> People are generally bad at
> accepting the importance of
> context and chance.

I agree with this, but in this particular context I find it quite amusing since 99.5% of all management, strategy, and theory-of-the-firm models and curricula that I know of utterly reject those two concepts. And standard micro theory doesn't have much to say about them either.

Cranky

Business and sports writing are like celebrity gossip rags for men.

Having seen a number of fads come and go in the business world, Surowiecki is obviously correct. There's a correlary. Any CEO who is fortunate enough to preside over a successful period due to a combination of luck, timing, talented staff, or whatever, will always attribute the success to his own genious. Prime example: Jack Welch.

I think that Surowiecki is spot on, but I have two quibbles with his Boeing-Airbus example.
1)By 2003, Boeing execs had been arguing for several years that the future of long haul transoceanic travel (or at least the biggest part of the market, the sweet spot if you will) was multi-point to multi-point rather than hub and spoke, and that this future required a very different type of aircraft than an super-jumbo (i.e., the A-380). So I think that Boeing would have gone ahead with the 787 irrespective of its straits in 2003.
2) In mainframe aircraft, one "bad patch" can kill you since a major new model can be a bet-the-company proposition. The A-380 may turn out to be a $10-15 billion mistake. If Boeing makes a mistake like that, it may be all over as an independnet company. So it's an industry (unlike, say, PCs or autos or fast food resaurants) where it seems reasonably rational for investors to extrapolate based on small sample sizes.

OpenBorderMan: "Any CEO who is fortunate enough to preside over a successful period due to a combination of luck, timing, talented staff, or whatever, will always attribute the success to his own genious. Prime example: Jack Welch."

I don't agree. Welch had a long enough period of success that I don't think he's a fair example pf the phenomena. I do have two possible substitute examples though, one from business and one from politics:

Michael Eisner and Bill Clinton.... ;)

One thing which Surowiecki seems to miss is that judging by orders from the first 6 months of 2006 Airbus is in much sadder shape than Boeing was in any particular period since it's slump began in the late 90's. Airbus surpassed Boeing in orders throughout that period but Boeing was within striking position of Airbus throughout.

That isn't the case with first-half orders in 2006: "Boeing took almost five hundred new orders for planes, while Airbus took just a hundred and seventeen."

That is a hell of a disparity and suggests that the Airbus crisis isn't confined to the 380 but has also hit its traditional bread'n butter, those midsize jets.

It's probably too soon to judge - but it looks like Airbus did itself a serious mischief by investing $15 billion in an aircraft which seems to have an increasingly limited market niche. Airlines may be asking whether they should schedule 4 flights a day between Boston and London with the 380 - or 6 flights with smaller aircraft. Most business-class passengers would prefer the latter, I think.

The other question is whether the spoke system makes sense for trans American or trans European flights? You won't see RyanAir or EasyJet using 380's because their market is point to point to small airports - and they are the growth sector in European aviation.

Why fly London-Paris and transfer to a domestic flight to Strasborg when you can fly direct and save time and money doing it?

Don S,
I agree that both Clinton and Eisner are better examples. Still, GE was in strong shape when Welch took over. I give him credit only for not screwing it up, not for being the God that he thinks he is.

OpenBorderMan,

While I might agree that Welch isn't as great as he thinks he is, I did work at GE Medical Systems for a while during his tenure - and saw a very well-managed operation. Not sure whether that was Welch or others, but...

I think the defense unit was on the downs at the time so some of the GE Aerospace's best imaging engineers (the people who design heads-up fighter controls) were working with me at GE Medical on medical imaging technology.

That kind of cross-fertilization is almost unheard of at other multinationals, which is one reason I think he might have been very good; perhaps almost as good as Albert Sloan.

I live in the UK now and have been in the body shop a few times lately (aka the NHS). They use a lot of GE equipment and most of them swear by it. Best of breed and all that....