The story of Boeing over the past one hundred years has undoubtedly been one of continuous innovation and development and as the company enters a second century it can look back on what is an incredible legacy with great pride. However, while it is right to recognise what has been a brilliant past it is also right that as the centennial year draws to a close we should take a look forward into the future Boeing as well.
2016 has been a momentous time for Boeing as the Chicago based company celebrated its first one hundred years. The centennial celebrations that had included events at the Museum of Flight, a huge and very interesting recognition of the company’s history, heritage and future at the Farnborough Air Show in the UK and various other events held through the year. The Boeing Centennial celebration kicked off mid-way through this year with the Founders Day Weekend in Seattle where the company lined up an unprecedented number of commercial jets at Boeing Field ranging from the hugely successful 707 passenger jet dating from the 1950’s to the present day 787 Dreamliner jet. This was in itself a remarkable setting and demonstrated well how over fifty years nine commercial aeroplanes including the 737 family and which remains the world’s largest selling airplane really have brought the world closer together and changed how people fly.
So how is management leading Boeing into the next one hundred years? Leaving aside technical and other innovation based advances that will of necessity play a huge part in the success of Boeing over the next one hundred years for a company the size that Boeing is today requires formidable leadership and a strategy to match. If one was to say that the purpose and mission for Boeing today is all about connecting, protecting, exploring and inspiring through innovation it is equally about driving through what has been aptly called by the company “Culture to Performance”.
Just short of eighteen months now since Dennis Muilenburg took over as Chief Executive Officer of Boeing suffice to say that while the underlying strategy of the company has not changed significantly the route to getting has. Culture is clearly very important to Muilenburg and rightly so. As a strong character and with motivation as one of his principle driving skills I was fortunate to meet him two and a half years ago at the Farnborough Air Show of 2014. As the heir apparent back then, I have subsequently been very impressed by the vision, clarity and the manner in which he is clearly driven to succeed.
Today Boeing may be said to be being driven on the back of ensuring that it has a strategy that is coherent and well understood right across the company. To achieve this requires that the culture message to ‘improve performance management’ has sufficient clarity and explanation behind it. There is cultural shift change in regard of how everything is done within the company and the message is leave no stone unturned, good process dictates results, don’t just fix the problem, prevent it from occurring and solve to create value.
In seeking to inspire, motivate and change Muilenburg recognised that while Boeing was considered as being innovative in relation to product, inspiring in terms of manufacturing achievement, awesome and always exciting in relation to design and development and one in which pride was a central hallmark throughout the company, the culture was also perceived by some as being bureaucratic, risk-averse, insular, hierarchical and sometimes arrogant.
The culture of any company is at the heart of what it does and what it achieves and it was clear that there was room for improvement. The change has been rapid and while it may be too early to measure the success the cultural shift is very noticeable. To Muilenburg it is I suppose about how the company delivers just as much as it is about what the company delivers. The need for the company to be competitive, diverse, dynamic, driven, and global and to embrace all the other requirements demanded today has required a strong mindset and one that would require significant change in how the company operated internally. Out would go poor management practices together with performance limiting mindset and in would come a can-do/will-do approach. Layers of management would be reduced and the whole exercise determined that greater efficiency would be achieved. And this wasn’t just in the US either as the cultural change requirements would spread across all Boeing activities including Europe and Asia.
Behind change lay the notion that there is always a correlation between culture and performance and that if the culture is strong and the clarity of both strategy and message was strong then buying into it would deliver results.
Importantly, Muilenburg has emphasised that a key part of the company’s strategy is to grow its share of the expanding $2.5 trillion global services market over the next decade. The strategy is based on capturing an increasing share of potential growth and in the process provide added value for customers. Boeing has launched a new business unit called Boeing Global Services and the intention is that this will combine the majority of capabilities within Commercial Aviation Services (CAS) and Global Services & Support (GS&S), including related subsidiaries. The intention is that Boeing Global Services should provide a more agile, cost-effective and streamlined after-market service and support operation to commercial, and defence and space customers whilst at the same time strengthening the ability to compete and win through delivering new innovative service offerings.
While manufacturing and MRO support for the commercial airplanes business remains a primary business activity for Boeing, defense continues to play a very large part in overall performance. International market potential is hugely important for Boeing and having won orders from the UK and Norway for the P-8 Poseidon Maritime Patrol Aircraft this year along also with orders from the UK MOD for the Apache Attack helicopter, Boeing continues to do very well in international defense sales. To emphasise the importance of the international market and how the company has grown international business activities close to being 30% of group revenues Boeing has made changes in the structural operation of how it intends to go forward to further grow its international business activities.
Effective from earlier this month and now headed by the much respected head of Boeing Defence UK, David Pitchforth, a new operation known as BDS Global Operations has now taken ownership of Boeing Defence UK, Boeing Defence Australia and Boeing Defense Saudi Arabia.
In writing this commentary I have I hope demonstrated how culture and change is at the centre of Boeing forward strategy. The company is already efficient and it has a range of products that are diverse and well suited for markets of today. However, markets of tomorrow demand that a company like Boeing cannot stand still and that it must be innovative in its approach to constantly adapting to change. No one doubts the technical and design abilities of the company and that by continually investing in new technology and materials and manufacturing techniques that Boeing will stay one step ahead. New competitors such as China will challenge in the decades ahead but by remaining effective, efficient and demonstrating that as a company it is fit for purpose and ready to meet the challenges ahead Boeing should not need to look over its shoulder.
CHW (London – 22nd December 2016)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785