MIT System Design & Management Program

SYSTEM DESIGN AND MANAGEMENT MIT System Design & Management Program Infusing Systems Thinking Into Organizations JM Grace 28 Oct 2005

STATEMENT OF PROBLEM • Infusion and diffusion I/D • Infusion -- to cause to be permeated with something to alter a condition • Diffusion -- the spread of cultural elements form one area or group of people to another by contact • Systems engineering and systems thinking • Systems engineering is a branch of engineering that concentrates on design and applications of the whole as distinct from parts.. Looking at the problem in its entirety, taking into account all facets and variables and relating the social to technical aspects

approach • Lets start by drawing on concrete observations from I/D experiences at Arvin and ArvinMeritor • Then lets explore the extension or generalization of these observations by adding your comments from your experiences • Our goal is to begin to understand the infusion and diffusion issues for different types of companies and organizations. • From these discussions I would hope we can develop a rationale and basis for a future systems engineering exchange

bias or perspective of presenter • Education • Work experience • Charge from Arvin and ArvinMeritor

From my observations there are factors you should consider when attacking the I/D issue in a system We will discuss some of these factors and then show how these factors played in the infusion and diffusion systems thinking in two corporations Your inputs will allow us to begin to generalize the issues and approaches to a broader range of companies

Factors impacting the infusion and diffusion of systems thinking • Corporation • Formation and evolution, culture, organizational structure, human resource philosophy, strategies, face to stakeholders • Market and market conditions for the corporation • Products and future products • Corp. needs as expressed internally and externally • Available platforms for promoting I/D of systems thinking

Other items for consideration • sources of systems expertise • plan for spreading the capability • tools etc. to work with • competencies you can draw on • change agents in the firm • help from outside of the company • sources of best practices from across your and other industries

NOW LETS STEP BACK AND LOOK AT WHERE THESE ITEMS CAME FROM AND WHY THEY WERE IDENTIFIED

Arvin and Meritor ( Rockwell Automotive) independent US companies for a long period. Tier 1 suppliers. Mature products. Some growth by acquisition. Arvin Business unit independence Some Participative management Significant management development Meritor Business unit independence Strategic planning formalized Technical Road Map exists Top down management Process focused in name Succession development Developed cultures; leaders dominantly business trained US nationals Little assimilation of Arvin or Meritor acquisitions ATQPS et al main process focus across company Scholars program entrenched Strategic processes exist but are weak in implementation Little formal management development FORMATION AND EVOLUTION OF ARM

Features of Arvin • Business unit independence • Some participative management • Manufacturing focus • Lean quality systems in place and operating • Product engineering • Business unit focus, no central engineering • Technology council exists • Scholars program exists with a long history • Little assimilation of acquisitions

Evolution of the approach to systems at Arvin • Broad general charge for engineering & systems development given • Understanding of BU’s state of engineering needed • Focused on working with teams on specific problems • Eg PD and manufacturing launch process • Planed, developed and recruited for an advanced engineering unit

Evolution of Arvin’s approach to systems • Started discussions with various universities, OSU, M, Purdue on relevant technology issues • A conference on technical supply chain issues at MIT was pivotal • Discussed a number of aspects of conference with Arvin management • Continued discussions at MIT with D. Whitney • Whitney gives introduction to SDM • After further study and discussion we decide to utilize SDM program and start with 3 entrants • Cadre formation and change agents

Evolution of Arvin’s approach to systems • Developed an Arvin technology board with inside and outside personnel: MIT and TU Aachen • TB undertook an examination of the technology issues Arvin should consider • Systems issues • Product development • Product preceding technologies • TB brings visibility to systems thinking and its potential

So what did we learn at Arvin? • Understanding of BU’s business and technical characteristics are key • Technically self contained units creates diverse systems • Within some units options exist for systems thinking • Staff position relies on relations and credibility • Budgetary authority or flexibility is needed • Initiation of PPT projects with universities, SDM program,… • Support from business unit head can be critical • Outside credible sources for knowledge in new areas is needed • It was an ongoing effort to move management thinking in areas of technology and new technology

Features of Meritor • Meritor ( Rockwell Automotive) • Top down management • Business unit independence • Process focused in name • Manufacturing focused • Quality via firefighting • Strategic planning process formalized • Technical Road Map process formalized • Innovation process exists and is utilized • Product engineering business centric • Central advanced engineering exists – strong engineering history • Engineering council exists • Little assimilation of acquisitions

Evolving nature of ArvinMeritor • ArvinMeritor’s characteristics (“merging of two common cultures”!) • Management top down • Business unit independence • Manufacturing focused • Quality systems are not to level of Arvin • Strategic planning process formalized • Technical Road Map process formalized • Innovation process exists and is utilized • Product engineering business centric • Central advanced engineering exists at headquarters • Product development process “rationalized” • Engineering and Technology Councils brought into existence

As you know…. • The evolutionary nature of the merged company must be recognized. • Mergers are messy and time consuming • There is much jockeying for influence • Directional changes are not seen at all levels as they are developed • It is a tough environment to develop a consistent strategy with regard to systems and it is an environment where you must be opportunistic and fleet of foot

Management top down Business unit independence Manufacturing focused Quality systems are not to level of Arvin Upper management must be involved If focus is on components this can be a definite stumbling block Infrastructure critical Typically not systems thinkers Manufacturing was a driver for many considerations Manufacturing strategy is evolving for multiple products in a plant vs. a single product in a plant ATQPS did aid in systems thinking Implications of ARM characteristics on systems thinking

Strategic planning process formalized -BSR Technical Road Map process formalized - TRM Innovation process exists and is utilized Product engineering business centric Opportunity for introducing systems thinking- a platform TRM is a ready platform for systems thinking and systems development Great platform for realizing systems thinking if it has visibility Hindrance if BU is component centric Hindrance if infrastructure is BU centric Hindrance if PD is independent of manufacturing Implications for systems thinking

Central advanced engineering exists at headquarters Product development process “rationalized” Engineering and Technology Councils brought into existence Great platform for introducing and advancing systems eng. Virtual PD platform Can facilitate systems engineering analysis if company wide Great platforms for introducing change and identifying rationale and impact of systems engineering EC good for visibility of SDM Must be visible to upper mgt. Implications for systems thinking

Factors implications corporate factors having influence on systems thinking – your perspective

Criticality of platforms • “platforms” of various types are used to generate forums for change • Examples of platforms • Positional ---- VP of engineering and technology • Groups ---- advanced central engineering • Modeling ---- virtual product development*** • Engineering and technical councils--- • unify the engineering community on goals • focus many change agents to common needed thrusts • BSR* and TRM* link technical strategy to business directions • Educational philosophy and leadership development programs

Platforms effectiveness Lets consider platforms that may exist in your companies and how they may affect + or – systems I/D

ARM product structure • Exhaust and Emissions elements C,L • Ride control products shocks and struts C,L • Roofs, doors, latches, L • Wheels L • Brakes C • Axles and drive lines C • Specialty vehicles C • Trailers C • Suspension systems C,L • Springs, torsion bars, stabilizer bars,.. L

ARM product structure • Mechanical products • Generally metallic structures • Axles, drivelines, brakes, suspension system elements • Bearings and Seals (tribological systems) • Catalyst components – ceramic substrates • Electro mechanical products • ABS and EBS, transmissions, • Doors, roofs, access control, suspension systems

PRODUCT STRUCTURE IMPLICATIONS FOR SYSTEMS THINKING • STRUCTURE IMPLICATIONS

Market and Market place for products • Global Market place • US, Europe, Asia, South America • OEM’s in light vehicles • Ford, GM, D-C, BMW, MB, Fiat, PSA, Renault, Toyota, Honda, Nissan • OEM’s in Commercial vehicles • Freightliner, International, Specialty products,.. • Commodity vs. specialized products • Drivers – cost, quality, functionality, technology

Market place factors • OEM strategies • Systems vs. components • Follow production sites • Supply chain strategies • General trends for interactions with OEM’s • Trends in manufacturing

Influential ARM market factors • Cost focus • Potential for module and systems work evolving at different rates with different OEM’s in LVS • Systems and module business opportunities linked to manpower savings at OEM esp in commercial vehicles • Infrastructure and processes are avenues for increased systems thinking • Global distribution of PD and manufacturing driven by follow source strategy promotes systems thinking

feature impact How do your market characteristics affect the diffusion of systems thinking +,- ?

Corporation needs and their implications • Internal • Resource allocation for development of products • Product launches • Evolution of engineering staff capabilities • Education of systems engineers • External needs • Satisfying expectations for systems • Satisfying expectations for product life cycle • Satisfying expectations for competency

Identification of corp. needs from your perspective • Type, source and impact of needs

ARM Organizational Elements and implications • Is strategy driving the organization or the reverse? • Business groups • Business units • Reward structure • Strategy for groups and units • Organizational aging • Personnel development plans

Feature Impact Organizational features you see impacting I/D of systems

What worked and what did not ? • Staff position is useful platform but…. • High level management recognition of need to organize for systems still to be developed…… • Engineering Council excellent platform but needs greater management awareness/involvement • ENGINEERING COMMUNITY NEEDS TO BECOME A BODY POLITIC • Central engineering is an excellent platform…. • TRM process improved and is great platform but…. • BSR tremendous opportunity but needs to be taken seriously and linked to strategic implementation…..

What worked and what did not ? • SDM and Certificate solid contributors to SE • VPD great tool; SE maturity model next?? • More “integration” of SDM cadre is an opportunity • Better use of SDM thesis is an opportunity • SDP could be an excellent tool for I/D but could not convince HR to use it “properly”

What about SEX next? • System engineering exchange • Use to set up exchange of ideas on systems infusion and diffusion within companies • Expand to exchanging other aspects of systems engineering and systems thinking • Develop SE I/D maturity model • Expand to companies in ESD not just those in SDM

MIT System Design & Management Program