Boeing: The perfect story of what's wrong with America's economy? | Gautam Mukunda

Boeing’s bright spot this year was the hiring of its new CEO, an engineer and aerospace chief named Kelly Ortberg, after years of finance men at the helm. But Ortberg’s arrival is clouded by the controversies hanging over Boeing, from hours-long hearings on safety issues to a fraud charge to the first worker strike in 16 years.

Let’s not forget the stranded astronauts at the International Space Station.

Boeing’s troubles started long before two 737 MAX planes crashed in less than five months between 2018 and 2019, killing 346 people. Several experts point to the 1997 merger between McDonnell Douglas and Boeing as the trigger.

What followed was a series of leadership decisions that prioritized profits and quarterly earnings over planes, according to Gautam Mukunda, a leadership expert, Harvard fellow and author of “Indispensable: When Leaders Really Matter.”

“It is a story about a larger pathology in the American corporate sector that just devastated the American economy and turned it from an economy that was focused on making things to an economy that was focused on playing games with spreadsheets,” Mukunda said. “And that story is why Boeing is the perfect example of everything that’s gone wrong.”

In the video above, Mukunda delivers a master class on Boeing’s history and leadership decisions that have steered this American company to its current crossroads.

Is Ortberg the right guy to fix Boeing’s problems? Should the company move its headquarters back to the Seattle area? What are Boeing workers saying in private about the culture at Boeing? What companies are most at risk of following Boeing’s path? Mukunda answers these questions and more in this Straight Arrow News interview.

0:00-7:11 When Boeing’s problems really started
7:12-13:35 Did government turn a blind eye to Boeing’s problems?
13:36-15:32 Is Kelly Ortberg the right chief for the job?
15:33-19:43 Workers expose ‘nightmarish’ conditions at Boeing
19:44-25:12 Boeing needs to build a new plane
25:13-27:34 Should Boeing move back to Seattle?
27:35-31:57 Airbus and Boeing: A duopoly in the skies
31:58-33:02 Prioritize making things over spreadsheets
33:03-35:45 What companies are at risk of following Boeing’s path?

Follow Straight Arrow News on social media:

Download the SAN App!

[craigkilpatrick]

As a physician in Colorado, this also explains the growth of the health care industrial complex. Hospitals and clinics are run by MBAs and MFAs focused on the bottom line which rarely gels with patient care. My primary care group was just bought by a private equity company out of Texas. The result? A system that sees patients and providers as commodities and not human beings. Goes along to explain why health care now sucks in the USA

[jamesdellaneve]

I’ve worked at McDonnell Douglas/Boeing for 34 years. I’ve also taught research methods in Pepperdine University’s Doctoral Leadership program for the past 15 years. I was in the McDonnell Douglas side of the business. They were led by a bunch of jerks from St Louis. Once Harry Stonecipher got there, our journey to the GE way had started. Now, all of the chickens have come to roost. We don’t have any new commercial airplanes on the “drafting board”. We haven’t won a new major defense contract since the C-17 program. The public mistakes of the 737Max, the door plug popping off, the Crew Exploration Vehicle thruster issue, and our continuous lack of winning new contracts is where we are now. We’ve been in cost cutting mode for so long that we lost our innovation muscles. I am looking forward to retiring in the 1st qtr of next year.

[DragNetJoe]

I'm a former military pilot. I remember when Boeing moved it's HQ to Chicago and my Brother-in-law (salesman) was really exited about it and wanted to know my opinion. He was somewhat taken back when I told him it was a terrible idea and would be the demarcation line when Boeing stopped being an aerospace company and became a business that just happened to produce airplanes. At the the time it was very popular for management consultant types to tell you things like "You're not an aerospace company, you are a transportation solutions company".

[davefox]

I’ve worked for Boeing for 18 years. I love what I do. But experiencing what a horror show the bean counters have turned the company into is sickening.

[dperreno]

As an engineer with an MBA in Finance and 25 years working in Finance at Ford - everything Gautam says is true.

[The-Team-Out-West]

I work for Boeing and I approve this message.

[brankog]

A great American company ruined by corporate greed, like so many others

[pmd]

My friend who is an engineer worked for Boeing for 36 years and became a engineering manager. He resigned 9 years ago citing confusion in decision making and a hostile work environment.

[lmc]

As an Aerospace Engineer in the past 20 years, i have been saying so for decades now. Give back the controls to the Engineers. Stop profit driven, but human driven.

[Retiredtraveler]

Great story great interview. I'm a retired Navy captain, 06 a senior leader. Leadership is continually hammered in our heads throughout our career in my case 27 years. One of the fundamentals of a good leader is listening to those whose he serves. If you are not listening to valuing and modeling your leadership to benefit, not only the product, but those who work for you, you've failed. Unfortunately, insatiable greed and lack of focus on a quality product completely derailed Boeing. What's most disturbing to me, is the golden parachutes given to CEOs who have failed the company. I completely agree with your first statement if you focus on a quality product, the money will follow. You're there for one thing and one thing only making a safe high-quality rest follows. Sacrifice quality and safety…… And you have what you have now.

[kbrilhart]

Anybody who remembers back to 1980, the same argument was made about the financial focus destroying American industry. At that time, Japan was eating America's lunch with better products that met consumer demands better than anything made in the US. In Japan, they focused on engineering and quality. In America, the focus was on meeting the next quarters' financial targets.

[temphtempg]

"From making things to playing with spreadsheets." So true, love it.

[colinbrazier]

I am British and an engineer. It upsets me greatly that all the work of talented and motivated people has been sold off so cheaply by people who do not deserve the money that has been stolen. There should be a law against raping.

[rfink]

CEOs are being way overpaid for basically doing nothing but destroying employees and customers.

[scotth]

I used to work for Boeing, When Stonecipher gave his speech about improving share holder value I knew that it would take awhile but Boeing would have a lot of problems. I looked at a few of my co workers and the were shaking their heads "NO" The speech I wanted to hear is that we were going to be the best aircraft mfg in the world and that airlines would want more of the quality products we made. In my opinion this would have done more to increase share holder value (I owned shares). It would have taken a little more time but would have been worth it in a few more years. This mess was caused by the CEO and you are also correct about moving to Chicago.

[fassilgabremariam]

The Harvard Bussiness School decease is contagious and destructive for American industry; Boeing is an example of the financialization mania

[gprufino]

Gautam is absolutely brilliant and 100% correct about Boeing and corporate America in general.

[mikegrant]

Until a ceo goes to prision, the pattern will not change.

[ADR-jm]

It's so nice to hear someone actually say this out loud. The worst thing that can happen to a company is for the lawyers and accountants to take over management. When I was in Business School, the organizational diagram had the line management people and a little bubble off the CEO called accounting and another little bubble off the CEO called legal. I went to Business School and law school at the same time. In the Business School, it was pounded into our heads that attorneys are nothing more than trained attack dogs, you keep them on a short leash, you never let them forget who's in charge and they're never allowed near the room where a deal is being made until the it is done and then all they do is write up what those in charge came up with. This day and age when accountants are in charge, every nickel they can cut out of costs becomes profit. I really hope this can change but, given the fact that most companies are owned by insurance groups, pension groups and other industrial investors, there is really no incentive it make a change. This also explains how we have so many CEO's with $1, 000, 000, 000 salaries and compensation packages.

[BulletproofPastor]

I began employment with Boeing in the early 80's through late 2000. I started with good pay, family wide medical and dental, an annual employee bonus, and great career advancement opportunity. When I left, pay was slow to meet cost of living, medical and dental required substantial payroll deduction with limited coverage, elimination of employee bonuses, and reduction in education/training and career advancement. The employment office became a vision of the Maytag repairman.