Is Boeing a Smarter Company (or Not)?

There have been a number of people talking again about Boeing's difficulties with the 787. Among the critics you can count ParaPundit, Michael Mandel and Dick Nolan.

In our book and blog, we include a discussion of Boeing in our discussion of relationship capital:
Technology makes it easier than ever for you to connect and collaborate with your vendors. A great illustration of this potential is the Boeing 787. The design of this plane represented a new approach by Boeing. Using an electronic system, the company was on-line with the hundred or so key vendors that would manufacture components and parts for the jet.

More than ever before, Boeing pushed the design decisions out to the vendors, each of whom has specific expertise related to their part of the plane. The specifications that Boeing supplied were dramatically reduced from past plane projects reflecting the fact that Boeing gave each supplier greater freedom to innovate and design in their specific arena. But because all the suppliers were all on line together, the designs could be coordinated and integrated into the overall design. This approach reflected an increasing faith by Boeing in its relationship capital with its suppliers. It also reflected a change in Boeing?s view of its core competence away from design to design coordination, assembly and marketing of planes.

If you are familiar with this story, you may be surprised that I cite it here. Because the process has not gone smoothly and delivery of the plane is expected to be two to three years late. But despite all this, Boeing?s experience with this plane will provide incredible lessons about how to manufacture in the knowledge era. Boeing is learning these lessons long before many others in the market. It is a case worth following so that you can learn from it too.
I, too, worry about American competitiveness and jobs. But I still stand by our statements above. Boeing came to the realization that, in the long run, it would be a smarter company if it let the expertise of each of its suppliers be maximized it they were able to have more of a say in the overall design. Boeing felt that the expertise that they needed to develop was in the coordination of this process. All these critics say that Boeing is giving away and/or losing control of knowledge.

This issue of control of knowledge is one of the core challenges that keeps coming out in all kinds of ways from Wikileaks to human capital discussion to this one about Boeing.

So let's try to envision the alternative. What if Boeing insisted on complete control of the design and manufacture of their next plane? Would they be in a better or worse competitive position? It doesn't feel sustainable to try to dominate a market using industrial-era approaches.

The lesson of the knowledge era is that we should not try to control all knowledge. It's that we have to find ways of maximizing knowledge. And find our individual role in that process. The future of American companies isn't in beating the Chinese at our old game. It's in our reinventing the game.

The sooner we all face up to it, the better. Kudos to Boeing for pushing in the right direction.

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