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

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

2. Alaska Airlines Quick Facts • Breakthrough Timeline

3. 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

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

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

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

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

8. 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

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

10. Impact Risk Return

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

12. 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

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

14. 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 • FoxMeyer Drug – ERP

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

16. Changing Paradigms • Amazon.com • NetFlics • Boeing 787 supply chain – modular construction • alaskaair.com • Alaska – airport kiosks • Boeing 787 composite construction? • iPad? • Home Grocer / Web Van

17. Impact Changing Paradigm Risk Changing Processes Automation Return

18. Impact Changing Paradigm Risk Changing Processes Automation Return

19. Idea Adoption Innovation Impact “What if we?” “Let’s try this” “Leverage the success” Time Getting Started Visionary Leadership Talent hits a target no one else can hit, genius hits a target no one else can see- Schopenhauer • 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

20. Idea Adoption Innovation Impact “What if we?” “Let’s try this” “Leverage the success” Time 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

21. Idea Adoption Innovation Impact “What if we?” “Let’s try this” “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

23. Adoption Innovation Impact Organization change 11/99 Time 9/99 - present 6/95 - 12/95 v1 12/95 - 9/99 www.alaskaair.com Idea “What if we?” “Let’s try this” “Leverage the success” Channel conflict Let’s hit 50% by 2005 We’re going to be 1st!

24. 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

25. 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 tomake it happen