Overlooking the Right CEO and Picking the Wrong One Turned Boeing’s Focus from Excellence


From time to time, we feature a guest blogger who has written on a topic of interest. This blog features guest blogger Mike Flynn, who is the retired editor and publisher of the Puget Sound Business Journal. Mike’s blog features thoughts from Revitalization Partner’s principal, Al Davis.

Overlooking the Right CEO and Picking the Wrong One Turned Boeing’s Focus From Excellence … By Mike Flynn

The development that turned Boeing’s decades-long focus on engineering excellence and customer satisfaction to a focus on pleasing Wall Street was when the man who “should have been” CEO was passed over and the guy who “shouldn’t have been” became CEO. So now could come the who “ought to be” CEO.

This and related thoughts come to mind with the current unfortunate events for Boeing from critical testimony before Congress, to reporting millions of dollars of losses and ongoing challenges with regard to safety, culture, and manufacturing processes.

As to the should-have-been, I’m referring to Alan Mulally, who served as CEO of Boeing Commercial Airplanes from 1998 to 2006, when he departed to become president and CEO of a Ford Motor Company that was near bankruptcy.

In retrospect, it was clear that Mulally began looking for a leadership role outside of Boeing, which he had joined right out of college in 1969, in December of 2003, when Harry Stonecifer was named president and CEO. Mulally was gone to Ford 18 months later.

By the end of his time at Ford as CEO, the company’s stock price was up, the board and the employees were happy, and Mulally was named Number 3 on Fortune Magazine’s “World’s Greatest Leaders” list in 2013, the year before he retired.

The “shouldn’t have been” was, of course, Stonecifer, who had been CEO of McDonnell Douglas and guided his company to the merger with Boeing.

Phil Condit was chairman and CEO when the merger occurred and Stonecifer came aboard as president and COO and in 2003 he ascended to the CEO role when Condit resigned following a military procurement scandal.

Stonecipher was known for his focus on cost-cutting and efficiency, which contrasted with Boeing’s traditional emphasis on engineering excellence and quality.

There were controversies and ethical concerns associated with Stonecipher’s leadership, which could be interpreted as evidence that his appointment as CEO was problematic for Boeing.

The board’s decision to remove him was based on the belief that his actions had damaged his ability to lead the company effectively.

Engineering excellence had been the watchword of the company from its founding by William E. Boeing in 1916. He was followed by Claremont Egtvedt, who was referred to as “the father of the four-engine bomber.”

Then came legendary leaders William Allen, and T. A.Wilson, who each guided Boeing’s growth and aviation successes for more than two decades, from 1945 to 1986 from its Seattle headquarters.

There were several highly regarded Boeing Commercial CEOs following Mulally, including Scott Carson who immediately followed him and after whom the WSU College of Business at his alma mater is now named Carson College.

It’s intriguing that none of the people who ran Boeing Commercial following Mulally’s departure was named Boeing CEO when the position opened up. Rather the board reached outside the company, by then headquartered in Chicago since 2002, three times after that to find the CEO, never turning to one of the Boeing Commercial leaders.

Boeing’s challenges under those three CEOs prompted discussions about moving the headquarters back to Seattle, with critics arguing that returning to Seattle could help some of the company’s problems of the vanished focus on engineering quality and customer needs. But the company has firmly rejected the idea.

I asked my friend Al Davis, founder and principal of the Seattle turnaround firm Revitalization Partners about whether a decision like returning headquarters to Seattle could help restore the culture that many see as missing from Boeing.

“It’s not a matter of returning to Seattle,” Davis said. “Rather it’s a matter of the board, if they should feel that way, looking for a company that embodies the kind of culture and focus that they would like to see evident again and reaching out to bring the leader of that company aboard as CEO.”

Current CEO David Calhoun, who moved the Boeing headquarters to Arlington, VA, four years ago, has announced he is leaving at the end of the year and chairman Larry Kellner, who has been in the role for five years, has said he won’t stand for re-election at the next board meeting.

And for the first time in a long time, the new CEO could already be in the Boeing leadership ranks. Thus comes the thought of the CEO “who ought to be.”

Stephanie Pope, 51, who has been with Boeing for nearly 30 years, was named to the newly created role of chief operating officer and vice chairman on January 1 this year, a role viewed by many as being positioned to be the next CEO. All units of the company now report to her.

In a way she will also be from the top ranks of Boeing Commercial since she served as CFO of Boeing Commercial enroute to her current role.

If she is named by the board to be the next Boeing CEO, it would be an amusing closing the circle of the Boeing-McDonnell Douglas saga since she had gone to work for the St. Louis aerospace giant in 1994 just out of college in her home state. Thus, she was among those who became Boeing employees with the 1997 merger.

Flynn retired in April of 2006 after 24 years at the helm of the Business Journal and moved to what he refers to as his “entrepreneurial encore” of consulting, counseling and advising businesses, business people and business organization. Since 2008 he has written a weekly column called Flynn’s Harp that is sent to some 1,700 readers in five states.

Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering, a State Receivership or Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

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