Enabling Continuous Innovation in a Complex World: Driving Towards the Adaptive Enterprise

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Enabling Continuous Innovation in a Complex
World Driving Towards the Adaptive Enterprise

• June 15, 2005

Automotive Strategy For IT
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Volatility is on the rise today

• From 1972 to 1987 the US govt deleted 50
  industries from its standard industrial
  classification and added 200 new industries.
  From 1987 to 1997 it deleted 500 and added
  1,000.
• In 1978 about 10,000 firms failed annually and by
  1998 that number had risen to 73,000.
• In 1988, the first virus impacted 6,000 computers
  and cost 10 M of damages. In 2000, the I Love
  You virus cost over 10 Billion and impacted
  millions of computers

Many examples of rising volatility exist across
most types of institutions
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Agents in a complex system co-evolve and as the
connections intensify the pace of change
intensifies. Some of these changes ripple
through the web of connections and produce
non-linear results. -- An IT illustration
Business Functions gt20
Operating Systems (gt10 Unix)
Brands 8
gt200 IT Vendors
gt300 Shadow IT Groups
gt10 IT Development Groups
Users gt300,000
Supplier Network
High Degree of Interdependency Between Agents
Voice, Data, Video Networks
Applications gt2,400
Hardware gt 5,000 Servers
Automotive and IT Standards
Dealers
Customer Facing Groups
Virus Writers
Operations Multiple Procedures
Connectivity is at the heart of the pace of
change and each agents vulnerabilities or
opportunities arising from it -- Globalization,
Internet, Satellite..
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Adaptive Characteristics Allow Organizations to
Evolve in Rapidly Changing Environments
Continuous sensing and Trend / pattern
recognition
Self-Organization
Sense and Respond
Recombination
Continuous Experimentation
Seed, Select Amplify
Continuous Innovation
Product Design, Services, Management Methods and
Partnering Strategies Will All be Impacted
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As the complexity grows, we must adopt management
methods, processes and tools that fit the
situation
Modeling Simulation
Systemic Thinking Methods
IT is at the core of these methods and tools
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An Integrated Learning System ProducesInnovation
AND the CAPACITY to ADAPT
Continuously integrating what we learn into all
aspects of our system, including measurement,
is essential to keep aspirations aligned with
actions
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Background

• Strategic Review is a milestone in the Business
  Plan Process
• Occurs in March
• Focuses on business environment in next decade
• Defines strategic priorities
• Strategy Energy room was commissioned to analyze
• Business Model
• Capital Allocation
• Commonality Strategy Governance
• Information Technology
• SBG members review Strategy Room monthly

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How Does It All Fit Together?
Capital Allocation
Business Model
Commonality
Information Technology
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What is a Conceptual Business Model?
What is our ability to deliver?

• Implement Global Commonality
• Utilize TVM for Total Cost Efficiency
• Grow FMC China Presence

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Capital Allocation
Apply Process Make Recommendations
Determine Corporate Spending Levels
Define Capital Allocation Process

• Historical Performance
• Projections
• Investment /Divestment Options

Affordable
Process that maximizes returns while supporting
growth
CorporateCapital SpendingTargets 2004 - 2008
Allocations for 2004 - 2008
Ensures Competitiveness
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Confluence of Technologies

• Sense and respond to
• Unique market conditions
• Changes in supply chain
• Emerging operational issues

• Intelligent vehicles / servicing strategy
• Key component and vehicle tracking

• True concurrent engineering
• Enabling radically different people and
  organizational distribution

• Virtual prototyping of integrated mechanical and
  electronic processes
• Business modeling systems dynamics, wargames
  and scenario-based learning

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How Do We Leverage IT Innovations?
Adaptive Enterprise
Breakthrough
Compressing the Gap between Sensing and
Responding
Opportunities!!!
Time
Vision, Column 1, Row 2/3
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Whats the Value of an Adaptive Enterprise?
Event
Occurs
Impact
Number Of
Response
Cost of
Options
Delay
Number
Root
Causes
Occur
E
-
n
E
-
1
E
E1
E2
E3
E4
E5
E6
En
Event
-
Impact Lag
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How Does IT Enable an Adaptive Enterprise?
Enterprise Business Model
Adaptive Enterprise
Enterprise Strategic Decision Making
Opportunity
Business Involvement
Opportunity
Business Involvement
Business Commonality and Collaboration
Processes Supported by Common and Integrated Data
and Applications
IT De-Fragmentation
Business IT Governance, Architecture Mgmt.,
Ford Computing Environment
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Synchronize IT and Business Commonality
Initiatives
Business
initiatives
Synergy
promoting
Opportunity
Platform
commonality
Commonality Goal
Business Commonality
of FMC
products
Business Model
processes
Project
Edison
Current State
Goal
Complexity
IT Defragmentation
Initiatives promoting defragmentation of IT
products processes
Our Approach to Real Time, Column 2, Row 3/4
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ENTERPRISE COMPETENCIES
RESPOND
SENSE
Business Results
Leverage Information
Identification of
Leveraged
Opportunities
Financial Tradeoffs,
Strategic Decisions,
EXAMPLES
Business
Scenarios
Business Model
Questions
In
-
Vehicle
Software
RFID for
Component
Demand
Tracing
Modeling
Scheduling Optimization
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Pervasive Computing Scenario The Adaptive
Vehicle
1. A family is going on a 2-week vacation in the
mountains and is taking the family car which has
been optimized for suburban driving.
2. Sensors inside the vehicle constantly
communicate terrain information, speed,
temperature and other vehicle diagnostics
wirelessly.
3. This information is wirelessly transferred to
the Ford servers that aggregate vehicle
diagnostic information from all over the country.
4. Robust pattern recognition software mines this
data and identifies optimal powertrain
configuration settings based on driving patterns.

5. The latest rev of the powertrain software is
pulled from a software vault and the new
configuration settings are applied to the
software.
7. The updated software is remotely flashed to
the vehicle while parked at a gas station and the
driver now enjoys enhanced performance.
6. Utilizing modeling tools, the new
configuration is modeled against performance and
identifies significant fuel economy/performance
gains.
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Adaptive Innovations Will Have Significant Impact
on the Automotive Ecosystem
Product Exciting features, content and
functionality
Marketing Context-awareness enables
personalized advertisements
Dealerships Improves ability to tie experiences
to brand image
Supply Chain Increased control and flexibility
through RFIDs
Service Simplified ownership and repair
Shop Floor Increased monitoring and intelligent
correction
Traffic System Integration Ability to provide
and receive traffic information
Internal Efficiencies Smart offices and asset
tracking
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Ford ITs Journey to Adaptive
It is not the strongest of the species that
survives nor the most intelligent, but the one
that is most responsive to change. Charles
Darwin
In todays increasingly complex world, ITs most
important role is to help create the conditions
for CONTINUOUS INNOVATION and ADAPTATION