LFM Strategy Proposal to the LFM Governing Board

1. CLE-AAA123-20080611- LFM Strategy Proposalto the LFM Governing Board Summary Presentation October 8, 2008

2. The LFM program has been exploring its brand and vision for the past several months • Desire to increase applications and numbers taking positions at partner companies • Effective change in breadth of LFM program in recent years • Value of companies in supply chain and other associated areas • Experience of competitors

3. WE REFINED THE MISSION AND VISION STATEMENT AND CREATED NEW PROGRAM FEATURES Vision “A partnership between MIT and industry that is the premier program for developing leaders of operations-oriented companies who bring both a management perspective and deep technical understanding.” Mission “To generate cutting edge knowledge at the intersection of engineering and management, and to educate leaders to address the world’s most challenging operations problems.” Proposed enhancements Current features to carry forward • Two-year dual degree program • MBA from Sloan • Master of Science in Engineering • 8 engineering disciplines • 6.5 month internship at a partner company • Class size of ~50 students • Operations, engineering and management core curriculum • Focus on intersection of engineering and management • Leadership curriculum • Extend manufacturing scope to critical adjacencies in service operations, supply chain and supplier development • Expand LFM to be more global than the original vision • Complement current program with cutting-edge engineering expertise through technology tracks • Tackle the most critical issues facing operations companies with pooled internships and formal knowledge agenda • Further diversify partner company portfolio and hold partners accountable for participation • Modify governance structure to ensure nimble decision making

4. Broaden beyond manufacturing Sharpen the technology edge Build and radiate relevant knowledge Renew partner engagement Accelerate decision-to-action cycle 1 2 5 4 3 PROGRAM ENHANCEMENT ADDRESS KEY ISSUES RAISED DURING BOARD MEETING WORKSHOP Potential 3 Year Aspirations • Master the critical enablers of operations beyond the 4 walls of manufacturing • Get more than 300 applicants for 50 spots • Generate active faculty participation of >15 SOE faculty advisors, and >15 Sloan faculty advisors • Have 5 new partner companies in renewable energy • Publish articles directly based on LFM activities • Present papers based on theses at 2 conferences per year • Attract targeted and diverse portfolio of 30 companies to the partnership • Have 10 active managing partners, 20 limited partners, and pipeline of 50 potential partners • Empower smaller, agile governing committees of partners, faculty, and students to focus on key governance issues

5. Manufacturing Systems Biotechnology • Biological Engineering • Chemical Engineering • Civil Engineering • ESD Supply Chain • Mechanical Engineering • Civil Engineering • Mechanical Engineering • ESD Sustainable & Renewable Energy 2 TECHNOLOGY TRACKS: BUSINESS BREADTH AND TECHNICAL DEPTH - “T-SHAPED MODEL” Maintain core excellence… MBA Core Economic Analysis for Business Decisions, Accounting, Communication for Managers, Organizational Processes Management & operations breadth Operations Core System Optimization & Analysis, Operations Management, Operations Strategy, Lean/ Six-Sigma Processes, Proseminar, Organizational Leadership and Change, Internship, Plant Trek Technology track depth High priority global concern Keep core strength Growth of lean mfg in healthcare Keep core strength • Students are not required to take one of these tracks and can also follow a program, based on traditional departmental requirements or a particular subspecialty. • Tracks are designed to be attractive for new companies, current companies, and the rest of the LFM community. • We will assign a team to develop the tracks further.

6. 70 SETTING CLEAR PORTFOLIO AND PARTNER CRITERIA ENSURES ACTIVE PARTICIPATION FROM COMPANIES 4 Partner Portfolio • Explicitly make room in partnership for new, exploratory companies • Minimum participation threshold for partners will be enforced with yearly scorecards • Board sets policy on number of companies headquartered outside the US • Exploratory • Pilot new types of companies and/or collaboration models • Industries • Logistics • Others • Technologies • Renewable energy • Core • Maintain critical mass • Industries • Automotive • Aerospace • Defense • Computers/Electronics • Consumer Packaged Goods • Technologies • Manufacturing • Supply Chain • Growth • Expand proven areas built on earlier success • Industries (e.g. retail) • Technologies (e.g. biotechnology) Partner Criteria • Set guidelines for evaluation of a company as a potential partner, e.g. • excellence in operations and innovation • expected participation into program • proven leadership success in operations internally • Evaluate partner participation in LFM (hosting >1 internship, conferences) through annual review using the partner scorecard • Proactively address concerns of reduced partners for up to 3 years or decide to end partnership

7. 5 GOVERNING COMMITTEES ENSURE COLLABORATION BETWEEN PARTNERS, FACULTY AND STUDENTS FOR FASTER DECISIONS Future LFM Program Faculty and Knowledge Internship Partnership • Set annual knowledge agenda • Proactively match faculty research interests with partners’ • Ensure active faculty participation • >15 SOE faculty advisors • >15 Sloan faculty advisors • Organize annual LFM conference • Publish branded LFM knowledge content • Establish knowledge dissemination network • Conduct & facilitate regular and 2-3 pooled internships per year • Publish monthly internship newsletters showcasing best internship projects • Share learnings generated from year-end internship scorecard review • Develop & maintain healthy pipeline of > 30 partner companies • 10 1st year limited partner • 15 limited partners • 10 managing partners • Develop pipeline of >50 prospective partners • Conduct annual partner scorecard review