Thursday, October 8, 2009

Boeing 787 Dreamliner - Feasible?

Today in class, Professor Robbins mentioned feasibility as a critical requirement for useful innovation. It struck me that idea of feasibility could in part be a relative term - a product that is infeasible to produce for one firm may be possible for another ; what is too soon for one market demographic could be long awaited for another.

That said, I read an article today about the Boeing 787 Dreamliner - the massive jet whose construction, suffering from more than two years of delays, seems all but cursed. Part of the problem, as this diagram shows, is the result of what has ended up being a nearly-infeasible innovation: nearly every part of the jet originates from a different nation. This approach to construction was rooted more in finance than in design - due to the sheer cost of the plane (approximately $10 Billion), Boeing parted from its usual strategy of in-house construction and instead opted to share this cost (and mitigate the associated risk) with foreign engineering firms.

This unique approach was originally championed by investors, "lifting Boeing's stock price from a low around $31 to a high above $107 in July 2007" (WSJ, article information below). In a manner that is somewhat reminiscent of credit default swaps, though, this innovative approach to funding the jet came with risks that could (and would) stall the entire project. The Dreamliner is newsworthy right now because of the steps Boeing is taking to fix the problem - additional innovation involving many language translators and high-definition video cameras make the distance between the various countries involved in this plane a bit smaller.

To return to the idea of feasibility - looking back on this project, should it have been considered feasible? Should it have been funded the way it was? If you consider the approach feasible, does this innovation add value?

Michaels, Daniel, and Peter Sanders. "Dreamliner Production Gets Closer Monitoring." The Wall Street Journal 7 Oct. 2009, Marketplace sec.: B1-B2. Print.

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