Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
787 -- A Crisis In Leadership  
User currently offlineServantLeader From United States of America, joined Jan 2013, 69 posts, RR: 0
Posted (1 year 6 months 4 weeks 1 day 9 hours ago) and read 19029 times:

Jim McNerney has been at the helm since late 2005 and has shown the ability to neither avoid the 787 crisis nor lead the way out of it. His leadership style to date has been to offer platitudes to soothe the beast Wall Street and to fire divisional and operational managers—a total of eight over this timeframe—and hope for the best. This can hardly be called leadership at all. Additionally, McNerney holds simultaneous title as CEO and Chairman of the Board, which creates a systemic conflict of interest between execution and oversight.

Therefore, the first two steps in the Boeing 787 turnaround are to fire McNerney and separate the CEO and Chairman of the Board duties.

61 replies: All unread, showing first 25:
 
User currently offlineStitch From United States of America, joined Jul 2005, 30901 posts, RR: 87
Reply 1, posted (1 year 6 months 4 weeks 1 day 9 hours ago) and read 19014 times:
Support Airliners.net - become a First Class Member!

Well, buy up 51% of Boeing's outstanding shares and have at it.

By the time McNerney was elected Chairman and CEO, most of the decisions regarding the 787 that have come to haunt the program were already made by people like Alan R. Mulally, Mike Bair and Harry Stonecipher.

Sure, McNerney could have just started from scratch all over again, but if he had done so, he'd have assuredly been voted out at the next Shareholder's Meeting and replaced with someone who would have continued with the decisions already made.

And we shouldn't forget that McNerney was the man who convinced Boeing to sign an exclusive power deal on the 777-200LR | 777-300ER | 777 Freighter, turning a massive financial liability (the GE90) into a cash cow.

[Edited 2013-01-31 09:02:46]

User currently offlinePITingres From United States of America, joined Dec 2007, 1134 posts, RR: 13
Reply 2, posted (1 year 6 months 4 weeks 1 day 9 hours ago) and read 18788 times:

Quoting ServantLeader (Thread starter):
Jim McNerney has been at the helm since late 2005 and has shown the ability to neither avoid the 787 crisis nor lead the way out of it.

It's unreasonable to expect him to have avoided it (as Stitch points out, the crucial decisions were long before set in stone), and it's arguable that he didn't lead them out of it. When you're in a deep hole it takes time to climb out.

I have no brief for or against McNerney, but this sort of thing smacks to me of witch-hunting.

Quoting ServantLeader (Thread starter):
the first two steps in the Boeing 787 turnaround are to fire McNerney and separate the CEO and Chairman of the Board duties.

This, I will actively disagree with. If the project hadn't been improving I might agree, but you don't sack leadership to punish someone else's bad decisions in the past. If anything, that move could well put Boeing deeper into the hole.

As for fiddling with CEO vs COB duties, I hardly see how that is going to fix the battery problem, or energize anyone to work harder, or smarter.

I've been through a couple CEO turnovers in the large-corporation world, and even when the new is drastically different from the old, it takes time for the effects to work down through the corporate culture. CEO replacement is almost never the fix for an operational problem. It may (or may not!) fix a leadership problem but that is a longer-term effect.



Fly, you fools! Fly!
User currently onlineMaverickM11 From United States of America, joined Apr 2000, 17442 posts, RR: 46
Reply 3, posted (1 year 6 months 4 weeks 1 day 9 hours ago) and read 18709 times:

Quoting ServantLeader (Thread starter):
to offer platitudes to soothe the beast Wall Street

I don't think anyone on Wall Street is 'soothed' at this point? You can only overpromise and underdeliver so many times before people stop believing you, and the trust probably ran out by 2009. I think Wall Street generally believes the 787 will work out long term, regardless of what Boeing leadership is saying.



E pur si muove -Galileo
User currently offlineServantLeader From United States of America, joined Jan 2013, 69 posts, RR: 0
Reply 4, posted (1 year 6 months 4 weeks 1 day 9 hours ago) and read 18710 times:

He is responsible for maximizing shareholder wealth -- how does $150B in unrealized planned revenue over the past 5 years meet that standard?

User currently offlineStitch From United States of America, joined Jul 2005, 30901 posts, RR: 87
Reply 5, posted (1 year 6 months 4 weeks 1 day 9 hours ago) and read 18645 times:
Support Airliners.net - become a First Class Member!

Quoting ServantLeader (Reply 4):
He is responsible for maximizing shareholder wealth -- how does $150B in unrealized planned revenue over the past 5 years meet that standard?

Return on invested capital (excluding goodwill) has averaged 36.5% during the past three years, which is considered excellent.


User currently offlineServantLeader From United States of America, joined Jan 2013, 69 posts, RR: 0
Reply 6, posted (1 year 6 months 4 weeks 1 day 8 hours ago) and read 18546 times:

The Boeing Company proper is in good financial standing -- the issue being discussed here is the performance of the 787 to date and the looming disaster should it be grounded for an extended period of time due to having to redesign the entire lithium ion battery system.

User currently offlineakelley728 From United States of America, joined Dec 1999, 2191 posts, RR: 5
Reply 7, posted (1 year 6 months 4 weeks 1 day 8 hours ago) and read 18462 times:

There is an interesting article that came out from Newsweek this week that talks about some of the leadership issues that potentially contributed to the 787 woes.

"The Dreamliner is grounded. How a scrappy and innovative company lost its way."

http://www.thedailybeast.com/newswee...ing-s-dreamliner-was-grounded.html


User currently offlinepacksonflight From Iceland, joined Jan 2010, 379 posts, RR: 0
Reply 8, posted (1 year 6 months 4 weeks 1 day 8 hours ago) and read 18384 times:

Here is pretty good article about the change in Boeing leadership.

http://seattletimes.com/html/sundaybuzz/2014125414_sundaybuzz06.html

I recall a comment made by one of the Airbus bosses from 19 jan regarding the new A350 It was something along the lines of not to loos control of the architecture of the aircraft through out sourcing.

In light of the latest developments with the 787 this is possibly what happened at Boeing.
When Boeing launched the 787 program they talked a lot about now being a "system integrator" I guess that is a strategy that failed.

http://www.jpri.org/friends/BoeingFingleton.pdf


User currently offlineStitch From United States of America, joined Jul 2005, 30901 posts, RR: 87
Reply 9, posted (1 year 6 months 4 weeks 1 day 8 hours ago) and read 18247 times:
Support Airliners.net - become a First Class Member!

Quoting ServantLeader (Reply 6):
The Boeing Company proper is in good financial standing -- the issue being discussed here is the performance of the 787 to date and the looming disaster should it be grounded for an extended period of time due to having to redesign the entire lithium ion battery system.

The FAA could permanently revoke the TCDS for the 787 tomorrow and Boeing Commercial Airplanes, much less The Boring Company, would survive.



Quoting packsonflight (Reply 8):
Here is pretty good article about the change in Boeing leadership.

I firmly believe that if the 7E7 program had been presented to Boeing's BoD with the intent to develop the plane following the same plan as the 777 was developed, the BoD would have declined to grant Authority to Offer on the grounds that it probably would have ended up being too expensive.

Yes, Boeing spent as much or more in the end by choosing the outsourcing level they did, but at the time the decision was made, Boeing's exposure was estimated at around $5 billion, whereas doing it the 777 way probably carried estimates of between $10 and 15 billion (considering the 777 doubled her planned budget).

There was no way McD Management would allow that level of spending.

[Edited 2013-01-31 10:25:59]

User currently offlineServantLeader From United States of America, joined Jan 2013, 69 posts, RR: 0
Reply 10, posted (1 year 6 months 4 weeks 1 day 8 hours ago) and read 18115 times:

Nobody is suggesting that Boeing Airplane is in danger of going out of business -- everybody is talking about BA leaving bundles of money on the table and inviting Airbus in for an all-you-can eat smorgasbord. Survival is not the name of the game -- maximization is.

User currently offlineLHCVG From United States of America, joined May 2009, 1556 posts, RR: 1
Reply 11, posted (1 year 6 months 4 weeks 1 day 8 hours ago) and read 18111 times:

Quoting Stitch (Reply 9):
Yes, Boeing spent as much or more in the end by choosing the outsourcing level they did, but at the time the decision was made, Boeing's exposure was estimated at around $5 billion, whereas doing it the 777 way probably carried estimates of between $10 and 15 billion (considering the 777 doubled her planned budget).

There was no way McD Management would allow that level of spending.

I think that's a key point. It very well may not have been considered acceptable with those numbers, so perhaps the outsourcing was the only way the 787 got built in today's environment. We have to be careful about what things are current mgmt issues, and which are "baked in" to the 787 program writ large from the get-go, due to these major structural decisions made a decade (or so) ago.


User currently offlineStitch From United States of America, joined Jul 2005, 30901 posts, RR: 87
Reply 12, posted (1 year 6 months 4 weeks 1 day 7 hours ago) and read 18044 times:
Support Airliners.net - become a First Class Member!

Quoting ServantLeader (Reply 10):
(E)verybody is talking about BA leaving bundles of money on the table and inviting Airbus in for an all-you-can eat smorgasbord.

Airbus can't offer A330-200s in any significant quantity in the next 12-18 months. And even if they could, the 787 is the better long-term economic platform. As such, even if the 787 is grounded for 12-18 months, I do not expect major 787 customers canceling their orders.


User currently offlineServantLeader From United States of America, joined Jan 2013, 69 posts, RR: 0
Reply 13, posted (1 year 6 months 4 weeks 1 day 7 hours ago) and read 17961 times:

The FAA has signaled that they will not allow the 787 back in the air without a major redesign of the lithium ion battery system -- if this crisis lingers into 2014 Boeing will face significant defections to Airbus.

User currently offlinemotorhussy From New Zealand, joined Mar 2000, 3198 posts, RR: 9
Reply 14, posted (1 year 6 months 4 weeks 1 day 7 hours ago) and read 17922 times:

Quoting Stitch (Reply 9):
The Boring Company,

Assuming this was an AutoCorrect issue rather than a slight on Boeing's sltyle of business.

On the leadership front, what difference would/could have Alan Mulally have made? He's very hands on and knows what it takes to make a good aeroplane.



come visit the south pacific
User currently offlinepacksonflight From Iceland, joined Jan 2010, 379 posts, RR: 0
Reply 15, posted (1 year 6 months 4 weeks 1 day 7 hours ago) and read 17743 times:

Quoting Stitch (Reply 9):
I firmly believe that if the 7E7 program had been presented to Boeing's BoD with the intent to develop the plane following the same plan as the 777 was developed, the BoD would have declined to grant Authority to Offer on the grounds that it probably would have ended up being too expensive.

That is the problem. Wall street is to short sighted and to focused on quarterly earnings. Making airliners is a long term business and the rewards come decade after the first dollar is spent.


User currently offlineStitch From United States of America, joined Jul 2005, 30901 posts, RR: 87
Reply 16, posted (1 year 6 months 4 weeks 1 day 5 hours ago) and read 17359 times:
Support Airliners.net - become a First Class Member!

Quoting ServantLeader (Reply 13):
The FAA has signaled that they will not allow the 787 back in the air without a major redesign of the lithium ion battery system -- if this crisis lingers into 2014 Boeing will face significant defections to Airbus.

Unless the FAA (and EASA) demand Airbus perform a major re-design on the lithium-ion batteries used in the A350XWB, in which case I foresee another banner year for 777 sales...


User currently offlineServantLeader From United States of America, joined Jan 2013, 69 posts, RR: 0
Reply 17, posted (1 year 6 months 4 weeks 1 day 5 hours ago) and read 17091 times:

The Airbus lithium ion battery system is smaller and less integral to plane functions that of the 787 -- and besides, they can learn from the Boeing incident and adjust accordingly.

User currently offlinecornutt From United States of America, joined Jan 2013, 338 posts, RR: 1
Reply 18, posted (1 year 6 months 4 weeks 1 day 5 hours ago) and read 17033 times:

Quoting Stitch (Reply 1):
By the time McNerney was elected Chairman and CEO, most of the decisions regarding the 787 that have come to haunt the program were already made by people like Alan R. Mulally, Mike Bair and Harry Stonecipher.

Mulally being an exception, a lot of the people dismissed were Phil Condit cronies. And some of them had to go anyway because in 2005 the company was still trying to cleanse itself of the Mike Sears scandal. (Fortunately, Debby Hopkins was quick to clean up the accounting side. And then she went to Lucent... poor gal...)


User currently offlineabba From Denmark, joined Jun 2005, 1334 posts, RR: 2
Reply 19, posted (1 year 6 months 4 weeks 1 day 5 hours ago) and read 16950 times:

Quoting ServantLeader (Thread starter):
Therefore, the first two steps in the Boeing 787 turnaround are to fire and separate the CEO and Chairman of the Board duties.



I have no particular views on Mr.McNerney. However, no matter what - having the CEO and the chairman of the board to be the one and the same person is absolutely ridiculous. It eliminates the checks and balances in a company and significantly reduces the accountability of the CEO. Corporate history is full of examples on how bad things can go with this kind of insane leadership structure. It is no coincidence that this leadership structure is prohibited by law is quite a few countries.

Quoting PITingres (Reply 2):
When you're in a deep hole it takes time to climb out.


Certainly - and it takes even longer if there is no COB to put the CEO under pressure and make him/her honest and focused. Being the same person that is left to the individusl's personal moral and ethical standards. Something I do not put much trust in... (among others knowing myself)

Quoting Stitch (Reply 5):
Return on invested capital (excluding goodwill) has averaged 36.5% during the past three years, which is considered excellent.


I have seen companies go bust with similar ROI. It only takes a CEO-COB strong enough and a board weak enough to cook the books. The problem being that the one creating this result and the one being accountable to the owners that this result is real is one and the same person. Do not trust this number!

[Edited 2013-01-31 13:10:51]

User currently offlinemultimark From Canada, joined Jul 2006, 796 posts, RR: 0
Reply 20, posted (1 year 6 months 4 weeks 1 day 5 hours ago) and read 16479 times:

Quoting akelley728 (Reply 7):
There is an interesting article that came out from Newsweek this week that talks about some of the leadership issues that potentially contributed to the 787 woes.

"The Dreamliner is grounded. How a scrappy and innovative company lost its way."

http://www.thedailybeast.com/newswee....html

A great article that reinforces my belief that Condit's move of HQ to Chicago was the end of Boeing's golden era. Breaking up a corporate culture, further seen by move to circumvent Boeing unions with outsourcing and Charleston, have not enhanced the company.


User currently offlineStitch From United States of America, joined Jul 2005, 30901 posts, RR: 87
Reply 21, posted (1 year 6 months 4 weeks 1 day 5 hours ago) and read 16395 times:
Support Airliners.net - become a First Class Member!

Quoting ServantLeader (Reply 17):
The Airbus lithium ion battery system is smaller and less integral to plane functions that of the 787...

With the exception of helping to start the APU, I imagine that the main batteries on the A350 perform much the same functions as they do on the 787.



Quoting ServantLeader (Reply 17):
and besides, they can learn from the Boeing incident and adjust accordingly.

They're already starting to assemble airframes.



Quoting Stitch (Reply 5):
Return on invested capital (excluding goodwill) has averaged 36.5% during the past three years, which is considered excellent.
Quoting abba (Reply 19):
I have seen companies go bust with similar ROI. It only takes a CEO-COB strong enough and a board weak enough to cook the books.

Ah, so Boeing is deliberately performing Accounting Fraud, then. You'd think they put that fraud to positive PR use and add a couple hundred phantom units to orders and deliveries each year so they could have remained the largest commercial airplane manufacturer the past few years.  


User currently offlineabba From Denmark, joined Jun 2005, 1334 posts, RR: 2
Reply 22, posted (1 year 6 months 4 weeks 1 day 5 hours ago) and read 16145 times:

Quoting Stitch (Reply 21):
Ah, so Boeing is deliberately performing Accounting Fraud, then. You'd think they put that fraud to positive PR use and add a couple hundred phantom units to orders and deliveries each year so they could have remained the largest commercial airplane manufacturer the past few years


No - that is not what I am saying.

What I am saying, however, is that the system that should - to some extent at least - help prevent that this being the case is most unfortunately not in place in the leadership structure at Boeing. The conflict of interest between a CEO and a COB that might help keep the system honest has been eliminated at Boeing. This will be a major reason for me not to invest my few dimes in such a company.


User currently offlineFreshSide3 From United States of America, joined Nov 2012, 213 posts, RR: 0
Reply 23, posted (1 year 6 months 4 weeks 1 day 5 hours ago) and read 16053 times:

The primary problem with Boeing(and the 787 project in particular)has to do with this "moving headquarters to Chicago" nonsense a few years back. Granted, that in itself, didn't cause the problems......but this obsession has kept the company unfocused on taking care of business. Yes, they did save some tax money in Illinois, instead of Washington......but this lack of focus by Boeing's management has cost them dearly, in the long run.

They have made a lot of mistakes by not paying attention. And this is before the battery debacle. It was not too long ago, that 787 components made in South Carolina, were not exactly compatible with those make in Italy or Japan. Too often, taking the "easy way out" , outsourcing too much of the project, not enough made "in-house" and not enough control.

Management was too busy patting themselves on the back for doing a good job in saving the company taxes, that they forgot about the rest of the operation. Simple as that.


User currently offlineStitch From United States of America, joined Jul 2005, 30901 posts, RR: 87
Reply 24, posted (1 year 6 months 4 weeks 1 day 4 hours ago) and read 15973 times:
Support Airliners.net - become a First Class Member!

Quoting FreshSide3 (Reply 23):
The primary problem with Boeing(and the 787 project in particular)has to do with this "moving headquarters to Chicago" nonsense a few years back. Granted, that in itself, didn't cause the problems......but this obsession has kept the company unfocused on taking care of business.

In fact, the move to Chicago was to allow the company - the entire company - to focus on taking care of business. Boeing now had a massive presence in Saint Louis (with McD's defense business) and a much stronger presence in California (via the acquisitions of Rockwell International and Hughes aerospace). It also put them closer to Washington D.C., which was important from a defense lobbying aspect.



If this grounding leads to some large quarterly losses in 2013, that would probably give Boeing's stock price a nice boost when you consider that Apple announces they made more money than any company in the history of human civilization and their stock promptly drops like a rock and when Amazon announces yet another loss, their stock jumps to an all-time high.

[Edited 2013-01-31 13:44:43]

25 sankaps : An interesting read, but has factual inaccuracies. For instance it perpetuates the myth that the jet age was an American innovation "... a surpassing
26 ServantLeader : How do you defend 4 years late, billions over budget, and an FAA grounding? Hold a major position in Boeing stock.
27 Norcal773 : I've always said it since Mullary left Boeing for Ford.. bring Alan back and he'll right this Boeing ship. Look at what he has done at Ford!
28 Post contains links redflyer : As Stitch pointed out, McNerney inherited most of the 787's inherent problems as the majority of the program's fundamental decisions were cast by his
29 Stitch : As President of Boeing Commercial Airplanes, Alan Mulally was directly involved in the decisions to outsource so much of the design and production of
30 BoeingGuy : No, that's true. How successful was the Comet? Zilch. The 707 and DC-8s were the first real successful jet age aircraft. The successful jet age was a
31 Norcal773 : I am a Vendor Manager for probably the biggest outsourcing company out there and I do know for a fact Vendor performance has a lot to do with how the
32 mrocktor : Chasing market share is almost always poor business strategy. Businesses are about making money: margins and return on investment are the measure of
33 Stitch : You are quite correct, however I expect the lack of vendor management and oversight undertaken by Boeing would have occurred under Alan as that reall
34 a380900 : Whoever was CEO at the time of the "Potemkine rollout" was a liar and a fraud and should have been fired many times over. 'nuff said.
35 Arrow : Give me a break! the first tranche of US jet engines in the 40s were license-built copies of the Rolls Royce engines. The Comet's design flaws were m
36 LTBEWR : Indeed this is the root problem not just for Boeing, but all other big companies, especially in the USA. Taking risks, as Boeing has did with the 707
37 sprout5199 : And the jet engines in the Mig 15? reverse engineered Rolls-Royce Nene engines. Your point is? But do you see centrifugal compressor engines on the 7
38 JAAlbert : It is not at all uncommon for one person to hold the Chairman of the Board and CEO positions in large multinational corporations. And most of these c
39 kanban : He can't, he's too old and would have to retire (he's 67). the massive outsourcing was partially a Stonecipher legacy from MD.. and they had problems
40 tdscanuck : Jesus Christ himself couldn't have avoided the 787 issues if he'd come in in 2005. The die was cast. That's what CEO's at very large public companies
41 justloveplanes : That is one possibility and certainly has sound logic to it, but conversely who is to say Mulally would have allowed the 787 fake rollout or the aggr
42 solarflyer22 : Amen! Finally someone in America as bitter as me. Boeing needs a Steve Jobs. Someone that combines technical knowledge with artistic design and a focu
43 F9animal : McNerney is one of the most hated CEOs Boeing has ever had. The workforce and unions despise him. He fired Commericial CEO Scott Carson, or should I s
44 gegtim : Despite all of the politics being argued here, the 787 has yet to kill a passenger. Passengers died because of design flaws on the 707. It went on to
45 Norcal773 : So you should know a company's stock isn't a very good indication of how well they're doing.
46 sxf24 : I think you're portraying many of your opinions as absolute fact. It is sad you could have such personal hatred for one person. No wonder the employe
47 sankaps : The article was not referring to commercial success, it said "a surpassing American **technical** achievement—the jet age". The technical achieveme
48 wjcandee : Amazing how one vapid investor-board-type troll post that posits some Freshman Business Class corporate-leadership nonsense could generate 50 posts an
49 sankaps : This is a Newsweek article, and it does share some interesting insights. It is certainly no troll. Threads with titles like "Why was the xyz aircraft
50 Post contains images Unflug : Not only a problem for companies. Had they not tried to save money in Berlin they might have a new Airport by now... Thanks to this thread we now kno
51 sankaps : Fully agree. However the article was not talking about best or biggest commercial success, it was talking of the ** technical innovation** behind the
52 LMP737 : The die was cast when Harry Stonecipher took the helm.
53 Post contains links airproxx : Agreed, I'm not expert enough to argue if there's a cultural change in the way people in the US consider leadership. But you seem to forget one simpl
54 sankaps : I assume you meant to write Japan, not China.
55 Post contains links airproxx : Oops, my bad. Yes, Japan. Sorry for that one. I stand corrected. My source is here; http://www.flightglobal.com/news/art...twitterfeed&utm_medium
56 abba : There might not be a problem - and most often there is not and everything is working out just fine and well. But the same thing can be said of other
57 ServantLeader : Anybody with the courage to lead and not simply throw others under the bus would have done a better job than McNerney -- one article had him really s
58 cornutt : This has degenerated into an innuendo and slander thread. I suggest that the entire thread be deleted.
59 Stitch : It appears that lower levels of management were actively suppressing "bad" information to prevent it from going up the chain. So if Mullaly was kept
60 ServantLeader : And this is the essence of true leadership -- insisting on hearing the whole truth and nothing but the truth and never shooting the messenger -- I ca
61 iowaman : Myself and many other members have felt this thread has ran its' course long enough. I will be archiving it for now and cleaning out any forum post(s)
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Faulty 787 Engine In CHS Part posted Thu Sep 27 2012 14:42:57 by rotating14
LAN's First 787 Arrives In 9 Days (August 31st) posted Wed Aug 22 2012 11:35:53 by g500
B 787 Dreamliner In Flight At OSL (must See Video) posted Sat May 5 2012 04:21:10 by Mortyman
ANA 787 AOG In FRA Again? posted Tue Mar 13 2012 23:07:01 by flyinTLow
787 Land In Toronto 030112 (video) posted Thu Mar 1 2012 15:25:57 by kl692
787 Dreamliner In Huntsville. posted Fri Jan 27 2012 12:18:41 by bikerthai
ANA B-787 Stuck In Frankfurt AOG posted Thu Jan 26 2012 10:40:34 by luxair_ca
787 Arrival In Dublin, Will EI Staff Be Invited? posted Sat Jan 21 2012 10:17:26 by ei737ng
What Was The 787 Doing In SRQ? posted Sun Jan 15 2012 11:45:48 by Oceanic
Are All The New 787's Stored In Everett? posted Tue Aug 23 2011 11:00:05 by n471wn