TELA April 2010 Robert M Reeder Senior VP

TELA April 2010 Robert M. Reeder, Senior VP & CIO (retired)

• Alaska Airlines Quick Facts • Breakthrough Timeline

Alaska’s Quick Facts • First to sell tickets on the Internet • First to successfully use airport kiosks • First check-in from home or office • First airline to offer wireless check-in

From Innovation to Breakthrough What does Breakthrough mean? A sudden advance, especially in knowledge or technique

The Breakthrough Timeline Breakthrough! Impact Idea “What if we? ” Innovation “Let’s try this” Adoption “Leverage the success” Time

The Breakthrough Timeline Front end Impact Idea “What if we? ” Development Innovation “Let’s try this” Commercialization Adoption “Leverage the success” Time

The Breakthrough Timeline Getting Started Impact Idea Innovation “What if we? ” “Let’s try this” Adoption “Leverage the success” Time Compress

Premise • A business process is a logically related set of activities that define how specific tasks are performed* • Every business can be seen as a collection of business processes that support a business model* • The potential impact of a business initiative (Innovation) is directly proportional to one or more of the following: – The extent of change in business processes or the business model – The commitment of capital – The resulting organizational change – The scope of change for customers – The scope of change for employees – And, perhaps, the scope of the technology * Management Information Systems Laudon & Laudon

Impact Risk Initiatives that have small impact probably have small returns Return

Impact Risk Return

Impact Helping people perform their tasks more efficiently and effectively Can be foundational for an objective that has a greater return Risk Gartner calls this “Stay in the Race” Automation Return

Automation • • • Updating an existing transaction system Creating a data warehouse Improving the automation of a business function Changing an output from paper to on-line Catching up with a competitor

Processes are created, streamlined, combined, or eliminated Impact Business model may change Gartner refers to this as “Win-the-race” Risk Changing Processes Automation Return

Changing Processes • Modifying processes to take advantage of a new system • Boeing - 777 on line CAD (CATIA) • Boeing - 737 assembly line • Alaska - Customer Care call center integration • Fox. Meyer Drug – ERP

Rethinking the nature of the business, new business model, Impact or changing the very nature of the organization “Change-the-rules” Changing Paradigm Risk Changing Processes Automation Return

Changing Paradigms • • • Amazon. com Net. Flics Boeing 787 supply chain – modular construction alaskaair. com Alaska – airport kiosks • Boeing 787 composite construction? • i. Pad? • Home Grocer / Web Van

Impact Changing Paradigm Risk Changing Processes Automation Return

Getting Started Visionary Leadership Talent hits a target no one else can hit, genius hits a target no one else can see • The right idea, right time, right plan • The right people who can get it done • Clear, consistent, supportive leadership Have a method for Process Improvement Purposeful Innovation - Balanced Portfolio Impact Idea “What if we? ” Innovation “Let’s try this” Adoption “Leverage the success” Time - Schopenhauer

Compressing the Timeline The potential impact of a business objective is directly proportional to one or more of the following: • The extent of change in business processes or the business model • The commitment of capital • The resulting organizational change • The scope of change for customers • The scope of change for employees • And, perhaps, the scope of technology Impact Idea “What if we? ” Innovation “Let’s try this” Adoption “Leverage the success” Time

Compressing the Timeline The sooner you identify and address the needs of the various stakeholders, the shorter the path will be to adoption and Breakthrough Impact Idea “What if we? ” Innovation “Let’s try this” Adoption “Leverage the success” Time

www. alaskaair. com Impact Idea “What if we? ” Innovation “Let’s try this” Adoption “Leverage the success” Organization change 11/99 Time 6/95 - 12/95 v 1 We’re going to be 1 st! 12/95 - 9/99 Channel conflict 9/99 - present Let’s hit 50% by 2005

Summary Best practices for success • Create a balanced portfolio of projects • Find people with vision and passion for change • Augment them with people who can finish • Early in the cycle, address changes to: – – – Business Process Business Model Organization People Capital Customers

Summary IT’s role in changing the business • Know the business • Help people see the possibilities • Develop solid executive support • Use iterative development with short cycles • Develop expertise in process improvement • Identify and involve all stakeholders - early • Use project management • Go the extra mile to make it happen