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Boeing is the worlds leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft combined (Boeing 2010). Boeing was founded in 1916 and has quickly moved to be an industry leader in the global aerospace industry. The main competition for Boeing developing and manufacturing large commercial jets is Airbus, this has been the case since the 1990's. Operating in a heavily regulated and competitive global environment, Boeing must ensure that it is at the forefront of change and the management must encourage innovation, collaboration, responsiveness and adaptability. As suggested by Daft (2009, p.7) the world is changing more rapidly than ever before, and managers are responsible for positioning their organisations to adapt to new needs.
The management at Boeing had realised that it must respond and adapt to the complex and changing environment in which they are confronted with, should they decide not to change they risk losing any competitive advantages that they may have already gained, or even be left behind by their competitors if they were to continue to conduct business in the same way that they have for the past few decades.
For businesses to transform themselves and/or evolve to enhance their business sustainability and inturn increase shareholder wealth, they must develop their human and social capital to support them with the change. The organisational design and culture are two of the biggest challenges that can greatly assist the change process in constantly changing and complex times. Daft (2009, p.33) suggests that "A danger for many organisations is that the corporate culture becomes fixed, as if set in concrete. Organisations that are highly successful in stable environments often become victims of their own success when the environment begins to change dramatically".
The decision to change to an Enterprise Project Management (EPM) model enabled Boeing to embrace the challenge in front of them without neglecting the need to continually innovate and concentrate on their core competencies. Boeing seen the EPM model as an ideal change for utilising and expanding on it's human and social capital, the challenge was to carefully manage the processes to ensure it was responsive, flexible and adaptable. The Information and Communication Technologies (ICT) infrastructure will be used to assist Boeing with capturing the learning experience gained from their project groups and then to expand on their learning's, the capturing and utilisation of the information enhances the overall learning experience and social networking between the project groups.
Boeing recognised early on that to keep up in today's ever-changing business environment, it must look to the processes and practices of contemporary models with a learning focus. Effective organisational learning only comes about with commitment from all levels of the organisation, however, implementing elements of these models will have benefits for all in the long run. The benefits for Boeing are discussed later in this report. The models of the 'project-based organisation', 'social capital' and the 'learning organisation' are outlined below.
In project based organisations, projects are the main focus for "production organisation, innovation, and competition" with the major projects taking on the functions that might be confined to divisions in other types of organisational structures (Hobday 2000).
Two of the most important practices within project based organisations are goal setting in the initial stages, and feedback gathering during the lifespan of the project and after its conclusion. Lindkvist (2008) notes the importance of having pre-specified goals, and recommends that these goals be open-ended, allowing project teams to determine how they believe the goal will best be achieved. While this approach leaves much uncertainty about how the work will get done, it once again puts the power back into the hands of the project team, and encourages creative responses to problems as they occur.
Feedback in the form of milestones, tests and other measures is equally important to project teams. Lindkvist (2008) suggests interrupting project teams at certain intervals during the project to encourage reflective thinking. This will promote learning for individuals and the team as a whole. A culture of 'trial and error' processes encourages further learning, and assists the business overall to integrate the learning's of individuals into overall strategic thinking.
While individual project teams can develop immensely using these practices, it is unfortunately common for learnt information to get trapped within the team and not communicated to the greater organisation. Project teams need to ensure information is available to other project teams for the organisation to truly grow and utilise its social capital.
Social capital describes the way in which people learn about an organisation's culture, including its value system and norms in behaviour (Champoux 2006). It also influences the way in which information is shared and how groups communicate with each other. In an organisation committed to learning, the way information is exchanged is strongly affected by the networks of individuals and teams. Therefore, social capital is effective knowledge management in a learning organisation.
Szymczak and Walker (2003) state that "any technological solution will fail if it does not recognize the importance of human connections". Furthermore, they recommend that any knowledge management strategy should be mostly (two-thirds) people-related, with only one-third being technology related.
There are three types of social capital, each which can benefit business in its own way (Woolcock 2001). The first is Bonding social capital, which refers to the horizontal networks between people and groups. Second is Bridging social capital, which is solely the networks between groups. The last is Linking social capital, which refers to the vertical power relationships which provide information, ideas and resources.
There are a number of processes an organisation must go through before it can deem itself a 'learning organisation'. As with project based organisations, a strategy and goals must be set initially, with this strategy clearly communicated with the employees of the business. The company needs to measure its progress and seek feedback as to where it is not meeting its goals. The company also needs to work to increase the knowledge and skills of its human resources through hiring, training and developing (Appelbaum & Gallagher 2000).
In the model of a learning organisation, Thompson (1995) suggests a number of factors will prove valuable in helping to achieve effective organisational learning. Other than those mentioned above, some of these factors are:
The role of senior management, particularly in setting an example and making learning a integral part of the company's competitive advantage. Full commitment from senior management is required, including willingness to invest time and resources
Staff engagement in the change process to a learning organisation, through a compelling vision and linked performance management system
A culture open to experimentation, collaboration, and innovation
Multiple feedback structures and multiple learning channels
Furthermore, Szymczak and Walker (2003) note that learning from the customer is also an important characteristic of a learning organisation.
Theory of the project-based organisation
When considering the practices and processes operating at Boeing, the traditional Boeing corporate culture was one of "stove pipe" reporting and knowledge hoarding in separated and segregated "silos" with little sharing or leakage of knowledge from one silo / stove pipe to another (Szymczak and Walker 2003). This shows how aligned the organisation was to a traditional project based organisation (PBO).
These silos and hoarding of knowledge could be seen as a built in problem of PBO's the challenge for Boeing could be seen as how to transform the organisation away from a pure PBO. As suggested by Szymczak and Walker (2003) "utilising enterprise project management (EPM) to assist interconnected teams transitioning change towards a learning organisation by implementation of (EPM), across the organisation. Changing this through sharing of knowledge and commitment to the use of knowledge management (KM) across the enterprise was one of the ways in which it was seen it may be able to improve organisational learning, and profit from that change. It was mentioned that "Boeing discovered that knowledge is a tangible asset with a life of its own".
Another way that Boeing top management specifically improved sharing of knowledge was in creating a new way to increase revenue through development of an intellectual property (IP) strategy. They set up a internal website to address IP across the enterprise so as to leverage its knowledge with patents. Boeing not only encouraged sharing of knowledge here, but focused staff to help develop ideas, innovate in developing patentable ideas, but made sure their internal reward structure made it worthwhile for employees to contribute in this way. They also protected and secured that knowledge to ensure the company benefitted financially.
To encourage employees to embrace and accept the change, Boeing's top management "required all divisions to buy into the concept of KM". They argue that EPM must be supported and fully coordinated with ICT and both upper and lower management human resources. This seems to suggest that Boeing standardised on ITC tools, but while Szymczak and Walker (2003) do not provide any examples or basic fundamentals of ICT systems utilised by Boeing, it was clear that this focus on ICT based sharing of knowledge was important. Yet in so doing, Boeing retained the flexibility project teams require by allowing the "implementation of ICT tools to be decided locally", giving "each business unit the freedom to decide what works best for them"
One other way that Szymczak and Walker (2003) examined how Boeing promoted moving to a learning organisation was the way it developed multiple levels of rewards for their staff for inputs that support the enterprise knowledge infrastructure. Boeing has 'linked reward systems such as pay to the level of quality and contribution and use in the enterprise... ...to reward workers on an immediate and periodic basis for tangible contributions to the base of knowledge". It is another factor into another of the building blocks that Boeing used to assist in building social capital within the enterprise.
It was pointed out by Hobday (2000) how informal methods, experience and trust were more important than tools and formal procedures on projects. Boeing had developed that well within its project teams, and the knowledge gained can be considerable when the complexity and scope of a single aircraft line project, say the 777 line. The author used a case study of complex industrial Products and systems (CoPS) to say that PBO is a form that is suited to increased product complexity, fast changing markets, cross functional business expertise, and customer focused innovation and market with technological uncertainty. Boeing was faced with increasing competition from its main rival in aircraft from Europe, Airbus, and so needed to increase enterprise knowledge infrastructure to regain competitive advantage.
Another example utilising Boeing was shown in Kaipa (n.d), to illustrate how to design organisations that learn. He states "leadership is inherently connected with learning", and that one of the key steps leaders take is to "create a foundation". He suggests that leaders create boundary conditions and ground rules for designing and differentiating an organisation from others. An example of creating that foundation was the Boeing 777 Program Reviews. He met Alan Mullaly, VP and General Manager of the 777 program at Boeing, (who went on to become president of commercial aircraft division), who invited him to attend one of these program review meetings.
In describing Mullaly personally conducting these reviews, "how the ground rules provided not only a clarity of where they stand and how to proceed on a project, but they also take into account the emotional, cognitive and generative aspects of learning together. This shows how the tying of social capital, both "bonding" and "bridging" types, has been supporting organisation wide spreading of knowledge to help bring about a learning organisation within Boeing.
Social capital model to support organisational learning
Woolcock (2001) suggests "social capital refers to the norms and networks that facilitate collective action". Boeing has a long tradition of being an aerospace leader and for being innovative to meet the emerging customer needs which has been made possible by taking a learning approach to strategy as per Pedler et al's (1991).
Daft (2007) notes that learning organisation promotes group effort and communication so that every individual is engaged in identifying, solving problem, organisation with continuously experimenting and a culture that encourages participation and adaptability. On Table 1 of the Boeing Case Study Model it shows the importance of change management and working culture where knowledge is shared.
At Boeing the impact of organisational learning application leads to cross fertilization of ideas which enables knowledge management to transfer across the organisation. As Senge (1990) maintains that organizations where employee constantly expand their knowledge to create various results, innovative patterns of thinking is promoted, where collective objectives are set free, and where employee are constantly learning how to learn in a team.
Following are the Boeing's Table I and II comparison and how it is helping towards relevant organisational learning:
Not only defines Boeing for who they are but also shows how much they value their stakeholder and they continuously believe to advance with a learning approach. Building shared vision as per Senge's (1990) by fostering genuine commitment in organisational learning and innovation.
The manager's task is to facilitate experimentation, learning from experience and continuous improvement approach as per Pedler et al's (1991) learning company characteristics. Also have a committed leadership model who are willing to change and drive away the fear of the organisation as per Thompson (1995)
Where the entire employees are treated fairly and with respect to promote supportive organisational culture which is very much evident in the Figure 1 and 2 Boeing Case Study Model.
Is met as per Gardiner and Whiting (1997) shared vision and goals, teams with authority to carry out tasks, encourages initiatives, errors viewed as learning opportunities which is evident in Boeing Knowledge Management Strategy.
People working together
Person to person networks and links are developed to share knowledge. Boeing invests heavily in its IT to connect its people form where sharing of skills and resources to work towards improvement can be achieved as per Gardiner and whiting (1997).
They foster organisational learning which values employee's skills, perspective and strengths. Knowledge Management strategy at Boeing obtain competitive advantage form constant learning both individual and as a group. Thus Boeing being a promoter of learning organisation which is part of their culture to share knowledge by conducting workshops, brainstorms, good communication process.
Value System is provided by the Boeing Company being a good corporate citizen which has been an important case factor of Boeing. Communication is the key for any organisational learning enterprise and in the case of Boeing their interaction with global customers, consumers, community, suppliers, shareholders, employees and partners had led towards innovation, forward thinking and quality of their organisation.
Boeing utilises the matrix structure for senior management and communication is their key towards success. This structure is only used where it adds value or works towards value creation, remove barriers and to supply clear direction. The line of communication is freely in this type of structure which provides increased accountability for project teams and managers. Thus by having a strong horizontal linkage allows coordination required to meet customers demand. It also has a vertical structure where senior managers make decisions for the organisation. The organisation is sub divided into a Horizontal structure compares of smaller business units. This gives Boeing the ability to learn faster than its competitors to make it a sustainable competitive advantage present as per Be Geus (quoted in Senge 1990).
It is also claimed to promote a range of business situations based on three various sources such as:
Bonding social capital (horizontal connections within various groups, people and communities)
Information shared within the groups and communication process which is important to link people and develop networks in Boeing. This provides participation of stakeholders in strategy making as said by Daft (2007).
Bridging social capital (horizontal links between groups or communities.)
Organisational design needs to facilitate social capital creation that supports both collaboration and competition.
Linking social capital (vertical links with powerful and significant individuals and institutions that provides information, resources and ideas)
Initiatives around innovative projects in response to sustainability agendas have become critical in this current business environment. Businesses are an important actor of any society and productivity improvement by doing more with less has become essential in today's world as the chairman's message from WBCSD.
The emphasis on joint alliances between government, business and community has in recent times redefined the roles of business, which is also prominent in WBCSD publications and announcement from the World Economic Forum which is a source of competitive advantage. Boeing's participation in the WBCSD and other environmental affiliation with Climate leaders The nature conservancy international leadership, World environmental centre and so on shows is linking social capital approach to lead the market by doing what it does best to form partnerships to create efficiencies and competitive advantage to meet its customer needs.
The emphasis on association between government, community and business has been redefining the role of an organisation and the source of competitive advantage. Boeing is proud to be a citizen of the world by working with its partners, stakeholders worldwide to create tangible impact with the communities where Boeing employee work and live. Thus the linkage and bonding is created via innovative projects taken to participate in organisational learning by engaging into sustainable agendas by Boeing.
Knowledge management in the learning organisation is an important contributor to what social capital is all about.
The evidence suggests that the move towards being a learning organisation at Boeing is further developing innovation which enhances business sustainability.
Therefore Szymczak and Walker (2003), may be correct in that learning and sharing of knowledge is getting to top management team members, and ICT systems are allowing for knowledge to be spread horizontally throughout the organisation. Does that show from their examples that it was enterprise project management (EPM) that was the key to Boeing moving towards a learning organisation? While we concede they did show evidence of Boeing changing to a learning organisation, we did not see enough evidence to prove EPM was the driver to this change.
However the evidence does seem to confirm some of what Hobday (2000) had to say about how the experience and trust on a project team that can be shared upwards within a project team, and then shared horizontally across project teams to benefit social capital, and contribute to learning.
Throughout the report many different authors' arguments were covered which all seem to support differing aspects of the concepts shown in the examples used by Szymczak and Walker (2003). This seems to indicate that Boeing was able to shift its culture to competitive advantage by investing in building social capital of all 3 types, bonding, bridging and linking, as well as change the culture to embrace horizontal knowledge management sharing. These differing perspectives also indicate that top management committed the organisation to not only network, but use ICT systems to document knowledge management at upper and lower levels of management. Again, it must be questioned whether that change was due to EPM, or due to many of the ideas we discussed within the body of this report regarding changing to a learning organisation.