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A Note To The Reader

This section briefly describes how Saab could give the Swedish Defence Materiel Administration added value at the same time as the organisation was streamlined and organisational capabilities were strengthened based on demands for increased profitability!

It describes the scope of the change management and the results produced. An account of the measures implemented to ensure success is also provided.

If the resources at one's disposal are insufficient to execute urgent projects, it behoves one to think differently.

One cannot get bogged down in speculating how things would have been accomplished had the requisite resources existed. Over the years, Saab has had to think differently, think small and think practically. One also needs to be willing to question oneself. If one works correctly, working procedures are able to change so that work can be carried out more rationally, thereby achieving a lower cost level.

Saab dared to re-evaluate working procedures and dared to invest in new, more flexible working procedures which simplified future product development, production and test operations in order to free up financial resources. This allowed for investments to be made in exigent development projects for Gripen's future capability development.

Background

At the beginning of the 2000s, a large proportion of development orders from the Swedish Defence Materiel Administration were regulated in a long-term agreement which was exhaustively detailed. At this time, Saab and the Swedish Defence Materiel Administration had a considerable interest in developing a technology demonstrator able to show the Gripen system's future development potential. Unfortunately, owing to the budgetary allocation at hand, such a project was never able to materialise. Another financial solution needed to be devised in order to develop a technology demonstrator.

Recomended reading

The author recommends the following texts that relate to this story: In chapter Having a low life cycle cost under the heading Challenging Changes in Production , under the heading An Effective Procurement Process and in chapter Ensuring long-term organisational capability under the heading Capability development in an international environment.

This section concerns the marked areas in A Journey of Change in the Aircraft Industry

Summary

Costs within the international development of military fighter aircraft had begun to sky-rocket, which Swedish politicians had denoted in such a way that generated scepticism towards military investments, especially at a time when a military threat to Sweden was judged as unlikely.

To leverage its capabilities, Saab needed to maintain continuity in development work to retain its world-leading development capabilities for military fighter aircraft. To enable this, either a new development project was needed or a project in the form of a technology demonstrator.

How could this be achieved when no financial means were available for development assignments of this size and character? Through assertive thinking, new working procedures and new management of capability development. And this was when the save-to-invest concept was born.

It was then decided that a rationalisation and streamlining programme was to be initiated. This would allow for the realisation of the save-to-invest concept.

The meeting wherein the decision was made took place on 09 January 2006. This date happened to be the name day for "Gunder" in the Swedish calendar and the programme was therefore dubbed Gunder.

Implementation was to be carried out through rationalisation and streamlining and would create the possibility to free up resources and capital.

The Gunder Programme included twelve sub-programmes that would contribute to sustainable profitability. The sub-programmes were oriented towards pure streamlining and rationalisation measures, but also through the overseeing of long-term work involving value creation and capability development.

Description of content

  • To leverage its capabilities, Saab needed to maintain continuity and retain its world-leading development capabilities for military fighter aircraft.
  • At the beginning of the 2000s, a large proportion of development orders from the Swedish Defence Materiel Administration were regulated in a long-term agreement which was very detail-driven.
  • When Gunder was initiated, a programme plan existed containing twelve sub-programmes which would contribute to sustainable profitability.
  • The results of the Gunder Programme contributed to reducing costs at the business area and even enabled the creation of a financial solution that permitted the Swedish Defence Materiel Administration to place a development order for Gripen Demo.

Defence Budget Reduction vs. Development Capability

With the societal situation in the mid-2000s, with reduced politico-security tension in Europe, politicians had no plans for further development of the Gripen system.

The Swedish Defence Materiel Administration had submitted orders for a number of development assignments that constituted the basis for Gripen development at the time. However, budgetary funds for technology studies were limited.

The government and the parties in Parliament were drawn in a new direction regarding Sweden’s defence capabilities, with investments for participation in international missions.

In other countries, technological and capability development in military fighter aircraft continued.

Costs within the international development of military fighter aircraft had begun to sky-rocket, which Swedish politicians had denoted in such a way that generated scepticism towards military investments, especially at a time when a military threat to Sweden was judged as unlikely.

New Development Project vs. Technology Demonstrator

To leverage its capabilities, Saab needed to maintain continuity and retain its world-leading development capabilities for military fighter aircraft. To enable this, either a new development project was needed or a project in the form of a technology demonstrator.

Saab had also determined that working procedures had to be created to significantly lower costs for development, production and maintenance. In part to further reduce life-cycle costs for the Gripen system, but also because of the assessment that funding for future investments in military fighter aircraft would be very limited.

Gripen Demo

The Gripen Demo project was Saab's way of realising and showcasing future capabilities for the Gripen system, with the sights set on continuing as one of the world-leading players in military fighter aircraft. The Gripen system had to evolve to ensure it became a cutting-edge system with unique operational capabilities and able to be further developed until 2040.

Gripen Demo was a strategic development project and a technology demonstrator for testing new concepts and new system solutions for future development of the Gripen.

Gripen Demo also intended to showcase Saab's unique development expertise and to provide value to Saab's customers by developing new systems with a focus on low life-cycle cost.

New Ideas on Development Work Funding

At the beginning of the 2000s, a large proportion of development orders from the Swedish Defence Materiel Administration were regulated in a long-term agreement which was exhaustively detailed. How could a solution be achieved that allowed for a development assignment of the size and character Gripen Demo would entail? An alternative funding solution for Gripen Demo needed to be identified.

Assertive thinking, new working procedures and new management of capability development was the answer, and this was when the save-to-invest concept was born.

If Saab could rationalise and streamline its operations so that the previously submitted orders from the Swedish Defence Materiel Administration could be filled with retained quality and functionality at a substantially lower cost, this would create the financial means to move forward. The Swedish Defence Materiel Administration would then be able to initiate a development order without any expense to Swedish taxpayers.

Saab needed to streamline operations and significantly increase capacity in order to retain its unique system development capabilities in the years ahead.

To succeed, radically altered working procedures would be needed, in part to increase profitability, but above all, to increase efficiency.

Streamlining Preparations

A few months were spent on preparing a rationalisation and streamlining programme for the company that encompassed all aspects of the organisation. A project proposal was produced and no organisational areas would be spared the streamlining measures. Streamlining would occur in the line organisation as well as within product projects. All types of efficiency measures would be implemented in accordance with the principle of “every little bit helps”.

A short time later, Saab AB's CEO at the time encouraged Saab Aeronautics management to focus activities on strengthening profitability. And to make it all the easier, there was already a finished proposal for an efficiency programme for creating long-term and sustainable profitability.

Decision on ”Save-to-Invest”

It was then decided that a rationalisation and streamlining programme was to be initiated. This would allow for the realisation of the save-to-invest concept. The meeting wherein the decision was made took place on 09 January 2006. This date happened to be the name day for "Gunder" in the Swedish calendar and the programme was therefore dubbed Gunder. This programme would encompass many new ideas for streamlining and rationalisation to create long-term and sustainable profitability.

The Gunder Programme and the entire arrangement for how streamlining and rationalisation would be implemented constituted the foundation of a cost-saving programme called the Billion Programme (Miljardprogrammet) that would apply for all of Saab AB. The approach developed in the first year of the Gunder programme came to form the pattern for how following up the results and financial value would be carried out within the Billion Programme. The Billion Programme was started about one year after the Gunder Programme.

The Gunder programme then became a collective initiative to realise the "save-to-invest" motto and to increase operational capabilities within the business area. The Gunder programme was initiated in order to obtain stable and long-term working procedures, which would secure lasting results with significant financial value.

Sustainable Profitability Purpose and Background – Save-to-Invest!

Creating sustainable profitability and establishing sustainable change management was fundamental to this work. Effective working procedures and capability development were to be created that produced long-term and strong competitiveness on the international military aircraft market.

This would be done through rationalisation and streamlining and would make it possible to free up resources and capital.

Also hoped for was the possibility to become comparable to other industries. Measurement and comparison was to be carried out pursuant to Capability Maturity Model Integration (CMMI). Some cases involved customers and partners requiring the CMMI level of the business to be reported. CMMI is five-tier scale, with five being the best. It was then decided that the goal was for Saab to be at CMMI level 3 within two years.

Reasoning Behind the Direction of the Gunder Programme

At the same time as the Gunder programme was being initiated, its direction was established and guidelines were defined so as to ensure the success of the change programme. A number of areas were subject to discussion.

  1. Advance the work by communicating business plans to all employees.
  2. Secure experience from international partners.
  3. Secure decision models and mandates in change management.
  4. Secure implementation of results from change management and identify methods for value creation.
  5. Define working procedures for product strategies, product development ladders and product development plans.
  6. Secure experience from various "market cases".
  7. Balance overhead costs with business models.
  8. Focus on streamlining working procedures.
  9. Increase efficiency in the value stream with business units in Saab.
  10. Ensure the professionalism of each individual.

Change management and capability development are based on statements in the business plan. Options 1, 3 and 4 were therefore selected as crucial for the Gunder programme.

Gunder, A Rationalisation And Streamlining Programme

The objective of the Gunder programme was to safeguard working procedures conducive to continuous change management in the "spirit of Lean".

Three areas were adjudged critical for the Gunder programme, namely:

  1. To advance work on strategic objectives in order to improve the governance of capability development
  2. To develop working procedures that provide sustainable change management.
  3. To ensure both the realisation of streamlining and to gain a long-term capacity for growth.

When the Gunder programme was initiated, a programme plan existed which contained eight sub-programmes which would contribute to sustainable profitability. The sub-programmes were oriented towards pure streamlining and rationalisation measures. The sub-programmes were also to focus on long-term value creation and capability development in the line organisation but, first and foremost, were to provide new efficient working procedures for production development projects. Shortly after commencement, additional sub-programmes were created as a result of the division of the eight original programmes. One of the sub-programmes was to create a new core value for the business area.

How was Gunder then implemented as a rationalisation and streamlining programme?

Important Programme Objectives

  1. Assurance of a long-term and sustainable cost level at an internationally competitive level based on statements and goals in the business plan.
  2. Release of resources and capital through rationalisation and streamlining
  3. Establishment of a corporate culture adapted to international collaboration

Sub-programmes in Gunder

The Gunder Programme would come to include twelve sub-programmes that would contribute to sustainable profitability. The sub-programmes were oriented towards pure streamlining and rationalisation measures, but also through the overseeing of long-term work involving value creation and capability development.

These twelve programmes could be divided into four areas:

  1. Core Values
  2. Rationalisation
  3. Streamlining and capability development
  4. Reduction of product costs and capital rationalisation

Core Values

In order to create new core values in the business area, an initiative was implemented which meant that guidelines were established for how all staff, at all levels, were to act in their day-to-day work This Gunder sub-programme later became fundamental to actions within the business area.

The core values work was aimed at promoting dialogue and the importance of each employees' attitudes and behaviour and to give everyone the opportunity to create knowledge and understanding of Saab's core values and its business situation. During a six month period, all employees were given the opportunity to absorb and understand the implications of the words Expertise - Trust - Drive, and their significance for the company in reaching its objectives.

The work involved with core values has become a keystone for the entire business area's professionalism and understanding of the approaches which provide positive direction for the whole organisation and a solid foundation for success from a long-term perspective. Core values are a part of the workday and serve as a basis for decisions that need to be made. It is therefore necessary that all managers continuously work with core values questions.

Rationalisation

There were three rationalisation sub-programmes. One sub-programme was oriented to production, for creating profitability in short production runs with respect to low and flexible production rates. Another sub-programme implemented a new working procedure for logistics and stock management to reduce costs throughout the logistics stream. The third rationalisation programme concerned all overhead costs and surveyed all resource needs, as well as fixed and variable costs in the entire organisation.

Streamlining and Capability Development

Seven of the sub-programmes were oriented to increasing capabilities. The first sub-programme concerned business and contract models. It was a matter of how business and contract models could be developed and adapted, based on the conditions indicated by the strategic business plan from a ten-year perspective.

The second sub-programme for streamlining implemented a new working procedure and system for change and configuration management of articles. The third sub-programme was oriented to project efficiency to improve performance in conducting and managing product projects, as well as in handling quality issues in these projects.

The fourth sub-programme was oriented both to efficiency and, above all, to capability development in work with system development. It implemented a model-based working procedure for the MBSE development organisation. An entirely new working procedure was created herein with dramatically reduced lead times, increased quality and delivery precision.

The fifth sub-programme had to do with creating an efficient procurement process with a brand-new working procedure, which involved the suppliers in development work in an entirely new way. This programme also contained a section that dealt with business development in concert with suppliers. This work was directly linked to Gripen Demo, in which the new working procedures were applied (this can be read about in other texts).

The seventh sub-programme contained activities geared towards developing a work model for maturity planning and self-appraisal. The aim was to continuously measure, evaluate and improve operations and projects in order to compare efficacy with other industries. Maturity assessment pursuant to CMMI was used here.

The seventh sub-programme concerned future IT infrastructure and included the establishment of guidelines to reshape infrastructure in line with information flows and to create new and flexible IT infrastructure.

Reduction of product costs and capital rationalisation

One sub-programme was directly oriented to work with partners and suppliers. Major changes and improvements were made here as regarded supplier agreements and the forms supplier partnerships would take. This ensured future delivery capabilities for purchased articles with high economic or strategic value. It also encompassed activities for risk minimisation and for handling obsolescence of purchased articles.

To Deliver at the Right Time in the Right Way

In order to produce good results, it was determined at the start of the Gunder programme that all sub-programmes would be planned, which would allow for continuous deliveries thereby securing value creation as early as possible.

Successful deliveries afforded each sub-programme the opportunity to secure additional financial resources in order to expand their scope and ensure additional value creation. The opposite was also true; if no deliveries were made there would be no access to resources. Thus, the term was coined:”No results, no money”. After a while, this led to no activities being initiated which did not have a reasonable chance of success.

A requirement for the sub-programmes was that project results were to be developed in stages and that part deliveries would be continuous. This is an essential prerequisite in attaining a good introduction. The sub-programmes that have generated the greatest financial value are those that had a short gestation from start to implemented results. Well-functioning administration was quickly established therein.

However, in order to transfer results from the sub-programmes to line functions and product projects, a great deal of work and time was required to support participants in sub-programmes and recipients of the results.

How quickly and easily an introduction could occur depended a great deal on individual factors. A lesson learned was that comprehensive support was invaluable when introducing a result into the receiving business.

Quarterly Follow-up on Financial Results

Securing results was carried out by sub-programmes and the individuals responsible for value creation and for utilising a project's results.

To safeguard results, deliveries and financial value for Gunder, a specific follow-up existed. Special follow-up meetings were held in order to review progress and results, and to deal with any difficulties or problems that may have arisen.

Follow-up meetings were held on a quarterly basis. Meeting participants included Gunder's project management and the respective sub-programme managers. The focus of these meetings was progress and financial value creation. Programme activities each sub-programme had delivered over the most recent quarter were reported, along with a forecast for the coming quarter and a rough assessment of the possibility of achieving the goals for the year's activities.

Commitment to Utilising Results

Active work was carried out in the Gunder programme to ensure that a good interplay existed between programme owners and project managers. An important task for everyone involved was to work with coaching in order to support effective change management. It had to be ensured that results defined in the Gunder programme achieved their targets.

Delivery times were also coordinated and synchronised according to the change project's delivery schedules and the product project's time requirement plans. This was done so that deliveries were made at the right time.

This resulted in a "demand craving" for deliveries from the Gunder programme which meant that delays in deliveries were rare.

Result and Capability Development Follow-up

Follow-up controls were conducted by programme management in the Gunder programme in order to ascertain how the results had been implemented and utilised in the business. 6 months after the completion of a change project, check-ups were carried out to determine the actual results. Between ten and fifteen employees were interviewed on these occasions along with their managers. The business being analysed reported on how results had been utilised and on the practical benefits of the change.

These so called "6-month check-ups" constituted one of the success factors for Gunder. It was not possible to skew results and introduction.

The controls examined a number of important issues which showed whether the change offered any actual benefits. The following areas were included:

  • Risks/Opportunities Are all risks/opportunities handled by the programme being dealt with and measures implemented in management?
  • Are roles and responsibilities being shared?
  • Is the responsibility for agreed deliveries being managed in accordance with the activity list and relevant administrative objectives?
  • Are existing decision forums involved with the change?
  • Are existing process changes being implemented?
  • How are efforts being overseen to motivate and develop expertise amongst employees, and to cultivate commitment towards work tasks and personal development in accordance with the "new roles"??
  • Does an operational plan exist for the current business? Have goals been established and equally distributed and how is follow-up being conducted?
  • How is change management being carried out and what form have the personal goals for employees taken to effectuate the results from the programme?
  • Are the "results" established within the line organisation, projects, programmes and management groups?

Review of the results from the 6-month check-up

The results of the 6- month check-up were summarised and any proposed measures were discussed with the relevant line managers. Actual progress was documented for each area by detailing the results as follows:

  • Which documents were practically used such as instructions, manuals, etc.?
  • Which changes were implemented and practicable?
  • Which activities in the form of training were carried out?
  • What methodological support or information was required and which were to remain in use?
  • Did any type of problem exist that impeded something or someone in the business?
  • Which measures were implemented to eliminate these problems?

Checks were also made to determine whether ongoing improvement work was being carried out which further developed businesses after completed change projects. Finally, determinations were made on whether the results had had an effect and had provided definite value, and if this concurred with earlier project reports.

The working procedures used in the business were also followed up by interviewing those involved and reviewing the documentation. Some of the reviews were used to establish goals for forthcoming changes and how these could be effectuated to further improve the business.

This resulted in an eagerness to continue improvement work and many creative ideas came to light that would later lead to new improvement projects and which in turn provided new value creation and additional benefits.

The 6-month check-ups cultivated a positive attitude to change management and increased interest in further changes and improvements within the businesses concerned.

”Leadership” for Dealing with Changes

Minor and major changes alike were carried out in Gunder and, regardless of which, played a significant role in getting the organisation to embrace the changes. Considerable perseverance and continuity was required. Efforts were made to provide leaders and managers with constant mentor support, coaching and training so that they were able to justify the changes being made.

Work was also being done in Gunder to strengthen and advance the individuals who implemented the various measures for change. Purely practical activities with respect to this included providing the participants with an understanding on the relevant requirements for change implementation in order to achieve lasting capability development. Even simple support tools proved invaluable for this, such as support in the form of check-lists and practical tips that were appropriate and specific to change projects.

Managing Risks

The direction of all change projects is always ambitious at the beginning. To ensure that the activities and the working procedure to be used in the Gunder programme would work realistically, continuous risk assessments were included for all sub-programmes and for the entire Gunder programme.

All risks identified as able to be remedied were addressed and eliminated. When the Gunder programme concluded, no projects risks remained.

It is important to be aware of this so that risks are not assessed incorrectly and to avoid spending unnecessary time on the wrong things. It is imperative to adapt working procedures for risk management in correspondence with the size of the project.

The Gunder programme clearly showed that it was easy to allow risk assessment work to stagnate if too advanced tools and methodologies were used. Nonetheless, it is necessary to conduct a reasonably simple risk assessment in a change project and then employ a practical view of risk assessment work.

Information & Communication

The Gunder programme concerned the entire business area and was a very comprehensive change project that took place over 3.5 years. Many sweeping and major changes would occur during the programme, which meant that information and communication methods were of a high priority.

The programme manager dedicated a great deal of time to explaining and, above all, providing the conditions and support to those affected by the work involved in the change, but also to inform management groups and project management of the programme's ramifications and the consequences of these. All sub-programmes drew up communication plans which were adhered to across the programme's lifespan. A number of management meetings and sub-programme meet-ups were arranged to keep up the momentum in the change management.

Other activities carried out over the years included seminars and workshops during which the results of the work were presented. A number of reviews were conducted at the start of the programme. Here all managers and leaders were provided a foundation and conditions to influence and promote the change management within their respective businesses.

In addition to information provided through a specific Gunder programme website, there were also opportunities for all employees to communicate with programme management and to offer suggestions for changes and improvements. Several of these improvement suggestions were utilised in one way or another.

Videos

In order to show the new working procedures being introduced at the time, two videos were recorded. The one dealt with how the future logistics stream would be shaped while the other demonstrated how to carry out model-based work with MBSE. The videos had several purposes; one was to spread general information about what was under way, and another purpose was to explain and practically portray to those concerned how work was to be performed thenceforth. The videos could be viewed by everyone via streaming from Gunder's website or by borrowing a DVD.

Seminars and Workshops

Upon conclusion of the Gunder programme, managers and leaders were assembled and shown concrete results from a selection of the most critical changes and the most innovative working procedures. This was accomplished through seminars with various workshops in which participants were able to see how best to utilise the new model-based working procedures as regarded MBD and MBSE, etc.

Furthermore, it was shown how the work with Lean would be carried out in the future, how the new working procedures would be implemented and utilised within the then current product projects Gripen 11 and Gripen NG, and the support tools developed in the Gunder programme.

The result

In the preparatory stage of the programme, methodologies were developed to govern a major change project programme, and to follow-up and evaluate the results.

The results from each sub-programme have raised capabilities in various degrees. This is partly due to the form in which the results were supplied; if the recipients were in lines or projects and how driven and receptive managers had been.

Upon conclusion of the programme, it could be stated that long-term and persistent communication in many different forms was a very significant success factor in the programme and that it achieved exemplary results.

The results of the Gunder Programme contributed to reducing costs at the business area and even enabled the creation of a financial solution that permitted the Swedish Defence Materiel Administration to place a development order for the Gripen Demo.

The results can be summarised in purely financial terms as follows:

  1. Business Case for the programme was 21 % greater than estimated.
  2. Risk minimisation was 22 % greater than estimated.
  3. The long-term, lasting effect was 217 % greater than estimated!
  4. The cost for the programme was 16 % lower than estimated!

The author´s reflections