ODD Case-1
Boeing Dream-liner: Engineering Nightmare or Organizational Disaster?
As a flight of imagination, Boeing’s 787 Dream-liner was an excellent idea: made of composite materials,
the plane would be lightweight enough to significantly reduce fuel costs while maintaining a passenger
load up to 290 seats. Airline carriers chose options from a long list of unprecedented luxuries to entice the
flying public and placed their orders well ahead of the expected completion dates. And then the problems
started. An airplane like the 787 has a design about as complex as that of a nuclear power plant, and
Boeing’s equally complex offshore organizational structure didn’t help the execution. Boeing outsources
67 percent of its manufacturing and many of its engineering functions. While the official assembly site is
in Everett, Washington, parts were manufactured at 100 supplier sites in countries across the globe, and
some of those suppliers subcontracted piecework to other firms. Because the outsourcing plan allowed
vendors to develop their own blueprints, language barriers became a problem back in Washington as
workers struggled to understand multilingual assembly instructions. When components didn’t fit together
properly, the fixes needed along the supply chain and with engineering were almost impossible to
implement. The first aircraft left the runway on a test flight in 2009, but Boeing had to buy one of the
suppliers a year later (cost: $1 billion) to help make the planes. The first customer delivery was still years
away. If Boeing and industry watchers thought its troubles were over when the first order was delivered to
All Nippon Airways (ANA) in 2011, 3 years behind schedule and after at least seven manufacturing
delays, they were wrong. Besides the continuing woes of remaining behind schedule, Boeing’s Dream
liner suffered numerous mechanical problems. After the plane’s technologically advanced lithium- ion
batteries started a fire on one aircraft and forced another into an emergency landing in January 2013,
ANA and Japan Airlines grounded their fleets. The FAA followed suit, grounding all 787s in the United
States. The remaining 50 flying Dream liners worldwide were then confined to the tarmac until a solution
could be found.
This looked like an organizational structure problem, both at corporate headquarters and abroad.
However, there have been so many management changes during the 787’s history that it would be
difficult for anyone to identify responsibility for errors in order to make changes in the team or the
organizational structure. For the work done abroad, restructuring reporting relationships in favor of
smaller spans of control to heighten management accountability and tie suppliers to the organizational
structure of corporate Boeing could be considered. Or “re-shoring” to bring manufacturing physically
close to the final assembly site and under Boeing’s control while centralizing the organizational structure
could be an option.
Questions
1. Do you think this is a case of the difficulty of launching new technology (there are “bugs” in any
system), or one of an unsuccessful launch?
2. What type of executive management structure do you think would be most conducive to getting
the Dream liner past a component failure and back in flight? Is this a different structure than you
would suggest for fixing the ongoing manufacturing problems? Sketch out the potential design.
3. What organizational structure would you suggest to effectively tie in Boeing’s managers and
suppliers abroad? Sketch your ideas. (Goals for managers might include facilitating teams,
coordinating efforts, maintaining organizational transparency, and creating conversations.)