VERGE Executive Series: Q&A with Boeing's Tim Noonan

Editor's note: GreenBiz continues our series of interviews with business leaders that were conducted as the basis for the report, "Converging worlds," produced in conjunction with PwC.

In the fifth installation of our series, PwC's Don Reed spoke with Tim Noonan, Vice President, Phantom Works Ventures and Boeing Energy at Boeing. Here, Noonan shares his insights about how Boeing Energy is working to drive innovation by leveraging its own internal resources and tapping into key partnerships.

Don Reed: How did Boeing Energy come about?

Tim Noonan: Boeing Energy is a startup inside of an aerospace company. It sprang up out of an advanced programs division. We're not energy experts, but what we saw was that energy was a big pain point that was affecting not only our core defense customer, but also national security. So we crafted a strategy to address this; one that really focused on leveraging things that we already do or own — existing technologies and capabilities. We wrote a series of proposals seeking funding from the federal stimulus grants for demonstration products. We won everything that we went after. That confirmed our market understanding and confirmed that we had a concept that mattered. So we took a step back and we said, "We think this market will be big. It is growing. It has room for another competitor."

DR: What are your challenges in pursuing this opportunity?

TN: The fact of the matter is that we're an aerospace company. We make airplanes for a living. So part of what we need to do with our energy division is to think big, but start small. Our biggest challenges are continuing to validate, externally, our value propositions to show success against some pretty important strategic milestones, and then continue to weigh out our strategies so we're making the highest and best use of finite investment dollars inside the company.

DR: So, how are you approaching opportunities to provide energy-related services?

TN: We've explored a number of areas that we think have a lot of potential: generation, transmission, distribution, storage and carbon capture. Not all of them are going to pay off, but I think we've placed some good bets.

So far, we haven't seen much in terms of the complexity of the technical problems that stresses our ability to provide a solution. What we're doing here is really more business model innovation than technology innovation.

Airplane photo by March Cattle via Shutterstock

Don Reed: Are you pursuing any sort of business network or collaborative relationships in this arena?

TN: We are. There are big enough problems with energy that there has to be a reimagining of how governments, industry, universities, labs, ventures, and private equity create solutions together. And that's one of the tenets of innovation that we saw: the opportunity to collaborate. And Boeing is a topnotch collaborator. You don't develop a next generation 787 without high levels of collaboration in your supply chain. The way that airplane comes together is sort of an unbelievable demonstration of what collaboration looks like.

So, when we started developing our business, we went looking for people that were just as passionate about energy as we are about aerospace. We didn't have those guys right out of the gate, so we created some relationships with smaller companies that brought some of that passion. Now they're part of our core technology offering.

We've teamed up with some small companies that develop services that ride on top of our services-oriented architecture for creating a micro grid. We've teamed with a startup to leverage some of our intellectual property on intelligent agents to help do interesting things on transmission wires.

But the other thing that we believe is that this energy opportunity is a scale problem; it's a big, big scale problem. So, we have an alliance with Siemens where we are working together to create this next generation micro grid group for the Department of Defense.

Fundamentally, we just don't think that we know everything and that any one company's got all the solutions here.

Don Reed: For some of the companies we’re talking to, there are ways in which their strategy in this area is disruptive of some of their existing businesses; I don’t hear any of that in your case.

TN: We understand disruptive technology and the disruptive business models in many ways. If you think about it, the 787 is disruptive to an aluminum airplane. Our small, unmanned airplanes are disruptive to satellites. Here, I think that what we're trying to do is disrupt many of the incumbents that haven't taken a large-scale systems integration view to bringing forward a solution. We think this kind of business model innovation provides a systematic, repeatable approach to the business of building businesses. That's fairly new for us, and we think it has a lot of potential.

DR: When you think of the opportunities that you're addressing, what’s the scale you’re looking at? Is this going to be a big business for Boeing?

TN: I would say, from a scale perspective, the Boeing Company is very good at allocating scarce resources to the highest and best use. Our intent here is to create a business that really has the scale to be meaningful to the Boeing Company. We're not in it to dabble. We're in it to create a business that has a material impact.