses on flexibility as an important means of managing uncertainties and leverages real options analysis that provides a theo- retical foundation for quantifying the value of flexibility. Real options analysis has traditionally been applied to the valuation of capital investment decisions by considering managerial flexibility. More recently, real options have been applied to the valuation of flexibility in system design decisions. However, different applications of real options are often considered in isolation. This thesis introduces an Integrated Real options Framework (IRF) that supports holistic decision making under uncertainty by considering a spectrum of real options across an enterprise. In the context of the IRF, enterprise architecture is described in terms of eight views and their dependencies and modeled using a coupled dependency structure matrix (C-DSM). The objective of the IRF is to leverage the C-DSM model in order to identify and value real options for uncertainty management. The contributions of this thesis are as follows. First, a new characterization of a real option as a mechanism and type is introduced. This characterization disambiguates among 1) patterns of mechanisms that enable flexibility and 2) types of flexibility in a system or enterprise. Second, it is shown that a classical C-DSM model cannot represent flexibility and options. The logical C-DSM model is introduced to enable the representation of flexibility by specifying logical relations among dependencies. Third, it is shown that in addition to flexibility, two new properties, optionability and realizability, are relevant to the identification and analysis of real options. Fourth, the logical C-DSM is used to estimate flexibility, optionability and realizability metrics. Methods that leverage these metrics are developed to identify mechanisms and types of real options to manage uncertainties. The options are then valued using standard real options valuation techniques. The framework is demonstrated through examples from an unmanned air vehicle (UAV) project and management of uncertainty in surveillance missions.
by Daniel Mark Gillespie, Lt.Col. USAF, Ph.D. Thesis, Engineering Systems Division (ESD), Massachusetts Institute of Technology, June 2009.
Efforts to understand the determination of needs of new weapon systems must take into account inputs and actions beyond the formally documented requirements generation process. This study analyzes three recent historical cases of fighter aircraft development to identify decisions made independently from the documented requirements process, about the need for new systems. The primary inputs to those decisions are identified, and a qualitative model for understanding the undocumented inputs, and their role in determining weapon system needs, is presented. By analyzing data across the cases, which span a period of significant change in fighter design, the concept of a Dominant Mission Emphasis (DME) is introduced. The DME is defined as that mission which receives the most emphasis from the majority of participants in the needs determination process, and which the majority of other missions support, either directly or indirectly. It emerges when enough participants become convinced that it is appropriate to address the military, economic, political, social, and other needs that exist, and it serves as a means for bounding the intractable array of possibilities for weapon system needs. The convincing of participants occurs primarily through a social process, not a technical or an authoritative one. Over time, as conditions change, the appropriateness of the DME will decrease. The appropriateness over time can be modeled with a bell-shaped curve. Cues are identified which suggest the need to re-examine the DME. The strength of a DME can be measured by qualitative and quantitative indicators, including such things as verbal statements, military doctrine, intellectual and academic writings, organization within the military, resources committed, and promotion decisions. These indicators can also be used as controls to strengthen or weaken a DME in response to the perception of its appropriateness for existing conditions. The DME is constantly being questioned and challenged by individuals who seek to convince others that its appropriateness is not sufficient for existing conditions. Alternative missions are proposed and advocated as new DMEs. The roles of the primary means for convincing participants of the appropriateness of a DME are presented.
Craig D. Blackburn, 1st Lt., USAF, S.M. Thesis, Technology and Policy, Engineering Systems Division (ESD,) and Aeronautics and Astronautics, Department of Aeronautics and Astronautics, Massachusetts Institute of Technology, June 2009.
The objective of this thesis is to depict the role of metrics in the evolving journey of enterprise transformation. To this end, three propositions are explored: (i) metrics and measurement systems drive transformation, (ii) employee engagement is a proxy to gauge transformation progress; and (iii) metric considerations enable enterprise transformation when systematically executed as part of a transformation roadmap. To explore this problem, the aerospace measurement community was consulted to help grasp a better understanding of the context in which transformation is currently defined and measured. Once the problem space was defined, the environment of doing research with the enterprise as the unit of analysis was described with the intent of exploring the role of metrics and transformation. In particular, the performance measurement literature helped identify tools and methods used to select metrics to enable decision making at the enterprise level. After this review, two case studies were performed, considering: (1) the implementation of a bottom-up measurement system to drive transformation and (2) the effect of a top-down corporate measurement system on the enterprise. The first case study revealed insights regarding the benefits and challenges of implementing measurement systems and highlighted the use of employee engagement as a proxy to measure enterprise transformation. In the second case study, contemporary measurement issues were discussed and mapped to an Eight Views of the Enterprise analysis to identify critical enterprise interactions. Ultimately, the Lean Advancement Initiative’s Enterprise Transformation Roadmap was used as a method for depicting how performance measurement can help enable enterprise transformation. The implications of research in metrics for enterprise transformation span across three areas: (1) the extensive literature reviews provide an academic contribution for performing enterprise and measurement research; (2) a common language and framework for exploring measurement problems is depicted for practitioners through the case study analysis; and (3) a connection between enterprise measurement and enterprise transformation is established to drive future transformation success.