Thursday, October 27, 2011

The Boeing 787 Dreamliner and the Purple Squirrel

In its effort to create the 787 commercial airplane, it appears that Boeing has also participated in the search for the elusive Purple Squirrel. The Boeing 787 has been an offshore outsourcing failure, a costly lesson learned by the largest exporter in United States. The bird (787) does fly, but with a 3-year overdue delivery date, Boeing has had to provide price discounts of 25% on some of the earliest pre-purchases.

Project managers often use the “Faster, Cheaper, Better” mantra to sell a project based upon optimistic timelines or budgets, most engineers will respond with “pick two” and more often than not the engineers are correct.

The 787 Project:

Faster:
Failed, 2008 projected date, time wasted creating outsourcer supply-chain difficulties. Technology issues also arose during the project – which should have been expected in cases where emerging technologies are employed.

Cheaper:
I’m sure that Boeing’s version of cheaper didn’t include cost and time overruns and deep discounts granted to companies who placed pre-production purchase orders. See “Better”

Better:
Commercial airplanes are the ultimate durable-good, many are flown for decades and safety should be the ultimate concern; “Better” should have the highest priority. The “Cheaper” aspect of the project could still be salvaged, if purchasers find that the 787 is a durable (and safe) aircraft. Boeing may experience a lager market share, offsetting production and engineering cost overruns, dependent upon durability and fuel savings. The Boeing 737 Wikipedia entry says that there are still thousand of 737s in the air at all times of the day.

The point is, that Boeing went cheap on the “Faster” aspect of the project and paid the price. Attempting to save time and money on project engineering, Boeing assumed that outsourcing would somehow mitigate a failure to maintain “institutional knowledge” and/or a resistance to train new staff.

"You have to realize that we hadn’t done a major development program at Boeing since the triple seven, you know that was 20 years ago, we had lost a lot of the institutional knowledge, we have got a lot of institutional knowledge now, we have trained 12,000 to 13,000 Engineers on how to do it right." Video transcript excerpt: Jim Albaugh, CEO Boeing Commercial Airplanes


Some people in management tend to believe that Purple Squirrels do exist. Somehow, somewhere there is a highly skilled employee candidate who is pre-configured with the exact skills and knowledge needed to staff a project that may even involve emerging technology. Once the list of United States candidates have been exhausted/discounted, management lobbies the government for more temporary employment visas because they want to look at more squirrels to see if they can find a purple one.

The Wall Street Journal has actually printed an article that doesn’t blindly support the “shortage” of Purple Squirrels in Science, Technology, Engineering and Math candidates. During the worst employment market since the Great Depression, there are lots of squirrels – again many employers are still not interested in squirrels that are not purple.


Dr. Peter Cappelli, Director of Wharton's Center for Human Resources, in The Wall Street Journal: 

With an abundance of workers to choose from, employers are demanding more of job candidates than ever before. They want prospective workers to be able to fill a role right away, without any training or ramp-up time.
In other words, to get a job, you have to have that job already. It's a Catch-22 situation for workers—and it's hurting companies and the economy.

To get America's job engine revving again, companies need to stop pinning so much of the blame on our nation's education system. They need to drop the idea of finding perfect candidates and look for people who could do the job with a bit of training and practice.

Dr. Peter Cappelli, “Why Companies Aren’t Getting the Employees They Need”  The Wall Street Journal, 10/24/2011

Dr. Cappelli did a follow up article due to the avalanche of reader response.

Most of the emails I received were in support of my argument, especially from readers struggling to get a job themselves. No surprise there. But a remarkable number of those who wrote were in positions where they were hiring, including recruiters. They reported that their organizations had shortages of employees because they would not train or invest in new hires.
My favorite email came from somebody in a company that had 25,000 applicants for an engineering position and the staffing people said none of them were qualified. Could that really be possible? Link
Once the employer and recruiter have determined that there is no such thing as a Purple Squirrel, they tend to complain that there are not enough temporary work visas squirrels. A suspicious mind may conclude that employers might want to have additional leverage over any worker that they need to train -- a work-visa might just fit the definition of leverage for squirrels who don't happen to be purple.

Fortunately, the CEO of Boeing Commercial Airplanes (Jim Albaugh) has come to the realization that regular squirrels can be trained just like purple ones. Mr. Albaugh also appears to have come to the realization that squirrels tend to work better together in-groups where the output can be controlled.


 CNNMoney Video transcript excerpts, Jim Albaugh, CEO Boeing Commercial Airplanes
You have to realize that we hadn’t done a major development program at Boeing since the triple seven, you know that was 20 years ago, we had lost a lot of the institutional knowledge; we have got a lot of institutional knowledge now, we have trained 12,000 to 13,000 Engineers on how to do it right.”
“I think we over-stretched this time with some of our technologies and I think that we didn’t completely think through the supply-chain that we put in place. I think we’ve been able to address the technology issues and we’ve pulled some work back from the supply chain, we’re doing it internally…”

“Obviously, whenever you have an issue you want to learn from it. We are doing a variant of the 787-8 and the 787-9 we’re doing more of the work inside the company now, we want to make sure we don’t lose control like we did on the 787-8”




Video Courtesy of CNNMoney


“Boeing's game changer finishes first flight”
By Chris Isidore @CNNMoney October 26, 2011: 1:43 PM ET
http://money.cnn.com/2011/10/25/news/companies/boeing_787_dreamliner/

See also:

W.T.O. Ruling on Airbus Subsidies Upheld on Appeal
By NICOLA CLARK
Published: May 18, 2011
http://www.nytimes.com/2011/05/19/business/global/19wto.html?pagewanted=all

Special Thanks to Dr. Peter Cappelli for his WSJ article

Dr. Cappelli is the George W. Taylor professor of management at the University of Pennsylvania's Wharton School and director of Wharton's Center for Human Resources.

1 comment:

Unknown said...

Thanks for the great article. "Purple Squirrels" indeed.
-John Donaldson, Oakland CA
Software Engr for 30 years.