by As signs of trouble at a company go, a hole through the wall of one of its planes at 16,000 feet is not subtle.
So it was no surprise that Boeing CEO Dave Calhoun spent most of the company’s fourth-quarter earnings conference call Wednesday focusing on safety. “We caused the problem and we understand it,” he said of the Jan. 5 incident.
Calhoun said the company had instituted additional quality controls and stopped production for a day to focus on safety and quality. But Boeing’s problems span decades, and some aviation and management experts have long suggested they go beyond processes, pointing instead to a shift in the company’s culture that put finances before engineering. Fixing that may require more drastic measures.
“What Calhoun and his team need to do requires both a leap of faith in the way they have been doing business and some kind of viable, credible courage,” said Nancy Koehn, a historian at Harvard Business School who specializes in leadership in crisis.
DealBook asked experts in business culture, aviation and management what actions Boeing could take to try to fix its long-standing problems.
Design a completely new plane. The 737 Max, the workhorse of the Boeing fleet, It was introduced in 1968. “They’ve been putting in new components, but I think they need a completely new airplane design based on all the lessons learned in aeronautics over the last 60 years,” said Bill George, former CEO of Medtronic and executive fellow at Harvard Business School who has written two case studies on Boeing. “They may have to cut their dividend so cash doesn’t go out the door and money is spent designing new airplanes,” George said, adding that Boeing should stop stock buybacks. Mr. Calhoun has saying that Boeing would not deliver its next all-new aircraft until the mid-2030s.
Move headquarters to Seattle, the heart of the company’s engineering operations. Boeing moved its base to Chicago in 2001, and then near Washington, D.C., in 2022. George said that was a mistake. “Management needs to get back in touch with the engineers who understand flight safety,” he said. “Boeing’s senior management does not have aeronautical engineering degrees, for the most part.”
Open the factory. Koehn said one historical example that could be instructive for Boeing was what food manufacturing companies did to deal with exposure of grotesque health and working conditions in the meatpacking industry: They organized tours and pushed for regulation of the food industry. quality control. “Boeing could say, ‘Come to the factories, come talk to our people.’ Do it now. Do it in four weeks. Do it in six weeks,’” Ms. Koehn said. During Wednesday’s earnings conference call, Calhoun said she had invited Boeing customers to visit the factory. Doing the same with regulators, journalists and consumer groups could help rebuild trust, Koehn said.
Host tech-style product launch events. Ashley Fulmer, an assistant professor at Georgia State University’s Robinson College of Business who researches the dynamics of trust in organizations, said Boeing should communicate more with all of its stakeholders, including the general public. She pointed to the types of big product launch events hosted by tech companies like Apple and Meta as one way to do this. “I think at this point, looking for no incidents is not enough,” she said. “What they need is a regular demonstration of capability where, for example, they have innovated the design to improve safety and reliability.”
Ask: Should Boeing be nationalized? Matt Stoller, research director at the progressive think tank American Economic Liberties Project and author of the monopoly-focused newsletter BIG, recently made the case which it should be, considering that the US government already accounts for much of its revenue and helps sell your planes abroad.
But Richard Aboulafia, CEO of aerospace consultancy AeroDynamic Advisory, said nationalization would be unlikely. In any case, he said, the government could attach conditions for Boeing’s management to defense contracts, although there is little precedent for such a move.
“The risk is not bankruptcy; It is managerial negligence,” Aboulafia said.
