I was asked to take over a failing aircraft conversion project. Eight aircraft at the end of their useful life as passenger aircraft were being converted for cargo haulage. The first two aircraft had been delivered late and at a large financial loss. Recovery of the remaining aircraft conversions proved to be profitable, but could not meet the original program delivery requirements. This project provides practical insight into the implementation of working business strategies and tactics.

By Dan Harrison

A strategy is a conceptual approach to attain a specific objective in a given set of circumstances. Once a conceptual approach—a strategy—has been fully developed, tried and proven, it then becomes a tactic, which may be used routinely. Therefore, a tactic is a proven approach to attain a specific objective in a given set of circumstances.

Strategic development or strategic planning is the evolution of a strategy to the point where known tactics may be applied to reach the desired objective. It is at this point that operational planning begins.

Operational planning is the application of business tactics to attain a business objective and may or may not be the end product of strategic development.

Most planning performed in an ongoing business is routine, having nothing to do with strategy. Planning functions are designed to perform tactical planning, specifically, the development of procedures using known methods with the allocation of facility and manpower resources to perform previously defined work. This may sometimes include projections of future resource requirements, but this is also accomplished using known methods.

Planning functions are rarely equipped to handle the development of a business strategy. Unfortunately, planning, or other functional managers, are often delegated responsibility for strategic development in the mistaken belief that this is detailed planning which they are equipped to perform. Although some functional managers are very good at strategic development, many are not. And whether capable or not, they rarely have access to the resources and information necessary to perform strategic development. Consider the following example.

An aircraft engineering and maintenance company obtained a contract to convert and standardize passenger aircraft to a cargo configuration. This contract required major structural and electrical systems modifications to several aging aircraft. The customer had purchased the aircraft for modification after several transfers of ownership between foreign operators, and both structural drawings and electrical schematics were unavailable. To attain this competitive contract, the company had to agree to complete the modifications while producing updated technical data under aggressive schedule constraints.

To produce a cost effective proposal, the company developed two parallel strategies to turn the absence of technical data into a competitive cost advantage. Its first strategy was to use its highly skilled production workers to hold down engineering costs. To meet aggressive schedule constraints, the second strategy was simply to heavily man-load the aircraft with simultaneous work in many areas.

After commencing work on the contract, directed heavy man-loading of the first two aircraft resulted in large cost overruns with very poor schedule performance. The initial result was a multi-million dollar loss after late delivery of the first two aircraft.

This is a clear example of incomplete strategic development that resulted in conflicting and unworkable strategies. The project was ultimately brought under cost control by using teams of production workers and engineers. This was similar to the first strategy. However, because of the heavy interdependence of the aircraft structural and electrical systems, this approach required small teams working in parallel—too small to meet schedule constraints.

The heavier man-loading envisioned by the second strategy (to meet schedule constraints) would have required very extensive engineering prior to the input of each aircraft. However, since accurate technical data was not available, only a preliminary baseline could be created. The more complete engineering required for heavier production man loading simply was not possible due to physical space limitations onboard the aircraft.

Although the recovery strategy did shorten the delivery times and cut costs below budget, the initial losses could not be fully recouped. The result was a program that was unprofitable as a whole and a customer who was very dissatisfied because of late deliveries.

Many business projects fail for the same reason: incomplete strategic development. This is true even when the project does not require significant innovation, but introduces business systems (tactics) that are unfamiliar to the current management. The solution is either to resist the temptation to delegate strategic “details,” or to hire a specialist to guide the company through the project development.

Dan Harrison is an SMA Principal Associate in our Technical Management & Engineering Services Practice, and has over 35 years of experience in aerospace engineering.

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