If you’re trapped in the world of “Web 2.0” and the Internet, the larger face of business might well pass you by, which is too bad. Between ongoing stock options scandals, excessive executive pay for failed performance and the dramatic vacillation of the stock market, the errors are big, the people are larger than life, and the problems are often shocking.
Little has surprised me more, however, than watching and tracking the ongoing failure of Airbus, the EU-backed competitor to American cornerstone Boeing (NYSE: BA). If you ever get on a plane, odds are good it’s built by one of these firms. Popular Boeing planes include the 737 and 747, and the A320 is the best-selling Airbus craft. (other possibilities include the Lockheed’s L-1011 (NYSE:LMT) and McDonnell Douglas’s DC-10, but that’s another story).
When Airbus announced the A380, the industry was thrilled. A two story, 555-seat jet that had an extraordinary range (8000 miles), lots of long-haul airlines ordered the planes. Then a cargo version of the plane was announced and it too received lots of orders: if you’re FedEx, for example, a plane that’s twice the size is clearly going to be more efficient for transporting packages. Sure you had to build longer, stronger runways and that few airports can handle the monster plane, but that’s just progress, right?
Everything was going well until the different engineering groups inside Airbus forgot to talk with each other and the result has been nothing short of catastrophic…
The core problem is the organizational structure of Airbus itself: funded by the European Union, it wasn’t possible for the company to centralize its design, but instead the process was distributed out to various teams throughout the Union.
Boeing, by contrast, learned about engineering coordination the hard way years ago and its computerization of the entire process is a marvel, with millions of documents and complete, highly-detailed, schematics of everything, including simulations of subsystems, before a single sheet of metal is pressed.
The Airbus A380 wiring system has proven to be the fatal Achilles Heel of the project, and when they first assembled the full airplane, it turned out that the systems wouldn’t connect properly. Even with the best gum and bailing wire, it was a no-go and the A380 has been delayed at least two years. Two years of orders, two years of shamefacedly watching sales move over to crack competitor Boeing.
Airbus has said that the problem was simply that the wiring in the aircraft was too darn complex (and, to be fair, each aircraft has 300 miles of wiring), but the real problem was that the different engineering teams were using incompatible versions of the CATIA design software, which led to all sorts of miniscule, but critical mismatches in connectors.
As with most aircraft, Airbus has always planned on both a commercial passenger and freight version of the A380, and has been taking orders on both. Known orders for the A380F, the freight craft, included multiple planes from UPS (NYSE: UPS), FedEx (NYSE: FDX) and International Lease Finance Corp. The latter two canceled their orders late in 2006 and as of this week, Airbus has announced that they’re postponing further work on the freight plane to focus more attention on finally resolving the engineering challenges with the passenger plane. No surprise, UPS immediately cancelled its 10 aircraft order (an order worth an estimated $3 billion).
Okay, so that’s the history lesson of the A380 aircraft and its design problems. The question is: how is this relevant to smaller businesses, to businesses that aren’t necessarily operating in the realm of billion-dollar decisions?
I suggest to you that, in fact, every business needs to pay close attention to the communication channels between its teams, and how well — and accurately — it communicates specs and details to its partners and suppliers. If I order a new display card for my computer, one that’s incompatible with my system, it’s the exactly same communications issue rearing its ugly head, albeit in a smaller scale.
My question to you then is:
How closely are you ensuring perfect compatibility within your company and throughout your supply chain?
It’s something to think about, alright. Airbus is learning this lesson the hard way. The very, very hard way.