|Maintaining the TECH
The development of high-tech products occurs through a disciplined process that ultimately creates value for customers and will help Boeing thrive in the future
BY JUNU KIM
For Boeing, there was more to two recent contract wins than just securing pacts initially worth a total of more than $600 million from the U.S. Army.
On their face alone, the two wins were great news: first, in March, the selection of the team of Boeing and Science Applications International Corporation as the lead systems integrator for the Army's Future Combat Systems; and then, in June, the selection of Boeing as the prime system engineering contractor to develop the Army's Joint Tactical Radio System.
But their real significance is in what they portend about Boeing's approach to the future and about its strategy to pursue integrated, networked, system-of-system solutions for customers. In the past, the Army has turned to Boeing primarily for rotorcraft. However, these two contracts pave the way for Boeing to address a new market worth as much as $200 billion over the next decade and that's just in the area of integrated battlespace. More market areas some in the military or government arenas and others in the commercial arena are open to the same types of solutions involving communication and information-sharing among various nodes and platforms.
Phantom Works, the company's arm for advanced research and development, and Space and Communications led the FCS and JTRS efforts (more information about each is available on the Boeing Web at http://www.boeing.com/news/releases/).
Pursuing, winning and executing the FCS and JTRS contracts is part of Boeing's vision of the integrated battlespace of the future, where networked information and communications systems give a competitive edge to soldiers in the field and commanders in the control room. This vision works hand-in-hand with the Army's goal of transforming itself into a strategically responsive force that's more agile, sustainable, lethal and survivable.
Company officials see the FCS and JTRS wins as validations of Boeing's approach to technology development an approach that involves the prudent investment in technologies relevant to customers' future needs; the development and acquisition of technologies useful to multiple business units; the establishment of partnerships to secure access to existing abilities and emerging technologies; and the integration of these developments in current and future products and services.
"Companies that have the capability to do large-scale system-ofsystems integration and provide the right information management capabilities are going to be highly advantaged" in contracts related to the U.S. Defense Department's transformation, said Ron Prosser, vice president, Advanced Space and Communications, for Phantom Works. The awards of FCS and JTRS are the best validation that we're on the right track, he said.
Boeing's ability to acquire or develop technologies that enhance its products and services or improve its design and production processes plays an integral part in the two future-oriented elements of its business strategy leveraging its core strengths and opening new frontiers while maintaining healthy core businesses. These developments will serve as the foundation of Boeing's future ability to meet the demands of customers seeking improved solutions and to address the challenge of intensified competition.
"Our business depends on our ability to deliver value to our customer through great ideas," said Dave Swain, chief technology officer, who as CTO heads Boeing's Technology organization, which includes Phantom Works. "Without innovations in technology, there is no growth plan and we will stagnate quickly. With technology, we have a great future."
Innovative technologies have permitted Boeing to introduce products from the Model 40A mail and passenger airplane of the 1920s to the Delta family of rockets. They also have made the work being done on revolutionary ideas for the future the Sonic Cruiser commercial airplane, the X-45A Unmanned Combat Air Vehicle and the X-37 reusable spaceplane elements of daily business life today. In other words, thanks to advancements in technology, the future of Boeing is currently in development.
"Maintaining a technology edge is integral to our existence," said Bill Lawler, vice president and general manager of Strategic Operations and Planning for Military Aircraft and Missile Systems. As an aerospace company, Boeing's products "are all high-tech products. We compete in a world where Boeing is defined by its technological edge."
Formula for innovation
In the eyes of Boeing senior technology executives, the formula for innovation requires three basic ingredients:
Leveraging R&D investment
In a business setting, technology creation also requires funding. Typically, Boeing earmarks between 3 and 3.5 percent of its annual revenues to R&D activities.
Business units apply most of the Boeing-invested funds to solutions specific to their businesses. Phantom Works' investments are used to develop common technologies the "technology thrusts" that have applications to products and services in multiple business units. A portion of Phantom Works' R&D funds is devoted to "enabling technologies" future technologies that could have major effects on Boeing future products and services. Phantom Works also captures government contract technology funds (CRAD) to augment the company's technology investment. This CRAD and the contributions from suppliers and partners produces a leverage of almost five to one for Boeing's investment dollars.
What common technology development efforts get funded are based on an annual, disciplined process coordinated by Phantom Works. This procedure begins by Phantom Works' Technology Planning and Acquisition organization working with the business units to determine what capabilities are needed.
Customer needs drive Boeing solutions
These objectives are based on input of the business units' customers, to assure that technology investments ultimately deliver value. "You first have to answer the question, what does the market need, and what do your customers need to provide for their marketplaces? Once your customers have helped you define these needs, you look to technology to ‘enable' those products," said Frank Statkus, vice president-advanced technology for Commercial Airplanes and head of Advanced Commercial Airplanes for Phantom Works.
Some business units face the challenge of integrating the opinions of an extremely diverse customer base. As part of its efforts in developing and implementing a next-generation air traffic control system, Air Traffic Management convened a Working Together team that involved 39 disparate stakeholders in the air traffic management arena, from the U.S. Federal Aviation Administration to airlines to the U.S. Department of Defense.
"Our system-of-systems is not only about information, hardware and software, but also about the people that operate in it," said Dennis Muilenburg, ATM's vice president, engineering. "Our team needs to not only understand technology, but also the business, cultural and political angles behind the implementation of that technology."
As Technology Planning and Acquisition coordinates the business unit requirements, it looks for the technology programs that can meet multiple business needs. Examples of these needs include lighter-weight structures or open systems architecture. "As an enterprise, we want to identify areas where we can deploy technologies that serve common interests among business units," said Craig McElfresh, senior manager in Technology Planning and Acquisition.
After Technology Planning and Acquisition identifies what capabilities are being sought, Boeing's senior technology executives allocate resources based on the value of the technology that is, how much more in revenues, cost savings or profits this innovation might generate and on the ability of multiple business units to transition this technology.
Teaming for mutual advantage
Funding decisions are made based upon the best approach for securing this technology. Chances are that the knowledge may exist possibly within Boeing, but maybe also in the outside world, as scientific discoveries continue to augment the collective compendium of technology knowledge.
To fully leverage the vast resources of the global technology research community and provide Boeing with access to developments that could improve its products or help open markets to it Boeing has struck partnerships worldwide with universities, government agencies, companies both within and outside the aerospace industries, and even suppliers.
For example, to facilitate and coordinate research overseas, Boeing is establishing research and technology centers abroad; the first one, in Madrid, Spain, will celebrate its grand opening July 9. Boeing also makes investments in venture capital firms to gain insight into emerging technologies.
In the case of FCS, Boeing is teamed with Science Applications International Corp., an internationally respected, San Diego-based research and engineering firm that has experience in providing information technology and systems integration solutions.
This partnership and investment strategy saves Boeing from spending money on reinventing the wheel. "It's not physically possible for Boeing to have on hand all the people who can work on the myriad of ideas available," said Bob Spitzer, vice president, External Affiliations for the Technology organization. "The bandwidth has gone up so much in our business that we have to be looking outside."
Boeing's partnerships also augment the company's technology budget. The intellectual capital gained through dealings with people outside is an amplification of Boeing's technology investment, particularly since the investment is done through other sources of funds such as suppliers, government agencies and laboratories or the Department of Defense.
Finally, the development of common and enabling technologies, which is handled by Phantom Works, is managed with the same rigorous discipline as any other program within the company. That includes forming an organization; setting objectives, milestones and review mechanisms; and providing continual evaluation of the program's progress, relevance and viability. The implication is clear: Boeing develops technology only through a disciplined process, and the team undertaking the work is accountable for its activities.
The paths of technology
To create value from these developments, the Technology organization follows one of four paths:
Better vs. best?
The constant advancements brought on by technology raise the question: What challenges await Boeing's efforts to maintain its status as an aerospace leader?
Undoubtedly, one major challenge will be competition. Customers may opt for products and services other than the best that Boeing and its technology minds can provide. As Jerry Daniels, Military Aircraft and Missile Systems' president and CEO, wrote in a message in October 2001 after being debriefed by the Department of Defense on its Joint Strike Fighter decision: "Our ‘A' was not as good as Lockheed Martin's ‘A-plus.'"
"You have to be more and more competitive. You can't keep looking at the same airplanes coming down the assembly line if they're not showing improvements," said Statkus.
Keys to future success
Yet another challenge is the ability of Boeing and its people to keep up with the rapidly evolving technology world. In other words, Boeing and its employees must:
Ultimately, it would make sense that meeting the challenges to Boeing's status as a technology leader will revolve heavily around the collective abilities of its employees. After all, innovations historically have come from the power of the human brain.
"Although we have a structure that allows us to effficiently develop technology, what really makes this structure work are the people whose intelligence, discipline and ingenuity help turn these ideas into reality," Swain said.
Additional reporting by William Cole and Daryl Stephenson
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