EADS, the parent of Airbus and the largest heavy industrial company in Europe, yesterday announced that it would no longer have two CEOs and two chairmen but, instead, make do with one of each. For years, EADS, which although publicly traded, is effectively a joint venture between the French and German states, had one French person and one German as its co-chairman and co-CEOs. This, many believe, hampered the company’s ability to make good decisions and move forward.
I have some doubts as to how much this will solve.
By all accounts, the structure itself seemed to work okay for some time. Until this past year, Airbus had led the world in aircraft orders for the better part of a decade and had promised to revolutionize air travel with a “super jumbo” the A380. By all accounts, it has top-notch engineers, scientists, and manufacturing capability. On the whole it was a rare state-owned firm that competed pretty well with the private sector.
The real problem for Airbus a decision to bet the company on a product–the A380–that nobody really wants. (Not a single U.S. airline has ordered one.) Airbus began with the “because we can” Concorde that, although awfully cool, never proved practical as a means of transportation. The A380, a plane nearly twice as big as the Boeing 747, is another “because we can” product.
Its apparent failure and the chance it could take Airbus with it indicates a simple problem with central planning: when a company becomes insulated from market forces, it becomes far more likely to pursue planned efforts of one type or another. Plenty of purely private companies–GM, Wang, and Coke to name just three–have grown fat and lazy due to virtual monopoly positions and spent billions developing products and marketing that nobody actually wanted to buy.