Smart Power at Africom and Boeing: A new business model for the intangible capital economy

March 22, 2011 by · 1 Comment 

Today’s New York Times explains the role of the U.S. military in this week’s multilateral efforts to create a no-fly zone over Libya. The effort is led by a group called Africom that is:

the military’s first “smart power” command. It has no assigned troops and no headquarters in Africa itself, and one of its two top deputies is a seasoned American diplomat…. is intended largely to train and assist the armed forces of 53 African nations and to work with the State Department and other American agencies to strengthen social, political and economic programs in the region, including improving H.I.V. awareness in African militaries and removing land mines.

This is the creation of a knowledge-based strategy for the U.S. military, leveraging its deep expertise in logistics, strategy and organizational development. If the U.S. did this ourselves, it would be too expensive—both in terms of dollars and political capital. But if the U.S. helps others do it, we are leveraging our knowledge and creating capacity in other nations.

There are huge political and strategic implications here that merit a lot of further discussion (as should any outsourcing decision in any organization). But for now, I want to focus on the “business model” of Africom. Because I see a parallel between this and the case of Boeing.

I’ve written a number of times about the Boeing 787, the new jet built with an unprecedented level of outsourcing and collaboration with Boeing suppliers. It hasn’t been an easy path and Boeing has received a lot of criticism. But I believe that Boeing is way ahead of everyone in taking this approach and learning from their mistakes long before others even think about trying this strategy.

And be sure that every successful organization will have to try this strategy in some form in the coming years. The essence of the intangible capital economy is maximizing the leverage of knowledge. And the best way to do that is to expand the network across which your knowledge is spread.

Smart Power. It’s about leveraging intangible capital.

Want to learn the basics of IC? Check out the free downloads from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization.

Design Constraints for a New American Economy: Why Boeing and every other company has no choice but to change

January 13, 2011 by · 6 Comments 

If you follow me on this blog or on twitter, you know that I worry about jobs and the U.S. middle class. That’s why it may seem contradictory to take the position I did in my recent post on Boeing.

Boeing is in the midst of a grand experiment with its 787. It has “outsourced” a greater degree of design on a scale that is unprecedented. What they have essentially done is create a connected community where suppliers of parts and subcomponents of the jet can collaborate. The individual suppliers are empowered to come up with the best designs they can. Boeing’s job is as a convener and catalyst for the network. The approach reflects their belief that their core competency is in design coordination, assembly and marketing of planes. The belief is that each supplier is more expert in their field than Boeing and, therefore, better equipped to optimize and innovate its piece of the overall product.

But the experiment is not going too well. It hasn’t failed but it has had a lot of delays and problems. So there are lots of people critiquing the whole project. Of special note are the critics who fear that Boeing is letting loose the knowledge of how to build big airplanes and that they (and by extension the U.S.) will never get back. This is not that different than so many other U.S. industries that have outsourced and moved more and more of their production off shore.

Here’s my position. Read more

Is Boeing a Smarter Company (or Not)?

January 8, 2011 by · 3 Comments 

There have been a number of people talking again about Boeing’s difficulties with the 787. Among the critics you can count ParaPundit, Michael Mandel and Dick Nolan.

In our book and blog, we include a discussion of Boeing in our discussion of relationship capital:

Technology makes it easier than ever for you to connect and collaborate with your vendors. A great illustration of this potential is the Boeing 787. The design of this plane represented a new approach by Boeing. Using an electronic system, the company was on-line with the hundred or so key vendors that would manufacture components and parts for the jet.

More than ever before, Boeing pushed the design decisions out to the vendors, each of whom has specific expertise related to their part of the plane. Read more

Relationship Capital and the Growing Importance of Partners

June 23, 2010 by · 2 Comments 

When thinking of relationship capital, most people default to customers, who obviously are fundamentally important to your business.

However, relationships with other kinds of partners are growing stronger and more important for the same reasons as those described yesterday for customers: increased outsourcing, increased linking of systems and the need for co-creation and innovation. I’ll talk about partnerships in value creation and those that provide support systems for your organization. Read more