A Very Public Bump in the Road for Boeing’s 787 Dreamliner

Boeing’s announcement this week that supply chain problems would force a six- or seven-month delay in deliveries of the new 787 Dreamliner demonstrate how difficult it can be to execute on innovative strategies. And Boeing’s strategy is more innovative than many.

You can’t hide a jumbo jet. But even if the company were making a less high-profile product, one not tied up with national prestige, even if we were not discussing a global, public company, Boeing’s effort would put it on the leader board for innovators everywhere.

Boeing is doing what forward-looking experts are saying entrepreneurial organizations must do: work more closely with suppliers, so closely that they help make products and projects better than they would be otherwise. It’s what authors Don Tapscott and Anthony D. Williams call “Wikinomics”: “collaborations on an astronomical scale” superceding traditional ways of working together with colleagues and associates. It’s what speakers on innovation at the recent CIO 100 Symposium advocated, too, citing examples from P&G and AT&T, among others.

Every big strategy comes up against bumps in the road, though. Boeing’s is a rather public one. In a conference call with Wall Street analysts and reporters, Boeing executives expressed both disappointment and vowed that they would make good on their long term strategy. “We’re not experiencing things we didn’t think we’d experience,” W. James McNerney Jr., Boeing’s chief, said of the supply chain delays. “We’re just epxeriencing slower resolution of what we thought we’d find.”

Scott E. Carson, president and CEO of Boeing’s commercial airplanes business, sought to emphasize a silver lining when he emphasized that the supply chain delays— not enough fasteners to keep manufacturing processes running on time for the first 787 Dreamliner—would give engineers more time to test software programs that represented a systems integration challenge. That extra time will be enough to get everything back on track.

Boeing executives said they treat their customers as partners, too, and expect to pay some compensation to 15 customers affected by the delays (out of 50 customers so far). And while the CEO of Qantas told The Age of Australia that he expects the company to seek some financial relief, the Reuters news agency reported that British Airways and All Nippon Airways of Japan, said the Boeing delivery delays would have little impact on them.

That’s relatively good news for Boeing following their announcement, but it sets up high expectations that the company will meet its next deadline in November or December 2008.