Could Ford's Mulally fix Boeing's 787 woes?
Filed under: Ford Motor Co.
Alan Mulally, the 64-year-old Ford Motor Co. (F) CEO, says he has no intention of retiring until Ford returns to sustained profitability -- which he believes will be 2011.
But the former Boeing (BA) executive may be one person who could turn around Boeing's troubled 787 Dreamliner aircraft, which has suffered five production schedule delays over two years (and some sources have recently told me could suffer even deeper delays). I spoke on-the-record yesterday with a Boeing insider who told me about Mulally's style and suggested he could do a better job than Boeing's current CEO.
My source, Stan Sorscher, is a physicist by training who worked as an engineer at Boeing from 1980 to 2000 when he signed on with the Society of Professional Engineers in Aerospace (SPEEA) where he is now legislative director. He has agreed to go on the record with his comments about Boeing's culture after calling me yesterday afternoon following a comment he made on my article about the technical problems with the 787's electrical system.
Sorscher is a big fan of Mulally's problem-solving focus. He believes Mulally would invite people from all levels of Boeing to share information and work towards solutions that are in the best interests of Boeing.
Sorscher noted that Boeing's last successful new aircraft was the 777, which employed this problem-solving approach in 1995, when Frank Schrontz was CEO. According to Sorscher, "The 777 had the opposite corporate culture [of the 787], with a strong emphasis on early awareness of problems, close coordination of all stakeholders and global optimization on the overall program, instead of sub-optimization on each organization's localized interests."
Sorscher does not have such kind things to say about the 787 program, which he believes is suffering because information is not flowing up the line to management. And the reason information is not flowing is that management sends a strong signal that it only wants to hear good news.
Sorscher notes that this lack of information flow began after Boeing's 1997 take over of St. Louis, MO-based McDonnell-Douglas. Ironically, since Boeing was the name that survived, this takeover brought Boeing a CEO, Harry Stonecipher, who employees such as Sorscher claim have ended conversations with the phrase "do it or else I will fire you and get someone who can."
Sorscher has observed that current CEO Jim McNerney has preserved this culture. He told me a story about an engineer who told his supervisor that he thought a supplier would not be able to deliver on time. The supervisor asked the engineer if the supplier has delivered anything late yet. The engineer said no and the supervisor told him not to bring up the situation again unless the supplier actually missed the schedule.
By punishing people close to the action for bringing up bad news, Boeing management is teaching lower level people that keeping your mouth shut about problems will let a person avoid punishment. So, not only is Boeing management shutting off information flow within a functional area -- e.g., designing and building the electrical system -- but the program managers who are supposed to know what is going on across all the functional areas are in the dark.
As a result, Sorscher believes that the 787 program is being managed in a dysfunctional way. As he wrote me, "The 787 program was launched as a "snap-together" plan [meaning that Boeing suppliers were intended to design and build the components and Boeing would assemble those parts in its Everett, WA-integration facility]. We skipped the required up-front coordination, with the expectation that "the market" would solve all those problems. We are now paying those coordination costs downstream where they are most expensive and most complex."
This is where Mulally comes in. In Sorscher's view, he is a little too intense and does have a "volcanic temper." However, Mulally will "tear your head off if you hide information" and he encourages people to work together to solve problems. Sorscher believes that Mulally represents the pre-McDonnell-Douglas Boeing culture which helped it develop the 777 so effectively.
If Sorscher is right, that earlier culture of aggressive problem-solving is what Boeing needs to bring back if it hopes to deliver those 787s.
Peter Cohan is a management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter. He has no financial interest in the securities mentioned.
Reader Comments (Page 1 of 1)
8-21-2009 @ 9:57AM
Bland said...
This guy has it nailed!!!
The post MD internal takeover era destroyed a crown jewel of American industry. The "Old Boeing" died with that merger and will not recover!!!
Those of us that were there warned Condit and the Board.
Not people to take advice. They paid billions too much for MD and allowed the internal takeover by the failed MD management.-----sad really!!!
gbb
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8-21-2009 @ 12:12PM
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8-21-2009 @ 10:56AM
Steve said...
Boeing made a terrible mistake subbing out major assemblies constructed from advanced composites. There are not only the current difficulties but also the reliability-in-service of those assemblies and the entire aircraft made from them. One has to question whether Boeing (or at least this program) can recover from so serious an error.
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8-21-2009 @ 11:55AM
Chas said...
I think that cultural shift, which caused Mullaly to leave Boeing and join Ford will go down in the history of Ford as the most important act of Fate that will preserve this Company.
He has created a razor sharp focus in Ford on absolute key areas of the value proposition (like Apple)
1- Technology
2- Fuel Efficiency
3- Design
4- Safety
5- World Cars
I've been impressed by the job he's done so far, and I truly believe you will see Ford begin to pull away from the rest of the market by providing features and capabilities others will not be able match in real time.
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8-21-2009 @ 12:09PM
Roy Bonner said...
The story has it right on. The added risk is that composits are a whole new technology and using them in huge structures as a Dreamliner is one heck of a risk. The more I read, I find that the problems with composits are beginning to bloom. The danger is that if management is turning on the "bad news bears" Boeing won't know until the test flight disasters!
Remeber the tail that came off the plane that crashed out of Kennedy. The cause was too much rudder deflection? Baloney ! The structure that held the tail on was a composite and it had delaminated --not an uncommon occurance with composits. It was in the report. The plane lost off South America? A similar plane had the tail come off --- another composit failure? We'll never know. The Airbus design problems should be setting off alarm buttons in the Engineering Department at Boeing.
The problem is the leadership is not there ---what the hell does McNerney know about building an aiplane? Another business school wonder that can do anything ---more baloney!
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8-21-2009 @ 1:05PM
Bob said...
Mr Cohan should do a better job vetting his sources next time. Mr Sorscher is not a Boeing employee, he was at one time but quit to become a full time employee of the Boeing engineering union SPEEA as its legislative director. Mr Sorscher and his SPEEA compatriots are, by defintion, no fans of Boeing management and never have been, regardless of who the CEO might be. For him to denigrate Mr McNerney is totally disengenuous and merely represents an attempt to further SPEEA aims without concern for the truth. For Mr Cohan and/or Mr Sorscher to have not disclosed his SPEEA affiliation brings into question the veracity of everything in the report.
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8-21-2009 @ 3:05PM
Robert T said...
Before Ford does anything, I think CHINA, who became Ford's major creditor and asset OWNER 2 years ago, will weigh in. Yes, Ford mortgaged itself to CHINA several years ago even hocking the blue Ford logo. Ford mortgaged all of it's assets to China hence no US govt. bailout.
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8-21-2009 @ 3:18PM
Yon said...
The new Boeing "kill the messenger" management is good for Airbus where they look for possible problems before they take over and ruin everything. Survival of the fittest will again work. BA is the next bailout?
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