Organizational Generativity*
This is the greatest corporate story never heard. The effective ingredients of this “fly-over” are known only to a select few people: those who conceptualized and then operationalized the powerful interventions that led to changes in Airbus’ policies and practices. Indeed, the corporate officers never realized that they had a tiger in the tank.
Airbus, a consortium of European aerospace industries, only learned to fly in 1970. Caught in the draft of Boeing, it faced financial-survival flying conditions until the 1990s, because Boeing dominated commercial aircraft production with a 70% market share.
These were the market conditions when I, as Executive Vice President of Marketing, ComputerVision, offered state-of-the-art Electronic Product Definition (EPD) services: that is to say Computer-Aided Design, Analysis, Manufacturing, and Product Data Management. Unbeknownst to us at the time, we were also offering Airbus a ticket to its flying future.
* Cohen, B. Organization Generativity. Ch. 4 in Saving America by R. R. Carkhuff. Amherst, MA: HRD Press, 2010
Enter Bob Carkhuff and his associates at Carkhuff Thinking Systems, Inc. Carkhuff and his associates were working with new and powerful ideational constructs in the economic arena. They labeled the core construct “New Capital Development” or NCD. Reasoning that financial capital accounted for approximately 10% or less of economic productivity growth (necessary but not sufficient), they set out to demonstrate the potency of these NCD ingredients as the sources of organizational generativity (see Figure 3):
- MCD or Marketplace Positioning;
- OCD or Organizational Alignment;
- HCD or Human Processing;
- ICD or Information Modeling;
- mCD or Mechanical Tooling.
They argued that, together, these NCD ingredients could account for the greatest part of economic growth.
Now we were set for the greatest experiment in corporate history. The ideational intervention that would change the Airbus policy-makers’ ways of thinking would begin with the NCD ingredients. Although the corporate board embraced the ingredients of NCD, its members never heard the term “NCD”!
Carkhuff Thinking Systems had supplied the appropriate NCD operations to ComputerVision, which at the time was processing with the marketplace to determine what responses it would need to make for growth. I remember vividly my initiation to the NCD concepts and constructs that would change forever the way I thought about human and organizational systems design and operation.
Our NCD processing took the form of intensive dialogues with our aerospace customers. The critical challenge faced by our new customer was how to participate in an aircraft design program that was being defined by 3D Computer-Aided Design (CAD), using digital solid models for the whole aircraft definition.
Figure 3. Organizational Generativity
This was a very big deal, as it fundamentally changed the organizational processes between companies from independent cooperation (exchange of 2D drawings) to interdependent collaboration (shared 3D design space). Using NCD thinking, it was clear that the marketplace requirements had changed, in part, due to time-compression and cost-reduction constraints. This had triggered a new organizational process response that in turn demanded new human learning, changes in behavior, and new skills.
People would need to work with new Information Capital (in this case, virtual assembly spaces of 3D solid models) which then required a technology tool-stack of CAD authoring applications, product data management, hardware platforms and high performance IP networks. The benefit to be derived for all this change was a massive reduction in time to design the product and a very large cost reduction to be achieved by removing the need for multiple expensive physical prototypes. Electronic Product Definition (EPD) and Digital Pre-Assembly (DPA—later renamed IPD or Integrated Product Definition) were born in the heat of spiraling change, true Information Capital Development (ICD)!
However the greater challenges faced were the responses to be made in the Organizational Capital Development (OCD) and Human Capital Development (HCD) domains of NCD. Given the changing conditions now faced, what were the new skills, learnings and behaviors that people needed to adopt, and how quickly had this to take place? The answers to these questions were nested in the context of having to know the organizational processes, project configurations and workflows that were to be operated to deliver the products and services to market.
ComputerVision, a technology company that successfully innovated in response to the marketplace with EPD and IPD, could now commercialize on the Information Capital Development it had realized. However, during the innovation process, it also had developed and acquired new embryonic capabilities in OCD and HCD that were later labeled IP5D or Integrated Process Development. These are methods by which organizational processes can be defined, dimensionally represented, and related to the human behavior, skills, and learning required for the successful adoption of new ICD and adaptation to new OCD.
Between these two domains is the domain of Human Capital Development, which becomes the critical success factor for any enterprise venture. The speed at which old learning can be unlearned and new learning can be deployed represents the social adaptive latency coefficient of an enterprise. Just-in-Time (JIT) learning, innovative thinking models, coaching, and mentoring were developed to facilitate and support enterprises in responding to change. Computer-Vision had now developed powerful professional services to complement its technology solutions, and began to leverage these new responses, recommendations, and expertise in its marketplace; that success later led to its acquisition by Parametric Technology Corporation Inc. (PTC).
This, then, was how I came to be empowered with these NCD ideas and presented them in the form of EPD to the corporate board at Airbus. The reality was that Airbus was already conceptually NCD-centric, but not operationally. The company continuously processed with the marketplace, organized itself collaboratively and systematically, and reveled in the diversity of ideas generated. Airbus also invested heavily in Human Capital Development across different cultures, but lacked common Information Capital Development (ICD) and Mechanical Capital Development (mCD) tools, until the ComputerVision intervention.
Indeed, NCD was facilitated at Airbus by ComputerVision in the form of evolutions of ICD, driven by the NCD recognition that value-added market solutions comprise Organizational Processes, People, and Technology. These were defined at ComputerVision as:
- EPD or Electronic Product Definition that ComputerVision contributed;
- IPD or Integrated Product Definition that Carkhuff Thinking Systems contributed;
- IP5D or Integrated Process Development that Carkhuff refined.
To be sure, Carkhuff’s IP5D represented the processing systems of NCD:
- P5–Positioning or MCD Positioning;
- P4–Partnering or OCD Alignment;
- P3–People or HCD Processing;
- P2–Processing or ICD Modeling;
- P1–Products or mCD Tooling.
In other words, we at ComputerVision had embraced NCD and subsequently integrated NCD into the policies and practices of Airbus by our collaborative processing with the ACE (Airbus Concurrent Engineering) program. Enough of the New Capital Development orientation, processes and practices were adopted by Airbus to help power its amazing growth over Boeing.
What follows is a composite, adapted story of Airbus vs. Boeing in a battle for market share in the commercial airliner production business. It is a story of the introduction, implementation, and emphasis of a corporation based on New Capital Development. NCD was the new ingredient for Airbus that powered its meteoric market assertion.
I document this as a personal history. More importantly, this story previews the story of the future of all business economic growth by New Capital Development!
Great corporate battles were fought by two megalithic airplane manufacturers: Boeing and Airbus. Initially, neither understood the real terms of the battles nor the true mission of the war. Conditioning dominated as each fought for the competitive edge in the marketplace. Then, marketplace conditions changed, and with them the directions of these two behemoths. Let us now take a virtual look into the two boardrooms as they anticipated these changes.
The Boeing Boardroom
Their marketplace positioning established as the premier builder of aircraft, the leaders of Boeing opted for a policy of incrementalism to deal with production bottlenecks and declining profits. The broad outline of the policy emphasized monitoring the computer systems, trimming thousands of jobs, and remaking relationships with the company’s huge supply chain.
A redesign of assembly operations had actually been underway for several years. However, it got detoured by a big production push to compete with Airbus. Boeing won the competition, but was losing the edge: production costs spiraled and profits tumbled. Moreover, global economic problems sent Boeing into disarray, leaving many orders unfilled.
Nevertheless, Boeing had a lot more going for it than met the eye on the profit sheet. In addition to its historic positioning, it had futuristic positioning as exclusive builders of projected products such as U.S.A. multi-services military aircraft. Indeed, it had already acquired McDonnell Douglas and its proprietary technologies in preparation for these bidding battles. Moreover, it had a massive technology transfer project with the emerging Chinese nation in which Boeing would exchange turnkey empowerment for continuing orders of aircraft, 30 being the latest and greatest number.
Then, surprisingly, Boeing received an invitation from Airbus centered upon joint-venturing between these two largest competitors. These discussions would focus upon jointly building the world’s best, cutting-edge products.
“Send them our bureaucrats!” was the order that emanated forth from the corporate boardroom.
“But they can only say ‘No’,” was the reply.
“Exactly!
The Airbus Boardroom
Airbus was positioned in the draft of Boeing’s leadership. Indeed, Airbus often ate the scraps from Boeing’s table—projects that were, for example, both mechanically and financially problematic. In other terms, Airbus got to customize or even tailor products that Boeing could not easily and profitably standardize.
In this regard, Airbus had developed an expertise in tailoring products to customer requirements. Whereas Boeing’s value system revolved around conservative, probabilistic principles, Airbus’ value system revolved increasingly around progressive, possibilistic principles.
In short, Boeing was disposed to stick to the knitting, avoiding risks, and protecting the status quo. Airbus, in turn, was increasingly disposed to being the best they can be, to taking risks, and to embracing change.
It was in this context that Airbus extended an invitation for joint venturing. Airbus had, itself, been a collaboration of efforts and specialties from the major aerospace businesses of Europe: namely, English wings, German fuselage, French cockpit and assembly, Spanish tail-pane. Collaboration was a reflexive, albeit difficult process, and so the invitation was extended.
“Together, we can be the best in the world for as far into the future as we can see,” was the rallying cry.
“Collaboration, not competition!”
“Interdependency, not independency!”
Unfortunately, it was not to be! With great hopes and much joy, the Airbus negotiators moved forward, only to be denied by the nullification of the Boeing bureaucrats! These were the first shots fired in what has become the enduring war of the ages: a war between status quo and change; a war between the old financial capital-driven economy and the New Capital-driven economy.
The NCD Wars
In this first foray, we can view the extremes of battle formations:
- Boeing’s commercialism is dedicated historically to the potentially finite variations of legacy learning and commoditized applications.
- Airbus’ commerciality is dedicated futuristically to the potentially infinite variations of generative thinking and innovative applications.
Both corporations compete on the same playing field:
- Boeing with a conservative and independent game plan, maximizing the contributions of powerful, existing technologies.
- Airbus with a generative and interdependent game plan, emphasizing a commitment to developing all forms of new technologies.
Neither corporation understood the mission of the war nor the terms of the battles. The mission pitted Old Capital versus New Capital. Old Capital meant the Financial Capital and Machine Capital that had dominated the equations of economists through the ages. New Capital meant the emerging new ingredients in the equation for economic growth.
Utilizing the exact same market data, then, the companies positioned themselves differentially in the marketplace:
- Boeing decided to go independent and continue on its then-current course, competing by customizing its standard product lines.
- Airbus decided to go interdependent and tailor future product lines to continuously-changing marketplace requirements.
One corporation, Airbus, learned to process deductively from the marketplace mission:
- MCD: Positioning itself as an innovator,
- OCD: Aligning its resources systematically,
- HCD: Tailoring new products generatively,
- ICD: Modeling information schematically,
- mCD: Tooling production contingently.
The second corporation, Boeing, groped inductively to maintain market performance:
- mCD: Standardizing its old products;
- ICD: Customizing new variations;
- HCD: Driving learnings from legacy,
- OCD: Aligning resources linearly,
- MCD: Positioning itself as commoditizer.
Today, Airbus is changing the innovative threshold in commercial aircraft manufacturing by introducing elevated standards for New Capital Development, upon which the current market is based. It is the pace-setter in the marketplace.
Boeing, in turn, is saved from attenuation only by the political machinations that make its commoditized products saleable on government contracts—here and abroad. Once a private sector standard-setter, it is now an extension of public sector bureaucracies.
Airbus has a future as Innovator in the marketplace, based upon its growing treasury of NCD.
Boeing’s future is tied to the rise and fall of non-substantive, political entities, based upon its legacy of Old Capital.
Airbus no longer seeks scraps from Boeing’s table. Airbus seeks Boeing’s lunch!
The Air Wars continue. Corporations come into and go out of existence, based upon their abilities to address continuously evolving and spiraling standards.
How do corporations win and lose wars so quickly? The answer lies in NCD—the New Capital Development ingredients of economic growth. The answer lies in understanding that our economic growth is a function of one form or another—or all forms together—of NCD. The Air Wars are really only the first battle in the “NCD Wars.”
In summary, there really is a New Economy undergirding economic growth. We label it “The Generativity Economy.” Indeed, one of the very reasons that recessions are shallow is the continuous elevation of Economic Productivity Growth or EPG. The sources of this EPG are the most important considerations in developing the Generativity Economy.
The current financial meaning of the term “capital” notwithstanding, the New Capital Development or NCD ingredients are now the prepotent sources of organizational generativity:
- MCD or Marketplace Positioning,
- OCD or Organizational Alignment,
- HCD or Human Processing,
- ICD or Information Modeling,
- mCD or Mechanical Tooling.
Together, these NCD ingredients have displaced financial capital as the most important conditions of EPG. To be sure, financial capital remains a necessary catalyst to growth, accounting for somewhere less than 10% of EPG.
Together, these emerging NCD ingredients constitute new and expanding economic universes, and are the prepotent sources of spiraling economic growth. It is as if we are merely in the foothills of a volcanic and exploding mountain range created by the global market, the Internet, and other new platforms of free enterprise.
– Barry Cohen
Organizational Generativity.
Chapter in R. R. Carkhuff, Saving America.
Amherst, MA: HRD Press, 2010