Boeings’s Downfall - “Greed is Good” the McDonnell Douglas Merger
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- čas přidán 3. 05. 2024
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Boeing Vs McDonnell Douglas: Who Absorbed Whom? Until the mid-1990s, Boeing was the aviation engineering company that all other aviation companies measured themselves against.
But, when McDonnell Douglas and Boeing merged in 1997, an official described the pairing of the management of the two companies like “hunter killer assassins meeting Boy Scouts”!
Why was that? How did Boeing’s exemplary focus on engineering just fizzle away, when the McDonnell Douglas execs moved in?
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Below you will find the links to videos and sources used in this episode.
SOURCES
• Times Square 2024 Ball...
• Dick Clark Productions...
• THE UNVEILING OF THE F...
• Building the 777
• 1994 Year Of 777 First...
• How Seattle Changed th...
• 21st Century Jet - Bui...
• Boeing 757: Short docu...
• A 1970 film about Seattle
• CondorTV: New Boeing 7...
• From the archives: Jac...
• North American Aviatio...
• Boeing HQ to depart Ch...
• Boeing in Charleston
• Boeing confirms 787 Dr...
• Fires ground Japanese ...
• Defence Secretary Unve...
• One Ford Plan - Alan M...
• How Boeing Lost Its Way
• "Shrinking the Earth" ...
• "Miracle Planes" | Boe...
• BAHF Boeing C-97 Start...
• A380 from dream to rea...
• The Indispensables: KC...
• "What Can't We Do?" | ...
• Boeing bringing 737 Ma...
• Life Inside Dangerous ...
• F-20 TIGERSHARK SHORT ...
• Douglas DC-9 Prototype...
• First 25 Years Of McDo...
• U.S. Air Force: Capt S...
• 'This Is Hell': Boeing...
• McDonnell Douglas MD-1...
• After a series of Boei...
• FAA finds Boeing cultu...
• Song of the Clouds - A...
• Boeing - McDonnell Dou... - Auta a dopravní prostředky
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@@koharumi1Blursed
This isnt a well thought out video. Boeing bought Mc-D as a cushion of military sales against the high risk of commercial production. That cushion remains to this day. Boeing isn’t failing it products Billions of US DOD contracts for JDAM’s (my personal go to favorite) other munitions, fixed wing, rotary wing etc etc etc. Boeing wont be allowed to fail but when they again produce a new airliner it won’t be “betting the company”. That was the idea from the beginning and well it worked. The missteps of the present are part of the frailty’s of human nature producing an incredibly complex machine
@@Dog.soldier1950 Boeing wasn’t “betting the company” in producing new airplanes, they were innovating & reaped every hard-earned reward for their cumulative efforts for decades. In the end, it was McDonnell Douglas that needed financial support, even with their “cushion.” Not Boeing. The zeptosecond a company both diverges from its core mission and becomes as you indirectly say “too big to fail,” especially as a result of governmental interference, is the zeptosecond it needs to be torn apart. It not only goes against the competitive nature of capitalism that breeds innovation that is it’s best advantage as an economic model but also breeds carelessness, greed, corruption, cost-cutting and ultimately leads to a worse product for consumers. With airplanes, where one thing going wrong is catastrophic, that is absolutely unacceptable. Alaska 261, Air France 447, Birgenair 301 & Lion Air 610 and others with every life lost, proved it many times over. Yet, still no one is proactive in preventing history from repeating itself…
To a lot of Brits over the age of 35, when the name, Bill Owen is mentioned, we think 'Compo'.
The downfall of Boeing is the downfall of the American industrial sector. Short term growth over all else, that end justifies all means, no matter how ruinous they are to anything or anyone else.
@@kilroy4843shut up about DEI. DEI is not the problem, it the management is to blame.
@@kilroy4843Boeing has been in decline for 30yrs. DEI is relatively new. So…no
@@kilroy4843Yup, Stonecipher, Mcinerny, Mullenberg and Calhoun were all DEI hires 😂😂
The 1971 Lewis Powell memo to the US Chamber of Commerce provided the spark for our new industrial revolution. The election of Ronald Reagan and the bipartisan acceptance of Reaganomics provided the means to impose Corporate Culture on all phases of our existence.
The downfall of Boeing is simply greed.
The 3rd largest military contractor worldwide and commercial licences in every country worldwide. But no Empire lasts forever.
Other airline providers came into existence and were better. Boeing became the 5th largest military contractor... and because the rich wont accept earning less or the same and must always have growing profit... they start to cut corners, make people redundant and reduce costs... until they are way into dangerous procedure territory... just to to keep those profits high... and they will keep going until they start borrowing... with zero intent on paying back... then declare bankruptcy and the shareholder and owners run away with the profits.
Nothing they are doing is unique or unpredictable. Every massive company does the same and it's all down to greed.
im not a christian but i hope there is a hell somewhere for that board of directors that forced hundreds of working class employees to give up their pensions and accept job cuts whilst they make millions. disgraceful and completely unjustifiable behaviour.
Please come to Jesus. Evil will not win this battle.
I agree!
There are many more execs who should join them in hell. A lot of large grocery chains used to pay around $30/hr to their front line workers, but in 2008, they tricked them into lowering their pay and still kept it around minimum wage. It has happened in so many industries, that we are now moving backwards as a society
@@HR_Raccthe union will be much more helpful in this battle than believing in Jesus... or God, Santa Claus or any other imaginary person...
I wonder if the board who forced employees to give up their pensions gave up their own stock options and bonuses? I'm sure we can all guess the answer.
I worked at Boeing Commercial Airplanes from 1988-2013. I recall being in a meeting around the time of the merger where the speaker brought up the stock price. I had never heard anyone mention the wall street element of the business prior to that. Microsoft was going through the roof and the only reason I remember any of this was because Microsoft charts were put on view foils and blasted on a screen. Being the resident master of the obvious in the meeting I blurted out that Microsoft is selling 99.00 windows CD's that are probably a dime or so to make.
We are building the 747.
Didn't matter to whoever was speaking. It was also around that time that Boeing brought senior managers from Toyota to explain to us how to build an aircraft. It was embarrassing to watch management from a different industry convince my managers that I didn't know what the fuck I was doing. We had the wing leading edge underwing panels as a job package on the graveyard shift. It was very demanding work. You had to move fast to drill 400 close tolerance holes over your head. All different types of fasteners and hole sizes. Rivets, huck bolts, blind rivets, WQ, HLT all diameters from 3/16" to 1/2". Some with collars and many with 12 point nuts that required a first and a second torque. If you had a shallow countersink and had to beat those things back out you had to use a slide hammer to pull the heads if you could even get it to slip over the shank. Usually they had to be drilled out.
The Japanese car builders saw us chucking up a drill bit and drilling every hole to pre coldwork dimensions from the number 1 strut to the number 2 strut. 060852 job, two guys and one shift to get that entire length drilled, holes sold at pre coldwork sizes. Sleeve coldworking if you could find the enerpac nose. Reamed after that and then another hole check. Then remove the panels to deburr everything, thaw out tubes of lead based sealant and get that shit everywhere. Put them back on and countersink into fiberglass which smokes cutters and causes a visit to the tool room to get another one if they aren't busy bullshitting. Set it to the correct depth, finish the rest. Start gripping the holes for the fastener lengths, go find all the right fasteners and get them in and torqued, get a QA to verify that, then after 20 minutes to allow for sealant to squeeze out, find another QA and have them witness the second torque. Put putty on every single but and then push your stamp into it to indicate that it was witnessed. Now go get rivet aprons and 15 different sized bucking bars, you really need the ones you had to grind the shit out of to get into a tight spot. Start blasting rivets over your head while the bucker is nearly hanging upside down to reach the tails. Shoot all 350 or so D rivets, microshave the heads, touch up the conductive coating. Install the blind bonding rivets, get a biddle meter to verify they are .002 ohms or less.
The Toyota peeps were morons. Not just a little either. Major idiots. They wanted us to run a separate air hose for every tool we used. No more quick disconnects. Hard connections. We were gonna shave the time it took me to pop the air line off my drill and slap it onto my rivet gun. Not only that, we were going to be tripping on about a dozen air hoses that would be a tangled mess in 10 minutes. And!! They wanted me to work every process for one hole before I moved to the next one. It was obvious neither Boeing management, nor the consultants they thought could teach a workforce that they didn't understand to begin with. Understood what we actually did for a living.
They hired people to follow me with a clipboard and a stop watch. I would lose the timekeeper in a matter of a minute or two. One said to me that the time in between countersinking one hole, moving myself to get underneath the next one wasn't value added and then said the drill was doing all the work anyway.
I laid that fucking tool on the ground and said. Let me know when it's done. Walked away before I beat his ass.
I could go on and on about stupid shit I had to deal with. That is a small sample. Like a couple hours of asinine bullshit. I wrote to Boeing after the Max crashes. I told them in simple English.
Thanks for ruining my bragging rights! I loved working there and you fucked it all up. You just never listened. Now people are permanently DEAD. I am ashamed to say I ever worked for Boeing. Sent that off and now I am self employed as an eternal voice to shove their noses in shit for the devastation they rained down on so many innocent people. Trying to blame anyone they could point at.
Boeing. 25 years of my life. They can never redeem themselves with me. Not a single real man in that C-Suite. Just a bunch of ivy league ass kissers.
They still have no clue and they can't find men with spines to stand in for the milk toast that runs the place.
They don't even care.
I was at Honeywell and recall a meeting where the President told us every employee should pay attention to the price of the stock. My guys who did the work had no idea what a stock was. But this was the President's big idea.
I never quite grasped how these assembly lines get staffed in the first place, with personnel who have the required know-how on such sensitive mass construction projects. So much work with so little margin for error. I assume you have supervisor team leaders, but all the same you can't send Joe Schmoe up there with a drill and just some healthy advise. Conversely, it's hard to see how mechanics would gain the required know-how without actually working on real aircraft in the first place. It seems like such a sensitive echo-system, looking from the outside in.
@@hide3reptiles365I studied aerospace engineering for 2 years back in 2002-2003 in Melbourne Australia. Every last rivet needs to be traced right back to the mine that the raw materials were taken from. Sensitive is an understatement.
I think you need to make a video. Interesting regardless.
Thank you for sharing your story. I used to hate flying the MDs in the 90s, you could just feel as a passenger that the Boeings would perform much better in any situation. Now they turned a great aeronautic engineering company into a cheap burger flipping restaurant. One would have to be soulless not to hate it.
Letting Mullaly walk was the biggest single mistake Boeing ever made.
Meh, tbh Ford is trash too
@@pmman4232trash after Mullally stepped down and they forget the lessons he taught them.
When Stonecipher left, the Pentagon told Boeing to bring in an outsider as CEO. The Druyun and Stonecipher scandals exposed the government as well. The Pentagon was also tacitly funding the 787 through an unorthodox contract and fee structure under the Army's Future Combat Systems program (which also failed).
This is why Mulally didn't get the job.
Mullaly should've stayed. Working together forever!. Boeing NEEDS ti bring that back
Mullaly saving Ford from bankruptcy in the late 2000s unlike Chrysler and Government Motors was mission impossible. Sure I'll likely never buy from either of the three products, but still impressive.
Jack Welsh has destroyed more wealth than almost any individual who ever lived. He is responsible for many of the problems we see in Big Business today with the concentration on profits and shareholder value rather than just making great products. He destroyed GE, and tangentially he is destroying Boeing as well.
and many other businesses who copied his model in their hero worship of his "success". I propose you can remove the "almost" from the first sentence in your post.
@@lisanadinebaker5179 Indeed.
And what has been destroyed is real wealth, the ability to do hard things well.
His policies are why "crunch culture" corporate policies still exist today after numerous studies in the early 1980s claimed and concluded that they were detrimental to the worker base. Many executives fawned over Welch because although he destroyed General Electric in the long term, he made several short-term, quarterly gains for investors. Plus, being involved in a corporation active in the United States military at the second half/tail end of the Cold War earned you more kudos than it does today. In fact, it was this "killer" mindset that fascinated them from a tactical point of view, as it made them appear more "pragmatic" than they actually were. It was simply an image decision, rather than a quality control decision.
Luckily Larry Culp revived GE
The idea of taking the business model of the failing company you just bought and make it yours just seems idiotic.
The deep state has its tendrils in both.
In their mindset, the company wasn't failing because of their leadership. It was failing because of the cold war money dwindling. On the other hand they thought it was their leadership that made them successful when in reality it was the cold war money. Terrible egos for management.
The commercial side of Mc-D wasn’t doing well but it was the military sales side that was and is the golden prize. I suspect DOD would have forced a merger if the two companies had not come to an agreement. The risk to commercial airplane manufacturing is on full view. You have only two major and one minor manufacturing firm world wide. It’s a high risk business. Military sales are a whole different world and is Boeings cushion against “betting the company” on the next passenger plane.
It wasnt the business model of the failing company. It was Boeings own business model.. they just so happened to avoid the negative image that befell MD.
Like the 737. It was garbage from day one with major structural issues with its fuselage. Plus the rudder PCUs.
And the reason was cost cutting. They wanted to use the same technology as the 727… but have the engines underneath for more passenger room than the DC-9 but still have it low to the ground for onboard air stairs.
The 747 was plagued with problems too and also had a cargo door blow out.
@@jameshamner9905 Except it ALWAYS is management. They made the poor contracts and they were the ones who failed to diversify in time. But management always will blame everything in the world before they think of themselves.
Ex Boeing employee here. Internally, we all knew the McDonnell-Douglas merger was going to be a disaster.
I do wonder why Boeing just didn't let McDonnell Douglas collapse and then pick up any bits they wanted at the liquidator's sale? Could have left the management in the bin and no Stonecipher.
Ex-KGB agente here, I'm interested in what both of you have to say. Cheers comrad... I mean guys.
Hey, it's McDonnell Douglas, not McDonald's. Did you push a broom?
@timf2279 Simple typo, and it's fixed but must have pushed your buttons.
Ex American president here, Im inviting you guys for a chat to see what you have to say. Im looking forward to our chat
Jack Welch was a monster, destroying General Electric. I lived outside of the very city he rose in the ranks of GE, Pittsfield Massachusetts. There's nothing left of the huge operations that GE once had there. The company is small, now, having sold off its various divisions and people. Welch's philosophy is used by many companies and is one of the most destructive, anti-social ways to run a company - so much so, that when I look to change employers, if I see a company that has adopted his and HBS principles, I avoid working there. It is completely unsurprising that Welch's policies wrecked Boeing, leaving it with back-stabbing beancounter managers and dissatisfied workers. In order for the company to be fixed, they must throw out Stonecypher's remnants and going back to "Working Together".
Indeed - and you´re not alone to avoid such working environment. This ends regularly with the remaining of only those People who´ve no other choice to stay there because they´ve no other option. Therefore the Jack-Welsh-Business-School regularly failed wherever they took over the leadership of a Company.
The real problem is Jack Welch was a disciple of Milton Friedman's economic theory. Friedman was the source of the "Greed is Good" philosophy and rampant Wall Street suck ups.
You would have to get rid of the entire board, and upper management to fix Boeing and find management that was more like the old Boeing. Good luck finding that type of management these days, they are all psychopaths.
We should perhaps celebrate people who build rather than destroy. Making a few investors even richer is no cause for being worshipped.
The idea of a big company spinning off its divisions into smaller companies, only to buy things back from them, and somehow "generating shareholder value" is mystifying to me. Where is the possible efficiency gain? I understand how one can outsource a task to a specialist company and benefit from the expertise they have accumulated, but not if that specialist company is literally one of your own divisions?
Simple, Boeing placed the dollar over the safety of their product. Now the chickens have come home to roost.
It certainly looks that way
Yep
If it’s a new Boeing I ain’t going. I seriously pay extra to fly airbus
What still is missing though are those who were ultimately responsible. Sure, "the shareholders" pay the price, but these aren't the same shareholders, who put a board in charge that pushed the dollar over safety policy. There needs to be long-term accountability by shareholders and boards, otherwise this will not be the last time. That board, those shareholders, they need to be made to pay damages.
Only then will the chicken have truly come home to roost.
It's actually illegal for a company to not do this
As a Boeing engineer through that period, I can confirm that Mulally was extremely popular and we wanted to see him in charge of the company. Great video 👍
Too sad the narcissists prevented that in the end, things surely would have taken an entirely different turn for Boeing. The 'E' in CEO should really stand for "Engineer".
A lot of Scottish/ Irish names in the aviation business it seems.
After watching any interviews of Mulally I was like, "now that's a real leader that I'd gladly work for."
His integrity and character shine through in the 777 documentary, which IMO, is one of the greatest aviation docs.
Mulally came down to Honeywell in AZ and spoke to the 750 people we had developing the B777 flight deck and his words were inspiring. He talked about first certified flight being Denver to Honolulu - 3 hour ETOPS - high altitude, full load takeoff - and he was looking for volunteers to be on that flight! It was rhetorical, of course, but it put us all in the mindset that performance and safety were top priorities.
When I started my journalism career in 2001, my manager asked me to read more about Jack Welch in order to understand the American psyche and thinking. After reading about Jack Welch, I came to understand how bad corporate greed could be.
Welch has nothing to do with the "American psyche", it has to do with simple greed with regards to stock price. That can happen anywhere. Unfortunately since Wall Street and the big business schools are located in the US, the implication is "that's how Americans think" and most do not.
@@clownshow5901no. It's an inherently american thing, where socialism is a dirty word unlike the rest of the world. Because of that neo liberalism has ran the us into the ground on the long term. Greed is in all people, but in europe the checks for that are mostly in place.
@@drunkensailor112 ROFL. Yeah in Europe the "checks are in place" except for WWI, WWII, Bosnia, Communism, Fascism, and a few other minor quirks.
@@drunkensailor112 it's also called that because the "forethinkers" like Welch as Americans had a very employer sided economy at Hand to execute these borderline sociopathic strategies. In Europe you often simply can't do something like "fire 10%" because there are laws that protect against that and unions and workers councils have their own rights. Not to say that shady Business practices aren't used here, but the prerequisits are just different. There is also more awareness that the stock market doesn't work for every company and a more natural growth is preferred for long term stability.
When the robot historians of 2084 are digging through the rubble, they will conclude that the MBA was the most destructive educational product ever conceived.
Undergraduate business administration degree is pretty awful too. I was an accounting major and when I transferred to a 4 year school I found a lot of the business classes were mostly older students complaining about their jobs and the professor complaining about their job. Did not learn much and I didn't tell this to my parents. it was an awful school I went to after all. We learned what NOT to do when running a business, but did Not learn what to actually DO. Just like people who are raised by abusive parents, know what NOT to do to raise kids but have no idea the right way to handle things and the abuse continues.
I keep waiting for whistleblowers to come forward out of these business schools and reveal all the dirty secrets they are teaching.
Maybe. But it really depends on the person with the MBA.
@@misha4422 If that is the case why go to school at all? Kind of like in driver training, the instructor should teach you to not throw the transmission into park when you are cruising down a highway. Teach things people should not do (and tell them it is wrong) and the correct things to do.
@@outoftheforest7652 I found a lot of the advanced business courses were very negative. I tried to get out of business but my advisers told me the alternative would be a liberal arts type of major which is a "useless degree". I had problems and ended up not graduating.
Who knew that in 2024, we would still be finding out new things that Jack Welch’s greed ruined? Wild.
Plus the whole climate that made him a hero.
@@maryeckel9682 .. Copy that. ..
But true.
GE is still in recovery from Welch's extremely destructive rampage. Yes, a lot of shareholders made money in the short term. But then... BOOM! I worked for a Jack Welch disciple who ran his own company into the ground at full speed following Jack Welch's teachings. He would send me his expensive executive newsletters. It was interesting to watch. I left when I saw the direction the company was going, and the ground rushing up quickly. When I told the owner why I was leaving, he couldn't begin to understand what I was saying - he was so enthralled with Welch and absolutely convinced he was right. The rest was like a Mentor Pilot crash video. Sad really. Prior to that, he spent 40 years building a great and successful company from nothing by being 1) deeply connected to his customers, 2) deeply connected to staff and the development process. Jack Welch convinced him to change all that and focus only on Welch values and techniques. One by one, when asked to perform ridiculous "fire the bottom 10%" exercises each year with zero awareness of how much it cost to hire and train each new employee, etc. etc. the best people left on their own, shaking their heads. He couldn't keep anyone in senior management that had any talent.
I don't think that greed is the accurate description of what led to all this crap. Instead, I'd say that it was a combination of scientism, "efficiency" viewed through a management lens, and the rise of the social-science paradigm of business and financial management, as manifest in the rise of MBAs in the business world.
-- We're all greedy. We all like to get paid the most we can get for our labor and our enterprises, but normal people are constrained by economic realities and by conscience. But when management is turned into a science, it casts practices such as Welch's and Stonecipher's in a different light, as efficiency and as the pursuit of managerial and administrative truth.
-- Scientific method objectifies and mathematizes what it studies, and when it's directed at rocks, trees, and molecules, the moral implications of this are not as severe as when it is directed at other people. Marxism developed as an application of the social-science approach to political organization, and has generally resulted in mass murder, among other things. When you objectify and mathematize the people, it's a lot easier to think like Stalin: "One death is a tragedy, a million deaths is a statistic."
-- Excessive greed is denounced in any serious ethical code, but we have little in our ethical conventional wisdom to warn us about reducing other human beings to objects and numbers. And forget about the feminist version of "objectification." Martha Nussbaum, like virtually every woke or feminist "philosopher," is highly over-rated.
-- Objectification is a deeper concept, rooted in phenomenological theory about how we convert dumb, un-self-conscious sense data into awareness of things in the world (and our "selves"). Objectification is a fundamental cognitive process by which we convert vaguely and ambiguously bounded sense data into representations of countable objects, distinct from ourselves and from one another (and our self-concepts are distinguished from the world as a side-effect of distinguishing objects from our selves). Learning language entails objectification and mathematization (in the use of singular and plural words). Thoughts (as opposed to feelings and sensations) entail objectification. Science refines these processes to a far higher degree.
-- Again, the moral implications of objectification are not so severe when it's applied to rocks, trees, and molecules, as in the hard sciences and in practical how-to language. But when it's applied too strenuously to other human beings, it diminishes our connection to and identification with them. ("... a million deaths is a statistic.")
-- The social sciences are inherently dangerous, but almost no attention has been directed at their fundamental ethical problems. And as Marxism continues as an intellectual cancer in some circles, the science of management and economic social engineering infect even nominally capitalist societies.
-- Talking about greed isn't going to bring about a come-to-Jesus moment among the Welches and Stoneciphers of the world. They're not pursuing "greed." They're pursuing efficiency and managerial-science truth.
btw with Mulally Ford was the only US automaker to not ask for bailouts from the government iirc, plus somehow surviving Detroit, man must be a beast
There’s a bit more. Ford hocked its machines tools immediately before the crash. It had cash to weather the storm. Later the government “squared” their handouts by paying Ford thru a bogus Department of Energy program.
It was very interesting to see how Ford started to reinvent themselves in the late 1990ies and 2000s, particularly in comparison with GM.
Being feared as a boss should never be seen as a good thing. People will just start hiding problems and they will not be honest anymore
It's also why dictatorship fails
Jack Welch being a mentor to the upper management at MD explains absolutely everything.
Yes.
May I ask why you think that is? Nah nevermind. You're probably going to say I should just google it.
@@SN57ONE No need for google, you can check the rest of this very comments section and a lot of them will elaborate on what he did.
@@SN57ONEWatch the video
@@FlameUser64 Or they can just... watch the video?
I absolutely love how when virtually every industry was, under programs like Six Sigma and Lean, slavishly trying to adopt Japanese management practices, like Gemba, where managers are literally required to walk the shop floor, Boeing consciously ran in the opposite direction 😂.
Yeah.. I’ve looked closely at how Toyota did things and just can’t understand why that wasn’t adopted
Because corporate executives want the “make big money” part without the “doing the work” part.
Japanese executives make a lot less money than American executives, that's why.
@@legitimatebusinessman5537 they definitely thought they were hot shit, anyway! 😂
@@MentourNow Because of class division. In Japan, it's part of culture to view work as your "family", while in US workers are viewed as dirty peasants, so managers do not want to walk factory floor smelling of welding, motor oil and other smells of running production. In other words, people become managers to get away from production, not to remain part of it.
I worked for HP for 30 years and saw the same thing once the Engineer CEOs were replaced by MBAs (something wrong with their educations and theories). Instead of building quality for the future the focus is on cost and how much the CEO bonus is, this short-term thinking creates a toxic working environment. Employees go from being willing to walk through fire because we are making the world better! to adjusting to the small changes until people give up and say it's just a job now, get used to it. The merger with Compaq destroyed the successful culture of H and replaced it with dictatorship-style management. ( maybe closer to Stalin-type management if you look at the record layoffs for two of these CEOs. These CEOs walked away with millions after gutting the company. The founders, Hewlett aand Packard understood the Value Added by the motivated empowered employees - something MBA education does not understand.MBAs don't realize their theories are just that theories, not reality - wrong theories are taught in MBA schools,
I have a 1995 HP Laserjet 5M still operating in my home. Today's HP printers won't last more than a couple of years. (And if you buy an ink-jet rather than a laser, then guess what, you just got conned.)
bet you just loved Fiorina?
Look at Xerox, digital cameras and Adobe, but we don't want to go there because we make money on ink
The whole Jack-Welsh-Business-School failed wherever they took over the Management of a Company - probably with the exception of their own Banking Account.
HP was the gold standard for engineering employers. Bill and Dave knew how to get the best out of their people and HP developed countless innovative products. A series of disappointing CEOs changed the company forever, but the old HP will still be remembered as a first rate place to work and a reputable company selling excellent products.
i lived it. when i went to boeing in 1977, my coworkers were apollo mission to the moon engineers. I was in awe. When I left in 2016, I threw my Boeing T shirt in the trash bin. So sad. It was brutal.
Sir , so you worked for this long ?
I am no engineer, couldn't cope it .
But I still like air planes etc .
I would have loved to feel the impact those giants must have had , those Apollo engineers on new recruits like yourself at that time.
Indeed science is beautiful.
Having worked at a company which started a downward spiral soon after being acquired by Jack Welch’s GE, I can attest to the toxic effects his business style had. “Neutron Jack” and his acolytes accomplishments did much to ruin America’s businesses . Effects of which we are still suffering, as shown by your excellent video.
I've heard of 'stacked ranking' style management before, and still think it's a disgusting method of running a business...."OK, you made 100% of your goals and benchmarks for the quarter and everything is excellent. However This other guy did 105%, this guy did 110% and this third guy managed a whooping 120% of his goals! Since you didn't overachieve like them we're just gonna have to let you go ".... I mean there's more to it than that but every breakdown I've heard of it before boils down that way. Great recipe for a work environment full of backstabbing, retribution, and over promising or overlooking things just to make your numbers look better compared to other peoples.
Management seem to overlook the importance of employee moral. When a company looks after you, you are inspired to go the extra mile. If however, you are seen as an economic unit and disposable, you just work enough to fulfil your contractural obligations with no sense of achievement or LOYALTY.
And construct workflow and inspection systems that facilitate no-tracking steps and incentivise skipping parts, in favor of expedience and timecrunch.
This reminds me of a story I once heard but have not verified. I was told United Airlines flew from Los Angeles to Boise, Idaho. The route was very popular and operated at close to 100% load factor. It was noted that this route failed to improve its load factor because of the simple fact it was already at max capacity. Somehow without further investigation the route LAX to Boise was canceled and the equipment moved to other routes. I do not know if this was the truth or just a story but encapsulates the idea of this blog.
You are right. All too many in upper management lack the sense to see the hefty downside in stacked ranking. There's only so much a manager can do to improve the _relative success_ of his group. To win in this succeed-or-die competition also requires pulling down the performance of competitors.
@@wilecoyote5757 nonsense. UA should have just offered Standing Tickets for these flights and fly them with 110% capacity!!! /s
Jack Welch is the standard bearer for all the worst practises in American industry, or what was left of it after Welch’s disciples had finished their wrecking.
And after he died, we learn that his success was due to cooking the books. The man almost single handedly ruined the American workplace
And since there are way too many other Jack Welches out there, it's no wonder that not only Boeing, but almost the whole US manufacturing industry took such a downturn in the past 40 years, while at the same time Asian and European companies show how to do it right. When making quick money to satisfy investors becomes more important than making good quality products to satisfy customers, you will pay for it in the long term.
At the height of Welch worship, I had a great mentor that told to ignore all the hype and never trust any senior manager from GE. Managers at GE rise up by stepping on everyone one the way up, covering up problems for the next person to deal with, and great at playing a "Game of Thrones" political game. Sure enough, the GE house of cards eventually fell. Hindsight has shown the way "Neutron Jack" did business was toxic as hell and gutted companies for short term gains. Bottom line, after you shake hands with any former GE manager, check to make sure all your rings are still on your fingers.
@@KCFlyer2 Democrats played their part as well. Give them their credit!
@@pmman4232 If you're going to make such a claim, then substantiate it, or don't post at all.
Mullaly was a huge reason why ford didnt need a bailout in 2008 and 2009 like gm and chrysler did. His one ford program isnt and wasnt perfect as it led to some unusual product lineup decisions, but strategically it did set up the company nicely for success. Ironically in the end, it was mullaly who was actually pretty smart with money, despite being an engineer by training
“Yes the company got destroyed, but for a beautiful moment in time, we created a lot of value for Shareholders” Boeing.
The Shareholder´s will be not happy with a destroyed Company, too. Or at least only those Shareholder´s (and Top-Managers) will be happy who "hit and run" - who took the Money, walked away with it and started then elsewhere the same Game.
@@NicolaW72 They will be hired at another company for their exceptional skills at “Maximising Shareholder Value”, while sucking away company longevity, their skilled workforce, and all the while jumping ship with a “Golden Parachute”. Destroying companies has become a skilled job, and they will do that to any succeeding company.
It all reinforces what I've been thinking: the focus switched from making airplanes to making money.
Yep, that certainly seems to be the case… They wanted to make money before as well, but it wasn’t the Primary focus.
@@MentourNow I have found over the ears, there are two mindsets when it comes to increasing profit. the one, focuses on increasing the rate of profit by cutting corners and abusing your labor and suppliers. it creates a toxic work environment, and mediocre products. the other recognizes that reducing the rate of profit in the form of building better products, often results in the total profit increasing for everyone, - and that contributes to a better work environment.
also, a lesson my dad taught me, is, you don't hire workers to make you more money. you hire workers to help you serve more customers.
Yeah, at first making money was a necessary step in making more planes. Employees and materials need to be paid after all.
Now making planes is a necessary step in making more money. Customers don't hand over their money without a product after all.
And thus the focus went from making good planes to planes that were just good enough to fulfill the contract.
@@BunjiKugashira42 there was a company I worked for that I printed a motivational poster and put it inside my clipboard to keep me in their desired mindset: it said, "*mediocrity* it takes a lot less work and most people won't notice the difference until it is too late."
they also inspired the descriptor, "a better brand X"
It’s worse. It shifted from making good planes that would eventually make more money to making money today by cutting corners at the expense of long-term profits. A company like Boeing must invest in R&D and in new technologies in order to remain relevant long-term. My fear is that Boeing might not be financially strong enough to design a new aircraft.
Turns out that managers optimizing bonuses is actually poor for the company. It's a perverse consequence of "what gets measured gets done". Because what doesn't get measured doesn't get done.
Goodhart's Law also applies here: any metric that becomes a target ceases to be a good metric.
@@lmpeters That is a deeper observation than the relatively simple fact that a selfish fulfillment of targets is detrimental to the whole.
What I love about "what gets measured gets done" is that it has relevance at face value but it is also a deeply ironic statement if you appreciate the detrimental potential of performance measurement.
@@unfixablegop One of my other favorite deeply ironic management truisms is that "every organization is perfectly optimized to get the results that it gets." I first heard it in a talk by Jonathan Smart, but I can't remember if he coined the term himself or if he borrowed it from someone else.
Also I'm convinced that all of these upper management and board members are all psychopaths/sociopaths, because they don't have any problem doing WHATEVER it takes to get their bonuses, and golden parachutes, no matter what it does to the company as a whole. They have no problems completely tanking a company, as long as they get what they want, and then moving onto the next company and doing the same things, and for some reason, people hiring these assholes don't say "hmm, company tanked after he got hired, maybe we should take that as a sign of performance?" Because they are the same type of people. Remember Carly Fiorina anyone??
It's so interesting how broadly people are beginning to recognise how problematic wallstreet and the MBA class are becomming.
And as yet there is no effort to dismantle it or even rein it in. Forget the Opioid crises; America's real addiction is the almighty dollar.
There were serious critics of the whole MBA thing when I got mine in 1984.
Boeing today is a microcosm of what the United States has become. Tragic.
Jack Welch's philosophy has also destroyed GE.
They had been a component of the Dow Jones index for a century but has been removed after years of declining revenues, and the company has broken up into several different businesses.
Exactly. It's incredible to me--well no, it's not.
GE is Jack Welsh's Magnum Opus. Hard to believe that one of America's first great manufacturing companies could be brought to its knees by a single narcissist.
My father retired as a GE manager in 1993 after watching Jack Welch fire many of the best power-systems engineers while keeping the personnel who were good at faking quarterly earnings growth and deferring maintenance.
The same thing happened at GE's finance divisions -- accounting fakery won out over quality lending.
And destroyed RCA while they were at it.
I wonder which slogans dominate the company's assembly-halls. May I suggest this: 'Your loved ones will be flying in the planes you are building.'
Good video.
Not a bad idea
Place that in the boardroom and in every management office.
Just ship it.
Yep, Spirit Aerosystems
Nah, we can do it cheaper than that, what could possibly go wrong?
Here are a few more slogans, to be freely used by Boeing to uphold employee morale:
"Make sure your loved ones always fly Airbus."
"Just get the shit done, and as cheaply as possible."
" Remember: nobody is irreplaceable, especially you."
"If you have to work here, you are obviously no good for anything better."
"Assholes"
As someone who has spent the last forty-plus years in the greater Seattle area (and near Boeing plants), I remember when Stonecipher took over, one of the first key things he did was to end the previously-common language of referring to workers there as part of "the Boeing family." Instead, he declared, they should be known as "the Boeing team," because "a family can't fire its members if they underperform." I thought the writing was on the wall at that point.
I have watched many times how the underperformers in a team, in critical situations pull the team out the situation. It is difficult to measure the performance of people, especially when the work is not pure physical moving of load from point A to point B or screwing bolts. Well, all the time I have worked and still working in the IT area. So what I have seen is not relevant for everywhere.
McNerney was CEO of 3M where I worked just before he sold all his 3M shares and shuffled off to Boeing. His legacy at 3M was the same odorous pile of Welchanista management that ended the 3M innovation mantra and brought in an era of disastrous acquisitions such as KCI and the Combat Ear product. A gift that keeps on giving. 3M is now a shadow of what it was and it remains to be seen if it can right the ship after jettisoning it's medical business.
did he have any responsibility for those forever chemical?
Losing Mullaly was the biggest factor that doomed Boeing. I remember thinking at the time, that it was madness not to appoint him to be the head of Boeing. I still think that today. Terrible business decisions live on infamy and this is one of them.
Mulally didn't get the job because, when Stonecipher resigned, the Pentagon told the Boeing Board to bring in an outsider because of all the scandals (Stonecipher, Druyun, Sears). The Pentagon was not only a major customer, it was also tacitly funding the 787 program through an unorthodox contract and fee structure on the Army's Future Combat Systems program (which itself failed).
Once again, Big Government has failed us.
Quoting Harry Stonecipher who liked to say:
“You can make a lot of money going out of business.”
That's likely the plan... Jack Welch acolytes' only focus is share price, short term gains and management bonuses.
Yea ... I never liked Jack. I always thought his management style was total BS
And then we are here, where having good shares is more important for company then actually having profits, good product or even future. Why do you need all of it, when you can sell shares high and get billions in CEO pockets?
@@doughayden I forgot to write, but yes Jack Welch was a typical narcissist sociopath. And the last 4 Boeing CEOs are exactly the same. Amazingly so many people only starting to realize that now, when the writing on the wall was there for so long...
@@alexturnbackthearmy1907 The last 4 Boeing CEOs couldn't care less about airplanes. They only liked them because the airplane business generates a large cash flow that they can use for their real goals, financial engineering. But it's a headache and they would surely prefer to sell manure, if the cash flow of the business was similar. Fewer problems, regulations, quality and safety checks.
My wife and I met when we were instructors in Boeing Flight Training. We endured the outsourcing of Flight Training, the failed reintegration of training when the outsourcing failed. We were among the last group of Boeing employees to retire with pensions. From the inside, the McD and Lazy B merger was simply a disaster. Stonecipher actually told the employees that there was a long line of people who would happily take our jobs if we were "unhappy" ... What used to be Flight Training continued to function as a Technical and Flight Operations Engineering support group. I often traveled to my former flight training customers to provide technical support. Also, I have a favorite memory of when I was honored to present the newly designed Boeing 777 Pilot Operations Manual to Alan Mulally. Yes, he should have been the next CEO. My last several vehicles have all been Fords. "Shareholder value" is my favorite cussword.
I’ll never understand why the successful Boeing takes one the failing McDonald Douglas’s management approach. It makes zero sense.
Taking McDonnell Douglas's approach was probably good for the upper levels of management, at least in the short term.
Defense contract gravy train
I experienced McDonnell Douglas's management style from the inside. I worked for a small (100-person) computer software company that was acquired around 1980 by McAuto, their automation division. We had nice offices in suburban LA but occasionally had to go to the main aircraft plant (the Douglas part) surrounding the Long Beach Airport and sometimes St. Louis (the McDonnell part). What sad places these were. I remember being taken on a tour and seeing engineers whose "office" consisted of a tiny desk literally in the hall with no dividers at all between their work area and many employees passing by. They all had to wear suit and tie in an era where casual was the everyday standard for all but the very top management.
Another anecdote was when the manager in charge of our software division got replaced. They brought in a manager from elsewhere in the company who had no knowledge at all of our product area. We were creating computer-aided design systems which were sold commercially and he had been in charge of hospital systems. This meant that he couldn't cope with our very competitive industry. Everything seemed to be about keeping one's head down. If a business opportunity presented itself, it was always deemed too risky. Again, very sad.
Happens every time in every business when the management start listening more to the bean counters and less to the people who can actually do the job.
If you cut corners at the wrong end, you will pay for it in the long run. US companies already had enough scandals with product failures due to saving money at the wrong end, just remember legendary examples like the Ford Pinto. At the same time, European and Asian companies show how to do it right.
That's part of the reasons I left a fab shop years ago, the roi bean counter was literally screaming at the employees "Why are you taking so long to set up these machines, the f******g book time says it can be done in less than half the time."
These were brand new machines that had very delicate heavy tooling, we employees had less than a week of training on how to set up/ use the machines(which were putting out error warnings left and right), the programing had been moved from the knowledgeable operators on the floor to unknowns in the office who had never seen the machines (the mess of debugging that we as the floor operators had to do to get any of the programs to even run was painful (we were told this is better), then yet again we all get yelled at again by the bean counter even more for not providing a good return on investment, plus the shift manager was unprofessional, (and other safety issues that never got repaired).
Yeah, that company had/has a high turnover rate for employees and is still currently hiring now for a below market wage, every position (even the manager position is listed as $20/hr max in an area where the barely surviving wage is $24 per hour.)
I don't think accountants are at fault, so much as executives obsession with "shareholder value". Friedman's favourite principle-agent theory got it all wrong.
Welch was the worst thing that ever happened to business in general. Boeing didn't "lose" Mulally, they pushed him out. The turnaround at Ford was Mulally's revenge.
I'm retired, but previously head of HR at a large organisation and professionally qualified. What you have produced here could easily be used as case study material for undergraduates. The work itself would warrant masters. It is of the very highest quality, thank you.
When you stop seeing financial indicators as signs of how the company is doing and see them as the end goal, your company basically starts to die slowly.
who are the "persons" who set indicators? "
"dont believe a report that where not falsefied by urself "
if you stop building safe airplanes in order to cut costs your company is going to die even sooner.
And if you treat your workforce like slaves you will see product quality going down much faster than production costs.
In the end it doesn't pay off to treat your employees like enemies, period.
Goodhart's law: When a measure becomes a target, it ceases to be a good measure.
This is the reason why of the companies that existed 100 years ago that were publicly traded, a mere handful exist today. Once you go public and tie your success to the market and investors, your company can easily enter that downward spiral.
that was the era of rewarding executives with stock options. This directly rewarded them for getting the stock price up. Not a very good way to reward long term strategies, of course.
As a Seattle native this is an amazing series. The culture change destroyed the company. I would even go as far to say McNerney instead of Mulally was the root cause of the 737 MAX deaths. Look at what Mulally did at Ford. Clearly more than an engineer but also an amazing businessman and leader.
He brought Ford from a joke to a company making good cars.
@@maryeckel9682 And that's why, unsurprisingly, the Ford company is still successful, while GM and Chrysler went massively downhill in the past decades.
Firing the bottom 10% is called "decimation", which is something the Roman army did as punishment. I guess that should give one insight into that person's mentality.
As an engineer working in aviation, I can assure you the Jack Welch model of leadership is alive and well in most of aviation's largest players. Whether airframers (GA/Biz or Mil) or tier 1 suppliers, cash is king and quality is 2nd rate.
I was a 737/300 captain back in 1998 when i switched jobs and went to fly for an airline that 2 years later begun updating their fleet to Airbus. At the beginning i was really considering going back to my previous job, but after flying the A320 family I realized what a good planes they were. Have flown Airbuses from the A319 all the way to the A350 in which i did my last flight. Nowadays i get really worried cause my son is a 737 Max captain in the middle east.
middle east? don't worry too much. If he flies for Emirates or Qatar or Etihad, those companies have a reputation to uphold. Even their smaller ancillaries have a legal obligation because of the country of their air operations certifications. Still, better if he's looking for things to go wrong more than everyone around him.
@@corpsecoder_nw6746 its unlikely that his son flies for emirates etihad or qatar as none of them operate any notable number of 737 maxes. More than likely he's flying for "flydubai" (low cost counterpart of emirates), as they operate the most number of 737s in the region. air arabia, which is another low cost carrier in the region, focuses solely on airbus A320s, and 321s same as most other carriers in the region.
when it comes to safety, i doubt OP has much to worry about. fly dubai has been alright when it comes to maintaining their aircraft, and a lot of it is done by Emirates engineering.
@@johnbenoy7532 I was gonna mention FlyDubai (featured on a Mentour Pilot incident review). They're pretty good with maintenance as you said.....
That thumbnail and the description of "hunter-killer assassins" may be more literal than anyone imagined...
Yup..first whistle blowers.. next, board members ?
I worked as an Engineer at Boeing from 1985 to 2020. Back in the 80's the company didn't care about stock price; the thinking was, build awesome aircraft and the stock will be fine. When McDonnell took over, the only metric that matters is Stock price. With all the debt, they've sold about every piece of Real Estate they can. I'm afraid long term they are done. As a friend often says, "They shot the horses and burned the wagons. And had one Last BBQ."
Why did you leave.. retirement ?
Just retired after 37 years with Boeing. The way you explained is 100% true!
Repeating a comment I added to a previous video, Boeing is an example of Pournelle's "Iron law bureaucracy" which states: "In any bureaucracy, the people devoted to the benefit of the bureaucracy itself always get in control and those dedicated to the goals that the bureaucracy is supposed to accomplish have less and less influence, and sometimes are eliminated entirely."
How true.
It's nice to see someone who actually knows about aviation confirm the "vibe" the merger always gave off to me. Whenever people would talk about how when two companies would merge the stronger of the two companies would basically take the lead. I would always point to the Boeing/MD merger as a great example of the opposite.
Also... Harry Stonecipher. That's a comic book villain name if there ever was one.
Yup, I worked for a local bank that went through a big merger a few years before I worked for them, got to experience the old and new guard first hand, the management from the failed bank that was merged with got cushy jobs and went on making the same chaos they always had that led to the downfall of the original bank in the first place.
They changed the corporate culture into one of “us” and “them”, squandered money on frivolous expenses and brought in 200+ archaic broken IT systems from the 80s/90s that were still being used in the 2010s, with a heavy emphasis on using EXCEL macros to process multi million dollar transactions.
The corporate culture was so broken and combative that a lot of people didn’t stick around, and by the end of it very little of the original bank was left.
@@Underestimated37EXCEL?? For any transactions at all? Yikes 😬
Unfortunately, Stonecipher got away with ruining Boeing with a golden parachute, were as Comic Book villains never do.
Here in the Pacific Northwest, we all wanted Mulally.
This is such a well put-together series! Over the past few months, especially after the onslaught of Boeing incidents on the news, you see a lot of media outlets and CZcams channels covering the same story: how the Boeing and McDonald Douglas merger ruined company values and led to Boeing's downfall. I'm not saying they were bad or anything, many props to those channels covering this topic. However, I love how you go into much more detail, not just simply blaming the merger, but going deep into the history of the three companies (Boeing, McDonald, and Douglas). You put these stories together in such a concise, in depth way, and you can really see how the company culture Boeing has today wormed it's way through each of the three companies. From the McDonald and Douglas merger where they simply iterated old designs, to how the focus shifted to being profit-driven and pleasing investors. It's so fascinating (and tragic) to step back and see the foundation of Boeing's current situation being laid decades prior. Fantastic job with this series, Petter, I look forward to the next video!
1:15
That is certainly an interesting logo for a company with that name
Yep
It was intended, Dick Clark Productions
Surely they did it on purpose.
Its strangely phallic looking.
🤣🤣🤣🤣
who would have guessed that putting short-term profit focused CEO in a company dealing with goods that inherently require long-term thinking for both planning of products and their production would go poorly
while some companies can get away with such a mindset, aviation industry dooms such companies to a downwards spiral
Having to report quarterly earnings might be useful for investors but it is poison to building a healthy long term business. First thing that goes is R&D funding, then customer care, and finally your customers.
...that last part...quite literally... 😢@@jamesbriers696
Its funny you make a video on this subject. I was just talking with my grandma about this subject two weeks ago. My grandpa was retired from Boeing by the time the merger happened and he predicted back then that it would destroy the company. He's probably rolling over in his grave having seen all of this unfold. I got into stock investing in 2022 and my grandma almost immediately told me about grandpas thoughts on why not to buy Boeing stock, how the corporate level would bring the entire company down, and how it was not the same after the merger.
John Oliver covered this well on an episode of Last Week Tonight, fixing the blame on the merger and the including of McDonnell Douglas "cost-cutting" management into the existing "quality-conscious" Boeing management...
John Oliver's video on Boeing is fantastic, like most of his work.
@@cris3f Indeed.
I worked for 3M during the time that Jim McNerney was destroying it. He then went on to Boeing. None of this surprises me. His entire attitude is completely wrong for engineering companies with long development timelines. That Jack Welsh philosophy is best suited for running a McDonald's.
Probably not for running McDonald´s, too. The Jack-Welsh-Business-School failed wherever they took over the Management of a Company, not only at Industrial Companies.
Not really good for McDonald's either.
Harvard has produced some of the worst business leaders in the world. Garbage university.
I worked for a medium size tech company that was forced into a merger with another tech company by the parent company of both “mergees”.
Both merging companies were in “tech” and there was some overlap, the management of the other company took over. It became apparent shortly after that they do not know much about the technology of “my” company. The CTO that came from the other company had to have a session with a few engineers to explain to him very basic concepts of the technology “we” offered to customers.
One of those engineers told me “he doesn’t know anything about what we do here”.
He and most of his senior peers left the company within a few months.
Within 3 years the revenue declined by 2/3, big portion of capital assets were sold to competitors and the rest to investment capital firm.
Today the company revenue hovers around 10% of combined pre-merger revenue with employee number 1/3 of pre-merger count.
That's disgusting and sadly too common.
What company did you work for
Yeah, but it you were a CEO getting paid in stock and your contract was only for another two years...think about that.
Jack Welch is a key factor in the decline of American manufacturing. The other key factor is getting engineers out of leadership. I come from 45 years in the electronic industry and the same things that ruined Boeing killed the US electronics and consumer industries.
Welsh had a "psychopath's style" of management, rewarding employees who use "cut-throat" practices against their peers. Diametrically opposite to that is Mulally's management style, that uses empathy & cooperation.
Finally the top business schools saw they had taught destructive management styles. It damaged Boeing. I hope M-D's board is ousted.
Jack Welch gutted the middle class, he taught executives to pursue massive layoffs and cuts. For shareholder profits and investor wealth At&t and many others imitated these kinds of cuts. As we lost more and more manufacturing jobs. We no longer make most electronics furniture textiles. Which brings us back to Beoing passenger door plugs flying off and new software that could influence a plane to be uncontrollable and crash "Maxx"
It's so infuriating to see how Boeing's downfall gives all the marks of a death by a thousand cuts. All the choices made after the merger, watching the people who could have steered the company away from disaster being brushed aside, it does feel like the Boeing we see today is a twisted picture of how McDonnell Douglas would have looked had they somehow survived the post-Cold War downturns.
I can only imagine the horror and anguish William Boeing would have if he saw what happened to the company he built. Even the disappointment of Bill Allen upon seeing the way the current leadership is treating its employees.
Yeah.. it’s pretty sad but I think they can come back from this. But it will take time
Coming back from something like this would first and foremost involve management taking a long look in the mirror and admitting they dropped the ball in the last 2 decades. I am not positive that we will ever see that!
It’s history coming to roost for Boeing, but it’s currently happening at class 1 railroads with *Precision Scheduled Railroading* which in reality is cut everything; employees, equipment, maintenance, customers who won’t pay a jacked up price for worse service.
Culture is harder to change than anything else. Especia!!y for the better.
@@velisvideos6208It is hard, but it's not impossible. If Boeing can find a new CEO who can do for them what Paul O'Neill did for Alcoa, they might have a chance.
One of the problems with accountants running a business is that there time-scale is very limited.
Strangely, it seems like Boeing needs a very good lawyer to run the company, like Bill Allen. They need a President / CEO who "knows what he doesn't know" and LISTENS to people who are experts in Aerospace engineering and industrial manufacturing, who KNOWS that screwing up and getting sued will set you back years, and someone who knows how to negotiate win-win settlements with unions and workers organizations.
Keep the accountants in the accounting department, and make sure the CFO is clearly subordinate to the President, who considers ALL FACTORS in his decision-making, not just stock price.
Funny how all the free marketeers who supposedly believe competition creates the best of all possible worlds, love competition killing mergers.
In economics, anti-trust is something that's accepeted as being neccessary to keep free markets functional. It's just that governments stopped enforcing it a few decades ago because they are getting lobbied by a few that profit out of this.. None of these people are "free marketeers".
"Free marketeers" are actually just individuals who want to destroy government. Unfortunately, government, when it is actually independent, is the only thing powerful enough to regulate the excesses of the Free Market. Today, government is in the back pocket of industry so can no longer perform this important regulatory function, except when the Democrats control the White House.
I'm a regulated free market believer. I don't believe in competition killing mergers. I believe in breaking monopolies and empowering workers and consumers.
The fall of boeing is really heartbreaking. The planes such as 757 and the 747 are just so iconic. I really hope boeing get their act together so that they can rebuild themselves. Sometimes i think they are beyond repair reputation wise, allegedly killing 2 people is not what you want on a company name.
Why worry about "allegedly" killing 2 whistleblowers when the blood of 346 lives already is on the hands? I agree 100% that a top to bottom culture reformation is needed.
@@alphabravoindia5267 well, that would be the difference between manslaughter (recklessness) and premeditated murder wouldn't it?
@@alphabravoindia5267 That culture reformation is needed at more than Boeing.
@@alphabravoindia5267that makes 348
Only 2?
Lies and shenanigans of Boeing's directors killed all those ~350 people in MAX crashes!
I feel sorry about what happened to the Boeing. This cutthroat style of management explains a lot. It ultimately explains that to survive the company-wide culling at Boeing, you have to play dirty as a manager and the decent ones get crushed. In Czech, we call this "over-bastarding".
Where I worked in the building industry we were taken over. The company that took us over was absolutely horrified that our staff were all experienced and had risen up through the company. All the experienced managers were got rid of because they didnt have degrees. The staff were let go at every opportunity to be replaced by people who knew nothing but had qualifications. Its now a poor shadow of its former glory. Dont bother asking questions about the product all they care about is profit.
I worked as a pilot for Ansett Australia in the 90's. Owned at the time by News Corp (Rupert Murdoch) and TNT (Sir Peter Ables).
News sold their share to Air New Zealand, who then had first rights of refusal to TNTs half. And they took the bait. In 2001.
It would be similar to Alaskan Airlines taking over United. Then the management culls started, and the losses mounted.
Only bested by September 11. The NZ government nationalised Air NZ as long as Ansett was let go. Administrators were sent in and the airline, after 65 years, was gone.
I was lucky enough to get employment in the biggest airline in Middle East flying the best plane Boeing ever made. The 777. I used to tell my colleagues, that they were flying the last properly engineered aeroplane Boeing had ever made. Since then, the MD influence has ruined what a great company Boeing, and it's aircraft ever were. That includes the 787, 747-800, 737Max and the 777X.
So l find it interesting that a dumb merger forced me to a job where l enjoyed the best plane l ever flew. Ironic.
I recall also, after the first introduction of the 787, an engineer saying "The 787 is the best Airbus, Boeing has ever made!" Yes.
You have to ask yourself why Jack Welch regularly crops up into this whole picture. This seems to be what happens whenever one person who thinks he's smarter than everyone else, gets deified. When the eye is focused on only one thing (the bottom line), failure is not far behind. In this society, we've become so accustomed to this strategy, we barely react to the ultimate disaster that follows.
Goodhart's law: "When a metric becomes a target, it ceases to be a good metric." The metric was profits - a measure of how good the products you're making are (or service you're providing for service companies). When you just focused on making more profits...with the (perceived) quality of your products being the metric...yeah.
MDD's commercial arm was dead because their management refused to invest in new projects. Their engineers brought some very good ideas to the table with airlines queueing up to order. But the CEO wasn't interested and insisted on just warming up their existing products instead. Very short sighted decisions for short term gains.
The MD-90 program was OK, but only OK. Nothing outstanding about it. The MD-11 was a terrible hodgepodge, and frankly dangerous. Look how many landing crashes the model has had. This is due to its tiny elevator surfaces. They reduced the size to reduce drag. No considerations made for landing safety!
The engineers were ignored and profits were prioritised.
Sound familiar?
This is Boeing now. Yes, we got the 787. But that program had and still had is difficulties.
It was likely already on the cards when the MDD management started infesting the Boeing HQ offices with their "that'll do and save us money" way of thinking.
WOW, overseeing the two of the most dangerous modern airlines: 787 and 737MAX is an achievement.
You are such a smart guy. The way you explain very complicated stuff without blinking a lot, or body shifting says you really know this…
That thumbnail is cursed
yeah
Must be another Airbus prototype.
I think that's the point. Its a symbol of how messed up everything got.
It looks like two airplanes are docking into each other... (if you understand, I'm sorry xD)
@@Blex_040
Two tail ends with no command center, otherwise known as a taxiway merger.
What i don't understand is why any part of MDs leadership was kept. They were the reason they needed merging in the first place
Just a wild guess: their first priority in the merger negotiations was to ensure their own positions.
Because John McDonnell, other McDonnell family members, and Harry Stonecipher were the largest private stockholders of MDC stock which was then merged in to Boeing stock making them the largest private Boeing stockholders. The golden rule in action . . . Those with the gold make the rules. haha
It's always sad when a good company is bought and then profits are put above excellence
Phil Condit was enchanted by the financial community. Boeing cut back capital expenditures and was well on its way to the investor-centric business strategy by 1996, and we could see it in the workplace. We didn't understand it in the moment, but it became clearer in retrospect. Boeing got exaclty what it wanted in the merger.
I have a nephew who is in his mid-30's who is a mechanical engineer. He went to a major university in the New York with a 4.0 average. For two summers about 15 years ago he worked at Boeing in Seattle. They like him so much that the said that if he held off going for his masters degree after graduation they would hire him and pay for his masters degree later. He turned them down and went elsewhere after he got his masters degree. For years I didn't understand why he turned down Boeing's offer, but now I realize that he must have seen things there that turned him off to Boeing.
Former Boeing Everett.... I was part of the 'merger' and met Phil Condit and Harry Stonecipher. As part of Lean Manufacturing, standardizing processes was a daily rally cry. I was given much latitude and ran with what was our new mission... Better, Faster, Cheaper, and Safer. We all loved Alan Mulally and wish he had stayed.
There are some very colorful nicknames for Stonecipher. None of them good.
@@Nick-ji7hb Thanks for comment... Harry was 'colorful'...
True story... Everett Plant had a computer thief stealing memory and CPU chips... row after row of PC's. Back then, it was very expensive. I was in IT then and spent more than a few weekends in the cubical farms upgrading OS.
We were told to challenge anyone not wearing official Boeing Employee Badges; chest high and in plain view. One weekend I saw this guy lurking around, so I challenged him. I knew who it was before I challenged him. It was Phil Condit himself. He was pleased someone had the balls to challenge the CEO.
From that day on, I would drop him a quick note and report employee 'mood' during the very disruptive 'merger'. Later when I became SME Lean Instructor, got to spend time in St Louis and our F/A-18's and F-15's.
@@SJR_Media_Group Pretty sure St. Louis still knows how to build aircraft. :) Great story.
@@Nick-ji7hb Thanks for comment...
I'm 70 years old. It was during the early part of my career that workers started seeing the impact of the likes of Jack Welsh and 'Chainsaw' Al Dunlap and it's been a downhill slide ever sense. Boeing will survive but will never recover its respected, number one place in the industry. Every company I worked for put investors before customers and workers and have ended up shadows of what they used to be. And business schools teach the financial side but fail to teach the full breadth of what makes a company a good company. It's no surprise to me that young people today are disillusioned, have no loyalty to a company, and aren't interested in going above and beyond.
Right at the start of this video, even before I’ve heard Petter speak one full phrase, a thumbs up and this comment. Your videos have been getting incrementally more professional. A fantastic added bonus to your otherwise already brilliant channel.
Losing Mulally when they were that close is like getting a videogame boss to 5hp only to die a second afterward
I would say ousted, not losing. The board (and shareholders) made their bed, now they lie in it.
Another great video. It's worth listening to the Slow News Cast podcast about the merger. They interviewed a few Boeing employees, and one of them recited when there was a gathering of 500 Boeing engineers to be introduced to the new boss of the department, one of McDonnell Douglas's people. The old Boeing manager introduced him, and he responded by saying something along the lines of "And now I'm his boss and can fire him at any time!" The 500 engineers were so disgusted at how the McDonnell guy had tried to insult and humiliate their old boss, who they highly respected, that they all walked out of the room. There were a lot of recounts of how poorly the McDonnell Douglas managers and bosses treated the engineers and other employees of Boeing once they took over. Regarding the 787, one of them told how he saw misalignments so large with the new composite construction that he watched as people literally jumped on parts to make them fit together.
Yep, I find the McDonnell Douglas management style repulsive
@@MentourNow you can leave Douglas out of your opinion, we did more with less and built aircraft that were far stronger than Boeing or scarebus. I've worked on them all.
That “scarebus” jab really shows how long it is since you left the industry.
@@markwheat2668 I'm sure it's extremely difficult to hear criticism of a company that you have worked for and done a lot for, and I'm sure both you and your colleagues did a lot of great work on some famous aircraft. Nothing said here would take away from that. But the fact is that the change in management style at Boeing as a result of the merger that evolved to where it is today, has contributed to the safety issues we're seeing. I've heard some horrifying stuff being said about the construction of the 787 to the point where I do not ever want to fly on one again.
Unless the facts of how Boeing ended up here can be looked at objectively, from a distance, something Petter does very well, nothing will change. I hope you won't take this as any sort of criticism or insult of work you or your colleagues may have done.
@@lollorosso4675 looking strictly at the structural strength of the airframes I stand by my comment. If you know the difference between a 3/16" HI lik or huck bolts compared to a NAS 1097 5/32" rivet that Airbus uses at the fuselage barrel joins or that Douglas used longerons vs stringers or the beefy plates that were under the skin at the joins then the longerons were spliced over.
I will ceed your point that Airbus are great aircraft but they will never match the years and cycles that a DC 9 will fly.
An accountant friend of mine stated many years ago that, if you wanted a company to grow, never put an accountant in charge of it.
This is not only happening in the airline business I'm afraid. All public companies nowadays are looking to maximize quarterly profits. Nobody is looking at the longterm anymore, with very few exceptions.
I really enjoy how you can do an intelligent, nuanced analysis of an airplane failure just as easily as you can provide great insights into a business merger. Being smart is cool.
In the "Boeing Bust," you forgot to mention the end of the Apollo program. While the manufacturing for the first stage of the Saturn 5 was done in Louisiana, all the engineering was done in Seattle (and, later, Kent). Also, the Lunar module was built in Kent (as well as some other stuff). A significant part of the layoffs came from that program ending.
Working together was not an achievement of Condit but of Mullaly. Mulally was the engine of working together culture at Boeing and later Ford.
I worked for Boeing in Australia. There was lots of silent agreeing and head nods during this Vid. Nice work
It sounds just like the airline I work for, we're a business before we're an airline. We're now reviled by our own customers, but it's all about shareholder value, income, maximising profit and cutting costs (at all costs!). No one who has worked with passengers in the terminal or on board aircraft actually sits on the board.
We have a silo management mentality where senior managers will build their own little empires and power grab to step on others to climb the corporate ladder. They'll institute financially disastrous initiatives in the medium to long term (by which time they've left and joined higher up in another company) and also make decisions which will save their own department money, but will overall cost the company more than any savings.
And it's all the employee's fault...
only a matter of time before customers face the brunt and then no one buys the product or service. Then the execs start losing their savings just to stay alive or feed themselves another day.
@@corpsecoder_nw6746 and yet, executives will still get away with millions in their pockets :/
RyanAir?
@@alan-sk7ky nope!
Just questioning what Airline to be able to avoid flying with them.
I had, and have, a lot of time for Alan Mulally - his style is one I 100% agree with, and, based on the results he gets, seems to actually make the right things happen, too.
Excellent video, Petter. I'm grateful for the history of McD & Boeing - now I see why it went pear-shaped.
THis should be part of business school training, as well as infotainment on CZcams.
The problem there is that students learn what NOT to do but do Not learn how to manage the business right.
Fantastic journalism! Deep insights and a great way to bring it in perspective... Thank you!
Great analysis! This Old Pilot worked through these years and I was often troubled as I saw how Airline CEOs (and all business leaders) fell for a hero-worshipping (almost cultish) mentality as they tripped over themselves in a rush to adopt new 'cool' slogans. "More with Less!" / Lean and Mean / yadda yadda yadda... And to elevate the interests of One Set of Stakeholders (INVESTORS) over all others (i.e employees, managers, customers! even) ... Boeing's loss became Ford's gain.
1) The old Boeing: Management serves engineering to make great products, leading to a great reputation.
2) The new Boeing: Engineering serves management to make great profits for Wall Street and big bonuses for executives, leading to dead passengers & ruined reputation.
3) New New Boeing: Hire only the most diverse people to make decisions they aren't qualified to make.
Excellent series of programs. Well researched and excellently narrated! Thank you.
When it was taken over, McDonnell Douglas was a risk-averse company, distracted by trendy management theories, that had missed some very obvious market opportunities and thus ended up with an ageing product line - while having its reputation tarnished by several high-profile accidents. Good thing none of that rubbed off on Boeing.
You are incorrect. The shareholder value ethos at Boeing was introduced by Boeing President Philip Condit. Phil was an engineer and had spent his entire career at Boeing. Merging with McD was a step (not the first) in his "conversion" of Boeing. Condit was yet another executive in that era enamored with Neutron Jack Welch. Boeing is in trouble, but the McD merger was a symptom, not the cause!
Yes, yes, and yes. You are correct!
This is all too common a theme within business today. Focus on making money and keeping shareholders happy, rather than being a good steward of your business.
Yup, if making quick money to satisfy shareholders becomes more important than making good, safe, quality products to satisfy customers, you will pay for it in the long turn. Sadly too many US companies have chosen this path of extreme capitalism, while many European and Asian companies still have a business culture that puts quality first and profit second.
In the aviation world, it seems the time is ripe to extend the acronym CRM beyond the flight deck.
Airlines learned the hard way that cockpit / crew resource management was a critical safety factor and that there was no room for egos or bullies.
Airliner manufacturers need to learn that, in their industry, the same applies.
Techniques of Company Resource Management are as essential to board rooms as they are to cockpits.
Dangerous aircraft are built on the *ground* just as much as safe ones are.
Back in 97, my grandparent Joaquim was still alive and, at the time, working on the L-1011 maintenance @ TAP/OGMA. I remember him saying something like "Oh God... Here come the economists trying to engineer planes".
Almost 30 years later...well... He wasn't wrong.