Boeing has implemented a successful long-term strategy focused on innovation, adaptability, and quality. Key elements of their strategy included a 20-year vision implemented in 1996 focused on becoming a global leader in aerospace. This included acquiring McDonnell Douglas and developing game-changing projects like the Boeing 787 Dreamliner. While facing challenges, Boeing's values of innovation, leadership, and commitment to quality have allowed it to thrive and maintain its position as a world leader in aerospace.

1. Anya Lozinski
Mgmt 489 Strategic Management
November 17, 2014
Boeing’s 20-Year Winning Strategy:
Pursuit of Excellence and Adaptability

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WINNING STRATEGIES BEGIN AT CORE VALUES
Boeing is one of the singular companies whose long-term strategy has shown it’s winning
historically. Evaluating the company’s road since beginning to 2013 has shown some
valuable insights on how it has achieved competitive advantage and proved to be a winner in
the Fit, Completive advantage and performance tests.
In order to achieve a winning sustainable competitive advantage a company needs to have a
distinctive competitive product offering, build a competitively valuable expertise and
capabilities not readily matched, as well as having a “hard to beat” capabilities and
impressive product innovation.1
Boeing has been a recipient of 2 Baldrige awards: one in 1996 and in 2003.
Boeing’s Airlift and Tanker Program received the award in 1996 and Aerospace Support won
the 2003 Award in Excellence.
COMITTMENT TO QUALITY
Boeing has been a high tech pioneer. It has been renowned for its unmatched reliability.
The failure rate of a Boeing commercial airplane on any individual commercial flight is
about one in a billion.
To better understand the Boeing 787 case and its IT architecture, it’s important to learn and
appreciate the context of how the company evolved from the founding to the present day.
Boeing has grown from the startup in 1916 to a $36 million revenbue business in 1934, a
billion dollar company in 1954 and over a $50 billion at the turn of the century. During these
phases it evolved from a small company to global. Its organizational structure morphed from
1
Crafting
and
Executing
Strategy,
Quest
for
Competitive
Advantage,
Arthur
A.
Thompson,
Jr.
Margaret
A.
Peteraf,
John
E.
Gamble,
A.
J.
Strickland
III,
Arun
K.
Jain,
19th
Edition

3. 3
vertically integrated to horizontally virtually integrated; and it’s corporate strategy
restructured and focused on a very defined set of core capabilities.
BOEING AND ITS DRIVING FORCES
The “driving forces” in an industry are major underlying causes of changing industry and
competitive conditions and have the biggest influences in reshaping the industry landscape
and altering competitive conditions.
The article by Richard Nolan, published in Journal of Strategic Information systems
“Ubiquitous IT: The case of the Boeing 787 and implications for strategic IT research”,
describes Boeing’s IT system and its growth since 1916 till present. It originated as an
innovative business idea by Bill Boeing who recognized commercial potential of flight and
set up a factory around Seattle’s Lake Union. It became so successful that at one point the
government brought on antitrust lawsuit and forced the Boeing to divestiture of Boeing’s
United Airlines and Pratt-Whitney business units. The government’s settlement caused the
Boeing President, P.G. Johnson to leave. The founder, Bill Boeing sold his stock and left the
company. After divesting Pratt-Whitney and Universal Airlines business units, Boeing had to
learn how to operate these business units as independent companies. Boeing established and
expanded network organization and network relationships. One of the big influences in
Boeing’s strategy was its president’s Clairmont Egtvedt’s pursuits to start producing military
bombers. This strategy involved adopting advanced technologies of military planes in
commercial airplanes. That phase almost pushed the company into a bankruptcy, but
luckily the US involvement in World War II saved Boeing with getting the contract to
produce B-17 bombers.
Boeing proved itself and their Seattle Plant 2 factory became the most successful mass
production facility of B-17 in the world. They were able to produce 16 B-17’s in a 24 hr
period – an unparalleled accomplishment then.

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During the WWII, Boeing along with other aircraft companies adopted automatic data
processing equipment to support their mass production and engineering tasks.
After the war, Boeing returned to its big-Boeing Strategy and built the Dash-80 prototype,
which became the Boeing 708. Boeing prospered and reached $1 billion in revenue in 1954.
In the 1960s the large multi billion companies were typically decentralized in operations and
assigned planning and management to centralized corporate headquarters.
In the 70’s Boeing experienced troublesome boom-and-bust selling cycle and attempted
diversification and globalization in Italy and Japan. Boeing’s then CEO Phil Condit
cooperated with Italian companies to create a 100 passenger commercial airplane. It has also
worked with Japanese on an airplane design and manufacturing project. Boeing also dabbled
in consolidating its internal computing organizations known as Boeing Computer Services,
which sold computing services to customers, including US government. After entering into
33 diversification projects, Boeing finally seized them. It came to realization that their
competitive advantage always was in the aerospace industry. Diversification into unrelated
businesses failed miserably.
2016 LONG TERM STRATEGY
The last 2 decades of 20th
century Boeing stood as a industry leader with a strong financial
position and its’ stock price was at $106 a share. Phil Condit, then the President in 1996
envisioned a 20-year vision and strategy, called the 2016 strategy. It would lead the company
into being a industry leader into the 21st
century. Two main airplane programs were being
led, the Boeing 757 and Boeing 777. The latter was the first commercial plane designed with
modern CAD/CAM systems.
Condit lead Boeing 20 year strategy focused on Boeing becoming the premier “large-system
integrator”. Boeing had realized the importance of implementing Internet and IT to its
business strategy.

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The 20-year strategy projected Boeing to become a “knowledge and resource sharing
company that excelled in the design, manufacture and support of commercial aircraft,
dense and space systems. Boeing would continue its global leadership with focus on
operating efficient systems. Main core of the revenue were sales of commercial airplanes
(80%) but Condit’s strategy was geared toward a more balanced company and also provided
for growth by acquisitions being a part of that strategy. Boeing was changing also from
traditional vertical organization to virtual, including a major change to global outsourcing.
In 1997 Boeing acquired McDonnell Douglas, a 17 billion company with a troubled
commercial business but a solid Defense business. Boeing’s revenue increased to $52 billion.
The company restructured the Boeing’s company into 3 divisions: commercial, defense and
space. Each division had a newly appointed CEO. Condit became Corporate President and
COO of Boeing. These decisions further decentralized the company. In 2001 Boeings
headquarters moved from Seattle to Chicago. Almost overnight, the IT environment
transformed from highly centralized to highly decentralized. That fragmentation
affected the company’s core almost immediately.
It’s main competitor, Airbus was way swifter in operations as it was centralized with IT and
strategy. It had aggressively priced their planes and Boeing factories gradually lost their cost
advantage. Airbus was gaining competitive advantage by outselling Boeing. Boeing’s
desperate decision to lower the prices (e.g. lower cost provider) of their airplanes backfired
causing control and supply chain problems resulting in the first loss in 50 years of $178
million.
Airbus continued pressure on Boeing and developed their VLA, the Airbus 380, a giant,
double-decker, state of the art airplane. Boeing decided to challenge Airbus on a different
angle by creating a lighter, fuel efficient, mid-sized, long-range airplane. It was a move
signifying Boeing to be a “game changer”.
The Boeing’s project was the Dreamliner, later named the Boeing 787. It was aggressively
priced therefore appealed to the airlines. However 2003 was a year where Airbus surpassed

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Boeing in the numbers of places being delivered. Boeing’s backlog of orders was
surmounting and Boeing was defeated from its industry leadership position. That hadn’t
deterred the Boeing to stay on course it’s values and commitment to keep it’s business going
unaffected.
Baldrige Excellence Award won in 2003 by Boeing’s Aeorspace Support unit was a
turning point. In 2004, Dreamliner program was approved and it was a simultaneous
venture of building a leading edge commercial airplane as well as developing a global
network of outsourcing partners for Boeing. Boeing board approval of Dreamliner created a
huge interest and more than 800 orders flooded in. At the same time, Airbus 380 orders were
slowed down significantly.
INDUSTRY GAME CHANGER
The conclusion drawn here is that Boeing new IT strategy effected a change. It created a
breakthrough product, became the industry “game changer” and revitalized its’ IT
strategy by global outsourcing and focusing on large-scale systems integration. All of
this in action caused Boeing to create the most advanced commercial airplane ever with a
breakthrough cost and price.
The Dreamliner’s breakthrough design was accomplished by using composites rather than
aluminum for components. The composites made the airplane lighter, and would allow for
more efficient aerodynamics. The design process was called “build to print”. Boeing decided
to divide building process into partner teams and a different professional team would
implement each phase of construction. The global outsourcing network of partners would
be creating each aircraft as a team.

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The newest agenda in Boeing strategy in its defense division is to drive cost out of its offered
products and globally increase share of its business. They are achieving its target as their
international growth of 30% showed 28% in the first quarter of 2013. Besides still having
significant market share of the defense business, they’re a good example of employing long
term strategies that work.2
“Annual revenue has more than doubled from 1999 to 2003. Since 1998, Boeing Aerospace
Support has provided products and services within 3 days of request, while competitors take
up to 40 days”3
SUMMARY
To summarize Boeings 2016 strategy, it’s imperative to recognize that it proved itself to be a
great strategy. Its implementation did have challenges along the way. Boeing and its
dedicated people showed their spirit by delivering a breakthrough airplane to their customers.
Boeing has proved to be the industry leader and a successful entity through a unique mixture
of cultivating strong core values and commitment to quality that was unparallel in the
aerospace industry. Its solid business culture and great work ethic embedded in its leadership
and employees made it the world leader it is today. Let’s point out its absolute strengths:
• being innovative in the competing marketplace
• strong leadership with vision implementing 20 yr strategy that was successful
• being a game changer
• ability to adapt to changing forces
• horizontal virtual integration
• global outsourcing to gain competitive advantage in their manufacturing process
• implemented technology to its business strategy
2
Aviationweek,
“Boeing
Building
On
‘One
Boeing’
Strategy,
June
13,
2013
3
The National Institute of Standards and Technology (NIST)

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While learning about Boeing case through the mentioned resources, I paid particular
attention to the field of IT since it is my business concentration. The analysis of IT role is
well illustrated in the example of Boeing in the Richard Nolan’s article. This allowed me to
make a interesting realization pointing to how deeply intertwined IT is everything that a
company does. IT leadership needs to always go hand in hand with corporate
leadership and only companies who embed those two will thrive in the global scene.
I appreciated learning some interesting tidbits about the culture and most influential leaders
of Boeing, which were very captivating. I found myself envisioning the industry and its
issues at the time the author described them. I got a better understanding through these
resources about the competitive environment Boeing was in with Airbus and their dwellings
over market leadership and competing with the design of the airplane that would make them
the leaders in the market.

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BIBLIOGRAPHY
1. “Ubiquitous IT: The case of the Boeing 787 and implications for strategic IT research”,
Richard L. Nolan, Journal of Strategic Information Systems (2012) Pages 91-102
2. http://boeing.mediaroom.com/2003-11-25-Boeing-Receives-Malcolm-Baldrige-National-
Quality-Award
3. The National Institute of Standards and Technology (NIST)
http://patapsco.nist.gov/Award_Recipients/PDF_Files/Boeing_Aerospace_Application_S
ummary.pdf
4. Aviation Week,” Boeing Building on ‘One Boeing’ Strategy” June 13, 2013, Bill
Sweetman, Aerospace Daily & Defense Report
http://aviationweek.com/awin/boeing-building-one-boeing-strategy
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Crafting and Executing Strategy, Quest for Competitive Advantage, Arthur A. Thompson,
Jr. Margaret A. Peteraf, John E. Gamble, A. J. Strickland III, Arun K. Jain, 19th
Edition