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SPEAKER_01: Hi, everyone.I wanted to jump in before we get started with the episode to let you know that we recorded this before Boeing fired their CEO.Anne and I fully support that decision, which you'll understand as you listen through.We'll be back at the end with some additional thoughts about this news.
SPEAKER_02: Hello, Frances.Hello, Fixable audience.Welcome back.We are going to do something a little different today.Well, it's not that different.We're still doing our favorite thing, which is giving out advice.But this time, no one is asking us for it.
SPEAKER_01: Oh, goodness, yes.This is what I do all day, every day.And I certainly don't often have a chance to say it, but I always have it in my head.
SPEAKER_02: Well, you share it with some of your most... intimate audiences.But yes, because this is our very own podcast, Frances, no one's going to stop us.Oh, this really, I hope this segment takes off.Yeah.Today, we are going to be giving unsolicited advice.This is the first time we're doing it on the podcast.We're going to keep trying things and you can expect to see more of this stuff popping up in the feed now and then.Please let us know what you think.I'm super excited about this.
So what's today's topic? Princess, today we're talking about Boeing, which is a company that's had a rough go of it, as our listeners know.And our question is really, what the hell is going on?Why literally are the doors coming off planes? What does it mean about this company and what can they do to turn things around?
SPEAKER_01: Oh, I have so many thoughts about this.You and I say that we like to go towards burning buildings.This is as burning a building as there can be.And I think as we explore it, there's going to be a lot of takeaways for people who want to avoid disasters.So we think about fire prevention and firefighting.We're in a fire.Let's talk about what could have been done to prevent it for our listeners.
SPEAKER_02: And how does this company fight it?
SPEAKER_01: Yeah.Going forward.Two really important things.
SPEAKER_02: This is Fixable.I'm Anne Morris.
SPEAKER_01: I'm a company builder and leadership coach.And I'm Frances Fry.I'm a professor at the Harvard Business School and I'm Anne's wife.
SPEAKER_02: Most important.
SPEAKER_01: Most importantly.
SPEAKER_02: On this show, we believe that meaningful change happens fast.Anything is fixable and good solutions are usually just a single brave conversation away. So here's what we know.Boeing is currently under heavy scrutiny from everyone, regulators, the media, the flying public, because of multiple high-profile issues with their planes, including multiple deadly crashes, a door coming off a plane, and a wheel falling off and smashing into cars.
SPEAKER_01: It's unbelievable.I believe just the other day, another Boeing plane landed in Oregon and they discovered that one also had a missing panel.
SPEAKER_02: That is correct.That was March 15th, the year of our Lord, 2024.Luckily, no one was injured.The missing panel was discovered during a routine post-flight inspection.But my God, this is coming just a few months after a similar issue blew a hole in one of the planes midair.The doors came off.That was January 15th. Just minutes after takeoff, the door plug of an Alaska Airlines flight separated from the plane.So the entire wall panel came away from the plane mid-flight.That is correct.
It left a gaping hole in the body of the plane, forced an emergency landing. By the grace of God, no one was seriously injured in this incident.There was a kid who had his shirt ripped off by the force of the decompression.I mean, can you imagine how terrifying this was for everyone on board?It's awful.It's awful. And that plane, a 737 MAX, was also the plane, if you recall, that had risen to some infamy after two deadly crashes in 2018 and 2019.Now I'm just mad.
SPEAKER_01: I mean, I'm just mad that they had accidents back then.They have accidents now.And I'm not sure how much learning is occurring.And this must have roots in the culture.
SPEAKER_02: Yes, there is a good reason for all of those emotions.And there's a lot to be said from an engineering standpoint.Regulators, the Federal Aviation Administration, everyone's getting involved.Congress is getting involved.By the way, these conversations are also not going well for Boeing. But what I think we want to go after is what we consider to be the deeper question, which is how did a company like Boeing get to the point where something like this is even conceivable?
SPEAKER_01: You know, when you say a company like Boeing, the phrase that was so commonly said was, if it's not Boeing, I'm not going.That's what they were known for.Yes.
SPEAKER_02: Yeah, I mean, this is an organization that embodied engineering excellence, process rigor.I mean, they had an almost religious devotion to excellence on the production line.So I want to get into what happened here and where do leaders of this organization go from this point?Let's do it. All right, so let me throw out some context here for listeners not familiar with the company.So Boeing was founded in Seattle in 1916. You know, this is a storied arc of an organization.They became one of the biggest commercial aircraft producers, as you know, and they had this incredible reputation for engineering excellence.They merged with a competitor, McDonnell Douglas, in the early 90s, and that coincided with a shift in behavior where it seemed like the company was solving for financial performance instead of quality. They eventually re-headquartered in Chicago and then moved right outside of D.C.
SPEAKER_01: Ah, to the engineering metropolis of D.C., where all engineers go.
SPEAKER_02: Right.I mean, it's a great metaphor.Well, it's a terrible metaphor, but this is not what we do in our nation's capital.No, what we do there is lobby.And here we are now, 2024, where the doors are literally coming off the planes. So, Frances, I want to pause and just start with where is your head in terms of where do we go from here?
SPEAKER_01: Well, I think we have to figure out why the doors are coming off, and then we can change it.And to me, the only reason that doors will come off is if quality no longer was the number one most important thing.Right.
SPEAKER_02: So let me create some tension.Let me try to channel the people who were leading the company over the last decade, because a lot of this is super well documented now.There's been fantastic reporting.There's been congressional hearings.There's now an FAA report that has dropped. And so it's really clear what people were thinking and what they were thinking was, yeah, but now we got to run a business.So what is a graceful way to deal with that tension?
SPEAKER_01: I think about it in terms of the objective function and constraints.We're going to maximize an objective function subject to a certain set of constraints.So it sounds like the history of Boeing was we're going to maximize quality subject to making sufficient money. financial.And then it became, we're going to maximize financial subject to sufficient quality.And I can tell you in an engineering company, if you don't have quality and improvement of quality as the objective function, you will never achieve it.So if we got to go back in time, we would feel everywhere the organization was that it was the maximizing of quality.And And so when financials are a manifestation of quality, that's when the engineering companies will thrive.Anytime, and I don't mean to say this disparagingly, but I get nervous every time a CFO becomes the CEO.
If you're going to optimize on money, you may or may not end up with improvement of quality. But if you're going to optimize on quality, you will end up with the improvement of financials.And so which one is primary and which one is manifesting?And this to me feels like a classic case of it used to be improvement of quality and then it became financial.And I don't think there'll be anybody at the company who will say, no, we didn't do it, except for they probably would say we had both.And I can tell you, I have never seen both work ever.
SPEAKER_02: And the irony is that the failure on the engineering side was so profound that they've had five years of deep losses and more expected ahead.Like the assumption was false.
SPEAKER_01: They gave buyouts to their experienced employees. You don't give buyouts to your experience unless the only thing you care about is the money side of this.So I think had we gone back and played the camera and saw them making financial decisions, which were all being made behind closed doors, if those doors were open then, we could have predicted that this was going to happen.It's just a matter of time.Yeah.Yeah.
SPEAKER_02: So we're sufficiently worked up.I presume our audience is sufficiently worked up.So let's relieve some tension.How are we going to fix this?So whenever there's a crisis, there's three things you have to do.
SPEAKER_01: You have to honor the past. We have to have a clear and compelling change mandate, and we need a rigorous and optimistic way forward.It's always what you do in a crisis.To honor the past, we have to honor the—if it's not Boeing, we're not going.We have to honor the engineering part of the past.That's honoring the good part of the past.That's what gives me optimism in this case.Me too.
SPEAKER_02: This company has such gorgeous roots in engineering. And having reverence.Get reverence for it.
SPEAKER_01: So we have to honor that.
SPEAKER_02: And can I just say on this, because I know this is a public company.We've been in the rooms where the stakes of kind of owning it have felt really high.But the world has done this for you. Just open any paper.Any paper.The mandate for change is clear.The blame has been assigned.The root cause analysis has been done.You don't have to worry about people finding out things that they don't already know.This has been laid out for the world.
SPEAKER_01: And so now what do we do?So we honor the past, the good and the bad.We have the clear and compelling change mandate.It's on the front page.The doors came off.We use that as a metaphor.Right. And now we need a rigorous and optimistic way forward.We have to get back to our engineering roots.So neither the current CEO nor the last CEO was an engineer.
Now, I'm not saying you have to be an engineer to have reverence for it, but your job of showing the reverence is that much harder.So I know sometimes when it's not a physician running a hospital, you can do it, but you have to care more about the health of the patients than all other physicians do. Yeah, yeah.And what would I do on day one?I would have a campaign to bring back experienced engineers because we need them and I would honor it and I would apologize.I mean, I would do all of the things.
SPEAKER_02: The phrase we will often say to organizations in moments like these are organizations are perfectly designed for the outcomes they get.
SPEAKER_01: This is a predictable outcome from the culture they put in place.
SPEAKER_02: So we have to start from that assumption.Like we designed for the results that we're getting.And so we have to bring design thinking.We have to redesign this organization for different outcomes.And the senior team responsible, and that's the executive team and the board of directors of this company, has to take radical responsibility for this pivot.Right. Now, what does radical responsibility look like right now?First of all, it's treating this like the emergency that it is for the organization. The status quo is totally unacceptable.And right now, it is a show-not-tell game.
And so I want to see some drama.Why aren't factories being taken offline?Why aren't people losing their jobs?Why isn't this whole system being redesigned right now?
SPEAKER_01: And if it's the why aren't people losing their jobs, I have to tell you, it's the board and the senior team.Put engineering at the center of this business because it's the only chance we have to make money. You know, it's indirect, but it's that simple.And so the people who I would bring on the board, the senior executives, I mean, if there's 10 people on the board, I would need at least five of them to actually be engineers.
SPEAKER_02: I think it's a huge part of walking the walk.I mean, if it's not Boeing, I'm not going.How do we plant that flag and what is it?
SPEAKER_01: Look like every employee would rally around this.Every customer would rally around this.Here's the thing we know about change.Change can happen in an instant as long as you do it in a 360 degree perspective.Everyone would rally around this.
SPEAKER_02: So, Frances, it seems like since we recorded the original episode, we have manifested a personnel change at the top of Boeing.The CEO resigned on March 25th, and the chairman of the board is being swapped out for someone with a real engineering background.So the question before us now is, where does this company go from here?
SPEAKER_01: First of all, I'm so glad that they've, one, swapped out the CEO, two, brought in an engineer.I mean, it's a central casting engineer, an engineer who has led companies before.I recommend that Boeing not pay any attention to the CEO's resignation letter, which was, oh, this was long-planned. It was just all about them.It actually showed what was wrong, so I would ignore the resignation letter.But magnificent that they have the moment now to bring reverence back to the engineer.And so my further advice is do not talk about the financials for one moment.Talk about the reverence for improvement and quality and safety.And I promise you, as in the long tradition of Boeing, when you get those things right, the financials will follow. And the second you put financials in primacy, this stuff may, we just learned, may not follow.
So good news, Boeing, for bringing in an engineer.Next up, please reopen your plants with union workers in Seattle.
SPEAKER_02: Yeah, I mean, where my head is, I think they needed this kind of dramatic moment to signal to the world that they had the appetite for a real reset here. So I think it's a really encouraging sign.I think it was the right move.I think the question on everybody's mind now will be what happens next and how do they keep this momentum for meaningful change, not just the chatter of change, for meaningful change to really happen.And I think those next signals are less about the personnel than And less about leadership and more about a willingness to go back to the drawing board on process here.And I think to your point, it includes what are they doing on the manufacturing line?Who is there with them?Where is this happening?Where is headquarters?
Please move it out of D.C.Now, let me ask you this, Frances.You are a case-based educator, right? Is there anything that Boeing executives can learn from any other organizations who have been through this kind of trauma?
SPEAKER_01: So one of the best selling cases in the history of the Harvard Business School was on the Toyota production system.And Toyota had the first world famous production system. They had good financial performance as a result of having the best production system in the world.And then the CFO rose a little too high in the company.And when the CFO became the head of the company, it just had a small change, but important, which is there was the primacy of financial performance, hoping that improvement would manifest.And improvement halted. And again, I don't mean to, I think CFOs can be great CEOs, but only if they have more reverence for the non-financial thing than anyone else in the company.
SPEAKER_02: And then how did Toyota bounce back from that pivot?
SPEAKER_01: They switched from the CFO.So in that case, it was a personal change.They went back to the roots.I even think to the like family of Toyota, like to the improvement oriented part of it.
SPEAKER_02: Yeah.And that's the culture change that we now need to see after the personnel change.
SPEAKER_01: What happened next?They got back to better than they were before and have stayed in that story place for decades.I love that.And so to close, here's what I would say to the Boeing executives.Congratulations.Don't stop here.The entire employee base is watching. Who are you hiring?Who are you rehiring?Who are you elevating?
Where is work getting done?Where are you headquartered?We're watching for all of the other decisions you're making.And are they aligned with this absolutely perfect first step?
SPEAKER_02: And not just the employees, the whole world is watching.Well, indeed, the whole world, the flying public is watching. All right, everyone.Thank you for listening.If you want to figure out your own workplace problem with us here at Fixable, send us a message, email us at fixable at ted.com or call us at 234-FIXABLE.You can even text us at 234-349-2253.We'd love to hear from you. Fixable is brought to you by the TED Audio Collective.It's hosted by me, Anne Morris.And me, Frances Fry.
This episode was produced by Isabel Carter from Pushkin Industries.Our team includes Constanza Gallardo, Banban Chang, Michelle Quint, Corey Hajim, Alejandra Salazar, and Roxanne Heilash.This episode was mixed by Louis at StoryArt.
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