The limits of Open Innovation

Michael J. Denton, vice-president of Engineering at Boeing declared that the company will rely less in outsourcing and more in in-house engineering for the next planes, beginning with the next iteration of the famous 787.

The Dreamliner, the 787 has been for quite some time a prime example of a massive use of partners in key areas such as design. This was also one of the most salient claims of the Society of Professional Engineering Employees in Aerospace, the union that represents around 20.000 engineers and technical writers working in Boeing.

Does it sound familiar?

We have been witnessing a similar movement in Apple, who is integrating even more of its activities in order to gain both market and technical advantages.

And it seems that for these companies that aim for the top, relinquish control of significant components of its product strategy is costly. That contrast with the average type of firm, also situated in this area, who clearly prefers a market based approach.

Both cases of Apple and Boeing show that when companies aim to play at the edge of the complexity frontier, a network/integrated approach could bring benefits. In this frontier, the number of outstanding quality partners available is not large and the procedures that could streamline integration are not yet standardized or common practice, this is the reason why an integrated or network type schema at the end will work better.

However, remember this is only true in the complexity frontier, and complexity reduces as time passes because of standardization and modularization, both common engineering practices.

P.S. Again this is part of our on-going research with Prof. Ramon Casadesús.