Boeing has had some big shifts in corporate culture in the past decade. It’s in the midst of another one, under the direction of new CEO Jim McNerney, and last week we may have gotten a glimpse of where the new pilot is steering the plane.
McNerney’s arrival in July coincided with Boeing’s big rebound year. You can’t really credit McNerney for that. The big decisions – particularly the one to launch the game-changing 787 – were made before he came on board.
In fact, Boeing did very well, chugging along on autopilot for the first half of the year after former CEO Harry Stonecipher was sent packing.
McNerney’s hiring didn’t bring an immediate shift or series of new policy directives. The new chief said he was taking “deep dives,” trying to familiarize himself with the details of the company.
Internally, McNerney was active – at least according to John Dern, a spokesman at Boeing’s Chicago headquarters.
But from the outside, it appeared that McNerney was content to let his business unit presidents – Jim Albaugh at defense and Alan Mulally at commercial – run things, with his support, perhaps, but not his direction.
That changed last week.
Last Wednesday, as he announced the company’s year-end profits, McNerney also signaled that changes are on the way, telling analysts and reporters that he had instituted a series of new initiatives.
He said he wanted “financial results that match the quality of our people and technology.” The new programs are aimed, he said, at “finding ways to make Boeing bigger and better than the sum of its parts.”
The concept, Dern said later, is to take the drive for efficiency Boeing has instituted in its Everett and Renton factories and extend it to all areas of the operation. McNerney has appointed senior executives to sponsor the improvement program. Mulally, Commercial Airplanes group president, will direct the effort to make engineering and support programs more efficient; James Bell, Boeing’s chief financial officer, will do the same to overhaul Boeing’s back-office operations, its Bellevue-based Shared Service Group.
In addition, McNerney announced he had made some moves aimed at changing the corporate culture.
In January, Boeing leaked to the media a transcript of a recent speech by the company’s top lawyer in which he flayed Boeing leaders for serious ethical breaches involving top-level executives in recent years.
The message: Fudging the rules has sent your colleagues to jail and will cost the company literally billions of dollars.
McNerney followed that up last week by announcing he now expects his top executives to live up to a set of “attributes.” The expectation is that they will, among other things, deliver results, set high expectations and “live Boeing values.”
“We must take specific steps to strengthen the culture of leadership and accountability at Boeing,” McNerney said. “We’re going to insist that our leaders be models for the entire company.”
The timing is right for this kind of move, said analyst Richard Aboulafia with the Teal Group. McNerney is widely seen as one of the most talented proteges of retired General Electric legend Jack Welsh, and the Welsh School playbook holds that new CEOs “keep quiet for six months and then go in and make some major moves.”
“This is basically the time it happens,” Aboulafia said.
But only time will tell if these are the right moves, and whether they’re being made with conviction. After all, Stonecipher declared a new campaign for ethical behavior and mandated companywide ethics training – wildly unpopular with rank-and-file workers here in Everett – just before he was booted in disgrace for having an affair with a female subordinate.
There might be a difference. McNerney is tying senior executives’ pay to how well they adopt and exhibit the new attributes. Given that, new values “are meaningful,” Dern said. “They’ll have significant meaning.”
“Just talking about them won’t make them stick,” McNerney said. “We’re going to teach them to be leaders and managers. We’re going to let people know we expect them to live by these attributes.”
Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.
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