Boeing’s Culture Crash
This is a three part series. It is followed by the nightmare of the 787 Dreamliner and finally the 737 MAX going down.
Before Boeing planes began crashing, their culture did. You can see it all in their logo.
Boeing’s logo was once just BOEING, in a bold, stolid font. In 1997, however, they ‘acquired’ McDonnell Douglass. ‘Acquired’ in the sense that a host acquires a virus. You can see the McDonnell logo crash into Boeing and insert its DNA. Today, Boeing has the McDonnell Douglas logo in front of it. It was symbolic of the cultural lobotomy that was to come.
The failing McDonnell inserted their CEO, Henry Stonecipher, as Boeing’s President and eventual CEO. He took an axe to Boeing’s company culture.
As Stonecipher said:
“When people say I changed the culture of Boeing, that was the intent, so that it’s run like a business rather than a great engineering firm,” he said. “It is a great engineering firm, but people invest in a company because they want to make money.” (Chicago Tribune, 2004)
What Stonecipher had tattooed on his right knuckles from his GE days was RONA. Return On Net Assets. Returns being money, assets whatever it took to make planes. His management philosophy was more returns, fewer assets.
RONA is a ratio (income/net assets) and the simplest way to increase it is to just dump assets. If you sell your laptop you’ve suddenly increased RONA. You can’t do any new work, but for a while, the paychecks will continue to come in. Stonecipher used this tactic to goose up McDonnell for sale, and he thought it could work wonders for Boeing.
Stonecipher’s plan was to outsource as much of Boeing’s business as possible. This would enable him to fire engineers, get rid of factories and boost RONA. The stock price would go up, shareholders could cash out, and the board…
