Boeing 777

Today, commercial aircraft manufacturing is dominated by Airbus and Boeing. It is an industry characterized by intense competition, high product development costs, high market risk, and deferred profits.

Risks are high because there are few customers, and if the major airlines of the world shun a new plane, there are simply not enough smaller airlines to rescue the project from failure.

Indeed, development costs are so high that hundreds of planes must be sold before the fixed costs of design and development can be recovered.  For example, Airbus needs to sell 420 of its new A380 planes to break even, a milestone that will take many years to achieve..
 

Boeing Approves the 777 Project

In 1990 Boeing made the decision to develop a new family of aircraft.  Designed to bridge the gap between the 767 and 747 family of planes, the 777 (also called the ‘triple seven’) would be a long-range wide-body aircraft capable of carrying between 283 and 368 passengers and with a range from 5,235 to 9,380 nautical miles (9,695 to 17,372 km).

The 777 would be designed using the latest three dimensional digital imaging technology. It would be powered by lighter twin engines, the most powerful ever built, and designed to be 20 percent more fuel efficient than its predecessors. The airframe, some of which was constructed with new composite materials, would further add to its efficient use of fuel.

The budget would be over $6 billion US and more than 10,000 people would be involved in the project. To appreciate the size of the project as well as the size of the aircraft, manufacturing facilities would cover an area equivalent to over 70 football fields.

Risk Mitigation

Boeing would take several steps to spread the financial and marketing risk.  While they would manufacture the flight deck and forward section of the cabin, the wing, tail and the engine nacelles in their own plants, they would subcontract 70 percent of the project to suppliers throughout the world.  Subcontractors would include Alenia in Italy, ASTA in Australia, BAE Systems in UK, Bombardier Shorts in UK, Embraer in Brazil, Japanese aerospace companies, Kaman in USA, Korean Air, Northrop Grumman in USA and Singapore Aerospace.

Second, Boeing would involve eight of the world’s largest airlines as strategic partners: Nippon Airways, American Airlines, British Airways, Cathay Pacific, Delta Air Lines, Japan Airlines, Qantas, and United Airlines.    It was an approach that would prove instrumental in designing an aircraft that would not only appeal to passengers but provide the airlines with a more flexible plane to meet their changing markets. For example, the interior of the aircraft was designed with curved panels, larger overhead bins, and indirect lighting.  And the dimensions of the windows were increased to become the largest of any current commercial airliner.  Then "Flexibility Zones," were added.  Water, electrical, pneumatic, and other hook-ups were placed throughout the cabin in such a way that the airline could quickly move seats, galleys and lavatories when it was necessary to reconfigure the cabin.

Open Organization

By involving outsiders, Boeing changed the way in which teams were configured.  Now, they were open to wider participation and included engineers, procurement staff, manufacturing staff, customers and suppliers.  It was a strategy that made it difficult to ignore internal and external recommendations over the project life-cycle.  

This change in team composition was a significant departure from the way in which previous projects had been managed.  It changed the culture of the organization, away from a closed organization, that was dominated by union work rules and high power distance, to one that was open and encouraged communication both up and down the hierarchy.  In the past, relationships with suppliers were characterized by competition, suspicion, and distrust. This new approach involved suppliers and subcontractors as strategic partners and critical participants in a customer-driven design, development, and manufacturing process.

This open organization also radically changed the way in which the workforce was expected to work with management.  Regardless of where problems occurred, team members were encouraged to bring their concern to management. If they failed to receive the satisfaction they expected, they were encouraged to bring the problem to the next highest level and continue moving the problem higher until they were satisfied that their concerns were addressed.

What effect did these changes have on project success?

This is, of course, always difficult to isolate and conclude, however, as of 2009 more than 780 planes had been built, making the 777 one of Boeing’s best selling models.  Further, a more balanced perspective between the customer and engineering design efforts apparently did not compromise quality standards since there have been no fatalities since the plane’s introduction in 1995.

Lesson Learned

There is one very interesting lesson that seems to stand out from 777 project. Developing an open team concept, one that involves representation from many functional areas of the organization and one that involves customers and suppliers, may not only reduce project failure risk but may also prove to be instrumental in changing the basic project management culture of an organization.  

Involving the customer over the life cycle of any project does not come without its problems.   Conflicts from competing interests emerge, delays are inevitably introduced, costs often increase, and scope management can become a very real challenge.  Yet opening the project management process to customers and suppliers can be advantageous because it focuses the project squarely on business objectives.