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2007 Speeches
W. James McNerney, Jr.

Jim McNerney

Chairman, President and Chief Executive Officer

The Boeing Company

"Innovation and Invention"

James R. Mellor Lecture Series

Inaugural Lecture

Boeing Auditorium

College of Engineering

University of Michigan

Ann Arbor, Michigan

March 15, 2007

Dean Munson, thank you very much for a very generous introduction.

Long before the Wright brothers invented it, people dreamed of human, powered flight. We know that from the many myths and fables about flight.

In ancient Greek mythology, Daedalus built the famous Labyrinth in Crete -- and was later imprisoned in his own invention. (We'll come back to that in a minute.) Ever resourceful, Daedalus made wings out of feathers tied together with linen threads and fastened with wax. Rising on their wings, Daedalus and his son Icarus escaped the Labyrinth.

But you all know what happened next. Icarus -- not hearing his father's pleas (or, more likely, simply ignoring them) -- soared higher and higher. Soon, the blazing sun melted the wax in his wings and caused the feathers to loosen and fall. Though Icarus continued to flap his arms, they no longer caught the wind, and the poor boy plunged into the sea.

In the language of engineering, Icarus exceeded his thermal limits --leading to structural failure and a subsequent loss of control. Ladies and gentlemen, students and members of the faculty, that is the wonderful -- but unforgiving -- world of engineering!

It is a pleasure to be here -- at one of the top colleges of engineering in the land -- and in this space that you have named the Boeing Auditorium.

On a personal level, it is my honor and privilege to deliver the first annual James R. Mellor lecture examining the "societal impact of engineering." James Mellor -- an alumnus of this college and the former chairman and CEO of General Dynamics -- is here. Jim, why don't you stand and be recognized?

This morning, I'll attempt to provide a view (and, candidly, it is no more than one man's assessment) of the impact of engineering on the world at large -- looking at what has changed, what is changing, and what has remained the same over a long period of time.

In so doing, I will compare the concepts of invention, on one hand, and innovation, on the other. And I will examine a few other myths -- specifically, modern-day myths about innovation that I believe are relevant to engineering in a business environment. They are my own list of five common misperceptions that can cause even the brightest of minds to become trapped (just as Daedalus was) inside one of their own inventions.

To study history -- or even pre-history -- is to appreciate the centrality of engineering skills and the engineering spirit in human progress. When we talk about the "Industrial Age," the "Atomic Age," the "Jet Age," the "Space Age," and the "Information Age"... we explicitly recognize different stages in the evolution of engineering knowledge and insight.

To my mind, the late Jacob Bronowski, who wrote and starred in a television series entitled "The Ascent of Man," got it exactly right when he said: "We have to understand that the world can only be grasped by action, not contemplation. The most powerful drive in the ascent of man is his pleasure in his own skill. He loves to do what he does well, and having done it, he loves to do it better."

That's how mankind keeps making progress. We love to invent things -- and then make them better. That has not changed. And I don't think it ever will. Another thing that hasn't changed is the love of invention and innovation that impels people to take up careers in engineering.

In more than 35 years of working closely with all kinds of engineers -- on a range of products from detergents to pharmaceuticals and computers, to jet engines and airplanes -- I have never yet met an engineer who did not regard invention and innovation as anything less than two of the principal engines behind both personal and societal growth.

Now let's try to differentiate those two concepts. Both are important -- and complementary. But they are different.

To "invent" means to find, or discover. Invention involves major discovery -- those "eureka" moments or big, conceptual breakthroughs that, by definition, are few and far between.

Let me relate the legend behind the "eureka" moment itself: When the ancient-Greek mathematician, physicist and engineer Archimedes got into his bath and saw it overflow -- we all know the story -- he had this dazzling insight. He'd been puzzling over the problem of determining whether an irregularly shaped object -- the king's crown -- was made of pure gold. If it was not fake, Archimedes suddenly realized, the crown, when submerged, would displace the same amount of water as a piece of gold of the same weight. But if the crown had been mixed with silver or some other less dense (or less valuable) material, it would be slightly larger and displace a greater volume of water. So great was his joy in solving the riddle, Archimedes ran, naked, out into the street and famously shouted "Eureka, Eureka" (I have found it! I have found it!).

In the entire 100 year-plus history of aviation, there have been only a relatively small number of major, world-changing inventions -- including the miracle of powered flight at Kitty Hawk, the invention of the jet engine, and perhaps the pressurized cabin and supersonic flight.

But ... there have been millions upon millions of important, significant, and noteworthy innovations.

To "innovate" -- in its root sense -- means to renew. Innovation is critical to business success in today's world. It's about taking what's there and making it better -- as quickly as possible. There's a pace that's implied by it. It takes advantage of anything that will delight or better satisfy a customer.

We can all think of a few amazing individuals -- like Steve Jobs, Bill Gates, and (farther back in time) Thomas Edison -- who have excelled as both inventors and innovators ... and still more, as leaders -- which is to say, people with a gift for bringing out the best in others in service to the greater good of a business, a community, or even the world.

Edison held more than 1,300 patents, including major inventions such as the phonograph, motion pictures, and the light bulb. "The greatest living American," as he was called during his time on Earth, turned his company -- what became, ultimately, GE -- into a veritable factory for invention and innovation. At his industrial-research laboratory in Menlo Park -- the first of its kind -- he surrounded himself with other extremely gifted people. His company pioneered not only in the development of electricity and electrical devices, but also in the development of the entire system by which electricity was transmitted and distributed.

Another iconic figure -- Sir Frank Whittle, the co-inventor of the jet engine -- had a very different experience.

America -- and GE -- entered the jet age with the first flight of the XP-59A, based on the Whittle engine concept. Whittle -- who served as a consultant to the company -- is enshrined in the GE Aircraft Engines Hall of Fame, and there is a cutaway of the aircraft's engine in the museum adjoining the Hall of Fame -- not far from the office that I occupied while working there. Though I didn't know him personally, Whittle was someone I deeply respected as an inventor.

Frank Whittle patented his turbojet concept in 1930 at the age of 23. Was he a brilliant engineer? Without a doubt! Did he make a difference in the long sweep of history? Absolutely! Was there a need for the jet engine during the 1930s? Was there ever! This was in the run-up to World War II. If the Allies had possessed jet engines at that time, it would have been a major factor in enabling them to deter Nazi aggression.

So was Whittle able to sell his invention? No, he was not! The fact is, Whittle stands out as a prime example of the lone and frustrated inventor. Certainly, in those early days, his skills in reaching out to others and selling the value of his idea weren't nearly as well honed as his inventive genius.

As an aside, I cite Whittle's experience as a way of offering you a little advice: It doesn't matter how smart you are, if you are the only one who is able to appreciate the ideas that are inside your head. Building your communication and interpersonal skills -- like working collaboratively with other people; listening attentively; and conveying information clearly, succinctly and persuasively -- will serve you well wherever you go from here.

Of course, there's no question that Whittle had the ability to "think outside the box." Let me give you an example of his engineering logic. As the subject for his final thesis at the Royal College at Cranwell in England, Whittle chose "Future Developments in Aircraft Design."

"In the course of the preparation (of this paper)," he recalled in his autobiography, "I came to the conclusion that if very high speeds were to be combined with long range, it would be necessary to fly at very great heights where the low air density would greatly reduce resistance in proportion to speed. I was thinking in terms of speeds of 500 miles per hour at heights where the air density was less than one quarter of its sea level value. The top speed of RAF fighters in those days was about 150 miles per hour."

So there was his first startling insight -- or set of insights. He wrote his thesis in 1929. However, his paper considered only rocket propulsion and gas turbine-driven propellers as the possible means of achieving a threefold increase in speed.

A year later, Whittle had his second big insight. Again, it is well described in his autobiography ... a book that is, unfortunately, long out of print. He wrote:

"While I was at Wittering (as a flight instructor), it suddenly occurred to me to substitute a turbine for the piston engine. I was back to the gas turbine, but this time of a type which produced a propelling jet instead of driving a propeller. Once this idea had taken shape, it seemed rather odd that I had taken so long to arrive at a concept which had become very obvious and of extraordinary simplicity."

Though Whittle was the inventor of the jet engine -- in a conceptual sense -- the first jet-powered flight was made on August 27, 1937, by the German Heinkel He 178 airplane, with an engine independently developed by Hans von Ohain. Von Ohain obtained a patent of his own in 1935 (five years after Whittle conceptualized the "propelling jet"). By his own reckoning, von Ohain figured that Whittle was several years ahead of him.

As it happens, the two men became friends after the war, and they appeared together for Engineers Day at GE Aircraft Engines in 1985. Von Ohain made a memorable statement on that day. He said: "If Frank had had the cooperation from his government that I had from mine, the war would have ended sooner. However, if I had had Frank's metallurgical capability, the war might have ended differently."

The legends of Frank Whittle, Thomas Edison, Archimedes and others like them have inspired many wonderful stories and, frankly, a few myths about invention and the individual.

And over the years, in my various jobs, I've thought a lot about how the individual can best contribute creativity in the modern business -- or corporate -- environment. That's led me to what I call the five great myths of innovation:

Myth #1: The iconoclastic, crusading researcher, working out of a "skunk works" or bootlegging operation, is responsible for most innovation.

Myth #2: It's all about technology. The techies are the only innovators.

Myth #3: It has to change everything. Like Captain Kirk in Star Trek, anyone who cares about innovation should seek "to boldly go where no man has gone before."

Myth #4: Innovation is a matter of serendipity. Or accident. Or luck. As with Archimedes, it's the happy thought that comes to you when you least expect it.

And Myth #5 (and this is a big one in big companies): Discipline and creativity are mortal enemies. They cannot coexist. And discipline, by the way, is the bad guy. For innovation to flourish, the "suits" (that would be Jim Mellor and me) and the "bean counters" -- or the managers and the accountants -- have to get out of the way and accept that the creative process is inherently mysterious and unmanageable. (That's what makes it so much fun.)

Now, here's my version of the reality about innovation -- as I see it applying to the corporate world today.

Fact #1: Innovation is a team sport, not a solo sport. It depends on a culture of technical sharing and openness to others. It takes people working together across different groups, disciplines and organizational lines to make it happen. It also takes real leadership in charting the course and inspiring people to reach for the highest level of performance supported by a never-ending focus on integrity.

Fact #2: Innovation can and should occur in all areas of business. And it is -- or ought to be -- an everyday reality as well as a fun part of everyone's job. It's not solely about technology; it's about creating value for the customer in many different ways. If you define innovation as taking a task -- any task -- and finding a way to do it better, so that the customer benefits, it becomes clear that innovation is part of everyone's job.

Fact #3: With apologies to the author Richard Carlson (who wrote the "Don't Sweat the Small Stuff" series): In engineering, as in business, always sweat the small stuff. Incremental doesn't mean insignificant; it often means just the opposite. Never-ending incremental improvements are vital both to sustaining current business and to opening new opportunities.

Fact #4: The "eureka" moment -- while exciting -- is rare. As Thomas Edison said (and we all remember this well), "Genius is 1 percent inspiration, 99% perspiration." Even in the laboratory, innovation should not be left to happenstance. Like in other parts of the business, the effectiveness and productivity of a company's R&D efforts should be measured ... and managed ... to eliminate duplication of effort; to maximize returns; and to ensure the company pursues the right products, with the right partners, and does all the other things it has to do to maintain a customer-oriented perspective.

And Fact #5: In a business environment, you can't have creativity without discipline because -- like it or not -- not all ideas are created equal. You need the rigor and discipline both to say 'no' on some projects and to put the pedal to the metal on others. (Just as an aside: In many corporate environments, not saying "no" is as frustrating to people doing the work as it is to people not getting the results. They want to be deployed onto something successful.) As a project moves from the lab ... through marketing and manufacturing ... and into the field, there is a continuing need for discipline. At every stage, you must ask whether the project is on target to deliver a compelling value proposition to your customer -- and, in the business-to-business world, to your customer's customers.

Sometimes an eminently successful project -- through fantasy or legend -- can itself become a destructive myth. That happened at 3M with Post-it Notes. The legend that had grown up around Post-It Notes incorporates many of the myths I just mentioned.

Here's the story: Reportedly, 3M scientist Art Fry -- one of the best product developers in 3M's history, by the way -- had his "eureka" moment when a loose scrap of paper that he was using for a bookmark slipped out of his hymnal in the choir loft.

The myth: Seized with the idea of fixing a repositionable adhesive (and repositionable adhesive is kind of the Holy Grail in the world of adhesives) to the back of similar pieces of paper, he engineered the product and then led a solo crusade to overcome management skepticism.

In fact, Fry had lots of help all along the way -- from the lab through marketing and learning to manufacture the product. He had actually attracted and built a huge, informal team -- including managers and finance guys (all the people who eventually had to say "yes" to this idea).

But as the legend around Post-It Notes (and some other home-run products) began to grow, people began to mistake it for the truth. The company began to rely on its mythological past to find its future, and, in the 1990s, its growth significantly slowed.

Happily, the generation of leaders running 3M today changed the company's mindset in two basic ways:

First was to switch the emphasis from the individual to the team, and to make the team an all-inclusive concept.

Second was to move from an "innovation-for-innovation's-sake" mentality to a disciplined focus on customer-inspired innovation. R&D was realigned and the distance shortened between researchers and the marketplace. A heightened focus on the customer -- I want to stress -- did not ... and does not ... inhibit the flow of ideas or creativity. Just the opposite: Through a more disciplined, customer-based approach, 3M raised the bar and continues to ratchet up the growth rate.

Before we look at an example of customer-inspired innovation at Boeing, let's step back again and look at the bigger picture.

We may ask ourselves: How has engineering been changed by the changes that it has unleashed upon the world?

I would argue that three of the Ages created by engineers -- the Jet Age, the Space Age, and the Information Age -- have themselves profoundly changed the role of engineers and engineering within our society.

The threefold revolution in transportation, communications and information processing has enabled the leading companies in different industries -- whether they are selling jeans or jet airplanes, the sequencing of the human genome or missile defense systems capable of hitting a bullet with a bullet in space -- to handle complexity on an extraordinary scale.

At the same time, the leading enterprises in every field have become truly global in scope. And as global competition has become more intense, businesses have become more focused on creating practical and measurable value for the customer.

So here are some of the ways that I think the engineering profession has changed, and is changing:

Gone is the day when big engineering-oriented companies like Boeing would put technology into a product just because we could do it.

Gone is the day of the independent inventor within the corporation who isn't asked ... and isn't expected ... to know anyone else outside of a small group of engineers.

Gone is the say when most technical ideas and input come from within your own company or institution.

Today we are managing inputs on a global scale across every boundary you can imagine -- across engineering disciplines and in concert with all the other business disciplines. The challenge before us is to manage information better and get more information to more people in a more usable form.

That requires more than being adept at using computers, cell phones, and other tools; it requires exceptional teamwork across the entire enterprise -- extending from our supplier-partners, on one side, to our dealings with customers, on the other. Engineering has to be part of this huge -- and very agile and interactive -- global team.

That's what you see with the Boeing 787 Dreamliner -- the most successful launch in aviation history and the biggest leap forward in commercial airplane performance since the dawn of commercial jet travel.

We are looking forward to the first flight of the 787 later this year, and the program is essentially sold out from its year of introduction in 2008 -- when the first deliveries will be made -- through the first half of 2013.

Now here's what's really special about the airplane: The 787 is the perfect example of an engineering accomplishment that would not have happened if we didn't start with the marketplace -- including our customers ... and including the people who finance the airplanes for the airlines to buy, sell or lease.

The success of the program really starts with the fact that our sales and finance people did a great job of communicating their understanding of what their customers wanted to our engineers and business leaders.

Sure, we could have built a bigger airplane (as Airbus is doing with the A380), or we could have built a substantially faster airplane (something we had thought about doing a few years ago).

Instead, we decided to use advances in technology to build an airplane that will give the world's airlines more of the things that they want ... so that they can give the rest of us -- meaning everyone who travels by air -- more of the things that we want -- such as low fares, direct flights to our destinations, and, for long-haul travelers, relief from the fatigue of being crammed into a small space for six hours or a lot longer.

Just imagine a new airplane that provides the highest comfort level of any wide-body in the sky, that is actually a little faster than other airliners and, most important, that enables airlines to offer more nonstop service between distant city pairs ... at significantly reduced operating costs. Obviously, that sets up a win/win situation: lower fares, better service and other major benefits for passengers, combined with greater profits for the airlines and a stronger residual value for financiers and aircraft investors.

That is the Boeing 787 Dreamliner. And that's what I mean by a compelling value proposition.

Compared with other airplanes in its class, the 787 Dreamliner will use 20 percent less fuel and be 30 percent less expensive to maintain. To put those gains into perspective, by the standards of our industry, anything more than a three or four percent improvement in these metrics is considered a breakthrough.

So how was that possible -- from an engineering perspective?

Well, for starters, the 787 is the first large airliner with a composite fuselage -- and composite wings. Clearly, that's huge -- because composites provide the greatest strength and stiffness per pound of weight of any material on the face of the planet. By manufacturing a one-piece fuselage section, we are eliminating 1,500 aluminum sheets, the internal skeleton that you hang them on, and about 50,000 fasteners.

Further performance improvements have come from the design of the airplane and more advanced engines.

Not the least of the productivity-enhancing innovations that have gone into the 787 has been our approach to partnering with major suppliers in other parts of the world -- taking what you might call a network-centric, as opposed to a Boeing-centric, approach to the design and build of the airplane. For the first time ever in a Boeing airplane, major parts of the airplane -- including the wing and tail section -- are being designed as well as built by other companies. We have brought together what we think of as "the best of the best" in different areas of expertise.

Now, I must say our engineers have done an outstanding job in all kinds of ways -- including the one of making long-distance flight as painless as possible for the passenger. You will see and feel that the moment you walk into the cabin of a 787 for the first time.

For example, the windows are significantly larger than those in other airliners. Instead of having shades, they are tinted in a way that allows passengers to see out while keeping the cabin from being flooded with sunlight.

The interior lighting of the 787 will make you feel that you are surrounded with more space than you are accustomed to in other airliners.

Best of all, you should actually experience greater physical comfort both during and after flight. Despite being in a pressurized cabin, your ears pop in an airliner that is descending from its cruising altitude for the same reason they do when you're driving a mountain road. Today's airliners readjust the pressure in the cabin to about 8,000 feet -- the same altitude as the base of some popular ski resorts such as Vail. The 787 will bring that down to a more comfortable, Denver-like 6,000 feet. And that makes a real difference on a long-haul flight.

The use of composites also allows us to increase humidity in the cabin without having to worry about the corrosive effect of moisture on the structure (which is the limiting consideration today). That should make flying a lot easier on your nasal passages.

I have heard Norm Augustine, the retired chairman and CEO of Lockheed Martin, joke that he was "an engineer who descended into management." Since I was not an engineer to begin with, I have not experienced that same sinking feeling. But I can say that, for me, working with engineers has been a totally uplifting experience. Over the course of three decades, I've been continually amazed and impressed by the engineers I have known.

You have probably heard someone ask: Does the world really need another ... -- and here you can fill in the blank. I have never yet heard anyone fill in the blank with "engineers." But if someone did ask, "Does the world need more engineers?" just about every leader in business and government would answer with a resounding "Yes!"

At Boeing, we are sitting atop the biggest backlog in our history -- a total of $250 billion (or a quarter of a trillion dollars) -- which is more than four times our total revenues in 2006. As we work to convert that backlog into delivered product and continued growth in the years ahead, I know that we are going to need engineers -- the very best engineers that we can find.

That is one of the reasons that I am here today. I've gotten you to come this far -- to "the Boeing Auditorium." I'd like to think that I could get a few of you to go the rest of the way. These are exciting times at Boeing and in aerospace. I hope that some of you will give serious consideration to becoming a part of our company and a part of our industry -- and join the hundreds of University of Michigan alumni we already employ.

I've been with several companies, and after almost two years with Boeing, I can tell you it's a great place to work -- and there's great work to be done!

My closing thought is this: Upon graduating from this college, some of you will go on to become inventors. I'm sure that you will have totally satisfying and interesting careers.

Others -- and this will be most of you -- will go on to become innovators. Your kind of inventiveness -- even if it does not involve world-changing discoveries -- is more widely spread yet tremendously important and fulfilling.

Ultimately, your two paths will converge, as they always have in the past. Some of you will invent things; others will make them better. The important point is that, together, you will advance the cause of human progress.

Thank you for the honor of speaking here.