Has Boeing Become Too Big A Beast To Successfully Manage?

Boeing has long been considered one of America's greatest companies. Today the aerospace giant is one of its most troubled.

Planes built by Boeing have spanned the globe since the company's founding in 1916. Iconic Boeing aircraft ranged from the stylish Boeing 314 flying boat to the B-17 and B-29 bombers that helped win World War II. The company has built legendary jetliners for more than 60 years, from the Boeing 707 transatlantic pioneer to the distinctive 747, the jumbo jet with a piano bar.

The company has sold more than 10,000 Boeing 737 twin jets to its airline customers. Yet issues with the 737MAX, including two fatal crashes that killed 346 people, have consumed the company and its leadership for the last five years. With only two companies, Boeing and Airbus, building the lion's share of the world's airliners, Boeing's issues pose a challenge for airlines and their customers as well.

This week, just four years after the last management shuffle, Boeing announced the coming departure of top executives, including CEO Dave Calhoun and Chairman of the Board Larry Kellner. Boeing said, "Calhoun will continue to lead Boeing through the year to complete the critical work underway to stabilize and position the company for the future."

Kellner will be replaced as Chair by Steve Mollenkopf, previously CEO of Qualcomm, who will lead the search for Boeing's next CEO.

Stan Deal, Boeing Commercial Airplanes CEO, is "retiring immediately." He will be replaced by Stephanie Pope, a long-time Boeing executive who in January was promoted to chief operating officer.

National Transportation Safety Board Investigator-in-Charge John Lovell examines the fuselage plug ... [+] area of Alaska Airlines Flight 1282 Boeing 737-9 MAX on January 7, 2024 in Portland, Oregon. A door-sized section near the rear of the Boeing 737-9 MAX plane blew off 10 minutes after Alaska Airlines Flight 1282 took off from Portland, Oregon on January 5 on its way to Ontario, California. (Photo by NTSB via Getty Images)

No doubt the January incident on an Alaska Air Boeing 737 MAX, where a door that turned out to be missing four bolts blew off, depressurizing the plane, affected the 'resignations.' In February, the FAA blasted Boeing's corporate culture and called for the company to make more than 50 safety-related changes and deal with its quality-control issues.

We spoke to Professor Ashley Fulmer, assistant professor of managerial science at the Robinson College of Business at Georgia State University. Dr. Fulmer is co-author of a recent paper, "What Happened to Boeing?" with Michele Gelfand, Professor of Cross-Cultural Management and Psychology at the Stanford Graduate School of Business.

Fulmer believes management shifts like those at Boeing this week can affect the trust of employees and consumers rather than fix the underlying issues. She did note in our discussion that CEO Calhoun "made sure Boeing survived the pandemic." However, the exiting management team may not have been able to change the internal culture of a company of 170,000 people.

Forbes: What's wrong with Boeing?

Fulmer: Boeing has all these problems, five years of disasters [with the 737 MAX.]What it points to is a cultural problem, very deep seated. They seem to value profits over safety.

It's a loose culture, where units and individuals seem to have latitude to make up their own rules. A Google can have a free style culture, but for a Boeing, failures are very costly.

Boeing 737 Max airplanes sit parked at Boeing Field on November 18, 2020 in Seattle, Washington. The ... [+] U.S. Federal Aviation Administration (FAA) today cleared the Max for flight after 20 months of grounding. The 737 Max has been grounded worldwide since March 2019 after two deadly crashes in Indonesia and Ethiopia. (Photo by David Ryder/Getty Images)

Forbes: How can this be addressed?

Fulmer: Communication has to be centralized. There need to be clear sanctions if people are not aligned. A tight culture is required for safety, to make sure everything is aligned to the standard.

Boeing is kind of an assembly factory. They have a really large network of suppliers, and those suppliers have sub-suppliers. But at the end of the day, it is a Boeing plane. The company needs to take responsibility for ensuring that the whole organization can adhere to these safety standards."

My research is all about trust. We trust their integrity. If they are self-regulating, it's hard to trust.

The Boeing customer has to think if they want to fly on its planes. Alaska says its Boeing's problem. Dave Calhoun said it's our problem. Words are cheap. It's good to say we are taking responsibility, but now he's stepping away. Will there be anyone taking responsibility?

Forbes: What's wrong with the culture at Boeing?

Fulmer: The organization's commitment is no longer on the safety value. The competing message is profit versus safety. Employees say they would get punishment if they called out a problem.

An experimental Boeing 737 Max 10 jet airliner readies for its flying display in front of Boeing ... [+] workers at the Farnborough Airshow, on 20th July 2022, at Farnborough, England. The US aviation manufacturer is recovering from a financial downturn following the series of 737 Max crashes. (Photo by Richard Baker / In Pictures via Getty Images)

The FAA report says that people weren't able to raise their concerns. There needs to be a tight culture for safety. They instead have a tight culture for profit.

Forbes: Why couldn't Calhoun and his team fix it?

Fulmer: Because culture is something that takes a long time to fix. Boeing has been marked by the short tenure of its recent CEOs—now it sounds like it will be six in twenty years.

So they focus on profit because that's what shareholders expect. Wanting to change the culture is not popular, talking about making more profit is popular. Yet they are losing $30 billion because of these actions, from accidents and certification issues.

I think Boeing is showing accountability, showing a willingness to do what needs to be done. But it's not a popular transformation.

Forbes: What do you suggest?

Fulmer: Communications should be from the top, and clear monitoring through the organization. There needs to be top-down leadership. And that leader needs to be seen and present.

Current and former employees, customers and invited guests participate in a ceremony to mark the ... [+] delivery of the last Boeing 747 aircraft, at the Boeing Future of Flight Museum in Everett, Washington, on January 31, 2023. - Boeing officially bids farewell to the original jumbo jet, the 747, as it makes its final commercial delivery of an aircraft that democratized flying and serves US presidents. (Photo by Jason Redmond / AFP) (Photo by JASON REDMOND/AFP via Getty Images)

They say they are welcoming people raising their concerns. But employees who actually did it faced retaliation. They have to have a system where employees can raise their concerns without fear.

Boeing needs to do a systematic internal review. They also need to hire external companies to do analysis and interviews that are confidential and use collated information. Don't bury that report.

Boeing never explained what went wrong. Boeing doesn't disclose a lot. Perhaps they realize they cannot keep the lid on.

The company can be fixed But it will be very difficult. It's not going to be popular. It's not going to be appreciated.

It's about safety and trust. With the CEO change the public is going to be skeptical. People will be cynical because this has been going on for such a long time. It's hard to build trust and hard for a CEO to build trust.

Boeing employees work on the 737 MAX on the final assembly line at Boeing's Renton plant Wednesday, ... [+] June 15, 2022. (Ellen M. Banner/The Seattle Times via AP, Pool)

Nonetheless, as Fulmer and Gelfand said in their article, "Organizations can pivot and recalibrate their culture when they have become misaligned."

They wrote, "We would advise Boeing to introduce more accountability into its overly loose culture by adopting our SECURE model. The acronym stands for: Setting clear expectations, Establishing structure, Centralizing decision-making, Upholding oversight through increased monitoring, and making sure Rules are Enforced."

Fulmer told Forbes, "The new CEO has to have the courage to do something that will not be about profit and not be about immediate business."