If you were looking for an exciting product manager job, then being a product manager at the European aircraft company Airbus would probably be a safe bet. Airbus is always locked in battle with the U.S. firm Boeing and both companies sell hundreds of their large airplanes to airlines around the world. At the start of this century Airbus introduced their biggest bet on the future so far, the A380, and now it looks like their product managers were wrong about a number of things and that’s making everyone look bad.
The Problem That Airbus Is Facing
I’m not sure if you’ve ever had a chance to see a picture of the Airbus A380 superjumbo, but this is one very big airplane. I seem to recall that airports that were going to be servicing this new aircraft had to make changes to their gates in order to be able to handle an airplane that was bigger than anything that they had ever seen before. When they introduced it back in 2000, Airbus liked to call their new airplane “the Eighth Wonder Of The World”. The plane was an amazing creation, unfortunately it was the wrong plane at the wrong time.
The cost of creating this new flying machine was at least US$17B. When they created the airplane, Airbus promised that within 20 years they would be able to sell 750 of them. During that time, the company ended up selling less than half of that number. The company has announced that it has changed its mind and it will now stop producing this enormous aircraft. When they stop production, Airbus will have sold 251 aircraft. This is not going to look good on anyone’s product manager resume. This is one more than the original break-even point that they set before production delays added billions of dollars to the aircraft’s costs.
Originally Airbus had planned on having the A380 deliver up to 5% of the company’s annual deliverables. However, the reality is that it only ever reached less than half of that lofty goal. The first A380s that were purchased have already been parked after only flying for a decade. In the end, they will be sold off for scrap. Airbus understands that the A380 was a mistake. Their CEO has publically admitted that Airbus was probably a decade too late in bringing this airplane to market.
Where The Airbus Product Managers Went Wrong
So what went wrong (in a big way) here? What happened is that the Airbus product managers badly misjudged airline market trends when they were creating their product development definition and they didn’t take into account emerging technologies that would play a big role in their market. Things just got worse when the product managers allowed European pride to get involved and then they justified all of this with emotion. Once the plane was actually being built, the Airbus production system that had been built based on global politics rather than product efficiency, ended up failing.
The reason that the Airbus product managers wanted to create the A380 in the first place was to compete with Boeing’s massive 747 model. Airbus wanted to make the largest airplane in the world. There is no question that they succeeded from a technology point-of-view; however, the commercial viability of this idea was never a sure thing. The A380 was created based on two key bets that were made by the Airbus product managers. The first was that airlines would keep on using big, congested hub airports to transfer their passengers between connecting flights. The second was that there was a need to fly large four-engine aircraft on very long routes.
The world changed. Boeing started creating smaller hyper-efficient jets such as the 787 Dreamliner. Airbus was eventually required to come up with a similar aircraft. In the end, this new breed of aircraft ended up rewriting the economics of long-haul flying. Meanwhile, at the global airlines, their focus was shifting to try to lower their costs and produce returns for their investors. All of sudden, profits were more important than market share. The result of this was that big planes that could be hard to fill fell from favor and the A380 was doomed.
What All Of This Means For You
There is no question that being the product manager for a massive aircraft would be a very cool job to have. The problem that the Airbus product managers ran into is that once they had created the world’s largest commercial passenger jet, it turned out that there was no market for it. Clearly there are a lot of aircraft being used to move a lot of people around all of the time. What happened at Airbus that allowed their product managers to be so wrong about what their market wanted and when they wanted it?
The A380 was born out of a need by Airbus to compete with Boeing’s large 747 jet. Airbus was very proud of the jet that they had created and they called it the “Eighth Wonder Of The World”. In order to break even, Airbus had to sell 750 of these monster airplanes. They ended up only being able to sell 251 of them. The first A380s that were sold have already been permanently parked by the airlines that purchased them and will eventually be sold for scrap. So what went wrong? The Airbus product managers misread the aviation market and then they let their European pride get in their way. The Airbus product managers bet that airlines would keep using congested airports and they would want to fly four engine jets over long distances. However, Boeing came out with the hyper-efficient 787 Dreamliner and this changed everything. The market for the Airbus A380 went away.
It is the role of product managers to try to predict the future. It’s almost part of our product manager job description. We want to know what our customers are going to be looking for once we have been able to successfully create our product. We’d like to be able to provide them with a solution that will meet the needs that they are currently experiencing. The Airbus product manager attempted to do this. However, their market changed on them and this invalidated their guesses. They should have been monitoring their markets and made changes to their product when things changed. However, they didn’t and the result is that Airbus ended up with a very large and very expensive aircraft that they could not sell. As product managers we need to realize that our guesses are only as good as the day that we make them and we need to keep our eyes open for changes that can invalidate our guesses.
Question For You: When the market changed, what could the Airbus product managers have done to save the A380?
Click here to get automatic updates when The Accidental Product Manager Blog is updated.
P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!
What We’ll Be Talking About Next Time
As though you didn’t think that you already had enough to do, now you have to get ready for the metaverse. Look, over at Facebook they are investing millions of dollars into creating virtual worlds for visitors to come to and interact with each other in. If Facebook thinks that this is going to be a big deal, then they are probably on to something. Product managers need to start to take the time getting use to what the metaverse is and how it is going to impact their customers.