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Boeing: The Wrong Way to Manage Innovation

Two years ago, Boeing's 787 "Dreamliner" was the exemplar of how companies should manage innovation with partners. The company had overcome its bias favoring internal invention to instead work with more than a hundred companies in creating their next-gen aircraft, and enjoyed many early design and process wins as a result.

But now, nearly two years behind schedule, it turns out Boeing got it mostly wrong. The Dreamliner has gone through a series of delays getting to first flight, most recently in June when structural problems were discovered where the wing is attached to the fuselage.

Boeing's problems are something many companies need to take note of and learn from. Why? Because in this era of global resources, the best innovation and solutions to problems will usually be found outside our own corporate walls. How you manage those partnerships will determine success or failure.

Model for Success
Harvard Business School professor Karim R. Lakhani argues that companies faced with managing external innovation partners must first decide the proper model. Will these partners work cooperatively with each other as a community -- the open-source software movement, for example -- or will they instead take part in a market-driven process such as Apple's program to draw independent developers to its iPhone/iTouch platform?

"Boeing did not build a market or a community for its suppliers and got the worst of both worlds," Lakhani tells me in a recent interview on HBS Working Knowledge.
For additional insights into these challenges and rewards read "How to Manage Outside Innovation" (free registration required) in the current issue of MIT Sloan Management Review, by Lakhani and collaborator Kevin J. Boudreau.

How do you manage innovation in your own company?

(787 image by Max Boss, CC 2.0)

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