Boeing Faces Tough Decisions After 16,000-Foot Incident
As far as signs of trouble in a company go, a hole blowing through the wall of one of its airplanes at 16,000 feet is not subtle. So it was not a surprise that the Boeing chief executive, Dave Calhoun, spent most of the company’s fourth-quarter earnings call on Wednesday focused on safety. “We caused the problem, and we understand that,” he said of the Jan. 5 incident.
Mr. Calhoun said the company had instituted additional quality controls and paused production for a day to focus on safety and quality. But Boeing’s issues span decades, and some aviation and management experts have long suggested they go deeper than processes, pointing instead to a shift in the company’s culture that put finances ahead of engineering. Fixing that may require more drastic measures.
“What Calhoun and his team need to do requires both a leap of faith from the way they’ve been doing business and some kind of viable, credible courage,” said Nancy Koehn, a historian at Harvard Business School who focuses on crisis leadership.
DealBook asked experts in company culture, aviation, and management for actions Boeing could take to try and fix its longstanding problems.
Design a completely new plane: The 737 Max, the workhorse of the Boeing fleet, was introduced in 1968. “They’ve been putting in new components, but I think they need a whole new aircraft design based on all the lessons learned about aeronautics in the last 60 years,” said Bill George, the former chief executive of Medtronic and an executive fellow at Harvard Business School who has written two case studies on Boeing. Mr. Calhoun has said that Boeing would not deliver its next all-new aircraft until the mid-2030s.
Move the headquarters back to Seattle: Boeing moved its base to Chicago in 2001, and then near Washington, D.C., in 2022. Mr. George said that was a mistake. “Management needs to get back in touch with the engineers that understand flight safety,” he said. “The top management of Boeing does not have aeronautical engineering degrees, for the most part.”
Open up the factory: Ms. Koehn said one historical example that could be instructive to Boeing was what food manufacturing businesses did to deal with the exposure of grotesque sanitary and working conditions in the meatpacking industry: They hosted tours and lobbied for regulation to control for quality. “Boeing could say, ‘Come into 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 call, Mr. Calhoun said he’d invited Boeing customers to visit the factory. Doing the same for regulators, journalists and consumer groups could go further to rebuild trust, Ms. Koehn said.
Host tech-style product launch events: Ashley Fulmer, an assistant professor at Georgia State University’s Robinson College of Business who researches trust dynamics in organizations, said that 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 it could do that. “I think at this point, gunning for no incidents is not enough,” she said. “What they need to have is regular demonstration of ability where, for example, they have innovated design to enhance safety and reliability.”
Ask, should Boeing be nationalized? Matt Stoller, the director of research at the progressive think tank American Economic Liberties Project and the author of the monopoly-focused newsletter BIG, recently made the case that it should be, noting that the U.S. government already accounts for much of its revenue and helps sell its planes overseas. But Richard Aboulafia, a managing director at the aerospace consulting firm AeroDynamic Advisory, said that nationalization would be unlikely. If anything, he said, the government could attach conditions for Boeing’s management to defense contracts, though there’s little precedent for such a move. “The risk isn’t bankruptcy; it’s managerial malpractice,” Mr. Aboulafia said.