The Hindu Business Line : <I>Flight into thin air </I>

Enter the ethereal world of large commercial aircraft. Suppliers of LCAs, as they are known in trade, have goals that draw on `spongy assumptions, political hubris, and industrial savoir faire,' writes John Newhouse in `Boeing versus Airbus' (www.aaknopf.com) .

"Reading the market is largely guesswork," notes Newhouse. "An airline may plan to use a new airplane for 20, possibly 30 years, but can't predict how many times the market will change direction along the way. In market forecasting, the airline must guess what size bucket (the airplane) will be needed to carry an unknown quantity of sand (the passengers)." The business is `more about instinct and psychology than economics.'

The book, which narrates `the inside story of the greatest international competition in business', opens with the travails of being number one. In 1990, Boeing held 62 per cent of the market. Airbus, which then had a mere 15 per cent share, managed to outsell Boeing in 2004 and 2005. "Boeing's troubles were traceable partly to arrogance - a tendency to take the market for granted, to coast on its laurels - and partly to changes that developed in the corporate culture," the author analyses.

"This is a people industry, even if it is technology driven," he declares. "Those who succeed are individuals with vision and guts and a sure sense of their company's interests, as distinct from their own." One such was Jean Pierson, who worked wonders in Airbus. Newhouse describes an example: Pierson would talk to factory-floor guys, and then "based on what he'd learned, might say to his staff, `We are going to be ten days late in delivering this or that airplane,' - meaning, `You guys better shape up right now or we will be paying heavy penalties for missing delivery dates.'

Thornton Wilson of Boeing was not too different. He would `sit down with factory workers at lunch in the cafeteria and find out what was going on in their various operations'. Interestingly, though he wasn't Boeing's founder, Wilson was called `the founder' by some of his people. The only difference was that Pierson arrived as boss of Airbus in 1985, around when Wilson retired as Boeing's chief executive. "Just as Pierson's arrival marked the start of Airbus's ascent, Wilson's departure marked the start of Boeing's decline."

Boeing is seen as more hierarchical and less flexible, `more bureaucracy-laden than other companies.' Major flaws, says the author, because the trade draws heavily on instinct and seat-of-the-pants decisions. "Boeing's critics, in-house as well as external, complain about a heavy presence of inexperienced business-school types and too little listening to the airline market... "

A book to take off with, on a long-haul flight.

http://BookPeek.blogspot.com

D. Murali

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