Articles: Boeing Marketing Reorg Illustrates Hazards of Innovation, Has Boeing lost the battle for Japan?

The 787’s luxury cabin was great from a marketing standpoint.

Ten years ago, Boeing announced plans that it was going to differentiate itself from the competition by innovating a wildly new, exciting, and most importantly, futuristic aircraft for its airline customers. After numerous delays, it took nearly 10 years for the first 787 Dreamliner to finally be delivered and yet, by that time the idea of having a luxurious cabin and an aircraft designed nose to tail with state-of-the-art technology seemed to the airlines a mere recollection of the optimism of the past. With so many troubles plaguing the airline industry, and frustrations mounting from delivery delays and an infamous battery fire incident this past January that grounded the fleet for 3 months, the airlines that had originally placed orders for the 787 began looking for a substitute good enough to simply get the job done. They turned their back on Boeing and found solace in Airbus’s new A350. Japan Airlines (JAL), a once loyal customer of Boeing and key partner in the 787 development program, announced its decision this week to order 31 A350s – crushing news for Boeing.

I believe Boeing’s recent story has become a fine example of poor positioning strategy. They lost their edge to Airbus because they tried differentiating themselves with something that eventually became irrelevant to the airlines, whom this difference was costing, and with this difference out the window, the airlines held the buyer power. The airlines’ opportunity cost of holding on to the 787 eventually became so great that companies such as JAL finally responded by making the simple switch to the competition.

Airbus’s A350 [pictured] beat out the 787 in JAL’s recent fleet selection.

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