In the sections under Expertise and Organisational Capabilities we show how Saab has been able to run successful projects to develop its long-term organisational capabilities. This has been achieved via, among other things, various technology demonstrators such as the Gripen Demo and the international Neuron project.
Another important organisational capability is to successfully manage collaborations with partners and suppliers in order to create added value for both technological development and business development. Ensuring the incorporation of effective maintenance work for the customer already during development work is an important capability. This section describes important prerequisites for succeeding with change management and capability development.
At the beginning of the 2000s, the Gripen programme had reached fruition in the shape of the Gripen C/D. At that point, the development organisation had no completely new product development programme of the same order of the Gripen to begin working on. Several smaller development programmes were, however, under way. But capacity utilisation was insufficiently high and personnel cutbacks were necessary.
In the middle of the 2000s, the Swedish Armed Forces had ordered the remodelling and upgrading of the earlier platform, the Gripen A, into a new version, the Gripen C. This programme encompassed 31 aircraft, but primarily provided increased capacity utilisation in production rather than the development organisation.
At the beginning of the 2000s, the Swedish government showed little interest in developing an upgraded Gripen platform. The Swedish Armed Forces already had a modern Gripen platform in the shape of the Gripen C/D, which would offer exceptional and competitive performance until at least 2025. Moreover, tension in Sweden's immediate neighbourhood had fallen. The focus now was on Sweden's involvement in international cooperation and missions.
In order to investigate how the Gripen could be developed in the future, a project was initiated to analyse the market. This analysis identified a positive future, on the condition that a number of capabilities were improved and developed.
The most interesting needs identified were:
The market analysis also identified a major future need for the type of military fighter aircraft that the Gripen represents, on the condition that the aforementioned upgrades of the Gripen system were implemented.
Since the Swedish government, which funds the development of this type of defence materiel, was only moderately interested at the time, Saab was forced to find an alternative financing solution in order to conduct a study.
As a consequence, Saab had to take a new and innovative approach both to solve the financing issue and to develop the characteristics that would make the Gripen platform unique in terms of performance until 2050. Naturally, this was a real challenge.
At this time, a marketing campaign was also under way for the Gripen in Norway, as Norway planned to evaluate several fighter aircraft in preparation for its upcoming procurement. Norway had invested in participating in and financing Lockheed Martin's campaign for the JSF programme, which to a certain extent was also done with the Gripen campaign.
In order to meet the identified market needs and the needs that Norway had defined, Saab needed to conduct an internally financed development programme for the Gripen. This fact resulted in the initiation of work to develop a basis for conducting a demonstrator programme to showcase the Gripen's future development capability. This project was later named the Gripen Demo.
The project was also a driving force behind the later implementation of improvements to the Gripen system. Consequently, the demonstrator programme was an important part of the long-term development plan for the Gripen. A number of capabilities were defined for inclusion in the demonstrator programme.
Saab wanted to demonstrate that the following could be achieved:
The project was thus intended to produce a flying demonstrator of a new Gripen generation, which was a major challenge for Saab to finance internally.
When defining the project, the bar was set high to create a concept for a new Gripen platform. The concept would entail an aerial platform that could be further developed and offer high performance compared to the competition until 2050.
Since technical development moves at such a fast rate, a completely new approach was required, one that was outside the box. This required designing the new Gripen platform for all types of operational missions, which meant that the product and system architecture had to be modular and highly flexible to meet future needs and requirements.
The project produced a proposed solution that included all of the aforementioned requirements and that was based on all the knowledge and proven working procedures employed in the development of the Gripen C/D.
This proposal was presented to Saab's management in 2005, which approved the proposal with the caveat that the available budget would be reduced by 60% and the timeframe by 30%!
So what are the basic principles for solving an apparently impossible task?
They can be summarised as follows:
The Gripen Demo worked in accordance with the above basic principles, which required extensive communication efforts with project participants so that everyone understood the challenges and always had the same version of all information. In the Gripen Demo project, it took about one year to get this to work smoothly.
The business unit's management provided the conditions the project required, so that the exceedingly challenging goal Saab's management had established could be achieved.
When recruiting personnel for the project, the focus was on creativity, innovation capability and enthusiasm. Among other things, one could conclude that fewer leaders than usual were required.
The steering group for the Gripen Demo was very well read and active, which enabled them to make quick decisions concerning issues that required new, radical approaches.
There were a number of very experienced people in the project; those who acted as mentors for project management and those who worked with systems development.
Colleagues were able to work cross-functionally and contribute their own ideas, which ensured creativity and personal development. The work was both stimulating and enjoyable, even if workloads were occasionally very high. This freer and more creative working procedure did not suit everyone. Those who it did not suit were offered the opportunity to return to working in their line function. During the project period, the Gripen Demo project management team did not insist on any overtime hours; instead, participants assumed responsibility for solving their tasks. A great deal of overtime was worked, but none of it was forced. Personnel turnover during the project period was also very low.
At most, 500 people were involved in the Gripen Demo demonstrator programme.
The Gripen Demo was realised in collaboration with several of the world's leading companies in the aircraft industry: General Electric, Thales, Rockwell Collins, Honeywell, APPH, Terma, Martin-Baker and Meggitt.
Experience from the project demonstrated that the two single most important factors were:
The project was also challenging for the participants because the bar was set very high as regards work quality.
The vision for the Gripen Demo was to develop a demonstrator aircraft with the characteristics of the next generation fighter aircraft. This would make it so interesting that customers (armed forces and governments) and subcontractors alike would understand the Gripen's future potential.
It would then be possible to sell a future version of the Gripen to both Sweden and export markets, comprising a value of about SEK 100 billion.
A decisive factor for being able to meet management's demand to reduce the project costs by 60% and the project time by 30% was to invite suppliers to Saab to get them involved proactively.
The starting point for this was the earlier market survey and the business case produced within the Gripen Demo.
Representatives of the Gripen Demo project met with all strategic suppliers who would be involved in the planned development work.
Each supplier had trouble accepting the presented business case, as they believed that the next generation Gripen would warrant a considerably better business case than the one Saab presented!
More suppliers than necessary were interested, and the market situation played out favourably because competitors' projects were not running concurrent with the Gripen Demo. This offered potential with interested suppliers, which resulted in the suppliers making major efforts in development work and in the development of equipment and systems.
A completely new strategy for cooperating with suppliers was drawn up, involving the creation of cross-functional teams with participants from Saab and its suppliers. This practical collaboration involved the participation of the development organisations from both Saab and its suppliers.
An essential part of streamlining was to together with the suppliers influence the cost-driving aspects of equipment and systems.
The collaboration was also taken one step further; rather than cooperating solely on the Gripen Demo, close business collaborations with our strategic suppliers were initiated and refined in order to generate new business opportunities. Strategic suppliers act as partners by making investments and sharing business risks.
At the time the Gripen Demo was implemented, there were no requirements for certain types of equipment and systems to by necessity be considered safety-critical from a national sourcing perspective. This meant that the project could establish requirements that only considered functionality, quality, time and costs when choosing systems for the Gripen Demo.
New avionics were also developed. An upgraded avionics system structure encompassed a complete new computer system for the Gripen, which was integrated with one of the existing system simulators. The intention was to transfer a complete Gripen system into a new system structure and to use new computers to demonstrate the intended functionality in the simulator.
The project also demonstrated the possibility of considerably more efficient development with a modularised system structure, new structures and methods for assessing software criticality and more natural physical interfaces.
How did things turn out in reality?
Moreover, the vision has been fulfilled!
This section briefly describes Saab's participation in an international project to develop a technology demonstrator called Neuron.
If you would like to read this entire text, it can be found in Capability Development in an International Environment.
At the beginning of the 2000s, the Swedish military aircraft industry was undergoing great change. A number of Swedish projects had been conducted since the end of the 1940s. The international security situation had now been completely transformed. The Cold War had come to an end and instead there was a need to build a future based on international collaboration and exports in a global market.
Future product collaborations in the fighter aircraft systems market segment were predicted at the beginning of the 2000s to in all likelihood involve the USA, Russia, France or the UK. Saab was in need of new and advanced development work to secure and develop its technical expertise.
At this time, the aircraft industry was undergoing extensive consolidation. In Europe, there was great interest in cooperating with Sweden and Saab. Consequently, Saab needed to position its industrial expertise in preparation for future product collaborations and future export deals. In any international collaboration it would be necessary to identify possible roles and suitable work packages in the fields of technology and integration, which are important for both the Gripen and other products.
At the beginning of the 2000s, the Neuron programme was judged to fulfil these criteria. The Neuron programme aimed to develop a concept and a technology demonstrator for an unmanned combat aerial vehicle (UCAV) with low signature characteristics.
The aim of the Neuron programme, as defined by the government authorities, was to develop a vehicle in the shape of a technology demonstrator that included a ground station.
Specific characteristics and capabilities for the technology demonstrator included a vehicle with a low radar signature and protected against electromagnetic radiation. Another objective was to demonstrate that weapons could be used against ground targets following a very short decision-making process.
Regarding capability, the greatest benefit of the Neuron programme for Saab Aeronautics stemmed from work on the airframe. A new methodology (model-based) and a new working procedure were developed for fuselage design, preparations, production engineering and assembly.
The lead time for making changes and distributing manufacturing documentation was reduced by 90% compared to earlier traditional working procedures. The new working procedure entailed 42% lower costs compared to working in line with conventional methodologies and 2D design (2009)!
The timeframe for the programme was, however, altered dramatically following a number of decisions concerning the level of ambition. This was due to an initial difference in ambitions between industry and government authorities on a national level. The timeframe was also affected by differences in strategy, aims and culture between the participating companies.
This section briefly describes how purchasing operations were radically altered from the beginning of the 2000s, transformed from a traditional purchasing organisation into an organisation that developed a commercially strategic working procedure.
If you would like to read this entire text, it can be found in An Effective Procurement Process.
Saab has created an effective procurement process to achieve major cost reductions.
Here we describe how purchasing operations were radically altered by implementing extensive changes and developing new working methods within the organisation. This has encompassed internal work within the business area and throughout Saab AB. One very important change was the introduction of cross-functional teams, in order to gain an overall picture of purchasing and technology needs.
At the beginning of the 2000s, the purchasing organisation was order-oriented, pursuing traditional purchasing and contract work. Organisational maturity in purchasing at this time was characterised by a hierarchic approach, with purchasers forming the contact interface with suppliers.
The engineering function produced all the technical solutions for systems and components without any direct involvement from purchasing operations. Consequently, it was not possible to fully leverage new technical systems or other technical solutions that our suppliers already had in their product portfolios and that were fully developed.
The change described here – and which had a very positive impact on outcomes – is close collaboration with our largest strategic suppliers.
Most important in the practicalities of developing business relations is to together with the supplier create good relations at all levels of both organisations. A joint strategy for business relations was created, with shared values, to enable the business relation to develop.
At the beginning of the 2000s, there was a general trend in sourcing for wanting to increase business capability by leveraging the potential of suppliers and, more specifically, their development capability.
The driving force behind this was to get the suppliers on board at an early stage of the development work so as to increase their vested interests. There was also a desire to utilise the suppliers' capability and capacity in product development work and to utilise synergies from the suppliers' other development projects.
The business area management team decided to implement a radical change in purchasing operations, with a focus on securing low life-cycle costs for the products in the product portfolio.
A decision was also made to develop a new purchasing strategy with a focus on profitability and to create effective partnerships and supplier collaborations. Realising these goals required a differentiated supplier strategy.
Most important in the practicalities of developing business relations has been to together with the supplier create good relations at all levels. Together with each partner, we have developed a joint strategy for the business relation and shared values, the purpose being to create a good atmosphere between management for developing the business relation.
An essential part of streamlining was to together with the suppliers influence the cost-driving aspects of equipment and systems. This led to the creation of working methods wherein Saab Aeronautics' development organisation, together with the supplier's development organisation, could collaborate and produce new solutions by using known technology or by adapting existing solutions to Saab's needs.
One of the optimisation projects for the purchasing organisation was to transform purchasing work into part of a strategic business activity.
The ability to facilitate supplier collaborations is one of the most important success factors. Examples of important areas to facilitate include workshops for cost efficiency, product and business development and creating roadmaps for future technical developments.
A working method with regular management meetings has been established between Saab Aeronautics and each partner/suppler. These meetings are used proactively to work on synergies for both business deals and products, as well as support for marketing activities.
The organisational structure has been made extremely practical and non-bureaucratic, with all purchasers able to obtain advice and assistance, as well as transfer experience, in a fast and efficient manner. They have direct access to the department heads and experts they need without going via different channels.
An essential part of streamlining was to together with the suppliers influence the cost-driving aspects of equipment and systems. This is why we created working methods wherein Saab's development organisation, together with the supplier's development organisation, could collaborate and produce new solutions by using known technology or by adapting existing solutions to Saab's needs.
A joint roadmap with a focus on business and market development has been established between Saab and its strategic suppliers. Close collaboration with suppliers reduces the need for internal funding and also strengthens competitiveness with reduced product development lead times.
Important streamlining and optimisation have been achieved by the development organisations at Saab and its suppliers/partners collaborating in joint efforts in system solutions development. These changes have enabled Saab to develop effective working procedures. As a result, Saab can participate in international partnerships in which Saab's business focus has provided a model for collaboration.
Teamwork between the purchasing, product and project organisations has been a success factor for achieving the optimisation goals while simultaneously developing new and unique product capabilities, as well as for achieving a low life-cycle cost.
A very clear primary objective was established – to break the cost curve for the development of new military aircraft systems! There was a need to considerably reduce capital costs as the value added of purchased systems and equipment is great.
In order to succeed, a decision was made concerning a commercially strategic working procedure that meant working on long-term supplier relations, which is also an important cornerstone of Saab Aeronautics' business capability. Within the aviation industry, 30-year business relations are the norm.
In practice, this required changing the working procedure between Saab and its suppliers, which entailed introducing a cross-functional working procedure. For Saab's part, this involved specialists from the development organisation, systems developers from product development projects and account managers from sourcing. For the suppliers' part, it involved systems developers and specialists together with business managers and management.
The division of purchasing operations into strategic purchasing and category purchasing enabled a focus on the suppliers of greatest strategic and economic value, which increased Saab's business capability.
The cross-functional working procedure is also an important part of the supplier partnership, within engineering as well as between management at Saab and its suppliers. When Saab provides a supplier with knowledge about new and effective working procedures, the supplier has an incentive to maintain good relations and good development and delivery capabilities. This enables Saab to transfer its industrial capability to the supplier, which benefits Saab.
The core team decision forum issued a clear mandate and responsibility to account managers to develop long-term relations with suppliers. This enabled a business relation to develop that contributed to the supplier gaining a better focus on delivering in accordance with entered business agreements. Parallel to this, the supplier's ability to develop new products and system solutions increased, as did the mutual business capability for future business collaborations.
Regular training and development for employees was introduced as regards both building business relations and ensuring employees' personal development and good career opportunities. The recipe for success includes coaching and mentoring with regular training and development and clear strategic objectives.
The organisation had matured such that there was a need for change, and top management was focused on overall change management, which added a little weight to the more difficult decisions.
Long-term management focus
The chosen organisational structure was a smart decision as the different purchasing activities were streamlined and could thus strengthen the business approach and working procedures.
The changes were made at a time when product renewal was under way, which enabled the results to be seen immediately in the shape of lower costs for and increased functionality in purchased products and services.
Right market situation
Competitors' development projects were shifted in time relative to Saab Aeronautics' product renewal, which meant increased interest among suppliers.
Yes, we dared to challenge old assumptions and implemented radical changes, but that we succeeded was also down to enthusiasm and perseverance, among both management and employees, as the far-reaching effects and cost reductions were apparent to all.
If we summarise the changes made in sourcing, we see that long-term strategic and sustainable change management delivers very good results.
The following results and capabilities have been achieved:
This section describes how Saab has pursued and developed its work to deliver effective maintenance solutions to customers.
If you would like to read this entire text, it can be found in Effective Maintenance Concepts.
When designing system solutions for entire aircraft materiel systems, an understanding of the operational demands on the product that is, the characteristics, capabilities and performance the product must deliver, is of great importance. It is also essential to understand how the design solutions affect the maintenance and support costs incurred by the customer, as this greatly affects maintenance needs and complexity and therefore the life-cycle costs of the entire materiel system throughout the product life cycle. In order to create a cost-effective complete solution for the entire aircraft materiel system, the following approach is appropriate to consider:
This means that during the design phase one must first gain an understanding of how and under what circumstances a fighter aircraft is operated and, based on this, which operational reliability requirements apply. The choice of technical solution is also limited by financial aspects.
It is essential to consider aircraft and maintenance products as an integrated whole, so that this is reflected in the system design. This ensures that the product has the expected operational reliability characteristics, that is, general availability at a realistic cost level.
During development work, the design's function must be continually evaluated in relation to the operational reliability characteristics, which are to reflect the customer's desired capability. Evaluations are conducted to assess how much the design's maintenance needs limit availability, operational reliability and operating cost. Alternatively, one can express this as the optimal availability solution in relation to life-cycle cost.
When a customer orders and wants to commission a new fleet of aircraft, a maintenance solution is defined based on the desired operational performance and the number of aircraft the customer will have available. Other factors to consider include, for example, which maintenance products have already been designed previously and how the customer's organisation is judged to handle and conduct maintenance in peacetime, conflicts and wars.
In order to fulfil the customer's need to operate the aircraft, the maintenance solution is designed accordingly that is, a recommendation for a maintenance system is drawn up. This encompasses the maintenance resources that the customer will need for operation and maintenance, including tools and spare parts, as well as any training and changes to its infrastructure and organisation. This design work also includes the production of a maintenance and logistics solution for maintenance of a kind that is not favourably conducted at the customer/user.
The main task in the design work is to understand and produce a solution for a defence materiel system at operational level, for an organisation in both peacetime and wartime in accordance with the specified conditions.
This means that in practice the principles for ILS (Integrated Logistics Support) are followed in order to build a technical system that is flexible and thereby useful and marketable to all customers.
The customer's operational capability is to produce operational missions in different situations and for the entire fleet of aircraft to offer optimal availability over time. Accordingly, the customer must have a reliable system for being able to produce missions with acceptable maintenance measures at a low cost.
The customer must have the flexibility to conduct missions using its entire fleet of aircraft in peacetime as well as during crises. This requires a maintenance concept that is adaptable and permits a maintenance solution based on the customer's circumstances.
During development work there must be an understanding of the approach required to produce a well-functioning system solution that fulfils the customer's operational requirements from a broad life-cycle perspective. One must understand the intended use of the system and then develop system solutions that work for the customer. It is seldom possible to realise all of the customer's individual requirements; instead, it is often a case of finding the best compromises.
Different logistical solutions and supply chains for maintenance resources must be defined relative to the need for preventative and corrective maintenance. Based on these conditions, we define the likely extent of the need for reserve materiel and maintenance and support systems for the bases out of which the customer will operate. The result is an optimisation plan for how the customer should allocate its resources.
Good maintenance solutions require time to think, time to understand and time to formulate the actual problem and describe it in a solution. As a foundation for this, the development organisation must find out how a user thinks and operates, using generalisations based on several users to produce a design.
This most often results in an innovative working procedure where the development organisation is forced to consider the whole from the customer's operational perspective. If this knowledge and experience are thoroughly processed, they often provide an important contribution to the design of a technical solution that delivers good maintainability and the necessary availability.
When designing and choosing a system solution, it is important to consider which parts of the system, component subsystems or equipment must be recyclable as regards the environment, maintainable as regards efficiency and reusable following modification or upgrading. It is also important that the reliability and availability requirements are thoroughly considered in order to determine which maintenance solutions are suitable.
An understanding of a few different design perspectives is essential to good product and system design.
Function-oriented design focused on availability and performance incorporates characteristics that enable:
A customer agreement often includes assurances of a certain life-cycle cost for the customer's aircraft materiel system. Here we are sometimes faced with different kinds of dilemmas and must balance different types of conflicting requirements, such as when high operational performance and functionality are set against a low life-cycle cost.
Example: A piece of equipment can be switched for another piece of equipment that better fulfils the customer's operational requirements. The customer gains enhanced capabilities and high operational performance with the new system solution. However, if the new equipment has a design and technical solution with a short service life, and which also requires more maintenance, naturally this entails a higher life-cycle cost. If the new equipment must be chosen, with greater demands on maintenance that requires another more complicated maintenance solution, what happens then?
If there is a contractual requirement for a specific (or relative) level of life-cycle cost regarding the aircraft materiel system and enhanced capabilities are introduced as in the example above, the consequence is often that measures must be taken on other systems or equipment to keep life-cycle costs at the correct level. This means that it is important to early on in the design phase assess how different types of system solutions may affect maintenance and life-cycle costs.
When developing the aircraft architecture and design, maintenance product design is an integrated part of the work. During these efforts, an assessment is made of which operational capabilities the aircraft is to have, after which the optimal maintenance solution for each customer is assembled from the developed products. Wherever possible, unique maintenance products for a specific customer are avoided; the customer is to receive a product that includes a maintenance solution with a low life-cycle cost (LCC).
In order to offer a cost-effective maintenance solution, maintainability must be considered and incorporated already during product development. Consideration must then be given to, for instance, which type of equipment the maintenance applies to and how complicated maintenance can be in different situations as regards resource requirements and time frames. For example, some actions cannot or should not be taken in an unprotected environment, so instead an assessment is made of whether the action can be simplified, such as by modularising the design or developing suitable resources for creating the right environment for taking the action.
ILS includes all actions for effective maintenance and is a management process used primarily in the defence industry, such as by the Swedish Defence Materiel Administration (FMV). It is used to ensure that a system or product can be used, maintained and kept at a low cost while fulfilling strict requirements for dependability, operational reliability and maintainability.
Important prerequisites to be aware of include the customer's requirements for tactical performance as regards the types of missions for which the product will be used and the frequency at which these missions will take place.
Specific conditions and circumstances at the customer as regards organisation, capabilities, restrictions and expertise must be carefully considered in the design process. From a design perspective, it is also necessary to know how operation and maintenance will be conducted within the bounds of the customer's plans for operational capability.
From an equipment perspective, it is important to consider how testing, troubleshooting and fault finding of the aircraft's different systems should be managed, in particular when actions must be taken in a workshop.
So as to achieve cost efficiency, analyses are made of different alternatives for conducting work to repair or replace equipment and systems in the aircraft and in maintenance workshops.
Maintenance-related design can be split into two parts, the technical system and the logistical system.
The technical system includes maintenance products that are designed to be an integrated part of the aircraft design, the basis for this being that design decisions shall be devised so as to provide effective operational use of the product.
The logistical system is designed for an efficient supply of reserve materiel and rational service and repair activities in a workshop environment. The prerequisites for the design of the logistical system are based on customer-specific requirements.
The development work for the Gripen E included a large number of analyses and simulations to understand how different system security requirements should be managed. Many in-depth analyses of the entire materiel system were conducted in order to balance system security requirements with availability and functional requirements. Test and function monitoring development were very central to the work on the aircraft.
Specific tests were conducted to assess fulfilment of the actual requirements, which were based on performance analysis, availability and system security. This work balanced requirements for conducting secure peacetime operations with the requirements for effective operational activities in wartime conditions, with assessments of how the materiel system would function throughout the entire operating phase.
The model-based working procedure with 3D modelling has been used for many years for designing complex structures in aircraft and for developing complex systems for controlling functions and equipment in aircraft. Both now and in the future this working procedure will to a large extent also be used for developing maintenance solutions.
3D modelling is used in design and maintenance preparation to verify access during maintenance measures in the same way that 3D models are used to ensure access for fitting parts in the aircraft. This enables a design to be evaluated at very early stages without any major consequences – in terms of costs or time – if any alterations are deemed necessary.
In maintenance design 3D models are also used to identify and visualise maintenance measures, which with consideration for access and handling ought to be coordinated. Such visualisation improves reserve materiel scoping as an early assessment can be made of the extent of required measures.
With the continual use of simulations, a system's availability and durability can be analysed as regards operational reliability characteristics, maintenance strategies and resource allocation. This is then used to show how availability is affected over time by varying amounts of flying time and resource limitations.
This section briefly describes how Saab has worked with capability development over the past 15 years.
If you would like to read this entire text, it can be found in Managing and Governing Capability Development.
Capability planning and change management are based on an operational development plan to realise the goals established by the business unit's management.
Those who lead change management must have strong convictions and a good feel for what is important in the long term for the entire operation. In this context, we are talking about perseverance in the order of at least 10 years, preferably longer.
Managing and evaluating what is possible to change requires a strategy for how changes are to be managed over time. Fundamental to this approach is continuity and perseverance! Naturally, a basic strategy and plan must be in place to follow, based on the scenario the business can accommodate and allow.
The entire strategy and plan for capability development must be reviewed and possibly adjusted at regular intervals, which thus far has been done at six-month intervals. This interval may seem short, but if capability development is to be pursued actively, it is better to make small adjustments at regular intervals than dramatic changes at infrequent intervals. This has been a practical and pragmatic way of working.
Such reviews and assessments consider which direction change management should move towards for the coming period and which methods and working procedures are appropriate. Management needs to have a feel for what is possible and appropriate to do during each period. The aim, of course, is to head towards the long-term goals for capability development.
Over the years, Saab's organisational capabilities have been managed and governed in a few different ways.
Overall responsibility for capability development has fallen to different management groups in this time, with participants including department managers and line organisation representatives. These groups have made all decisions concerning budgets, focus directives and project portfolios. Moreover, project results have been reviewed quarterly and overall organisational capabilities annually. These management groups have included persons responsible for cooperation, coordination and the production of an operational development plan.
This requires long-term planning and long-term involvement from those who have a decisive influence on which needs for a new organisational capability are most important to satisfy. One must also be able to deliver this new capability in the time windows that provide the greatest benefit, so as to achieve the necessary efficiency and thereby create profitability.
This means that those who are involved must be able to embrace the changes and become more effective. Parallel to this, one must ensure that concerned persons and operations are involved in and motivated by the changes. Another prerequisite is the ability to deliver new changes and a new capability in sync with the needs of operations and product projects.
Operational development projects of a larger scope often require a steering group and a reference group in order to establish and support the change process. In many cases, change projects can be extensive in nature. In the case of smaller changes, one most often creates activities that are managed directly by a PM&T area, an administration group or one of the line organisations.
Saab employs process management with regular follow-ups of metrics and experience from projects and operations, with the aim of improving processes. Process management is responsible for the overall process map, overall management and the coordination of processes and process development. Ultimately, process management is about helping secure the company's competitiveness and profitability.
The overall process map is divided into four areas: management and support processes, business processes, project processes and technical processes. A senior process owner is appointed to each such process area. Each senior process owner has overall responsibility for their appointed process area and shall actively support subordinate process owners, the line organisation and product development projects with methodological support and guidelines for the production and utilisation of project and product applications. It is especially important to focus on value streams and to ensure that the interfaces between processes function effectively. It is also necessary to manage needs for new methodologies and IT support in each process area.
Each process area has a number of process owners and they are each responsible for defining and describing a process. Each process owner is also responsible for managing and further developing the working procedures, methods and tools used in their process.
Fundamental to change management is understanding what can be influenced, what is relevant and what actually creates long-term values and benefits. One must also consider when change can be successfully implemented and what conditions are necessary for successful change management.
But first one must consider which basic conditions apply within an organisation to see whether change can take place with successful results. A suitable aid here is the idea of change maturity, which is a measure of the opportunity to change and for such change to prevail.
The most important aspects of maturity as assessed in capability development over the years are the seven maturity criteria presented below.
In change management, the maturity of different aspects can be described as follows:
There are most certainly other approaches and criteria that are as valid as these maturity assessment criteria, but one must have some form of assessment criteria for making wise decisions.
In purely practical terms, it has been shown that how well these criteria are fulfilled answers the question as to whether the change process will succeed. This experience is based on the implementation of thousands of change activities and projects, both large and small, involving very many people.
For operational projects where several of these maturity criteria are not met, the results have not matched the established goals, in terms of timeframe, delivery precision, delivery content, costs or benefit.
When deciding on purely concrete capability development projects, different types of checklists have been created and used as an aid to preparations for and the implementation of capability development.
Implementing operational development of a more extensive nature requires agreement between the responsible stakeholders with defined value creation.
Value creation refers to optimisation in monetary terms, or an increase in value in the short or long term that provides concrete results that directly affect budgets, project costs, balance sheets or a customer contract. Value creation can also arise as an impact goal that cannot be measured directly in monetary terms, but which can instead result in increased quality, better functionality or enhanced user-friendliness, for example. These effects are often difficult to measure in economic terms, instead one must assess the benefits in the short and long term.
How, then, should one calculate a value for a capability initiative and how should one report it so that it is correct in relation to generally accepted accounting practices? It must be done in a simple manner, yet still follow the underlying principles of economic control.
This is why the term value creation was defined, and it can arise in several different ways:
Based on this reasoning, four types of value creation have been defined for capability development. The effects of capability enhancements can be calculated in budgets, balance sheets, contracts and product projects.
It was established that all capability development projects of a slightly larger scale shall always have a sufficiently strong business case as a basis for approval to commence. The business case is a cornerstone when calculating value creation and is defined in the project definition or in a project specification for a larger change project.
A few principles were defined for how to work with and follow up value creation. One fundamental principle is that capability development projects shall divide their delivery into several part deliveries. This contributes to values and benefits developing throughout the project duration. Project delivery follow-ups and value assessments of these deliveries are conducted at the milestones defined in the change project. Moreover, and this is most common, economic values and effects arise for a long time (a number of years) after the change project has been completed.
In many cases, this also means that economic value stemming from the enhanced capability can remain for many years, so from the start of a change project it is important to have determined how the economic value is to be measured and who is responsible for its reporting.
Each year, Saab defines the ten most important capability development areas to be realised over the next 1-2 years and this is an important planning condition for the budget process for the coming year.
This document also describes the process and work for producing documentation for decisions on which initiatives to implement, as well as which persons are responsible for their implementation.
Saab has PM&T (Process, Methods & Tools) areas, which are like nodes for ensuring that capability development is pursued. These PM&T areas gather necessary resources from the line organisation and the product development projects in order to conduct the actual change management in project form for larger changes. The administration of processes, methods, IT tools and IT environments takes place in a number of different administration areas.
The PM&T structure is divided into four areas, and these are Business, Projects, Technical, and Management and Infrastructure. Each PM&T area encompasses a number of PM&Ts, each of which conducts the practical work of capability development within different operational or technology areas. The largest resources for capability development are invested in technology operations.
A focus directive is established for each PM&T area, describing how the practical work is to be conducted in future budget years.
Based on the focus directive, the different PM&Ts included in a PM&T area prepare a plan and select a number of areas on which to focus. This planning is based on an established budget outline, which may be adjusted up or down for a particular PM&T once a joint overall assessment has been made for each PM&T area.
This work takes into account any ongoing change projects that will need to continue into the coming budget year. It is also common for a change project to lead to continued development in the shape of a new change project. Accordingly, it is important to have a well-described map and structure for how capability development is to be conducted within each PM&T. This work is conducted in cooperation with the line organisation and the product development projects.
The basis for this planning comprises a consolidated project portfolio of all conducted, ongoing and planned change projects. This project portfolio is updated continually. The project portfolio contains a number of details about the change projects, and particularly important factual information in this context includes information about request initiators, the type of change project, economic facts, plans for deliveries over time, and the status of the different change projects.
In addition to suggesting which initiatives ought to be conducted over the next 1–2 years, one should also assess which initiatives ought to be conducted in a 3–5 year perspective and which goals one has in a 5–10 year perspective in order to increase organisational capabilities.