Tuesday, November 30, 2010

Can Portfolio Management and Systems Thinking Improve Air Force Acquisitions Efficiency?

By David Rosenbaum

When Col. Dave Morgan was told by the Air Force that he was being sent to MIT's System Design and Management Program (SDM) to study systems engineering to see if Department of Defense (DoD) acquisition processes could be improved, Morgan wondered whether he really wanted to go back to school. He already had a B.A. in math from Temple University, an MBA from Ohio State, and a M.A., Military Operational Art and Science, from the Air Command and Staff College, and he knew the people he'd meet at SDM would be younger than he and, he jokes, "smarter." Of course, as a career officer, if the Air Force tells you to go somewhere, you go. But now, on the eve of graduating from SDM with his M.S. in Engineering and Management, Morgan wishes he could stay a little longer."

Colonel Dave Morgan, one of two candidates selected for the United States Air Force's inaugural Senior Development Education at MIT, is set to graduate in February 2011. Col. Morgan's thesis addresses the application of Portfolio Management theory in Air Force weapons acquisition and how it can curb cost overruns and schedule delays.
Photo by Sgt. Joyce Woods

"I've learned a lot," he says. "I've acquired a mental model that helps me think about systems holistically. That's how you solve problems: driving ambiguity out of the system, adding flexibility, understanding risk, taking into account feedback loops. Not to mention that the professors and the cohort are great."

Col. Morgan's thesis, which he's worked on with MIT's Lean Advancement Initiative, focuses on the potential of Portfolio Management theory to improve DoD weapons acquisition. Right now, says Morgan, the acquisition system takes a lot of criticism on excessive cost inflation and late delivery dates. It is estimated 30% to 60% of all DoD projects are over budget and between 12-24 months behind schedule.

"Most people in acquisitions are frustrated," Morgan admits. "There are so many stakeholders—the GAO, Congress, the financial managers. I mean, when Dick Cheney was Secretary of Defense, he told Congress the DoD didn't want a specific weapons system, and he wasn't able to convince them with sound logic and reason. So if the Secretary of Defense can't effect change . . ."

"My thesis models the current process and asks whether giving Project Managers a bit more authority within their portfolio of projects might improve the system's efficiency and save money," says Morgan. Right now, he says that managers don't have the power or enough power to move resources—people and money—between projects even if they know that one may be compromised and another, given increased support, would have a better shot at success.

"My model suggests that giving greater latitude in apportioning resources to the project managers could improve the system incrementally," says Morgan. "And given the money these weapons cost, even a small percentage savings equals a great deal of taxpayer money."

Morgan does not expect his thesis suddenly to reform the DoD's acquisition processes, nor to inculcate systems thinking theory and systems engineering practice in the Congress or in any of the other major DoD stakeholders. "After all," he says, looking through a systems thinking lens and incorporating stakeholder psychology, "increasing one person's authority means decreasing another's, and people don't give up authority easily, especially when it concerns money. At best, I hope my thesis is a conversation starter."

Applying Systems Engineering and Systems Thinking to DoD Acquisition Reform

By David Rosenbaum

Typically, the Department of Defense (DoD) relies on contractors for systems engineering, "but we needed to develop systems thinking expertise on our side," says Col. Gregory McNew, a fellow in MIT's System Design and Management Program.

Photo by L. Barry Hetherington

As Deputy Program Manager for the U.S. Air Force's Joint-Air-to-Surface Standoff Missile (JASSM) program, it was McNew's responsibility to "get the warfighters what they need, when they need it and to get it at the best price." This, he explains, is why the Air Force first sent him to MIT and why he then chose SDM, which is where he could get the grounding he needed in systems engineering and systems thinking to address this complex interdisciplinary challenge.

For example, McNew came across a Carnegie-Mellon University Software Engineering Institute study on patterns of failure in software acquisition and felt that the "patterns were generic enough to apply to the entire DoD acquisition system." He is now working with MIT's Lean Advancement Initiative to conduct his thesis work, which focuses on applying those patterns of failure to DoD acquisition in order to create greater awareness when "a program starts heading down the wrong path. This is not a fix," McNew underlines, "it's a tool for program managers."

One of the failure patterns McNew has experienced personally is "firefighting," in which "you take people away from one project to fix another."

For example, McNew was working on a radar system attached to the belly of airplanes so they could track enemy ground movements for targeting by both ground and air fighters. "The contractor took used 707s," McNew explains, "tore them down to the skin and stringers, determined their structural soundness, fixed what needed fixing, and then replaced the old systems and attached the new radar system." But when the plane got to the last test station, some structural problems still had not been fixed, meaning the systems that had been installed had to be ripped out to fix the problems, and then the systems had to be reinstalled. In order to get that last airplane out the door on time, firefighting became the order of the day. "We had most of the people in the plant working on that one plane while other planes up the line were falling farther and farther behind schedule."

Says McNew, putting on his systems thinking hat, "You think you're going to get a one-to-one ratio of effort-to-result but you don't. There's no linear correlation. The project you're firefighting isn't helped as much as you think it will be, and the other project falls farther behind as it's operating with fewer resources. In other words, you've doubled the dysfunction.

"You spend dollars on firefighting," McNew concludes, "and those are taxpayer dollars. At the end of the day, our responsibility is to be a good steward of the taxpayers' dollars." At SDM, McNew believes his research and his newly honed systems engineering and systems thinking skills will help save those precious taxpayer dollars.

Monday, November 22, 2010

SDM Alum Finds Dream Job at Thomson Reuters

by Lois Slavin, SDM Communications Director
November 23, 2010

Recent SDM alum Mona Masghati was recently profiled on the website of her new employer, Thomson Reuters, where she was hired as Director of Technology Strategy. In the article, which appears near the bottom of the page, she references her SDM thesis research in cloud computing and discusses how this helped lead her to what she calls her "dream job." Congratulations, Mona!

FYI, Mona and her husband have one child and are expecting their second in early 2011.

Thursday, November 18, 2010

SDM Student Juggles Coursework, Company, Speaker Series

By Kathryn O'Neill, managing editor, SDM Pulse
October 1, 2010

MIT's System Design and Management Program (SDM) attracts many students with master's degrees, but perhaps no one has entered with more academic credentials than Charles Iheagwara, who joined the 2010 cohort with four advanced degrees-including a PhD in computer science.

The founder and chief technology officer of Unatek Inc., a US government information technology contractor, Iheagwara has also taught at the university level and has 40 published works to his name. Nevertheless, he said that studying at SDM has been "fantastic."

"Going to MIT is the dream of every engineer," he said. "The coursework and the curriculum [at SDM] are the best that anyone could imagine."

Iheagwara said he is particularly benefiting from the management portions of the curriculum. "I haven't had any formal management education. So this is the opportunity for me to learn about the theoretical and practical aspects of management and leadership," he said. "In today's corporate world, technology is an indispensable tool .... [SDM] demonstrates how effective management can lead to better utilization of technology to enhance the bottom line."

He said he is already putting his new SDM skills to use on the job—particularly the lessons he learned about forging alliances in SDM's course in technology strategy. "I don't think in the past I was able to do that so well at Unatek. But immediately after [taking the course] I was able to strengthen areas where I was weak," he said.

Never one to do things by halves, Iheagwara is not just working and going to school full time. He is also organizing SDM's speaker series as a member of the program's Industrial Relations Committee, a student-led group that works to forge links between SDM and the business community.

As both an executive and an academic, Iheagwara said he felt a responsibility to put his resources to use for the benefit of the SDM program. "I thought I could tap contacts I had to help promote the program," he said, noting that he had organized several big conferences at Unatek. "I believe that if you are part of an organization, you should work to advance the interests of that organization."

The first series of talks organized by Iheagwara took place this past summer. Highlights were a keynote address on entrepreneurship and leadership by Mamoon Yunus (MIT '93, '95), president and CEO of Crosscheck Networks, and a panel discussion among Ajay Mishra, global head of innovations management at Nokia Siemens Networks; Rob Kramer, chief of applications development and operations at the Washington Metropolitan Area Transit Authority; and Darren Hammell, co-founder and executive vice president for business development at Princeton Power Systems.

"I like the panel sessions because, if nothing else, they make it possible to have more speakers from a diverse spectrum of the work force," Iheagwara said, noting that the series has three main goals:

  1. To give the SDM cohort the opportunity to learn directly from high-caliber professionals on the front lines of industry.

  2. To disseminate information about the program to the speakers themselves, who come to MIT from different companies and organizations.

  3. To promote the program more generally. "Each time we invite speakers and have speaker events, it generates some sound bites that can help promote the program," Iheagwara said.

Typically, the SDM speaker series is open only to members of the SDM community, allowing SDM students to meet with speakers in small groups and to ask questions during presentations and afterward. Iheagwara and others on the Industrial Relations Committee have been working to line up other speakers for the fall and have a commitment from Luwanda Jenkins, Maryland's special secretary of minority affairs. They're also reaching out to many chief technology officers and entrepreneurs and expect to have an exciting program lined up, Iheagwara said.

"We think the fall and spring will be very busy with events," he said.

For current SDM event information, go to sdm.mit.edu and esd.mit.edu.

Tuesday, November 2, 2010

MIT SDM Systems Thinking Webinar Series

Date: November 8, 2010
Time: Noon - 1 p.m.
Open to: All

Speakers: Akshat Mathur, SDM alum and Ted Piepenbrock, Ph.D.

Akshat Mathur

Ted Piepenbrock

Title: The Evolution of Business Ecosystems: Interspecies Competition in the Steel Industry

Abstract: This presentation builds on the work of Theodore F. Piepenbrock, whose 2009 MIT doctoral thesis, "Towards a Theory of Evolution of Business Ecosystems," proposed that firms in the same industry vary systematically in performance over time as a result of differences in architecture. Piepenbrock defines architecture in terms of the strength, closeness, and the specific morphology of relationships that exist between the core firm and the four markets that are its key stakeholders-product markets, capital markets, supplier markets and labor markets. Mathur extends Piepenbrock's model to examine its validity in commodity industries, specifically the steel industry from the 1860s to the present.

Akshat Mathur is a recent SDM alum and an accomplished operations and supply chain management professional. Graduating with a Metallurgical Engineering degree in 1995, he went on to a career in various operations management, strategy and planning roles in the steel industry in India, before joining the SDM program in 2008. While at SDM, his interest was strongly piqued by the path-breaking research of Ted Piepenbrock in the field of evolution of business ecosystems. With his background in the steel industry, he explored about the applicability of Piepenbrock's framework to the Steel industry and other commodity industries. His thesis, the topic of this webinar, is the result of his working closely with Ted to analyze and examine the applicability of the Theory of Evolution of Business Ecosystems to the US steel industry.

Dr. Theodore Piepenbrock is an international researcher, lecturer and consultant in strategic management, leadership and macro-organizational change to leading universities and global Fortune 100 companies. Throughout his career, he has worked in over twenty countries, lectured on management and engineering in many of the world's leading universities (e.g. MIT, Harvard, Berkeley, Stanford, Princeton, Oxford, Cambridge, Imperial College, UCL, Tokyo Institute of Technology), has appeared in various international news media (e.g. CNN-TV, BBC-TV, ITV, SKY-TV, The Learning Channel, The Discovery Channel) and his work has featured in the business press (e.g. Forbes and MIT Sloan Management Review).He received an interdisciplinary B.Sc. in engineering & humanities as a Da Vinci scholar, an M.Eng. in nonlinear structural dynamics from the University of California at Berkeley, a dual M.B.A./M.Sc. as a Leaders for Global Operations Fellow and an interdisciplinary PhD in strategy, organizational behavior and system architecting from the Massachusetts Institute of Technology's Engineering Systems Division. He was as a researcher with MIT's Lean Advancement Initiative and Communications Futures Program and is currently a postdoctoral research associate at MIT's Sloan School of Management, where his research focuses on inter-organizational architectures, inter-species competition and the evolution of business ecosystems.

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Date: Monday, November 8, 2010
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Monday, November 1, 2010

Beyond Engineering to Enterprise Leadership: A New Toolkit

By David Rosenbaum

SDM fellow Matt Harper has been a chief engineer and a product manager (most recently at Prudent Energy International). He's led teams, launched products (including battery stacks to smooth the spikes produced by wind turbines and solar cells), and registered patents. He amassed a toolkit of skills that allowed him to analyze problems as an engineer, including system design thinking. But two years ago he woke up thinking, "I've done everything I've wanted to do. What's next?"

SDM Fellow Matt Harper in the product verification lab at Prudent Energy, Beijing, China.
Photo by Mr. Eldon Mou.

Harper, who graduated in 2000 with a B.A.Sc. in Mechanical Engineering from the University of British Columbia, wanted "to learn how to engage customers and stakeholders while integrating engineering and operations." He needed, he realized, a broader toolkit.

Harper never seriously considered an MBA program ("I'd be sitting among a bunch of 25 year olds with, at best, no more than a few years of real business experience," he says) but at SDM "I sit among men and women with deep experience across a broad range of industries, a deep experience from which I can learn."

At SDM, Harper will not only earn an MS in Engineering and Management, but he's also acquiring a toolkit he believes will enable him to lead an organization at the highest levels. In addition to taking courses in leadership, systems architecture, product design and development, and marketing, he also chairs MIT SDM's Industrial Relations Committee (IRC) which engages with SDM's industrial partners while providing career development opportunities for the SDM cohort.

IRC hosts events designed to introduce industry to the SDM cohort and visa versa. Its focus is on exploring the value SDM grads, grounded in engineering, management, and systems thinking, can add to any organization. IRC also sponsors a speaker series that exposes students to industry leaders. This year's luminaries have included Microsoft Senior Director of Technology Jim Miller talking about Cloud computing reliability; National Renewable Energy Laboratory Executive Director Neil Snyder discussing carbon dependency reduction strategies, and Crosscheck Systems founder and CEO Mamoon Yunus delving into the entrepreneurial mindset.

Another IRC goal is to give SDM students opportunities to work on real business problems—a process that benefits partner companies as SDM fellows are often successful executives themselves.

For example, IRC recently brought a company that builds large-scale power conversion products for tying solar power to the electric grid together with a group of students working on a project for SDM's leadership and management lab. Grid operators are conservative and change—e.g., deploying new technology—is culturally and organizationally difficult.

"The challenge for this company," Harper says, "is how to go beyond the traditional sales model and get to partnerships and co-development arrangements that will add value on the managerial and strategic sides of the business. To do that, you have to understand buyer psychology."

Psychology rarely is part of the engineering toolkit. But through his engagement with IRC partners and his SDM studies, Harper is learning how to integrate buyer psychology into his systems engineering expertise. The result is an engineer with a new toolkit, better prepared to lead not only an engineering function but an entire business.