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Boeing 787 Dreamliner and decrease innovation

openingremarks05__01__630x420By the standards of commercial aircraft, the Boeing 787 was supposed to be a modern miracle. The carbon fiber body and a new electrical system provides reduced weight, allowing the fuel to burn 20 percent less than the intermediate plane was meant to replace. The cabin interior features cathedral-like arches to reduce enlarged sense of claustrophobia and the dim windows with one touch of a button. Because, the new composite material is stronger, the cabin can also be maintained at high pressure and humidity, so travelers feel more refreshed in the landing. The plane even has a name jumped, Dreamliner, filing a winner in the naming contest was held at America Online 10 years ago.

Now Dreamliner has turned into a nightmare for Boeing (BA) and the airlines that pay list price of more than $ 200 million per aircraft. These problems are typical for new aircraft, ranging from damage to the brake computer trouble. On January 16, the Federal Aviation Administration based on the 787 fleet after the battery had just landed in Boston fire and other produce errors that forced an emergency landing with All Nippon Airways flight to Tokyo, with passengers evacuated via inflatable slides.

The cornerstone of the 787 was in many ways inevitable for a project marked by missed opportunities, narrowed vision, and, yes, dreams deferred. It is also an example of the desperate shrinking tolerance for risk among corporate executives and government regulators, crippling innovation and threatens American competitiveness. “I often wonder if the people there as it does today with the media, politicians, and lawyers and managers to focus on revenue is not lost by two cents per quarter, if we are going to make progress in the past,” said Bob Bogash, which retired after a career of 30 years at Boeing and now writes a blog about aviation, rbogash.com.

The sky has long been a showcase for American genius for invention. More often than not, Boeing, was founded in 1916 on the shores of Lake Union Seattle by lumberman named William Boeing, was right in the middle of it. During World War II, B29 Superfortress has a pressurized cabin and a remote-control weapon. 707 U.S. ushered into the Jet Age in the 1950s, and 747, was introduced in 1970 as the world’s first wide-body aircraft, revolutionized long-distance air travel. All efforts have dental problems even worse than 787. Bogash recalled that “the glass front of the 747 which is used to solve so many times when I was based in Honolulu as a field service engineer I have two spares in my garage, just in case.” But each time, Boeing made the necessary repairs and fell forward with the next big bet.

Dreamliner was born from the ashes of Sonic Cruiser, a plane designed to fly close to the speed of sound with twice as many passengers as the Concorde, to airlines squelched the idea, saying they can not afford to pay for that luxury in the post-9/11 era. Boeing turned landscape for fuel-efficiency worthwhile goal but not very compelling one that drove virtually every design decision. Boeing decided to use carbon fiber composite-plastic-essentially for the body and wings, and to backup titanium and other heavy metals for the landing gear, engines, and some small parts. The new engine from Rolls-Royce (RYCEY) and General Electric (GE), which is designed to provide more thrust with less fuel. The lithium-ion battery, the focus of so much difficulty as Boeing, chosen because they can store more energy and quickly replenished. The electrical system replacing the traditional pneumatic system used hot air from the engine, for a more efficient approach that lowers maintenance costs.

During the development of the Dreamliner, Boeing board focused on reducing costs. So come up with a plan in which the supplier will be a partner and will finance and produce all parts of the 787, taking greater risks but also a greater share of revenue from each jet sold. Half a dozen major suppliers who had to build a large part of the aircraft to be flown, fully completed, to the Boeing factory in Everett, Washington, and snapped together in three days and shipped to customers. The plan is for Boeing to make 30 percent of 787 each and buy 70 percent.

How well does it work? Boeing executive’s first aircraft scheduled for delivery in time for the 2008 Beijing Olympics. But when the 787 was launched from the factory in July 2007, held together with temporary fasteners because the real has not been sent. After the ceremony, Boeing shame to roll back to the factory. The company admitted three months later that it was behind schedule due to lack of spare parts and suppliers who do not keep.

That setback was only the first of seven delays to the Dreamliner, which eventually went into service in the fall of 2011. An effort to reduce the financial risk associated with next-generation technology creates a series of spiral problem, which all contribute to issues that finally prompted the FAA to ground the fleet. “Thanks to an overreliance on other people, you have this ridiculous delay, which means there are too many planes built in the front, and it is a recipe for the disabled,” said Richard Aboulafia, a consultant with the Teal Group, an aerospace research firm.

Dreamliner problems reflect a broader trend. Innovation in today’s economy like America seems stuck in this holding pattern forever. Venture capitalist Peter Thiel has warned about a slowdown over the years. “There are so many incrementalism now,” Thiel said in an interview with Bloomberg Businessweek. “Even back in the 90′s there were companies like Amazon (AMZN) are willing to do great things. Yang has gone out of fashion now,” Thiel points. For SpaceX and electric car company Tesla Motors (TSLA), both run by Elon Musk, a rare example of the latest attempt to jump forward with courage. But Musk often gets described as quixotic dreamer. “I think it reflects the madness of our country, whatever non-incremental seen as crazy,” said Thiel.

Who is responsible for this perceived decline in innovation? One obvious target is the overweening government. Some advocates have alleged that the FAA Boeing wildly overreacted by grounding the Dreamliner. “They tried to make us overly risk-averse,” said Gordon Bethune, a retired airline executive who worked for Boeing and then ran Continental Airlines (UAL). “The FAA is teaching something Boeing. Are we sending the right signals to innovators in cars, airplanes, appliances, that recompense of God will come down on you if you have so much as one question wrong in a hundred question exams?”

But a more important factor than excessive regulation is that the public markets simply do not appreciate the huge risks. Communities will theoretically should give companies more access to capital to fund research and development, but it turns out that the actual initial public offering likely to prevent betting bold. Shai Bernstein, an assistant finance professor at the Stanford Graduate School of Business, recently studied more than 20 years of patent citations and found that, on average, in the five years after the IPO stage companies, there is a 40 percent reduction in the quality of innovation. This is partly because the inventor of the best companies tends to cash in their chips and head for a small company with more upside, and partly because managers become more inclined to pursue additional projects that will not scare investors.

Too often in the new company public, Bernstein said, “suddenly everyone is aware about the advantages of bottom-line rather than just building a great company.” Consider PC maker Dell fainting (DELL), which pioneered the sale of personal computers over the telephone and Internet. Over the years its founder, Michael Dell, openly mocks a rival to spend a lot of money to research and development. Wall Street liked the lightweight Dell, capital-efficient business model. But when consumers switch from desktops to mobile devices, Dell tripped and proved ill-equipped to come up with new technologies to meet changing tastes. Former Wall Street darling now in talks to go private.

After the explosion of the Space Shuttle Challenger in 1986, U.S. President Ronald Reagan addressed the nation from the Oval Office. “I know it’s hard to understand, but things sometimes painful like this happen,” he said. “It’s all part of the process of exploration and discovery.’s All part of taking a chance and expanding human horizons.’s Future not belong to the fainthearted, but to the brave” Less than three decades later, NASA has pulled back from manned space exploration-another sign of how benefit from risky efforts have been trumped by cost concerns and. fear of failure. Boeing 787 will definitely fly again; it probably was back in the sky by the time you read this. But a future full of bold innovation than dimmable aircraft windows remains just a dream.

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