Bungling management and internal turmoil at Boeing should serve as a lesson to major corporations in every industry. It also should grab the attention of jurists and a public that relies on policies that act in the interest of the people.
In January, a door plug flew off a Boeing 737 Max 9 jet shortly after it left Portland International Airport. Cellphones and other items were sucked out of the plane at 16,000 feet; in some cases, seat belts prevented passengers from being pulled into the opening as the cabin decompressed.
As investigations into the incident continue, Boeing CEO Dave Calhoun has announced he will retire at the end of the year. The head of the company’s commercial airplanes unit, Stan Deal, already has been removed, and board Chairman Lawrence Kellner has announced that he will not stand for reelection in May.
The shakeup is necessary as the aerospace giant attempts to regain a public trust it repeatedly has violated. The changes also lead to questions about Boeing’s mission and the role of leadership — a self-examination that should resonate with other multinational corporations.
To some extent, Boeing’s problems can be traced to a 1997 merger with competitor McDonnell Douglas. The $14 billion deal was, at the time, the 10th-largest corporate merger in U.S. history, and industry experts say it led to a change in Boeing’s focus. As Quartz.com explains: “In a clash of corporate cultures, where Boeing’s engineers and McDonnell Douglas’s bean-counters went head-to-head, the smaller company won out.”
Reflecting an emphasis on stock prices and corporate profits, in 2001 Boeing moved its headquarters from Seattle, where the company was founded, to Chicago. It since has moved to Arlington, Va.
The impact of those changes is evident today. In a note to Boeing employees upon announcing his pending retirement, Calhoun emphasized a “total commitment to safety and quality at every level of our company.” He added: “The eyes of the world are on us, and I know we will come through this moment a better company, building on all the learnings we accumulated as we worked together to rebuild Boeing over the last number of years.”
A wary public will rightly ask why that has not been the standard all along. Boeing does not make widgets; it is in a high-risk industry where inattention to safety and quality can result in hundreds of deaths.
That leads us to point out that Calhoun’s background is in accounting. Before joining Boeing, he served as a senior managing partner at Blackstone Group, a giant private equity firm, and his ascension at Boeing is reflective of a company that has lost its way.
Meanwhile, corporations and some politicians are pushing back against what they view as an oppressive regulatory state. Investigations following the crash of two Boeing airliners in the past decade — along with the door-plug fiasco this year — have revealed how Boeing officials have pushed for self-regulation.
This is not unique to aerospace; industries ranging from food processing to high tech long have argued that the fox should be allowed to guard the henhouse. Now, a case before the U.S. Supreme Court could undermine the power of federal agencies to enforce regulations on private industries.
Such a ruling would work against the public interest. It also would violate one of the important lessons that corporations should be learning from the difficulties being faced by Boeing.
