Did Boeing Go Too Far In Open Innovation?

Posted by: Bruce Nussbaum on March 30, 2008

We’re all gung-ho these days on open innovation, taking down the internal corporate walls, blowing up the NIH, Not Invented Here, culture and globalizing. But Boeing is sending us a serious message about the pitfalls of managing open innovation by buying back control of the assembly of its new 787. Boeing has been having big delays in assembling the new Dreamliner, mostly because it can’t control the subcontractors involved.

Look how complicated it is to simply buy that control. Boeing is buying the stake Vought Aircraft Industries has in a joint venture called Global Aeronautica that assembles four sections of the 787’s fuselage. Vought used to be owned by LTV but now belongs to the private equity group Carlyle Group. Boeing will now be partners in the joint venture directly with Alenia North America, a subsidiary of Italy’s Finmeccanica.

Boeing recently said it needed to strengthen the center box that attaches wings to the 787. That box is made by Japan’s Fuji and Kawasaki companies.

Boeing seems to have checked out all the contractors when it outsourced most of the 787. What it didn’t do was check out the sub-contractors, which it left to its partners. Not good. Now Boeing is bring some key work and control back inside where it has the expertise to do the job.

Getting the balance between management control and outsourced innovation is critical. And very hard to do. Boeing is just about the best at this and if Boeing is having a hard time, we must all ponder our assumptions about going too far in open innovation.

Reader Comments

Andrew

March 31, 2008 4:06 AM

The Carlyle Group doesn't own Chrysler, it's owned by Cerberus Capital Management.

WPC

April 4, 2008 12:01 AM

This a case that open innovation is bad or good; rather a case of plan old mismanagement!

WPC

April 4, 2008 12:01 AM

This a case that open innovation is bad or good; rather a case of plan old mismanagement!

James

April 8, 2008 8:24 AM

In hindsight it's easy to say Boeing made some mistakes here. The biggest mistake, perhaps, is in turning itself into a "system integrator" as opposed to an airplane maker. Long-term, there is bound to be some irreversible loss of technical prowess.

Short-term, however, basically all Boeing is guilty of is assuming its sub-contractors (Vought, especially) could handle such a daunting challenge. There was also clearly a lack of control and oversight on Boeing's part, but given the global origins of the 787's parts that might be a little understandable.

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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