|14 January, 2020

Boeing CEO's top task is to re-engineer culture

Calhoun’s immediate goal will be to get the MAX flying again

An employee works near a Boeing 737 Max aircraft at Boeing's 737 Max production facility in Renton, Washington, U.S. December 16, 2019.

An employee works near a Boeing 737 Max aircraft at Boeing's 737 Max production facility in Renton, Washington, U.S. December 16, 2019.

REUTERS/Lindsey Wasson

NEW YORK - “Not my circus, not my monkey” is the Polish idiom for saying not my problem. Boeing’s new chief executive, David Calhoun, can’t say that about disturbing messages released on Thursday. One said the grounded 737 MAX was “designed by clowns who in turn are supervised by monkeys.” They show a multi-year overhaul facing him – refocusing the firm from profit to engendering trust and making great planes.

Calhoun, who becomes CEO on Monday, knows the importance of a company’s culture. He had a front row seat at General Electric as former CEO Jack Welch turned the firm into a machine for churning out short-run profit. The long-run result has been a slow-moving disaster. The $100 billion firm’s stock has underperformed the S&P 500 Index starkly over the past two decades.

Many of the messages concern problems already dealt with. For example, Boeing wanted to minimize additional pilot training to fly the MAX. In a significant step on Tuesday, Boeing recommended simulator training for pilots. Others are griping typical of any big company.

There’s no escaping, however, that Boeing designed and produced a plane which crashed twice killing 346 people. An exchange on Boeing’s focus on low-cost suppliers and tight deadlines gets to the heart of the matter, “I don’t know how to fix these things...it’s systemic. It’s culture. It’s the fact we have a senior leadership team that understand very little about the business and yet are driving us to certain objectives.”

Calhoun’s immediate goal will be to get the MAX flying again. If that’s all he does, then Boeing’s future is bleak. A more sustainable fix is going back to its engineering roots, while spending less effort on finance, penny-pinching and swaying regulators. An engineering culture also tends to be blunt and addresses problems quickly. That’s not pleasant but it’s a good recipe if you want the public and regulators – in the United States and beyond – to trust and fly your planes.

In addition to GE, Calhoun has experience dealing with troubled companies at Nielsen and as a Blackstone executive. While he’s shown an ability to turn around flabby businesses and deliver profit, that was never the problem at GE, and more importantly, Boeing. If he grabs the yoke on Monday and talks about serious culture change he may be on the right flight path.

CONTEXT NEWS

- David Calhoun becomes chief executive of Boeing on Jan 13.

- On Jan. 9, the company released internal messages about the development of the 737 MAX. Many of the messages were critical of the company, the plane, and the Federal Aviation Administration. One message said the plane was “designed by clowns who in turn are supervised by monkeys.”

- The FAA grounded all MAX planes in March following two crashes that killed 346 people. The plane is still not allowed to fly.

- Boeing gave the messages to the FAA in December, and provided copies to the Senate Committee on Commerce, Science, and Transportation and the House Committee on Transportation and Infrastructure. Boeing said it released the messages publicly at the encouragement of the two committee chairmen.

- In a statement, Boeing said, “We regret the content of these communications, and apologize to the FAA, Congress, our airline customers, and to the flying public for them. We have made significant changes as a company to enhance our safety processes, organizations, and culture.”

(Editing by Jennifer Saba and Amanda Gomez)

© Reuters News 2020

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