Even before the coronavirus pandemic, Boeing’s leadership showed little reason to have faith the company would soon be righted. But now that 737 MAX-related business woes have been deepened by an economy-crippling virus outbreak, there’s a greater urgency to getting Boeing’s fundamentals in sustainable shape for the long term. The $60 billion federal bailout Boeing seeks for itself and its industry shows that these are desperate times that require drastic measures.
Yet Boeing still lacks the steadfast leadership the company sorely needs to pull through a crisis while implementing a meaningful culture change. To understand why change is needed — perhaps more than ever — examine how chief executive officer David Calhoun talks about his company.
Even casual observers know that Boeing started this year in the throes of an existential crisis that showed little sign of ending. Conditions grew worse with travel-industry consequences of the COVID-19 pandemic.
The rollout of the 737 MAX led to two airliner crashes, 346 deaths, a worldwide fleet grounding and disclosures of a dysfunctional relationship with regulators. A feckless recovery strategy over the past year has made Boeing’s long-term viability an uncertain bet. Moves this month to freeze hiring and travel, limit overtime and preserve cash show just how dire the situation is.
Yet Calhoun, a Boeing board member for more than a decade, has shown little willingness to make the drastic changes the company needs since taking over the day-to-day business in January. Incredibly, he told The New York Times that the company’s malaise is “more than I imagined it would be” even though he has been a corporate insider for many years. He also lambasted “the weakness of our leadership,” apparently exempting himself.
Calhoun later wrote to executives that he is “embarrassed and regretful” for speaking so critically. But his comments were not merely imprudent; they also struck the wrong target. The grievances he levied against former CEO Dennis Muilenburg’s management properly belong on the boardroom table. Company directors, including Calhoun, should be replaced for the shoddy oversight that allowed this industry leader to dangerously lose its way.
Boeing requires strong, farsighted guidance to prevail over its ongoing crises. Coronavirus fears have deeply cut into air travel — and orders. That is worsening the business pain in the near term. This is when strong leadership would step up; Boeing cannot simply muddle through, get the 737 MAX back into the air and count on order to be restored.
As The Seattle Times’ Dominic Gates reported, respected industry analysts see a muddy future unless Boeing embraces a visionary long-term strategy. A drastic move to rethink aircraft design and how to meet future needs would require short-term sacrifice. High-level research and engineering work come very expensively, but the path Boeing has been on for the last decade, under Calhoun’s watch, has led the company into peril.
Calhoun and the board of Boeing directors he still belongs to have shown little capacity to learn from how the company arrived at this low point, despite having the closest possible vantage point. They should accelerate their culture change or move aside for leaders who are capable of thoughtful corporate governance.