Of big jets and human nature

Published 9:00 pm Monday, July 24, 2006

Here’s an interesting opinion piece from The New Yorker. http://www.newyorker.com/talk/content/articles/060731ta_talk_surowiecki Granted I don’t normally turn to that magazine for aerospace industry insights, but columnist James Surowiecki makes some interesting points about the amazing turnaround in the market in recent years, and how human nature may be leading many of us to draw conclusions that are too broad about the state of the Boeing-Airbus dogfight.

Key Quote (1): “What much of the talk about the inherent weakness of Airbus ignores is that, just a few years ago, it was Boeing that looked fundamentally flawed, while Airbus was seen as the future of the industry. … Boeing, by contrast, was thought to be trapped in a short-term, cost-cutting mentality, because, as one analyst put it, ‘the money guys don’t reward long-term thinking and investment.’”

Key Quote (2): “The problem with such prognostications is that they infer basic truths about a company’s prospects from its short-term performance. In fact, present success is often determined as much by context and chance as by fundamental viability. This is particularly true of the aerospace industry, because success is heavily dependent on a small number of big gambles. If you bet right, you look like a genius for a few years, even if the success of your bet was due to factors out of your control.”

I think his points are extremely well-taken.

Granted, aerospace is a different animal, given the billions of dollars and years of lead time involved in new-product development. A mistake by one jet builder can take years to overcome.

But I still shake my head thinking back on how, back in 2003, the CEO of a well-known and respected American corporation told me that he was convinced that Boeing had decided to exit the commercial jet business — based on the trends of the previous couple of quarters. In hindsight, it was exactly the kind of thing Surowiecki is talking about.

Of course, three months after my conversation with that CEO, Boeing launched the 787 program, and you guys know the rest.