case inciDent 1 Kuuki: Reading the Atmosphere

Most Japanese businesses have very complex vertically

structured organizations. Each of the key departments of

the organization has its own vertical structure and operates

rather like individual businesses. There is very little

inter-relationship between departments. Each department

has very clearly defined roles.

When the business interacts with customers, it is the

sales and marketing departments that handle negotiations.

Even when the customer needs technical information

and support, sales and marketing are often involved as

an intermediary between the company engineers and the

customer. It is common for sales specialists to take on the

role of negotiators on behalf of the manufacturing department

or research and development. Inter-departmental

communications are not common.

One of the problems is that salespeople rarely have technical

expertise. The majority of salespeople would not have studied

science and technology and are more likely to be qualified

in the arts. They are chosen for the sales role due to their social

skills. The perception is that engineers and technical specialists

are not as sociable and are therefore not good sellers.

In their offices, larger Japanese companies tend to have

open plan spaces. This allows the departmental head to

learn what other people does and to ensure that they share information. In smaller Japanese businesses it is common

for the business owner to also be based in an open plan

environment.

The key to success is "reading the air" or reading the

kuuki. Keeping alert to what is being said and what is

being done means that Japanese managers have instant

access to up-to-date information. It means that they

know what individual employees know. Individuals in a

department are comfortable with this situation; informal

information sharing is seen as an effective and vital

process.

Questions

15-10. Complex vertical organizational structures are very

hierarchical in nature. They are very rigid, with

each department having clearly defined roles. Is

such an organization capable of being agile and

responsive or is it a disadvantage?

15-11. What are the problems in having such strictly

defined roles?

15-12. Is reading the air just eavesdropping and spying

on others? Would most employees be comfortable

with this situation?

case inciDent 2 Boeing Dreamliner: Engineering Nightmare

or Organizational Disaster?

As a flight of imagination, Boeing's 787 Dreamliner was

an excellent idea: made of composite materials, the plane

would be lightweight enough to significantly reduce fuel

costs while maintaining a passenger load up to 290 seats.

Airline carriers chose options from a long list of unprecedented

luxuries to entice the flying public and placed

their orders well ahead of the expected completion dates.

And then the problems started.

An airplane like the 787 has a design about as complex as

that of a nuclear power plant, and Boeing's equally complex

offshore organizational structure didn't help the execution.

Boeing outsources 67 percent of its manufacturing and

many of its engineering functions. While the official assembly

site is in Everett, Washington, parts were manufactured

at 100 supplier sites in countries across the globe, and some

of those suppliers subcontracted piecework to other firms.

Because the outsourcing plan allowed vendors to develop

their own blueprints, language barriers became a problem

back in Washington as workers struggled to understand

multilingual assembly instructions. When components

didn't fit together properly, the fixes needed along the supply

chain and with engineering were almost impossible to

implement. The first aircraft left the runway on a test flight

in 2009, but Boeing had to buy one of the suppliers a year

later (cost: $1 billion) to help make the planes. The first

customer delivery was still years away.

If Boeing and industry watchers thought its troubles

were over when the first order was delivered to All Nippon

Airways (ANA) in 2011, 3 years behind schedule and after

at least seven manufacturing delays, they were wrong.

Besides the continuing woes of remaining behind schedule,

Boeing's Dreamliner suffered numerous mechanical

problems. After the plane's technologically advanced lithium-

ion batteries started a fire on one aircraft and forced

another into an emergency landing in January 2013, ANA

and Japan Airlines grounded their fleets. The FAA followed

suit, grounding all 787s in the United States. The

remaining 50 flying Dreamliners worldwide were then

confined to the tarmac until a solution could be found.

This looked like an organizational structure problem,

both at corporate headquarters and abroad. However,

there have been so many management changes during

the 787's history that it would be difficult for anyone to

identify responsibility for errors in order to make changes

in the team or the organizational structure. For the work

done abroad, restructuring reporting relationships in

favor of smaller spans of control to heighten management

accountability and tie suppliers to the organizational structure

of corporate Boeing could be considered. Or "reshoring"

to bring manufacturing physically close to the final

assembly site and under Boeing's control while centralizing

the organizational structure could be an option.

Questions

15-13. Do you think this is a case of the difficulty of

launching new technology (there are "bugs" in

any system), or one of an unsuccessful launch?

15-14. What type of executive management structure do

you think would be most conducive to getting the

Dreamliner past a component failure and back in

flight? Is this a different structure than you would

suggest for fixing the ongoing manufacturing

problems? Sketch out the potential design.

15-15. What organizational structure would you suggest

to effectively tie in Boeing's managers and suppliers

abroad? Sketch your ideas. (Goals for managers

might include facilitating teams, coordinating

efforts, maintaining organizational transparency,

and creating conversations.)