Harry C. Stonecipher
The Boeing Company
"Working Together - Lessons in Global Partnering"
United Kingdom Ministry of Defense
Conference on Affordability in International Collaboration
Abby Wood, Bristol, England
January 31, 2002
Over the course of my career, I have been involved in a number of international collaborative efforts - beginning with the establishment of CFM International in the 1970s, a 50/50 partnership between Snecma of France and GE of the U. S. Having sold nearly 15,000 jet engines to more than 330 customers around the world, CFM has become one of the great success stories in international collaboration. On a personal basis, I can tell you that my life is a richer one because of the relationships that I have developed through different international joint ventures or partnerships with companies in Europe, Asia and other parts of the world.
However, this morning I'm going to play devil's advocate. Instead of giving you a recipe for collaboration, I will give you my view of why international collaboration has been, and will continue to be, important . . . and why it has been, and will continue to be, fraught with difficulty.
In most ways, it is easier and more natural to compete than it is to cooperate with long-time rivals. There may be a "selfish gene," but there is not, to my knowledge anyway, a "collaborative gene." Temperamentally, it is easier for many of us to lead than it is to follow. That is especially so with companies that are accustomed to serving in the role of prime contractor.
If you look in the dictionary, you will find two definitions of the word, "collaborate." The first is to work together, especially in a joint intellectual effort. We can think of the inspired collaboration of Crick and Watson, of Gilbert and Sullivan, or of Churchill and Roosevelt. There is, however, a second and pejorative sense of the word. To "collaborate" may also mean to act shamefully or dishonorably - in cooperating with an alien or hostile force. In other words, it's something that people don't want to do, even if they do it.
I ask you: Which sense of the word best describes international collaboration in the defense industry?
Let's take that a step further - in addressing the theme of this conference. Would you say, more often than not, that international collaboration in military programs has led to increased efficiency, or to decreased efficiency? Has it more typically promoted affordability, or has it usually had the direct opposite effect of driving up costs, protecting inefficient producers and ultimately delivering less value for the money to the military customer?
There are some excellent examples of the good kind of collaboration - and I will discuss a few of those. However, if we are to be honest with ourselves, we will admit that international collaboration in defense and aerospace has often been characterized by strong feelings of animosity, resentment or distrust on both sides, as if "collaboration" were, indeed, a dirty word. Certainly, if you think of some of the elaborate and cumbersome offset agreements that have been a part of many international combinations, it is clear that collaboration has often undermined affordability.
This raises a couple of questions. First, why do companies collaborate? And second, what is the key to a successful collaboration?
Usually, I would argue, companies - and individuals - collaborate out of necessity. In our field, this usually involves one or more of the following considerations:
- access to markets
- access to technology or unique core competencies
- and access to capital.
Certainly, it helps if the partners in a collaborative enterprise get along well on a personal basis. But this doesn't seem to be essential. While Churchill and Roosevelt seem to have delighted in each other's company, we can think of other famous collaborations where the individuals could barely tolerate each other. W. S. Gilbert, who wrote the lyrics, and Arthur Sullivan, who composed the music to their great comic operas, feuded constantly. Likewise, Jerry Lewis and Dean Martin - a great comic pairing - could not wait to split up and pursue separate careers. They collaborated for a time out of necessity - each needing the other's skills. Even the Churchill/Roosevelt pairing, I would argue, was an essentially pragmatic alliance - born of necessity, at a time when Britain was desperately in need of U.S. capital or material support, and when the U.S. was increasingly worried about losing any and all access to Europe to a very hostile competitor.
For a collaboration to flourish, I believe that the partners to it must begin with the right attitude, and I would define that as an attitude of I-don't-care-who-the-leader-is. Roosevelt, for instance, encouraged Churchill to play a leading role in molding American - yes, American - opinion in favor of the war effort. He did that by inviting Churchill to address Congress and by supporting the re-broadcast of his great wartime orations in the U.S. Certainly, in the field of business, I can think of a number of otherwise promising partnerships that have failed to live up to expectations because one side or the other was hung up on who would lead or take center stage in critical activities.
You may have noticed that I did not put affordability - or cost savings - on my list of the prime reasons for collaborating. While international cooperation may result in greater value for the money from a customer perspective, that is more likely to be a by-product of a successful collaboration than it is to be one of the primary motives behind the establishment of a joint venture or partnership arrangement.
As many of you know, there has been a long history of successful collaboration between Boeing and BAE SYSTEMS. Without a doubt, one of the reasons that things have worked out so well between our two companies is that we have been able to reach a point of indifference as to who would be the leader and who would be the follower. That has been the case in the development of such programs as the AV8B Harrier and the T-45 Goshawk Trainer. It also characterizes the Nimrod upgrade program currently going on in the U.K. BAE has led and we have followed in some areas and we have led and they have followed in others.
With the AV8B program, BAE and McDonnell Douglas - now Boeing - worked together to develop an improved version of the original jump jet for the U.S. Marine Corps. While thrilled with the concept of a close air support aircraft that could take off and land vertically, the Marine Corps wanted an aircraft with double the payload/range capability of the AV8A. But the Marine Corps was unwilling or unable to foot the bill for developing a whole new engine, let alone a whole new aircraft. The solution was to redesign the aircraft to take maximum advantage of new composite materials.
Thus, the two companies entered into a joint venture that gave McDonnell Douglas access to critical technology. At the same time, it enabled BAE to enter the U.S. defense market in a major way. But even that understates the mutual benefits. McDonnell Douglas also gained access to market - here in the U.K. and around Europe - and BAE also gained access to technology - in composites and other areas. Even better, the two of us have been able to deliver a vastly improved aircraft to the customer - and not just to the Marine Corps, but to the RAF and other allied forces around the globe. With the Harrier II Plus program, the original collaboration has been expanded to include Alenia in Italy and CASA in Spain.
For some years now, Boeing has espoused a "design anywhere, build anywhere" approach do doing business. That's an excellent philosophy, but it is, of course, more easily stated than put into practice. While advances in information technology have all but eliminated distance or space as a practical obstacle to doing business, they have not eliminated differences in culture - either between nations or between competing enterprises.
That said, I can assure you that Boeing is fully and, indeed, fiercely committed to acting as a true "global enterprise." In a variety of different ways, we are trying to implant what you might call "a global collaborative gene" both in the minds of our people and in the minds of potential partners around the world. We know that there's more good technology outside Boeing than there is inside. Our objective is to acquire as much technology . . . as many good ideas . . . and as much breadth and diversity in our ongoing relationships . . . as we possibly can.
To that end, we are establishing the academic equivalent of "preferred supplier" relationships with universities across the United States and around the world. Here in the U.K., we are part of the industry partnership that is supporting and working with the Advanced Manufacturing Research Center at the University of Sheffield. Further, we are supporting and working with Cranfield University and Cranfield Aerospace on aerodynamic research on the blended wing body.
Last May, in a press conference in Madrid, I had the pleasure of announcing that Boeing would invest about $10 million in establishing a new research and technology center in Madrid. We are just now getting ready to open that center which will do advanced research work on aircraft environmental systems and on futuristic air traffic management systems. In conjunction with that, Boeing has also established a research relationship with the Polytechnical University of Catalonia in Barcelona. In fact, just prior to coming here, I was in Spain for a technology conference hosted by Boeing.
We will be opening other research and technology centers in other parts of the world in the near future. From our perspective, international partnerships are a great way of leveraging Boeing's R&D funds and of capitalizing on the broadest spectrum of good ideas and creative talent.
As I see it, there are many valuable benefits to be gained from international collaboration. However, to collaborate - and especially to do so across national and cultural barriers - is never easy. It requires hard work and a real receptivity and openness to others. It may even require changing the prevailing culture or mindset inside your company. We certainly think so at Boeing. That is why we recently launched a Global Leadership Program designed to give all of our top leaders a "total experience" in living and working alongside suppliers, customers and competitors in different parts of the world.
We are truly committed to global partnering. I thank your for this opportunity to share these thoughts with you.