Roadmapping to Achieve Business Objectives. Honeywell International
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1 Roadmapping to Achieve Business Objectives Honeywell International
2 Presentation Outline 1. Honeywell organization and intro to key business processes 2. Strategic planning goals 3. Embedding roadmap architecture into key processes 4. A word on metrics
3 Summary Roadmapping supports all key business processes Business value comes from: - Improved clarity and communication of strategy within and across functions - More successful products with differentiated technology - Data-driven decision making and data reuse - Organizational and personal accountability due to formal roadmap linking
4 Honeywell s Business Segments Specialty Materials Automation and Control Solutions $7.0B 2002 Sales $3.2B Total = $22.3B $3.2B $8.9B Aerospace Transportation and Power Systems Broad and Diverse Businesses, Technologies and Products
5 Honeywell Initiatives and Behaviors
6 The Four Pillars of Growth Honeywell s first initiative is Growth. We will pursue organic growth through four fundamental strategies, or pillars : Doing a superb job for our customers every day in quality, delivery, value, and technology Superior sales and marketing Globalization Developing robust, funded technology roadmaps for new products and services all supported with a strong commitment to Design for Six Sigma (DFSS) Each Business Has Has Developed a Game Plan to to Pursue These Pillars
7 Some Background... Our business is changing...from components to products, from products to subsystems...from data to knowledge-based solutions...from products to services...from conventional to more-electric aircraft...from conventional turbines to hybrid power sources Challenge from Leadership: Are we investing in the right technologies at the right time? Are we adequately funding the critical technologies? Are we investing for growth? We We must continuously improve R&D effectiveness
8 Key Honeywell Business Processes Strategic Planning (STRAP) Long-term, multi-generation strategy Analysis and communication of strategy Support for future year plan forecasts Annual Operating Plan (AOP) Reflects decisions on what is/will be funded STRAP linkage to AOP New Product Introduction Strategy re-assessed at gate reviews Design for Six Sigma Communicate and align NPI to customer CTQs Competitive position and differentiation Management Resource Review ID and forecast personnel competency gaps/needs Business Planning Execution
9 Honeywell Strategic Planning Process Market Assessment Econ. Neigborhoods & Patterns Profit Zones/No Profit Zones Segment size & growth Scope Opportunity Space Customer Assessment Top customers analysis Customer system economics Needs assessment Profit Model Competitive Assessment Current/Future competition Disruptive technology implications Value Proposition Customer Selection Segmentation, Targeting & Positioning Prioritize segments Key growth indicators Scope Requirements Profit Model Strategic Intent Detail of Offering Define activities Current/Future delivery reqmnts. Gap assessments Marketing Plan Technology Plan Resource Plan Manufacturing Plan Revenue & Price Strategy Economics of delivery Risks Financial Plan Sales & Income Investments Scenario models Win Strategy Marketing Strategy Strategic Differentiation Sustainable Advantage Differentiation source Competitive sustainability Risks Implementation Planning Offering definition Offering differentiation Customer Impact Organizational Systems Organization Capability Structure & Responsibility Measurements Key skills, process, gaps PLAN COMPLETE/ READY FOR REVIEW Launch Plan Roll-out proposal Gap closure plans Contingency plans Integrated Schedule & Milestones Critical milestones Key dependencies Gates for success Business Impact Summary Metrics Commercialization Plan
10 The time is right for improved planning tools Each business s strategic plan is supported by several functional strategic plans: Supply Chain Management Information Technology Engineering and Technology Six Sigma Human Resources In Honeywell, roadmapping was born out of an initiative to drive more top-line growth and more cost-effectiveness out of the engineering development organization Each business challenged to deliver more innovation, more successful products and services with fewer resources
11 Purpose of Technology Planning Process Provide a systematic, disciplined process for forecasting, managing, and facilitating the evolution of core competencies, intellectual property, and product portfolios. Support transition from products to integrated systems...strengthen cross-unit collaboration Drive decisions from data Allow technology prioritization to be driven by business priorities but not become too tactical Improve R&D effectiveness and efficiency work on the right things and leverage our investments Deliver differentiating technology, when it it is is needed
12 Improving the Technology Planning Process Process Vision Provide a systematic, disciplined process for forecasting, managing, and facilitating the evolution of core competencies, intellectual property, and technology/product portfolios. Process Needs Tends to be too bottoms-up in nature. Criticized for not being aligned with business needs or direction Generate more pull for technology - less push Engineering, product lines and marketing planning must be more coordinated. Today info is shared via PowerPoint charts. Not systematic - not consistent - the data technical people need, is often not available. Accountability is weak. Poor methods to compare and prioritize investments in dissimilar technologies, supporting products, systems and services Difficult to know the technology plans of sister business enterprises Process Benefits Drives clearer definition of market and product strategy so process can be more tops down Sets data requirements and digitizes the collection and storing of data so it s available to all functions Supports a prioritization process which maintains focus from STRAP into AOP Derives product CTQs - Product owners are REQUIRED to define their differentiation from competition Driven by by a Black-Belt project team
13 ES&S Strategic Planning Process CAPTION: Inputs Vision Strategist Database Tech. Planning Process Update Database Dataflow Business Portfolio Analysis Budget ET&PM Capability SBE PLD and Tech. Ldr Bus. Dev. Long-term Growth Initiatives ET&PM Opportunity Roadmaps Marketing Product Roadmaps SBE Prod. Line Directors Technology Roadmaps (Updated) SBE Technology/ Chief Engineers/ Tech. Councils Technology Prioritization / Decision-making ES&S Technology / Chief Engineers / Prod. Line Directors Environment Marketing Platform Horizon Marketing Platforms/Products Prioritization Marketing Communication to Leadership & Staff ES&S Technology Other Opportunities Marketing/ Engineering Technology Roadmaps (Initial) ES&S Technology AOP Detail Project Plan
14 Key Features of the Process Captures and utilizes inputs from Marketing, New Business Development, Product Line leaders and Engineering Prioritizes customer platforms and our business opportunities to make sure highest priority products are identified (SBE Marketing function) Formalize, institutionalize and digitize roadmapping, a powerful technique and tool for all business functions improves communication, accountability, accuracy and reuse of planning data links between technology roadmaps and product roadmaps become contracts
15 Process allows for Technology Push and Pull Know-why Market and Competitive Strategy: Environment Roadmaps Understand customer buying behavior (customer drivers, CTQs), industry trends, regulatory drivers. Target key segments. Identify competitor s offerings and attributes. Push (capabilities) Know-what Know-how Product Roadmap Decide how the product will be differentiated to win in key segments. Translate overall customer CTQs into product attributes for this specific product (DFSS). Set multi-year targets. Technology Roadmap What technologies are most important? Link product attributes to technologies. Identify multi-generation technology investments to maintain competitiveness. Pull (requirements, drivers) Modified from - (Sources: Tom Kappel; Phaal, R., Farrukh, C., and Probert, D., Fast-start Technology Roadmapping; Richard Albright.) To-Do What resources and investments are needed? Plan projects with the highest priorities. Stage Gate Process Controls On-going management of product evolution and roadmap updates Time Know-when Action Plan
16 Key Honeywell Business Processes Strategic Planning (STRAP) Long-term, multi-generation strategy Analysis and communication of strategy Support for future year plan forecasts Annual Operating Plan (AOP) Reflects decisions on what is/will be funded STRAP linkage to AOP New Product Introduction Strategy re-assessed at gate reviews Design for Six Sigma Communicate and align NPI to customer CTQs Competitive position and differentiation Management Resource Review ID and forecast personnel competency gaps/needs
17 Key Success Factors Integration with Core Business Processes: Leadership Support - Has to be part of culture; the way we do business Functional Ownership of Map Data and Updating - Ownership drives accountability; Unique elements referenced Ability to Broadly Communicate and use Linkage - Digitization provides clear value-add here; Database Architecture Simple in Format - Minimal map-to-map interpretation required Architecture Adaptable to wide range of product offerings - Product development times and life cycles vary greatly Clear Value Proposition with with Minimal Administrative Cost
18 Measuring Engineering Success Metrics Engineering Leadership & Management 1 Description Measures the management capability of the Engineering function with emphasis on business integration and alignment to business strategy Roadmapping has the most impact on this dimension Engineering Performance 2 Measures the execution performance of the Engineering function Engineering Competency Development Capability 3 Indicates the performance in developing long term sustenance capabilities & functional excellence in Engineering Engineering, Engineering, measured measured and and improved improved along along these these three three dimensions, dimensions, would would maximize maximize the the Return Return On On Engineering Engineering Investment Investment Source: Performance Measurement Group (PRTM)
19 Measuring Planning/Roadmapping Success Engineering Leadership & Management Sub-Metrics Measure of Sample Resource Allocation Alignment Resource usage Ratio of Resources in growth, productivity programs versus total resources Project Portfolio Alignment Portfolio robustness Revenues versus Engineering Investment Engineering & Business integration Functional linkages No. of cross functional team reviews of technology & marketing roadmaps/ plans New & improved Product Contribution Product growth Revenue from products introduced in last 3 years as % of total revenue Contribution from high value IP Differentiation Ratio of revenue from products with IP protection; licensing revenue versus total revenue Time to Market/ schedule Performance Time to market Delivered date versus Planned date Integrated, Integrated, robust robust roadmaps roadmaps will will improve improve all all these these measures, measures, but butdo do so so with with the the help help or or hindrance hindrance of of many many other other critical critical processes. processes. Source: Performance Measurement Group (PRTM)
20 Summary Roadmapping Supports all Key Business Processes Plugs into STRAP, AOP and New Product Development process Environment maps identify market opportunities and customer Critical to Quality (CTQ) elements Multi-generation product evolution guided by Design for Six Sigma Technology strategy to meet product strategy and new opportunities Roadmap linking delivers significant business value Improved clarity of strategy within and across functions More successful products with differentiated technology Data-driven decision making and data reuse Improved organizational and personal accountability driven by formal roadmap linking Our Vision: A Fully Integrated, Strategy Driven Organization
21
22 Roadmap Integration into STRAP Portfolio Analysis Historic & Projected financials Growth Rate, Gross Margin, Cash Flow, ROI SBU/SBE/Prod.Line Trade-offs Opportunity Identification Environment Analysis Opportunity space Market Trends Customer Review, CTQs Regulatory Issues Competitive Analysis Environment Roadmaps Horizon 2 and 3 Growth Programs Operations Strategy Marketing, Brand Distribution Manufacturing Supply Chain Digitization Plan Financial Strategy Revenue Gross Margin Cap Ex. Cash Flow ROI Acquisitions/ Divestitures Product Evolution Plan/Roadmaps Key Attributes, CTQs from DFSS Schedule Product Evolution Roadmaps Intellectual Property Strategy Technology Plan Technology Roadmaps Key Technology Development Requirements Issues/Gaps and strategy to close Long Range Plan; platforms, extensions, disruptive technologies Technology Investment strategy/focus
23 STRAP Linkage to Annual Operating Plan 20 Revenue ($ M) 10 Phase I Phase II Phase II D2 G2 E2 0 Link Link Product Evolution to to Revenue: Using product lifetime estimates
24 Roadmap - New Product Introduction Linkage PR - Chemical Salts Phase 1 Phase II D2 R Phase 1 Phase II D2 R2 CaF2 Phase - Phase 1 1 Phase II ' D2 R2 Stage 0 Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Identify Customer Needs Concept Definition Planning & Specification Development Validation Delivery, Support, & Improvement New Product Introduction Stage Gate Process Roadmaps Reviewed and and Updated at at Gate Reviews
25 Roadmap Elements derived from Design for Six Sigma Process CTQ = Critical-To-Quality Characteristics Quality Functional Deployment Process Functional Requirements Customer CTQs Customer Requirements House of Quality Stage 0-1 Product Design Characteristics Functional Requirements House of Quality Stage 2 Competitor CTQs Product Design CTQs Competitor CTQs are assessed at every level of the DFSS process and captured in Environment, Product and Technology roadmaps
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