How Airbus Lost €4.8 Billion: A Cautionary Tale of What Happens When Knowledge Sharing and Collaboration Strategies Fail

With the release this week of our report  Airbus Hits Turbulence: How Knowledge Sharing Failures Cost Airbus €4.8 Billion,  we are presenting the report’s executive study in two parts.  It will conclude in next week’s edition of Basex:TechWatch and here in the blog.

In the coming decade, as companies move from the industrial age into the knowledge economy, more and more organizations will find that the cost of not knowing how to manage knowledge work and knowledge workers will have a significant impact on the bottom line.

What is the cost of failing to share knowledge? For years, pundits have suggested that there is a hard currency cost to organizations when there is a knowledge sharing failure, but it was virtually impossible to come up with a hard figure.

Today we have that number.

Airbus has provided us with a clear-cut example of a company’s failure to implement proper knowledge sharing and collaboration tools and techniques costing them dearly.  Moreover, this failure severely impacted the company’s bottom line, enough to threaten its very existence.

The figure: €4.8 billion or $7 billion.

In October 2006, Airbus’ former CEO, Christian Streiff, announced that the production of their highly awaited A380 would be delayed another year, pushing the jumbo jet’s production two years beyond its original schedule.  Airbus has already announced to the financial community that this delay will cost €4.8 billion in lost profit over the next four years. The consequence of ignoring the inherent friction in their knowledge sharing and collaboration processes could be fatal for Airbus, especially in conjunction with the problem of a weakening dollar.

With significant orders from some of the largest names in the airline industry, including Emirates, Virgin and Lufthansa before A380 production delays set in, Airbus seemed well on its way to establishing itself as the leader in the wide-body jet market. But Airbus’ lack of foresight in project management led to significant multinational knowledge sharing and collaboration failures.

But that impression was illusory at best.

Jonathan B. Spira is CEO and Chief Analyst at Basex.

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