The title should really be 787 Dreamliner teaches Boeing a costly lesson in due-diligence. This sort of thing has nothing to do with outsourcing and everything to do with poor decision making by management.
Who is capable of doing the due diligence?
There's a classic business case study about two handset manufacturers, a Philips fab in Mexico and a small fire in that fab. Details can be found here :
By the logic of the book excerpt that I finally had time to read, they should have read the tea leaves about the iOS and Android universes much quicker than they did. Nokia's burning platform memo would not have been so dire if their response had occurred one year earlier. Nokia was already considerably left behind by the application universe at that point. iOS had momentum then and should have been considered a direct threat even though the Android userbase was only 1/10th of the size it is now.
I still find that corporate cultures tend to sideline Android to this day because they underestimate the value of an open platform on commodity hardware with infinite hackability that intrigues developers. The same incredible growth occurred with Linux and Apache on the web as the 888% Android growth in the last year. Android will win partly for the same reason Microsoft beat Apple's superior UI in the 80s and 90s-- Apple is still tied to expensive proprietary hardware and the need to completely control their platform.
You can't have someone figure out how to put wings to hull properly if he never ever drawn a single fastening bolt in his life.
Just how loyal and committed are these folks one is poaching from vendors?
1. Manufacturing parts and then selling them throughout the life of the aircraft model has a high margin of profit. Assembling an aircraft form parts has the lowest margin of profit.
2. Outsourcing requires more coordination form HQ, not less.
It seems like those two were pretty big and important. Especially #1, what kind of an executive does not understand the value chain of the business he's in?
This is why I don't think CEO are stupid, but I do think they act economically rationally (perhaps not ethically) by increasing their compensation by pumping up the stock price in the short term.
In this case the CEO raised stock prices in the short term by appearing to create cost savings. His compensation goes up, he leaves the company, cost savings turn out to be costs, but the old CEO has already been paid and is gone, this is the new guy's problem.