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.