Several decades ago when Boeing began designing the revolutionary 787 Dreamliner, it chose the right goal: add value for customers. After losing market share to the European-designed Airbus in the late 1990s, Boeing could have decided to focus on reducing the costs and the selling price of its existing aircraft and let its competitors win the innovation contest. Over the long-term, that strategy would have mortally wounded the corporation. Instead, Boeing decided, commendably, to develop a radically new aircraft that would generate revenues by creating value for customers.[1]
First, Boeing aimed to improve the travel experience for the ultimate customers, the passengers. Instead of making the plane frame and skin from aluminum only, the composite materials to be used in the 787 – carbon fiber, aluminum and titanium – would allow increased humidity and pressure to be maintained in the passenger cabin, offering substantial improvement to the flying experience. Because of weight saved by using composite materials the plane would consume less fuel, enabling the 787 to fly nonstop between any pair of cities without layovers, a boon to harried travelers.
Second, Boeing aimed to improve value for its immediate customers, the airlines. For example, by designing an electrical system using light weight lithium-ion batteries and adopting other hi-tech innovations the Dreamliner would use 20 percent less fuel for comparable flights and a cost-per-seat mile 10 percent lower than for any other aircraft. Moreover, unlike traditional aluminum fuselages that tend to suffer metal fatigue over time, the 787's fuselage made of composite materials would, in theory, reduce airlines' maintenance and replacement costs.
Boeing's customers apparently thought it could deliver on these innovative promises, and the 787 became the fastest selling plane in aviation history. The stock price
popped and the C-suite received bonuses. But reality has since set in.