To understand why, you need to go back to 1997, when Boeing merged with McDonnell Douglas. Technically, Boeing bought McDonnell Douglas. But, as Richard Aboulafia, a noted industry analyst with the Teal Group, told me, “McDonnell Douglas in effect acquired Boeing with Boeing’s money.” McDonnell Douglas executives became key players in the new company, and the McDonnell Douglas culture, averse to risk and obsessed with cost-cutting, weakened Boeing’s historical commitment to making big investments in new products. Aboulafia says, “After the merger, there was a real battle over the future of the company, between the engineers and the finance and sales guys.” The nerds may have been running the show in Silicon Valley, but at Boeing they were increasingly marginalized by the bean counters.
Under these conditions, getting the company to commit to a major project like the Dreamliner took some doing. “Some of the board of directors would rather have spent money on a walk-in humidor for shareholders than on a new plane,” Aboulafia says. So the Dreamliner’s advocates came up with a development strategy that was supposed to be cheaper and quicker than the traditional approach: outsourcing. And Boeing didn’t outsource just the manufacturing of parts; it turned over the design, the engineering, and the manufacture of entire sections of the plane to some fifty “strategic partners.” Boeing itself ended up building less than forty per cent of the plane.
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