Systems Engineering based Strategy Development Paul AmRhein Strategy Bridge International September 22, 2018

Not Nirvana, But Close What if you could ….. Maximize ROI Align project portfolio with organizational objectives Increase Decision Visibility Document and examine implicit assumptions Track, audit and improve decision-making over time. Create Decision Traceability Final decision authorities can see how decisions were achieved Adjust strategy to changing market conditions with dynamic sensitivity analysis Save Time

Agenda Strategic Planning 101 Why Use Systems Engineering precepts? The Process

Strategic Planning 101 What is the Core Purpose of the organization? Where do we see ourselves in 3-5 years? What are the strategic challenges we must address? How will we address shifts in technology, markets, products, the competition, and the economy? How do we identify possible blind spots? How will we plan for long-term sustainability?

Strategic Planning Methods There are a number of approaches to strategic planning MBA approach – focus on cost and/or savings Zappos approach – love your customers, pay your employees to leave BOGGSAT – optimized for inefficiency

Ideal Decision Model

Agenda Why Use Systems Engineering precepts? Strategic Planning 101 The Process

Why Systems Engineering? The practices that systems engineers utilize in project definition and execution -- work NDIA SE Effectiveness survey showed that planning and executing trade studies well had a very high correlation to overall program success By applying a basic Analytical Hierarchy Process to the plan options, a justifiable, traceable decision can be identified The process eliminates personalities, pet projects and ambiguity Most folks are familiar with the budgetary process of taking the previous years budget and adjusting up and down based on that baseline

Key Strategic Planning Elements Understand the “problem” you are trying to solve Take a systems view of the enterprise Consider work systems, support processes, and inter-relationships within the organization Assign someone to have the voice of the customer Worry about the inputs as much as the outputs Individuals must take a systems view as well Many of us suspend our systems thinking skills when it comes to our own initiatives

What is a Decision? Decision is a response to a situation in which: there is more than one possible course of action the decision-maker can form expectations about the outcomes following each possible course of action each outcome has an associated consequence that can be evaluated Hammond, K. R. (2000). Judgments Under Stress

What Doesn’t Change Still using intuition The proper decision frame opens up the spectrum, allowing truly creative possibilities to emerge. Need the representative team to participate The price of additional perspectives and enhanced “buy-in” is time and effort Collaborative decision meetings must be carefully planned and facilitated

Agenda The Process Strategic Planning 101 Why Use Systems Engineering precepts? The Process

The Process Strategic Planning follows a trade study process Framing the decision to be made Generating alternatives Modelling-evaluating the trade study Choosing an alternative Conducting sensitivity analysis Implementing the selected alternative

Decision Process Flow A few cautions about collaborative decision-making are in order. First, individual self-interest can overcome the drive to make a choice for the common good at the enterprise level. For example, in how many meetings have you participated where a department manager announced that he/she did not need all of the budget allocated for a particular department that quarter and therefore intended to return it to the corporate level to reallocate for the good of the organization? Second, if the “bullets are flying,” it is probably not a good time to convene a decision meeting. Finally, if the decision-makers are not directly affected by the outcome of their decision, there is a danger that they will not take the process seriously enough to really take a critical look at all of the ideas before making a selection.

Why The Proper Frame is Critical Typical decision-making tends to focus on point solutions (the way we’ve always done things) vice taking the time to examine the underlying goal(s) of the decision. Better to ask the question “Why?” Allows a decision-maker to see alternatives and options that are not readily apparent if the chosen frame is constrained to answering the question “what’s wrong?”

Proper Framing

Evaluation Criteria The techniques rely on carefully selected decision criteria by which the alternatives are judged. Should be few in number, reasonably independent of one another, and like requirements, should be clearly and unambiguously defined. If the decision criteria do not have a common definition, the team results should be questioned, since team members may have evaluated the alternatives differently. Too many criteria (more than nine) often prevent a conclusion due to insufficient discrimination among competing alternatives.

Sensitivity Analysis Once the initial analysis is completed, it’s important to confirm that small changes to criteria do not significantly impact the results. In addition to confirming that “what ifs” don’t impact results, sensitivity analysis can be used to demonstrate the thoroughness of the decision analysis to stakeholders.

Implement and Repeat Once a decision has been made, review checkpoints to confirm that progress is tracking as expected. Depending upon how proactive your organization is, strategy development can be done at any time.

Summary System Engineering is not just for complex project execution. Decision Making techniques provide a reliable and repeatable process to make justifiable, traceable resource allocation decisions. Though structure is added, vision and collaboration remain paramount.

Need More Info? Paul AmRhein pamrhein@strategybridge.com 571-265-2230 (c) 540-723-4242 (o)