1. Innovation In Aviation
by Terry Drinkard
I've been reading Michael Lewis's book, "The New New Thing," and it brings to sharp relief the question of
innovation. Who actually innovates? Is it the Jim Clarks with some brilliant new concept? Or is it the
engineers who find ways to turn this brilliant new concept into software?
Are there other necessary contributors like investors, marketers, or administrators? The more I think about it,
the more I think innovation is a huge team effort. What we are really talking about isn't one or two or five
designated "innovators" in a company, but a culture of innovation, a society of innovation. In case you are
wondering, the US is second (or third, depending) behind South Korea in terms of innovation.
As we all know from experience, not everyone in a company is an innovator, nor do they need to be.
Someone still has to handle the mundane business of administration. Someone still has to make the existing
product line profitable until the new one arrives. Even those of us who are by nature innovators and neophiles
need people who can stabilize processes, keep the revenues flowing in, and contain the costs on existing
processes.
When we talk of innovation, what do we mean, really? Traditionally, innovation is seen as some new idea,
new process, new product, or new service. That's OK as far as it goes. I would add another characteristic. A
real innovation is actually good for us. I.e., it is a positive development in the world. Something that creates
more pollution, lowers levels of health, or literacy is not what I would label as an innovation, regardless of its
benefits to a certain narrow slice of humanity. By my definition, an innovation provides more value to the
customer than the current product or service. Or, it may provide the same value as the current product or
service, but at a lower cost. Alternatively, it may provide similar levels of value for similar costs but for a
wider set of customers, or for reduced social costs.
Aviation innovations
In aviation, I would argue that an innovation improves reliability or safety, or reduces costs. Innovation can
also show up as totally new products, totally new benefits, but those are increasingly rare. There are also
incremental innovations, small steps forward. Look at the most recent set of new airplanes to hit the market.
The G650 is a fine airplane, with a lot of excellent new technology on board, but it is still a transonic twin-
engine turbofan, much the same as its competition; it differs in degree, not kind. Look at the Boeing 787,
again, another really fine aircraft with a lot of amazing technology embedded in it, but it's just a more
efficient 767. The 767 was a major innovation. It was the first long-range twin-engine transoceanic airliner.
Our ETOPS rules were essentially built around the 767. Moreover, it was the 767 (along with its single-aisle
sister the 757) that allowed airline markets to fragment into the long-thin routes that enabled us to fly from
places like Vancouver, BC to Osaka, Japan. New product, new service, new benefits. The 767 was innovative.
The 787? Not as much.
We rarely see the major innovations in aviation anymore. I don't think this is because we have nothing left to
discover or invent or that we have somehow managed to climb to the peak of air travel, but rather because
our leaders have become risk averse. They fear failing greatly and so settle for failing in small incremental
steps. This is the corporate way. No one gets rewarded for doing something majorly innovative at a large
corporation. The system won't allow it. We get rewarded for incrementalism, for making a variation on a
theme that top management understands, something that appears low-risk.
I get the need for business stability-I've read Drucker, too-but this fear of flying shows a lack of vision, a
failure of creativity, a fundamental denial of the need to move boldly, to establish new markets with new
products. The world changes, and we leaders are charged with the responsibility to react, and sometimes to
make those changes ourselves, to preserve and expand the firm. This is part of why we were hired. If we can't

2. do this, or if we let our fears dominate every part of the decision making process, we should quit and let
someone else have a shot at it.
The importance of innovation
Growth is generally through innovation. Yes, there are mergers, yes there are the expansions into other
markets, but there have to be improvements in the products and services we offer or our competition will eat
us for lunch. Actually, at the risk of seeming pedantic, an improved product or service offered by our
competition can alter the expectations of our customers, making our existing product appear less valuable,
drastically affecting demand for our product. For example. When jet-powered airliners were introduced,
airlines that offered flights with their existing fleets of DC-6s and Lockheed Super Constellations-all very
fine aircraft-found their service offering dropped drastically in value to customers. When regional jets like the
Canadair entered service, the writing was on the wall for DeHavilland Dash 8 regional turboprops because
the faster regional jets offered more value to the customer in terms of speed and perceptions.
When the 747 entered service, the cost per seat mile dropped so low that airlines on the same routes were no
longer as competitive. Yes, it was slightly faster than existing jet airliners, but the key was that it carried
about four hundred passengers, more than twice as many as a 707 or DC-8, but with only slightly higher trip
costs. Granted, this advantage only applied on a limited number of routes, but on those routes, it dominated.
Aviation is defined by innovation, or was. Today, the industry appears to have peaked, or "matured." By
"matured" we mean that there is no more growth through innovation. Maturity is the stage before decline,
something worth keeping in mind. It really is grow or die, and growth is driven by innovation. Ergo, we must
innovate or become irrelevant economically.
Models of innovation
Back to those new ideas for new products. Where do they come from? There are two fundamental camps, one
is institutional-based, the other is consumer-based. One is a top-down push system, the other a bottoms-up
pull system. Top-down push refers to a firm that uses its Research and Development (R&D) organization to
think up new ideas, filter them through various executive committees, and pushed into the market place for
customers to buy. Bottom-up pull is when the consumers mash up something from existing pieces to make
something new and eventually some firm notices and makes that product, or a new firm is created by those
involved. Malcolm Gladwell in his book, "The Tipping Point" talks about this. For a fictional take on the
process, Cayce Pollard, the protagonist in William Gibson's novel, "Pattern Recognition" is a "cool hunter,"
someone who finds consumer mash ups for manufacturers.
Bottom-up isn't for us
We in aviation have little to do with bottom-up pull systems. We are almost entirely top-down push. Due to
the regulatory environment in which we operate, our customers can't really do a mash up of different parts to
create something new. They lose their certification if that happens. There are very interesting things going on
at the fringes, with home-builts and suborbital spacecraft, but there isn't really anything anyone can do in the
middle of our market without a great deal of engineering expertise and regulatory involvement. At least not
with hardware. Top down push is what we have always seen, I think. Perhaps the closest we have ever gotten
to bottom-up pull is with aerobatic aircraft, a relatively tiny market, and I'm not completely sure about that
one.
Crowd-sourcing
Most of us have heard about "crowd-sourcing." It's the hot new wikinomics sensation that is the fundamental
driving force behind the Free and Open Source Software (FOSS) movement. Think MIT, Richard Stallman,
and the GNU Project. Think Apache web server, linux operating system, wikipedia, and even Local Motors.

3. There are a great many frustrated software programmers maintaining COBOL or corporate web portals who
would much prefer to work on something as deep and sexy as an operating system or web server. These are
powerful, fundamental layers of technology to which coders are profoundly attracted; rewards include the
recognition of people who are widely considered to be giants in the industry. Wikipedia is a much broader
movement, with a slightly different reward system, socializing and peer-recognition by other subject matter
experts. Local Motors (http://www.local-motors.com) taps into the unbelievably large number of trained
automotive designers who will never have the opportunity to work in a major automotive R&D facility; their
reward is to socialize with other designers, reap some peer-recognition, and ultimately to see their design as
actual hardware. We have nothing like this in aviation.
Top-down push, that's us
When we talk about a top down push system, we are talking about firms creating the new product (or service)
and trying it out on the customer. This requires quite a few things, like an organization designed and staffed
to create new ideas, a top management that understands the need for innovation and a workforce that is
flexible enough to shift smoothly to the new new thing. We need managers who can give people the time and
encouragement necessary for them to come up with that great new idea. We have to create an environment of
trust, sharing, participation, and mutual respect. As you can see, it is much more challenging to manage a top-
down system than to wait for a bottom-up solution to show up on the radar.
R&D
That corporate pearl, the R&D department, is a mainstay in other industries, like agri-chemicals, computers,
and even the textile industry. Aviation has some R&D, too, but it isn't quite the same thing. Sometimes an
activity like designing a particular kind of airplane, say a supersonic transport (those are mainstays of
aviation R&D, and likely will be till the next millennium), is classified as R&D work, unless we decide to
build that particular airplane, in which case it becomes part of the usual program costs. Call it the difference
between cost accounting and tax accounting.
It takes time to build up an effective R&D group. The people there have to be very smart, it's true, but they
also need to be grounded in the realities of the business, not just in the technology but also in the goals of the
company, its targeted markets, expertise, and the critical issues that face not only the firm, but the industry as
a whole. Their management need to understand the business at least as well as the engineers and scientists do,
but they must also understand the top management in the firm and have credibility there. There has to be
communication, trust, and credibility-and that takes time. More importantly, the R&D managers have to
understand the people issues inherent in design
People issues
Designers as a group, and a successful R&D group will have a large proportion of designers, have what
appears to most people as a lot of ego. Maybe. But those egos are also somewhat fragile. That is, it takes
surprisingly little to damage the emotional investment the designer has in the project or in the firm. This
damage will not have spectacular results. It will show up as poor results, lack of creativity, and eventually, a
dearth of innovation. The R&D manager must understand this and be able to cope constructively. Not
everyone can do this. From personal experience, let me just say that putting your son-in-law in charge of any
R&D program is malfeasance in office.
Working in a traditional organization stifles creativity; kills it. And there are people who are quite happy with
that, not least of all, the managerial class in general. We as managers are working hard to keep everyone
coloring within the lines as we have been charged to do and it is a rare manager who can effectively manage a
creative employee. And yet this is where the rubber meets the road. This is where innovation begins.

4. Let me tell a story on myself. I was working in the 777 Final Assembly Liaison Engineering group back in
the late '90s. My manager was considered to be one of the better ones in our slice of the engineering pie. My
forte turned out to be working complex multi-variable problems involving engineering, manufacturing, and
suppliers. I could juggle all of those balls, work outside of the box, and come back with a workable, cost-
effective solution with buy-in from all sides. I successfully worked problems that by our own required
internal analysis ranged from $1.5 million to $20+ million. In my annual review my manager told me to work
more of the routine minor problems and less of the big stuff. This annoyed me beyond belief. I had put a
tremendous amount of energy and effort into clearing up those problems, any one of which would have paid
my salary for the rest of my life with millions of dollars left over. I left that group. People who can handle the
routine stuff are widely available; I wanted to make more of a contribution than that.
Fast forward a dozen or more years, and I'm now the manager of the 787 Mid-Body Liaison Engineering
group (I know, the apple didn't fall terribly far from the tree, did it?) and I now have an employee who is an
excellent engineer, but he concentrates on problems that are costing the program millions of dollars, spending
a lot of hours working with our production people, the "customers" in Seattle, learning what the problems are
and how we can fix them. He saved us millions in six months. Millions; I am not exaggerating. But he wasn't
helping the group move tags through the system, which was our primary organizational focus and what I got
graded on. I felt like I was looking in a mirror.
If you were wondering, I encouraged him to continue that kind of work. My job as a manager, as an officer of
the company, is to understand something of the business. If my management had disapproved of my decision,
I am sure I'd have heard about it, though I don't know if it would have affected my decision. The point is that
there really are people who do not fit into round holes and still have something substantial to contribute.
Moreover, the next time I have a big aircraft structural start-up and I need someone who can creatively deal
with the thousands of difficult cross-organizational problems that I know we will come across, I know where
to go. I know who can see the bigger picture; I know someone who can create a new solution outside of the
usual channels. We need to nurture innovative people as a firm preservation strategy.
Managing for innovation
It's clear, I think, that we need smart people in organizations where they are supported properly to bring out
the next new innovation. We don't usually get that, though. Moreover, there are a lot of firms where there are
insufficient resources to create a separate R&D organization. Those organizations depend on their entire
workforce to be innovative. Executives in that kind of firm would do well to manage their workforce for
innovation, not simply productivity. I tell you now, organizational rigidity is death to innovation and most of
the "managing for productivity" I have seen over the years is highly rigid and deadly to innovation.
There have been improvements, however; things that make our jobs as managers somewhat easier.
Technology like email and cell phones has made the cost of global support groups nearly zero. Our
innovators need to be able to reach out to other parts of the company, creating ad hoc teams to solve
interesting problems. Innovation is a cross-disciplinary activity. Rarely do we see new products or services
come solely from one narrow organizational chimney. It almost always requires people from other
disciplines, particularly when it involves products as complex and interdependent as those found in aviation.
Our biggest problem
In my experience, our biggest problem isn't finding smart people, or people who have an understanding of the
company and the industry. While they don't grow on trees, they are a lot more common than the managers
who know what to do with them. In short, the problem isn't our people; it's us and how we manage the
company. We need to communicate