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Dan Loney: The name Boeing has
been synonymous with success in
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the airline industry for many,
many decades. That's up until
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about the last 12 or 13 years,
we've seen a series of incidents
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like crashes, battery issues,
door plug issues, obviously, the
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impact from the pandemic, have
turned the company around and
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turned them into a target of
quite a few jokes, because they
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can't seem to eliminate all of
the problems. But what does
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Boeing, and maybe more
importantly, the leadership of
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the company, do to turn that
around? Pleasure to be joined
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right now by Greg Shea, who is
an Adjunct Professor of
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Management at the Wharton School,
and also Senior Fellow at the
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Wharton Center for Leadership
and Change. Greg, great to talk
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to you again. How are you, sir?
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Good. Good to see you. Happy
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baseball season.
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Happy baseball
season. Yes, it is. As for
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Boeing, this is just has been
kind of amazing to watch play
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out, because if you're somebody
of our generation, we know
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Boeing as kind of a very much a
trusted company in the airline
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sector. So I mean, to see this
happen is kind of just
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befuddling to me.
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It's really pervasive.
Reputational problems are as
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pervasive now as the
reputational quality was
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in a positive sense, 25, 30
years ago. I mean, you can just
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go through the list currently.
If it's a <i>Saturday Night Live</i>
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punch line,
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it's got a major article about a
whistleblower in the most recent
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issue of <i>Wired,</i> Niraj Choksky—
Chokshi, sorry— is writing
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regularly in <i>The Times,</i> and is well
worth following, about Boeing
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troubles and including the most
recent investigations and the
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BBC. Let's cover the cover the
breadth of worldwide media. The
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BBC, in the last couple of days
did a nice online piece about
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the state of the investigation
of the crash in India. And then
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somewhere in there, my piece
with Gad Allon about about Boeing
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and strategy and leadership— and
I only go through that list
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because A, people may want to
look at some of those people,
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but also because it just shows
how wide, how pervasive this
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impression is. - So then what
happened? What started this?
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Because in order for this kind
of string to occur, this had to
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happen well before the battery
problem started more than a
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decade ago.
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Well, I think it's
fair to say,
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and Gad and I in our article
went through this in some
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detail that you really trace it
back to 1997
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and the— quote, "the acquisition" of
McDonnell Douglas, although the
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jokesters at the time referred
to it as McDonnell Douglas
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bought Boeing with Boeing's
money. The—
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Boeing—
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they went— once that— that
became realized as a deal, it
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was— it was very clear that
there was a prolonged attack
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on Boeing's culture, to
convert it from, as they said,
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"We want to make it a business,
not an engineering company." And
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and that was the stated
objective. And they succeeded.
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It's a— it's a rather perverse
case, actually, of how to get
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culture to change. Although
often we think about culture
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change, we think about
improvement. I think we'd say—
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over the long arc of this, you'd
say this was how to take
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something apart that was a
unique quality and cash it out
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and then end up with what we've
ended up with.
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Well, and a lot of
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times when you talk about
culture, you're talking about
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the involvement of the
employees, but you're talking
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about kind of the mindset of
what the company really was
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expected to be moving forward,
correct?
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Oh, it was very
clear,
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and it's pretty well-documented
now— as I said, we reference it
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repeatedly— the quotes from the
CEO,
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the elimination of the
engineering function— not— I
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shouldn't say function.
Engineering orientation. Senior
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levels. Pull the senior
leadership out of contact,
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direct contact with the
line. You move the headquarters
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away from the plant. They're
just— it's not just what
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they were saying, which was, as
I said, we're going to make this
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a business, not an engineering
company.
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And all these different ways
that they actually went off
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quite— in quite a
coordinated fashion, to really
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change the way the place was
going to work and operate. And
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much of the whistleblowing
that you see
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over time, whether or not the
whistleblowers are all right, or
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even any of them are right, are
in the spirit of pushing back on
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the very thing we're talking
about.
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Well, and so that brings
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me to the question of trust, and
trying to regain the trust. And
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you kind of lead me into this.
Because not only does.
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Only have to regain the trust of
the public because of some of
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the issues that are all of the
issues that have occurred, but
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they have to regain the trust of
a lot of the employees who work
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for the company as well, and
many of the people who were
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talking 25 years of course. But
over that time, many of the
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people who would have been at
the core of the engineering
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culture are gone, not just
senior leadership on the floor.
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So it's— it's trust
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that you're actually— are you
serious about trying to
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reconstruct at least some
semblance of what was
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recognized, going back to
<i>Good to Great</i>. I mean, Collins'
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book. And in quality
journals at the time, Boeing was
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held out as the standard. So if—
you want to go back to
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that, to use the word "trust," why
would we believe that you really
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want to do that?
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Does it hurt the—
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path to building back that trust,
that Boeing is realistically one
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of two companies, along with
Airbus, that are in the airline
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manufacturing industry. They
have been that — it's been that
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way for many decades, and
there's a version of a monopoly
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there between Boeing and Airbus.
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Yeah. I mean, officially, it's a
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duopoly. The Chinese may want to
convert it into oligopoly, but
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that that gives you room. This
is one of the dangers of of
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consolidation, which is
occurring, of course, across the
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economy and across our
societies, is that you end up
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with very few options which
gives tremendous power and and
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quote— "survivability" is probably
not a word, but survivability, to
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to any of these, any of these
companies. And as one of
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the writers about Boeing said,
Boeing is probably too big to
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fail, to your point. But it's
not too big to be mediocre.
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What needs to occur, then? What do we
need to see occur from the
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leadership of Boeing now, to at
least start to chart a different path.
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Yeah. I mean, I'm being a
little flippant here, but I'd
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say, decide what you want. I
mean, it's clear that the— Boeing
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had got what it wanted. It
wanted short term
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and immediate
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financial returns, and it got
them for a period of time. I
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suggest a big piece of that was
cutting out the excellence that
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they had inside of the
engineering function. This a
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very complicated piece of
machinery, and obviously it's
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got great human consequences
when it doesn't work right.
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So you have to go back and try
to reconstruct
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at the shop floor level
up. You know, this is not—
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if what you think is this is a
PR problem, you're really
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missing the point. And I'm not
saying they say that, but that's
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really missing it. If you think
it's, quote, "a leadership issue,"
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maybe. But the real thing is,
what are you going to do to
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drive into the organization the
kind of deep commitment to
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quality? So do you do anything
like,
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you know, what— famous in the 80s,
Toyota was— if anybody saw a
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problem the production line,
there were red levers
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all over the place. You pull the
lever, the line stops. That's a
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very expensive thing, but
everybody's empowered to do it.
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That's very different from— and
that kind of
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across the board
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emphasis on quality of
production and manufacturing
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production would need to occur,
and it would need to occur in a
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symbolic and real fashion. So
that people say, "Whoa. Things
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are changing around here. They
really are. They're measuring
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different things, they're rewarding
different things. They're giving
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me different decision-making
discretion. There are different
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people in charge with different—
all of that's got to happen in
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order to drive this into the
bowels of the organization,
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which is where it got ripped out
from.
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Greg, great to talk to you
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again. Thanks very much for your
time today.
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Thank you. Be well.
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Thank you. Greg Shea, Senior
Fellow at the Wharton Center for
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Leadership and Change, and also
Adjunct Professor of Management.
