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

With every day, the innovation imperative grows…

The U.S. and many of the traditional “developed” economies are in one of the toughest moments economically we have ever faced.

In the U.S., the “recovery” is not increasing jobs. We continue to fight a foreign war and have yet to address the issues of climate change. Increases in fuel prices periodically remind us of the lack of progress in U.S. efforts at reducing energy use. The urgency of these problems was amplified by the fact that much of the world’s oil supply is in the hands of non-democratic governments. Healthcare costs continue to spiral.  There continue to be crises that demonstrated the vulnerability of the food supply. Education, one of the basic ways to develop a knowledge-era workforce is underperforming in the U.S. versus most other developed countries.

There is little consensus whether we have even begun to address these challenges. Read more

Open Response to PwC and the UK Financial Reporting Council

David Philips, whose Corporate Reporting Group at PriceWaterhouseCoopers has stuck with the challenges of reporting year in and year out, just posted about a new report from the Financial Reporting Council (FRC) called Louder than Words: Principles and actions for making corporate reports less complex and more relevant. In support of the report, PwC has written a letter suggesting concrete action plans to make that happen.

I started writing a response on his blog but it got a little too big for a comment so I moved it here. Regular readers have seen the data before (especially in my recent post on goodwill) so please excuse the repetition. 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