http://blogs.msdn.com/b/johnguin/archive/2013/02/11/lessons-from-the-dreamliner.aspxUp here in Seattle, Boeing is a very important company. Now that their Dreamliner is going through some &quot;teething pain,&quot; as they phrased it, I read a little bit about how this happened. After all, they had spent years designing the plane, builten-USTelligent Evolution Platform Developer Build (Build: 5.6.50428.7875)http://blogs.msdn.com/b/johnguin/archive/2013/02/11/lessons-from-the-dreamliner.aspx#10394690Mon, 18 Feb 2013 00:52:56 GMT91d46819-8472-40ad-a661-2c78acb4018c:10394690Andrew<p>Oliver Williamson shared the Nobel Prize for Economics in 2009 for his work in the 1970s &amp; 80s highlighting that losing direct ability to control conflict resolution was a primary reason for firms to keep work in house. He said that for outsourcing to be efficient either (a) there needs to be alternative sources in the market for the outsourced product (e.g. buy A320s instead of 737s) or (b) it must be possible to write a simple contract for the outsourced product (e.g. buy &#39;n&#39; Windows licenses for &#39;x&#39; dollars). If neither of those conditions holds true then the outsourcing will be inefficient and over time the relationship will get more and more complex and often one company ends up acquiring the other.</p> <p>Because Boeing outsourced both manufacturing and design work on the 787 neither of those two conditions were true. Boeing ended up with both product introduction delays and spent a lot of money to acquire suppliers, like spending $1Bn supporting and ultimately buying Vought Industries in South Carolina.</p> <p>What&#39;s truly amazing to me is that Williamson did his work in the 1970s &amp; 80s and he won a Nobel prize for it in 2009 because his theory has shown to stand the test of time yet almost no managers I&#39;ve ever spoken to have heard of it.</p> <div style="clear:both;"></div><img src="http://blogs.msdn.com/aggbug.aspx?PostID=10394690" width="1" height="1">