January 1, 2017 | Innovation

The Napkin Plan

When companies decide on new products or services, there’s often an initial, seemingly abstruse idea behind it—like the case of Siemens’ and Airbus’ aircraft cooperation

Article by Thomas Fromm published in the Süddeutsche Zeitung

There are moments in the life of a manager when you have to decide for or against something. Whether you made the right decision or not often only becomes clear years later. You discover either that you did everything right and whatever it was you decided about worked out … or it hits you that you wasted millions. Because it’s not just the future we’re talking about—in many cases, we’re talking big money. In this particular case, the matter involved was far from simple from the get-go. The goal itself was a difficult one: to design and build a hybrid electric-powered regional aircraft for 100 passengers and with a range of 1,000 kilometers. And the road to achieve this goal: Massive investment, thousands of hours of development and testing, and then all of this as a joint project between Siemens and Airbus, two corporations so big that it would be a challenge for each of them individually to manage such a project, let alone manage such a high-risk collaboration over so many years. Is a plan of this kind realistic? That depended on how you saw things, and basically the partners could have left well alone from the very beginning. Just because electric cars happen to be ‘in’ doesn’t mean you have to bolt electric motors behind the propeller of an aircraft. That’s one line they could have taken. On the other hand, there were good reasons at least to give it a go, one of these being Europe’s emissions targets specify a reduction in the CO2 emissions of airplanes by 2050 of 75 percent compared with the level in 2000. Everyone in the industry knows that this can’t be achieved with the usual kerosene tanks.

Flying without aircraft noise, with lower fuel consumption and lower CO2 emissions were, then, the ambitious intentions. Who knows, perhaps the skies can become cleaner in a few years, once we’ve cleaned up the streets. But how? The story of this decision is the story of two men. The one works for Airbus in Ottobrunn in deepest Bavaria and wears jeans, a jacket and open shirt. The other wears a white shirt and gray suit, and is an old-school Siemens engineer. Ever since they first met many years ago, they’ve held many many discussions, because when it comes to it, the two of them have to arrive at a decision together. “To be sure, not everyone is totally convinced by this technology,” says Martin Nüsseler, the man in jeans who heads up the electric plane project at Airbus. After all, “we ourselves don’t know yet when this technology will be within reach and what obstacles still lie ahead of us before we do.” And the man in the suit, Siemens manager Frank Anton, Head of eAircraft in the Research department in Erlangen, northern Bavaria, notes, “You can’t do what we’re doing here with the aid of an Excel spreadsheet. There’s no business plan that tells me that’s the way we did it last year and we can do the same this.”

Anton and Nüsseler are sitting together in a conference room at Airbus in Ottobrunn.   The whole thing with these battery-powered planes was from the very start a bit of bet, which both men wanted to win, whatever—and together, because neither would succeed on their own. In the meantime, they’ve actually working on their first model.

 

Companies that plan great things together somehow have to fit together

It’s early December in Munich. Standing outside Siemens Head Office located on Wittelsbacher Platz is small sports airplane of type Extra 330 LE. If it were to take off right this moment, you wouldn’t hear much noise, because this little beauty is a hybrid-electric plane—powered by a little bit of battery, a little bit of combustion engine. It’s just set a record for climbing: It took 4 minutes 22 seconds to reach an altitude of 3,000 meters. Frank Anton stands in front of the machine in this cool December day and smiles happily. This may not be a big jet, but it’s a beginning. In the aviation industry, such moments in which you take a deep breath before having to make a decision are, of all things, known as “decision gates”.   Gates you have to pass in order to check in big time. Siemensites prefer to talk of “milestones”. It’s now quite a few years ago since Anton and Nüsseler first sat down together. The conversation was all about milestones and decision gates, and because the entire world was talking about electric cars, buses and trucks, the two of them spontaneously asked themselves, “Why not airplanes?” “That’s the sort of point at which you start really start to talk with one another,” says Anton, the man from the electrical engineering giant. “And with a smaller plane maker, Diamond Aircraft, as well as with Airbus. And suddenly, there are three of you sitting round the table and someone says, “Let’s do the math and see how far we get.” As the manager explains, it all starts with a small group of people somewhere. A group in which you “jot all the ideas down on a napkin”. At some point you reach the moment you have to convince your bosses of precisely these ideas. Currently, there aren’t many people actually working on hybrid-electric planes. In the US, NASA is also showing an interest in such things, and the big American competitor General Electric, with its jet engine division GE Aviation, could also become a serious rival in this field. This explains the haste and also the decision back then to keep it a purely Bavarian venture. “Cooperating with Siemens was the obvious thing to do,” Nüsseler remembers. “Siemens is one of the largest concerns in Europe.” Time is short. By 2020 at the latest, Siemens and Airbus want to show that they’re able to propel bigger craft as well using hybrid-electric power plants—such as on routes like Munich to Paris, for instance. “If we were to work with a university or research institute alone, it would be impossible to reach the necessary technology steps in the given timeframe,” Airbus man Nüsseler explains. “We need to create the bases on which to take decisions fast.”

 

“The trick is to fail early on—before you’ve invested too much money.”

His company, the aviation expert reveals, has reached a point two years ago at which a decision had to be taken. “Should Airbus continue with this as a small research project or should we take the plunge and get stuck in?” The decision was made all the easier by that fact that Siemens also saw a future in these new, alternative power units and was likewise pushing for rapid decisions. This explains why the issue quickly moved past the napkin stage. “In the end, the decision to go for it together,” explains Anton, “was one for the board. At both companies.” Siemens and Airbus signed a cooperation agreement to jointly develop electric-powered aircraft in April 2016, and only two months later, the new propulsion system completed its maiden flight. That Airbus is talking up this development work and collaboration is obvious. But why Siemens? Once again, for the people in Munich, it’s a matter of all or nothing, the next big thing. Like back then in 1847 when the company’s founding father, Werner von Siemens, in a backyard in Berlin, first set up what would become Europe’s largest industrial conglomerate. In today’s vernacular, it was a very early ‘startup’. The fact that Siemens has now named a new subsidiary that orchestrates and supports cooperations with interesting startups “next47” comes as no surprise. This unit is set to invest €1bn in new technologies, artificial intelligence and autonomous machines. One of the projects next47 is involved in—the development of electric-powered airplanes. Things are going to get serious very soon, because the two partners are going to have decide how big this business is going to be. It’ll all come down to whether the two of them are still pulling in the same direction. What would have been if one had at some point realized that the project is doomed to fail? As Frank Anton points out, the sooner you realize it isn’t going to work out, the sooner you can adopt a new course. “The trick is to fail early on,” says the man from Siemens, “before you’ve invested too much money in the wrong thing.”