Boeing Leadership

Boeing High-Level Timeline - 1916 through Mid-2020

The following timeline outlines important, high-level events in Boeing’s history and shows the corresponding chairman, CEO, and president. Note the overlap of these positions.

Boeing

In 1996 Boeing’s president, Phil Condit, was worried about the cyclical nature of civil aerospace, especially as it made up the bulk of Boeing’s revenue. To stabilize the company, Condit believed that Boeing needed to continue to diversity into military aircraft expertise. Rather than build this in-house, he decided to acquire it. First by acquiring Rockwell International, a medium-sized defense company, then with McDonnell Douglas. This results in the world’s second largest defense company and the largest aerospace group.

McDonnell Douglas

McDonnell Douglas was a company born in 1967 from a merger of Douglas Aircraft Company and the McDonnelll Company. It was a logical merger, as Douglas made civil jets and McDonnelll made military aircraft. Unfortunately, the merger was not an overwhelming success as Douglas employees did not merge well with McDonnelll. In additional, McDonnelll Douglas was struggling under the pressure from Boeing and Airbus, and leadership issues.

A Shift in Philosophy: From Quality Engineering to RONA

Quality Engineering

For most of Boeing’s history, the company basically functioned as an association of engineers. Its executives “held patents, designed wings, spoke the language of engineering and safety as a mother tongue. Finance wasn’t a primary language. Even Boeing’s bean counters didn’t act the part. As late as the mid-’90s, the company’s chief financial officer had minimal contact with Wall Street” (Useem, 2019).

And while financial changes needed to be made, Philip Condit told Boeing managers when he took over as CEO and chairman in 1996 that his goals were based on four fundamentals:

1. Customer satisfaction
2. Integrity
3. Shareholder value
4. People working together (Lane, 1996)

It’s not an oversight that “shareholder value” is third on this list. Condit was, after all, an engineer at heart.

Return on Net Assets

In stark contrast, Harry Stonecipher, from McDonnell Douglas, was a man who believed in manufacturing efficiency and consistent profit margins, or RONA—return on net assets. Stonecipher had, over 27 years, moved up through the ranks at General Electric’s jet engine division. To that end, Stonecipher’s plan was to outsource as much talent as possible, enabling him to fire engineers, close down factories, and boost RONA. Stock prices go up, and shareholders are happy. But at what cost to the employees and the products they make?

Over the first few years of the merger, with Condit as CEO and Stonecipher as president, a culture shift began to take place and one of the “most successful engineering cultures of all time” was slowly overtaken by a finance-driven culture (Useem, 2019). Unfortunately, such a dramatic shift can have a negative (and in this case, disastrous) effect. A company that was built on engineering and quality was no longer focusing on engineering and quality. Technical knowledge was outsourced and Boeing’s builders and creators were intentionally isolated from leadership.

After a series of mounting disgraces, in December 2003, Condit was forced to resign as Boeing’s CEO. Stonecipher replaced him. Then, in 2005, James McNerney was brought on as chairman—Boeing’s first chairman without a traditional background in planes and engineering. Coming from General Electric, McNerney brought with him his “tried-and-tested route of cutting, downsizing, and shifting” (Frost, 2020). As the years go by, Boeing gets farther and farther away from its engineering roots.

If you recall our Boeing timeline, they created the 737 twinjet in 1968, which by the end of the 20th century had become the world’s best-selling commercial aircraft. And while Boeing had a storied history of creating the next big thing in airplanes, the culture shift from engineering to RONA instead meant figuring out how to re-invent an existing line of aircraft. This resulted in the 737 Max.

The 737 Max is an updated version of the outdated 737—a plane that was designed for 20th century technology and passengers. The 737 was ‘upgraded’, adjusted to fit more passengers, and was a cheaper solution than creating an entirely new plane. It was promoted as having higher efficiency engines and internal workings that pilots would find easy to adjust to, coming from other 737 models.

Unfortunately, continued redesigns of the existing 737 (the result of a desire to cut costs) meant that software solutions were implemented for what were really hardware problems. The biggest and most disastrous example being the implementation of the “Maneuvering Characteristics Augmentation System,” or MCAS, a software solution that was put in place, instead of getting the physical airframe hardware right (Frost, 2020). Additional cost-saving maneuvers such as outsourcing other software development to recent college graduates, combined with a continued lack of aerospace knowledge by leadership, put the 737 Max on a literal crash course.

Falling Out of the Sky

We know what happens next. On October 29, 2019, Lion Air Flight 610 crashed, killing all 189 passengers and crew. In eerily similar circumstances, on March 10, 2019 (less than six months later), Ethiopian Airlines Flight 302 crashed, killing all 157 people on board.

In between crashes, Boeing revealed that the 737 Max had a new automated flight control, the MCAS (remember the continued redesign of the 737?). MCAS software was mentioned once, in the glossary, for the Max’s 1,600-page manual. It was also left out of the 56-minute iPad refresher course. MCAS software that was meant to pick up the slack of a plane that was not a 21st century design, but an updated version of a 20th century design.

Groundings and More Leadership Changes

On March 11, 2019, after the Ethiopian Air crash, the Civil Administration of China ordered the first groundings of the 737 Max. This was followed by groundings from most other aviation authorities around the world. By March 18, 2019, all 387 aircraft (approximately 8,600 flights per week) were barred from service.

In January 2020 Boeing suspended production of the 737 Max, and by March 2020 the groundings and crashes cost Boeing $18.6 billion in compensation, lost business, and legal fees.

All of this chaos over a six-month period inevitably leads to changes in leadership. Dennis Muilenberg, CEO, chairman, president and director during this time was stripped of his chairman role by Boeing’s board, which stated that, “the move was an effort to strengthen ‘safety management,’ “ (Cavaliere and Isidore, 2019).

Splitting CEO and chairman roles is becoming a trend. In 2005, 30% of chairman and CEO roles at S&P 500 companies were split—that increased to 53% in 2019, a trend that makes sense (Josephs, 2019). Why is the CEO, who’s being monitored by the board, also the chairman of the board that’s doing the monitoring? (It’s like putting a toddler in charge of monitoring themselves to not eat any of the cookies on the counter.)

Muilenberg continued on for a short time, however, as CEO, president and director, until December 2019, when he was fired from Boeing entirely. Going into 2020 Muilenberg was replaced as chairman by David Calhoun. Who, at this time, was also Boeing’s CEO.*

If you’d like to dig in a little deeper, we’ve provided a reference list of links to the full articles used here for you to review.