26 Jan FIXING BOEING

Boeing is in crisis. This week’s New York Times’ article by Bill Saporito, “Boeing Made a Change to Its Corporate Culture Decades Ago. Now It’s Paying the Price,” tells well the stack of mini-crises that birthed mega-crisis for one of America’s most “iconic” companies.

On January 5, as anyone with a TV knows, an Alaska Airlines Boeing 737 Max 9 blew a door plug at 16,000 feet—creating a gaping hole of horror as 171 terrified passengers screamed their way down to an emergency landing. This followed two fatal crashes, back in 2018 and 2019, that ground the Max 9s—and the FAA immediately grounded these planes again and halted any planned production increases. And now, the National Transportation Safety Board investigates as Congress and others demand answers.

This week, CEO Dave Calhoun declared a “Safety and Quality Standdown” at Boeing and made his way across congressional corridors to brief senators. And both Alaska and United Airlines confirmed plans to return these grounded Max 9s to service following further inspections.

Today, Boeing continues to struggle as aviation expert Saporito argues it’s “paying the price for a shift in its corporate culture made decades ago.” The company that changed the rules of air travel by building the 707 in 1958, the 737 in 1967, and the 747 in 1970, was by the mid-1990s buying McDonnell Douglas, moving its corporate headquarters back and forth, shifting assembly lines to the East Coast to sidestep unions, and changing CEOs faster than losing NFL team swap coaches.

The cost, Saporito argues, was quality—some say, allowing Wall Street friendly cost-cutting to replace a storied corporate culture built atop engineering and safety.

Back in 2018, delivering corporate keynotes for a bunch of mega-companies out in Seattle, including Amazon, I was honored to tour one of Boeing’s vaunted factories. I can still see it: Bigger than any building you’ve seen all in one place, an airport-hanger-times-ten on steroids, with Robots everywhere, and just a few humans walking around in-progress-aircraft for what looked like a combination of good luck and high-tech checking. An extraordinary stew of scale, sophistication, and George-Jetson-like-future images.

So, how does Boeing fix itself? For a few decades, we’ve worked on crisis strategy for similarly iconic companies and today Boeing must do three things:

• First, use this crisis to reboot and play offense strategically—to create major fixes, major corporate culture transformations, and major strategic and proactive initiatives.
• Second, live by the words “truth is the best propaganda”—and put transparency out front in how you communicate—i.e., tell it all, tell it early, tell it well.
• Third, go back and pull forward your insurgent roots—and draw on what made you great in the first place and what birthed a storied company like Boeing.

 
This last point is strategically essential. We have not advised or even seen a single major corporate turnaround or crisis mitigation of an iconic company that did not go back to its past to rediscover its future. So, for Boeing, remember what got you there—and re-read this story I told a few years ago about what made Boeing the kind of iconic company it can be again . . . .

Let’s take to the air. Consider Boeing’s historic bet some sixty years ago to shift the company’s focus from military to civilian aircraft. At the time, it seemed crazy. In 1952, Harvard Law graduate and Boeing CEO William McPherson Allen convinced his board of directors that an urgent shift of focus will pay off, and, with a $16 million investment, the company created the Boeing 707, the first US transatlantic commercial jetliner.

This changed the course of aviation history, presaging Steve Jobs’s willingness to bet ahead of where consumers were and urgently focus on producing something totally new. For Apple, it was the iPod, the iPhone, and the iPad. In the case of Boeing, Allen literally bet the company. Without a single order in hand, he authorized investment of $185 million in the yet-to-be-created 707—some $36 million more than Boeing’s net worth at the time.

“I think it’s the biggest business decision of the 20^th Century,” recounts Boeing’s corporate historian, Michael Lobardi. At the time, Boeing’s chief competitor, Douglas Aircraft Company, had been building civilian aircraft since 1934. Douglas was clearly better positioned to take advantage of the economic opportunities linked to civilian aircraft.

Boeing, for its part, had endured a series of financial setbacks—the Clipper, the Stratocruiser, and the Stratoliner. The safer choice for Boeing was to stick to military manufacturing. But Allen refused. His bet was on Boeing’s culture and its ability to build some of the world’s best, fastest, and most accurate military planes. Allen believed Boeing’s focus and urgency could be redirected onto design and prototyping in the form of the Dash-80 (as the future 707 was designated) and then workshopping, building, refining, and flying a single consumer-focused product, the 707.

But even Allen did not neglect to provide some downside protection at a key moment. He knew the new USAF heavy jet bombers, the B-47 Stratojet and the B-52 Stratofortress, needed the availability of a tanker aircraft for midair refueling. The Dash-80 airframe fit the bill, and so the risk in development of the civilian 707 was cushioned somewhat by development of the KC-134 Stratotanker. The resulting military orders bought Boeing time and helped protect against some of the worst possible outcomes.

The rest, as they say, is history. On October 28, 1958, five years after its inception, the maiden commercial flight of the Boeing 707 took off, with a first-class seat selling for $505 and a back-of-the-plane economy ticket for $272. Every U.S. President from Dwight D. Eisenhower to George H. W Bush has flown on a modified version of the 707 designated Air Force One.

Indeed, the 707-320 was like nothing the aviation world had ever seen: 153 feet long with a 146-foot wingspan and the capability to fly 3,735 nautical miles in one go. It was launched in a benefits-focused print and advertising campaign: “Only seven hours to brush up on your French!” And it foreshadowed the focus of B2B companies such as Intel on consumer benefits. The tagline went “If it ain’t Boeing, I ain’t going.”

David Morey is Chairman and CEO of DMG Global, and a best-selling author. He has advised 22 winning global presidential campaigns and worked with a Who’s Who of Fortune 500 companies and leaders.