Last week, many news stories pointed to Boeing’s recent strategic changes enabling it to produce planes faster than AirBus for the first time in a decade. The innovation enabled Boeing to sell more planes than AirBus. Yet, producing planes faster may be an interim solution for the industry.
Boeing has invested in new technology and hired more people to make this production speed possible. For the present time, the strategy has restored Boeing to the industry leadership position. Critical questions demand answers, however, if we wish to assess the strategy for the long term:
- How long will it take AirBus to buy and implement the new technology?
- How long would it take AirBus to improve upon the new technology?
- Where is the breakeven point for either company in terms of hiring more people and remaining profitable?
The inherent problem for any company leading its industry due to production speed is that it is only a matter of time before someone figures out how to produce the same plane faster than you can. The solution – whether found through technology or staffing – is temporary. Then what happens?
Producing a plane like the 777 in record time is impressive. As a basis for competitive advantage, however, it is tenuous, at best. It might move your company’s growth to a plateau or it might keep sales on a plateau, but it is not the path to sustainable long-term growth. Adding employees to maintain the production time advantage is only possible as long as it creates an acceptable reduction of profitability.
A company like Boeing can use an interim solution to maintain predictable revenues while a new product or process is developed. Corporate leaders must define the breakeven point at which the company can continue to invest in additional employees and support the staffing and other costs for research and development of the next product line.
- If Boeing was your company, and you had this temporary advantage in the marketplace, where would you place your company on the change curve, and what would your strategy be to prepare for the future?
- How would you assess your company today?