Corporate Model of Research and Development

Dr. Nat: This is something that you just alluded to, will the corporate model of R and D going to give away to the dispersed R and D, like at Boeing you were doing both but is it going to be increasingly more dispersed R and D taking place in different units?

Dr. Atkins: We had a big effort back in 1997 and 1998, and that was really the genesis. The full blown Phantom Works was to become the corporate center of excellence per say for doing generic multi-business unit required research. I think that model has grown and is being accepted in the corporation and in the various business units. The thing that has made it so successful I think is that the corporation recognizes that there are unique pieces of R and D that need to be done that only the business unit can do and therefore, they are allowed to do that, but allowed being something that they are authorized from the board of directors. The development of the 787 is being done wholly within the commercial line and they are obviously pulling technologies out of Phantom Works but the majority of that R and D is done within that business unit. So we have a hybrid system that uses both a corporate R and D focus coupled with a business unit R and D focus where each has their own responsibilities that pull and push from each other and I think allow a much more efficient utilization of our R and D resources that we have thereby maximizing the dollars that attributed to that area.