Could Evergreen Solar keep its U.S. plants if it applied the new design constraints for American business?

A few days ago, I wrote about some new design constraints that I believe should shape corporate thinking about innovation. Today, my friend Ken Jarboe at the Athena Alliance sent me a link to this article about Evergreen Solar, a company located here in Massachusetts. This company built a manufacturing plant for solar panels in 2008, created 800 local jobs. Now, the company is closing down the plant and moving production to China. Ken asked me how this case fits into the standards I laid down. (It’s a hard question but I appreciate Ken asking it). So here goes.

First, I want to say that a big part of the story is the imbalance in the support that the Chinese government is willing to give to get the plant built there versus the support the government of Massachusetts and the U.S. is giving. I always get a kick out of this kind of argument because it demonstrates the hypocrisy we often see in American politics: taxes and government spending are bad. But if someone else’s government does it, we have no choice but to take the money. In this thinking, you get the short-term cost savings and worry about the long-term implications later.

In Evergreen’s defense, it is behaving consistent with the current mindset of the stock market and the still-dominant although highly discredited (see comments by Warren Buffett and Jack Welch) approach to maximizing shareholder value that we still accept as gospel–over the last thirty years, the concept of value somehow got to the point where short-term stock prices came to be a measure of how a company was husbanding its resources and building long-term value. Read more

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

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)?

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

America’s Continuing Failure to Innovate

The very first blog post of my career was at Denise Caruso’s Hybrid Vigor that I called The Intangible Imperitive.  The post was inspired by an article about how Brazil’s farmers were out-innovating those in the U.S. I felt frustrated that we were not stepping up to global competition. Since then, I have blogged about similar concerns for the automotive industry. I had the same feeling when I read a story yesterday in the New York Times entitled China Far Outpaces U.S. in Cleaner Coal-Fired Plants:

By adopting “ultra-supercritical” technology, which uses extremely hot steam to achieve the highest efficiency, and by building many identical power plants at the same time, China has cut costs dramatically through economies of scale. It now can cost a third less to build an ultra-supercritical power plant in China than to build a less efficient coal-fired plant in the United States. Read more

Automobiles and The New Sputnik Moment – Will America Leverage its Intellectual Capital?

One of the lead stories in this morning’s New York Times announces that:

Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and buses after that.

This comes at a moment when American auto makers are practically on the floor, still breathing due only to government subsidies. Yet I hope that Americans hear this announcement and think, “why not  us?” Read more