March 2005 
Volume 03, Issue 10 
Main Feature
 

Grow down this road

Strategic Development unit eyes better ways to increase business

BY KATHERINE SOPRANOS

Grow down this roadGenerating business growth for Boeing, especially in nontraditional markets, is the mantra for the Strategic Development Process Council.

Chartered in 2004 by Chief Financial Officer James Bell, the SDPC, in partnership with Mercer Management Consulting and Boeing's Learning, Training and Development organization, plans to seek better ways to enter new markets and start new businesses.

"Boeing has a strong heritage in winning business in traditional defense and commercial aircraft markets," said Bell. "But continued future growth may demand broadening applications for our technology and expanding into new markets."

"We need to complement Boeing's world-class technical innovation with equally valuable business-model innovation," added Joe Lower, vice president, Corporate and Strategic Development. "To grow, we've got to learn how to understand unfamiliar markets and design business models that will succeed."

The SDPC selected Mercer's Value-Driven Business Design process as the best method for new-business design. The value-driven design process addresses the importance of thoroughly understanding a marketplace and the factors that dictate customer decisions. According to SDPC chairman Fred Whiteford, at the cornerstone of a sound business design is the insight gained from a rich, fact-based understanding of the marketplace Boeing wants to penetrate to find detailed information about customers' needs.

"This is the first step toward defining "what value do I propose to create for my customer," and where will the customer 'allow' me to make money," Whiteford said. In addition, he said, it's critical to learn from the business designs of successful companies in various industries to emulate their strategies and avoid their failures. In August 2004, SPDC and several Boeing organizations cosponsored a pilot project that had teams across Boeing meet daily for 12 weeks to evaluate the Mercer value-driven design process.

Each team had a business concept that lacked a clear strategy on who the customers were and what the profit model was, among other key points. The Value-Driven Business Design process led to"a structured, actionable business strategy for the best concepts and revealed soft spots in others that led to cutting our losses or reevaluating them," Lower said. With the pilot project's success, SDPC is working with the Boeing Learning, Training and Development organization to incorporate Mercer's Value-Driven Business Design into the Boeing Leadership Center's curriculum.

‘The tools we sharpened made sense'

Last year, Steve Krause worked on a Strategic Development Process Council pilot program that used a "value-driven" business design to develop a strategically sound business proposal. The team designed a Boeing business that will deliver situational awareness to nontraditional customers in the security market. Krause, a director with Integrated Defense Advanced Systems, told Boeing Frontiers about his experience and how he learned to rethink his business approach.

Q: What did you learn?

A: It's important to build a business design on the foundation of a deep understanding of customers and markets. It's much tougher to succeed by building a business around a nifty new product or technology. Incorporating into the plan elements of strategic control—business features that make it tough for competitors to replace us—is critical.

Another lesson we learned is to ask customers more questions on what they need. We had to leave the product pamphlets on the shelf and ask open-ended questions.

Q: What was your approach?

A: We avoided advocating specific products and services to make sure we didn't limit our understanding of customers' needs. We looked at data that had already been produced by other Boeing teams and at commercially viable market research. We did an enormous amount of primary research in the form of customer interviews.

Q: What came out of this process?

A: The process led us to several attractive, early-adopter customers in target markets that Boeing doesn't currently serve. We're going after them.

Q: What did you learn about the "value-driven" business model?

A: This market need–driven approach is fundamental to the business-design process, and it's forcing us to consider both offerings and partnering relationships beyond our normal scope. The tools we sharpened made sense, and the understanding of these tools is now part of how we think.

—Katherine Sopranos

 

katherine.sopranos@boeing.com

 
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