The Aerospace & Defense Forum San Diego Chapter April 22, 2014 Organizing For Growth: Creating Natural Business Units Presented to: Aerospace and Defense Forum April 22, 2014 San Diego, California Purpose: • To define your businesses based upon capabilities and a defined value proposition • Align organizational structure with natural business unit definition • Define relationships between natural business units (NBU) for corporate and shared services functions. • Develop growth strategies which are aligned with value propositions and capabilities 2 1
The Aerospace & Defense Forum San Diego Chapter April 22, 2014 Results: • Focused growth based upon value creation, agility and responsiveness to new opportunities • Better definition and penetration of target markets • Improved customer alignment and focus • Enhanced operational performance • Clear definition of roles and responsibilities • An organization structure which supports the strategy 3 Natural Business Unit (NBU) Model vs. Traditional Model TRADITIONAL MODEL NATURAL BUSINESS UNIT MODEL • Managing Assets • Managing Resources • Built Around Assets • Built Around Capabilities • Sales and Marketing • Business Development • Focus on Managing Numbers • Focus on Creating Value • Hierarchical • Networked • Independent Parts • Interdependent • Reactive • Responsive • Command and Control • Empowered 4 2
The Aerospace & Defense Forum San Diego Chapter April 22, 2014 Natural Business Unit Attributes (NBU) NBU’s: • Are Structured to concentrate on what they do best • Are Structured around product lines or customer segment • Must have identifiable unique capabilities • Have a well defined value proposition • Have the authority and responsibility for developing and executing either all or a key portion of a strategy • Have accountability for revenue and profitability 5 NBU Design Framework What The NBU Is How Is It Structured How It Works 2 Design NBU Structure 3 1 5 Define Relationship Define the Define with Global Business Linkages Core (Corporate) 4 Define business Services (Shared Services) 6 3
The Aerospace & Defense Forum San Diego Chapter April 22, 2014 Identifying and Growing Our NBU’s Define • What are the customers NBU • Can I better define my demanding today? business system to In the future? deliver superior value to my customers? Assure Fit with Understand • How is the industry Ducommun External Market changing? Way Dynamics • Exploit synergies between NBU’s • What are competitors doing • Do we have alignment • Are we capable of meeting between structure and customer requirements today? strategy In the future? Align Determine • Are we responsive and timely Organization to Internal Market with delivery of products and Capabilities Requirements services? • Which Assets and • Are we cost advantaged? resources are Identify Gaps required? • Do customers perceive value for price? • Competitive skills • Resources • Do we have a sustainable competitive advantage? 7 Customer Value Lever Effectiveness Benefit Cost optimization via global service delivery, economies of scale, etc. Leveraging Cognizant's process, technology, and global delivery Maximizing use of existing assets strengths to rapidly and cost and resources to eliminate waste, Efficiency effectively design and implement reduce cost per unit, and solutions that optimize spend, implement cross-organizational reduce unit costs, and positively standards for lower cost. impact your bottom line. Subscription-based pricing to reduce capital expenditures while optimizing processes. Improving productivity and Process optimization that fosters operational performance via quality improvements while standardization, better tools controlling costs. automation, etc., to achieve more Effectiveness Increased control, transparency, effective business processes and adaptability of ongoing (driving reduced ticket volume, operations. higher levels of availability, Decreased time-to-market for streamlined processes, improved satisfaction metrics, etc.) products and services 8 4
The Aerospace & Defense Forum San Diego Chapter April 22, 2014 Customer Value Lever Effectiveness Benefit Consolidated resources that Addressing multiple levels of enable lower cost of ownership virtualization including work on existing assets and reduced (global knowledge and investment on new technology. collaboration), process Improved flexibility and Virtualization (atomization of processes), and collaboration across the technology (servers, applications, enterprise through technologies cloud-enablement) helps lower that allow better resource operational and CAPEX costs utilization, new ideas, and while boosting brand and knowledge management for shareholder equity. global workers. Growth opportunities that provide direct revenue. Business technology innovation Refined business models that to enhance revenue opportunities drive additional revenue and Innovation via new products, new IP, new strengthen bottom and top lines. market channels, etc., facilitated by Cognizant's domain expertise Joint go-to-market opportunities and knowledge. with shared investments and revenue. 9 NBU Process • Business Development Considerations – Technology Migration – Competitive Position – Outsourcing Trends – Global Demographics • Operations Centers Definition – Product Focused – Definition – Built around capabilities – enabling process – Focus on creating value – Networked/Interdependences – linkages to other businesses 10 5
The Aerospace & Defense Forum San Diego Chapter April 22, 2014 Original Structure Ducommun Ducommun Ducommun LaBarge Ducommun AeroStructures Technologies Miltec Joplin, MO Huntsville AK Parsons , KS Ducommun Miltec Berryville , AR Coxsackie, NY Guntersville, AL Ducommun LaBarge Appleton, WI Gardena, CA Technologies Oxford, MS Tulsa, OK El Mirage, CA Huntsville, AR Iuka, MS Phoenix, AZ Orange, CA Pittsburgh, PH Monrovia, CA Houston, TX Carson, CA 11 12 6
The Aerospace & Defense Forum San Diego Chapter April 22, 2014 Strategic Overview Business Segment Value Propositions Market Segment Targeted Customers Interconnect Solutions • Low Volume/ High • Military Upgrades • Rolls-Royce Complexity • Commercial Aerospace • Sikorsky • High Reliability • Engine Manufacturers • Parker • Design /Redesign • Natural Resources • UTAS • Harsh Environment • Medical • Northrop • Aftermarket Circuit Board Solutions • Low Volume/High • Military Commercial • Moog complexity Aerospace • Parker • Prototyping • Defense Products • Lord • High Reliability • Medical • UTAS • Design/Redesign • Northrop Aerospace Integrated • High Reliability • Commercial Aerospace • Parker Solutions • Product Lifecycle Mgmt. • Military Aerospace • Moog • Diverse Capabilities • Aircraft Engines • Rockwell • Military Market • UTAS Expertise • Raytheon • Marvin Industrial • Low volume/High • Mfg. Process Equipment • John Deere Integrated Solutions complexity • Heavy Industrial • Caterpillar • Product Lifecycle Mgmt. • Agricultural Equipment • Bombardier • High reliability • Construction Equipment • Vision Robotics • Harsh Environments • Transportation • GE Transportation • Design/Redesign • Natural Resources • United Engines • Medical 13 Strategic Overview (continued) Business Segment Value Propositions Strategic Emphasis Targeted Customers Advanced Systems • Innovative solutions to • Missiles and Weapons • SMDC Development & Integration complex problems • Nano-Satellites • AMRDEC • Support to other • NASA Prototypes • DARDA NBUs for Engineering • Missile Defense • NASA Solutions • DCO Customers Advanced Systems • High Reliability Products • Aerospace, Industrial, • Rockwell Engineered Solutions • Rapid Prototyping Medical • Boeing • Design/Redesign • RF Systems • Honeywell • Product Lifecycle • Integrated Assemblies • Sikorsky Management • HMI • Techtronic • Specialized Motors Structure Assembly • Broad Capabilities • Military & Commercial • Rolls-Royce Solutions • Hot Form/SPF Assemblies • UTC • Low Cost Sub Assembly • Engines • GKN and Finishing • Spirit • Airbus • Sikorsky Structure Systems Solutions • Higher Level Assembly • Military & Commercial • Spirit Integration Aircraft • Rolls-Royce • Range of Focused • Engines • Pratt & Whitney Capabilities • Honeywell • Chemical Milling • GE • EB Weld Capability Bonded Assembly Solutions • RTM Composites • Promote RTM/Foam • Boeing • Foam Matrix Core Matrix Capabilities • Airbus • Metal Bond Capability Commercial and Military • Bombardier Aircraft • Sikorsky • Airline & Military Maintenance Centers 14 7
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