How Much Do Silos Cost? About A Trillion.

imageAll companies make mistakes, but rarely do they have trillion dollar consequences. However, it appears that is the price tag Airbus will pay for siloed engineering teams that failed to communicate resulting in monumental problems on their new supersized 555-seat A380 airplane.

The details are here, but the gist of the story is that unlike the centralized, highly integrated workflow process that exists at aircraft manufacturers such as Boeing, Airbus, as supported by the European Union, uses teams in many countries. Spreading the wealth I suppose would be the concept. Unfortunately, during the development phase, the different Airbus engineering teams were using incompatible versions of the CATIA design software. The result was a huge mess with the plane’s wiring system (300 miles of wire in one plane) that cost delays of two years and billions in canceled orders.

Instead of sharing the wealth of their efforts, the silos created by disparate teams will mean the countries of the European Union will share a staggering loss. (More on the Airbus predicament here and here.) As one of the linked articles quotes, “This project ranks right up there with the Concorde.” This is a difficult way to learn a strategic business lesson.

Once these problems are taken care of (or if), it will make the job of marketing the A380, a difficult and costly assignment.

The Airbus A380 scenario reminds me of the $125 million Mars orbiter mission that failed because Lockheed scientists were using English units for measurement and NASA scientists were using the metric system. Oops.

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