Ideas to Innovation:
Idea Portfolio Management
Dr. John Lacontora
The Boeing Company
Scott Mathews
The Boeing Company
john.m.lacontora@boeing.com
scott.h.mathews@boeing.com
Portfolio Management for New Products & Services Conference
Fort Lauderdale, Florida , February 25, 2009
BOEING is a trademark of Boeing Management Company.
Copyright © 2009 Boeing. All rights reserved.
Abstract
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
Your employees are a rich source of potentially
scores of profitable ideas given the right
opportunity. But how can you sort through the
hundreds of proposals to uncover the handful of
nuggets that will really accelerate your business
growth? The Boeing Ideas to Innovation (I2I)
process couples a social networking ideation event
tool together with an idea portfolio management tool
to mature and select the very best strategic
opportunities. The presentation will provide an
insight into this emerging process on how
corporations can implement and manage their
innovation pipelines.
Copyright © 2009 Boeing. All rights reserved.
Ideas to Innovation (I2I)
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
 Ideas to Innovation (I2I) is a
- Systematic approach to transform ideas into a business opportunity
- Means to stimulate the capture and maturity of business ideas for
growth
- Streamlined method that integrates well into existing business
development gate processes
 I2I enables Boeing to…
- Rapidly generate dozens of viable business ideas to address our most
vexing business challenges
- Draw upon the best of Boeing’s customer knowledge and capabilities
- Cull rapidly through the ideas in weeks to identify the most promising
few…
- Address the biggest hurdles first, be they system concept, technology,
business model or market acceptance, and…
- Continuously manage a portfolio of business ideas to mature the best.
Copyright © 2009 Boeing. All rights reserved.
Notional I2I Growth
Idea Filer and Maturity Funnel
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
Ideas Portfolio
Management
Idea Generation
Idea Transition
Stage Gate
Processes
Customers
Staff
Partners
Ideation
Events
Markets
Internal Database
Data
Mining
Scans
Open Source
Business Intelligence
Competitive Intelligence
Copyright © 2009 Boeing. All rights reserved.
Individual
Input
Strategic
Fit
Initial
Screen
and
Review
Meets
Current /Future
Customer
Needs
Competitive
Position
Concept
of
Operations
Enterprise
Capabilities
Feasibility
and
Risk
Analysis
of
Alternatives
Investment
Cost
And
Funding
Streams
Revenue
Potential
Business
Plan
Partner
Alignment
Virtual
Prototype
Worthiness
Opportunity Pipeline
Business Unit Pursuit
Idea Development – The Starting Point
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
 Scouted the best of idea development practices
and tools from leading innovative companies
 Adopted challenge event-based ideas capture
methods that target key strategic objectives
 Developed a disciplined approach to identify key
next generation revenue opportunities…
 Operationalized an “Ideas to Innovation” framework
the fits with Boeing business processes and culture
Discovering the need for a broader innovation framework
Copyright © 2009 Boeing. All rights reserved.
I2I Framework
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
Idea Flow
Strategic Intent
Idea
Generation
Idea Portfolio
Management
& Learning
Opportunity
Transition
The I2I framework delivers opportunities to business units
Copyright © 2009 Boeing. All rights reserved.
I2I Idea Generation
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
 Boeing Idea Generation process
- Adapt Imaginatik - Idea Central portal
Idea Flow
- Process developed through collaboration
with help of the business and decision
analysis communities
Strategic
Intent
Idea
Generation
Idea Portfolio
Management
& Learning
Opportunity
Transition
 Challenge Event-Based Approach
- Events based
- Executive Sponsorship
- Ideally 10-12 days with a weekend
- Targeted Audience invited
- Review Team
- Define what a good idea looks like
“Raw” Ideas
Participants Input Ideas on
IC Idea Form
 Unrefined ideas
 Limited data (if any)
Initial Prescreening
Review Team Screening
Identify Interesting Ideas
with High Potential
Identify Ideas for
Further Development
 Unrefined ideas
 Limited inputs from
Prescreening questions
 Unrefined ideas
 Limited inputs from
review team questions
Idea activities generation tailored for Boeing’s culture
Copyright © 2009 Boeing. All rights reserved.
Manage Ideas as a Portfolio
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
 Two ways for new businesses to succeed
- Doing the right projects = portfolio management
- Doing projects right = project management and
gate reviews
- Enriching the right set of ideas = idea portfolio
management
 More than just best individual ideas
 Select right mix of opportunities to achieve
strategic goal
 Dynamically manage the maturation of ideas
and the portfolio
 Seamlessly feed business development
processes
Copyright © 2009 Boeing. All rights reserved.
X
Challenges for Idea Portfolio
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
 Ideas (initially) have little value
- Combine idea “fragments” into viable business ideas
 Ideas (initially) have little “working” data
- Create a progressive path to mature idea: qualitative  quantitative
 Many ideas aren’t worth pursuing
- Determine rapidly idea’s “worthiness” and “investment effectiveness”
- Eliminate those that don’t measure up
 Technologists (idea champions) don’t know business methods
- Provide business engineers to guide process
- “Business engineers”: engineer + MBA to design path from technology gem to
market value
 Strategically comparing apples to oranges
- Identify set of common attributes that apply to all ideas
Copyright © 2009 Boeing. All rights reserved.
I2I Idea Portfolio
Engineering, Operations & Technology | Boeing Research & Technology
Ideas flow into Portfolio
- Ideas screened for strategy
alignment
- Idea “fragments” combined
into viable business ideas
Ideas matured within
Portfolio
- Three phases of maturity
- Idea advance as rapidly
phase deliverables
completed
- Business engineers provide
guidance and validation
Business Engineering – Office of Chief Engineer
Idea Flow
Strategic
Intent
Idea
Generation
Idea Portfolio
Management
& Learning
Opportunity
Transition
Idea Phase
Learning Phase
Discovery Phase
Contextual
Qualitative
Range of Performance
Quasi-quantitative
Value and Investment
Quantitative
Idea Portfolio management tailored for Boeing’s culture
Copyright © 2009 Boeing. All rights reserved.
Portfolio Progression
Engineering, Operations & Technology | Boeing Research & Technology
Idea Phase – Qualitative
- Business concept
- Value proposition
START OF MANY IDEAS
- Related trends and
technology
Learning Phase -- Ranges
- Value ranges
Idea Phase
- Risks and opportunities
Learning Phase
- Assumptions and
contingencies
Discovery Phase
Discovery Phase -Quantitative
- Business case
- Investments and mitigation
- Customers and competition
MATURE IDEAS
Continuous strategy
refinement
Copyright © 2009 Boeing. All rights reserved.
Business Engineering – Office of Chief Engineer
Stage Gate
Processes
Portfolio Data Validation
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
Data Validation Critical to Portfolio
Strategist
Review
- Independent review at each phase
Strategist review and filtering
- Validates alignment to strategy
Finance
Review
Idea Flow
Strategic
Intent
Idea
Generation
Idea Portfolio
Management
& Learning
Opportunity
Transition
Business Engineer review
- Validates attribute data for each
phase
Finance review
- Validates business case before
transition to business unit
Copyright © 2009 Boeing. All rights reserved.
Idea Phase
Learning Phase
Discovery Phase
Contextual
Qualitative
Range of Performance
Quasi-quantitative
Value and Investment
Quantitative
Business Engineers
Review
Portfolio Scoring Framework
Engineering, Operations & Technology | Boeing Research & Technology
Objectives
Revenue
ROI
Operating
Costs
(Margin)
Program
Investments
Timing
Question
Magnitude
Scales
Business Engineering – Office of Chief Engineer
Contingent
Value
Risk-Averse
Probability
Value
Calculation
Probability
Calculation
Value
PV Earnings
Uncertainty
Market
Maturity
Magnitude
PV Investments
Uncertainty
Technology
Maturity
Launch Year
Market Entry/
Bid Year
Value
Calculation
Probability
Calculation
Time
Calculation
Discount
Calculation
Value
Uncertainty
NBF, B&P, …
Requirement
Platform
Potential
Magnitude
PV Cost
Uncertainty
Development
Maturity
Potential
Value
Adjacent/future
Projects Value
Value
Calculation
Leverage
Value
Calculation
Weight
Copyright © 2009 Boeing. All rights reserved.
M-153413_Portfolio Mgmt
| 13
Phase Information Maturation
Value
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
Discovery Phase
Business Value & Investment Targeting
Idea Phase
Business
Proposition
Depth of Understanding
Copyright © 2009 Boeing. All rights reserved.
Learning Phase
Risk & Opportunity
Exploration
Idea Portfolio Boundary
Project Management Process
Uncertainty/Risk
Real Options in the Portfolio
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
Ideas evaluated using real options methods
Portfolio process gathers the right information
- Profitability, uncertainty (“volatility”), launch cost (“strike value”),
timing (“exercise date”)
Determines appropriate investment balancing value and risk
Challenges
- Limited quantitative
information
- Complexity of analysis
Patented methods
- Simplified “range”
information is sufficient
- Provides excellent real
option value estimate
Copyright © 2009 Boeing. All rights reserved.
PVT of cash flow @rm
PV0 of cash flow @rm
PV0 (X) @ri
0pilot R&D
commercial
cash flow
T
investment
“Datar-Mathews Method”,
Boeing patent #6862579
X
time
Portfolio of Portfolios Concept
Engineering, Operations & Technology | Boeing Research & Technology
Portfolio I
Portfolio II
Business Engineering – Office of Chief Engineer
Portfolio III
IDEATION
SUBDIVISION
IDEA
PORTFOLIOS
Recycle
Division Portfolio
Review
Idea
Repository
Business Unit
Project Management Process
Copyright © 2009 Boeing. All rights reserved.
BETTER
BUSINESS
OPPORTUNITIES
Idea Portfolio Management at Boeing
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
Progressive structure to mature ideas to opportunities
Reliable results for coherent investment decisions
Best set of ideas that implement strategy feeding into stage gate
project management process
Roll-up consistency across portfolios
VALIDATION
FILTERING
Ideas
Copyright © 2009 Boeing. All rights reserved.
Idea Phase
Learning Phase
Discovery Phase
• Contextual
• Qualitative
• Business
concept
• Range of performance
• Quasi-quantitative
• Risk & Opportunity
Identification
• Quantitative
• Value & Investment
• Mitigation
Stage Gate
Project
Management
Process
Summary
Engineering, Operations & Technology | Boeing Research & Technology
Business Engineering – Office of Chief Engineer
 “Ideas to Innovation” taps the collective genius of Boeing
 Focus on the most important growth challenges
 Discipline at the front end of the business
- Targeted idea generation
- Strategy tailoring and refinement
- Strategic portfolio management
- learning, risk identification, selection
 More and better business opportunities feeding the stage
gate project management process
A Role for Everyone in Innovation
Copyright © 2009 Boeing. All rights reserved.