Boeing CEO Dennis Muilenburg’s departure sends a message that the troubled company is going back to basics. But in this case, the basics have less to do with nuts and bolts, and more to do with information.
Information technology rather than flawed hardware has been at the root of Boeing’s most recent troubles — including the problematic automated control system that’s thought to have caused two catastrophic 737 MAX accidents.
Although the roots of that problem predate Muilenburg’s ascension to the CEO role in 2015, Boeing’s board of directors had clearly lost patience with the way he handled efforts to recover from the crisis. That has to do with information technology, as well as plain old information.
His missteps in dealings with the Federal Aviation Administration, which has yet to sign off on the 737 MAX’s return to flight, have come in for widespread criticism.
In today’s statement announcing Muilenburg’s resignation, Boeing said the board decided a leadership change was necessary “to restore confidence in the company moving forward as it works to repair relationships with regulators, customers and all other stakeholders.”
Last week’s problem with the first flight of Boeing’s Starliner space taxi, which ended up in the wrong orbit because the spacecraft’s software picked up an incorrect time code, provides further evidence that getting information technology right will be crucial to the company’s future.
The next CEO
Boeing’s board gave an advance signal that Muilenburg’s position was precarious in October, when it stripped him of his post as chairman and installed David Calhoun, an independent board member, as non-executive chairman.
Now Calhoun will be Muilenburg’s replacement as CEO and president, effective Jan. 13. While Calhoun closes off his non-Boeing commitments — including his role as a senior managing director of the Blackstone investment firm — Boeing’s chief financial officer, Greg Smith, will serve as interim CEO.
Today Calhoun promised to get the 737 MAX program back on track.
“I strongly believe in the future of Boeing and the 737 MAX,” he said in Boeing’s statement. “I am honored to lead this great company and the 150,000 dedicated employees who are working hard to create the future of aviation.”
Boeing’s newly appointed non-executive board chairman, Lawrence Kellner, said he and the rest of the board were “pleased that Dave has agreed to lead Boeing at this critical juncture.”
“Dave has deep industry experience and a proven track record of strong leadership, and he recognizes the challenges we must confront,” Kellner said.
Based on the market’s reaction, the switchover has reassured investors, at least in the short term. But is Calhoun the right person for the long haul? Aviation industry analysts are doubtful.
“I think the ideal leader has a combination of program management skills, commercial market experience and an engineering background, or at least the ability to communicate with and prioritize engineers,” Richard Aboulafia, vice president of analysis at the Virginia-based Teal Group, told GeekWire in an email.
“They haven’t had that in many years, and there’s nothing about Dave Calhoun’s background that suggests he brings those things, even if he would be good for short-term stabilization,” Aboulafia wrote. “I’m concerned that he might want to stay for some time.”
Scott Hamilton, managing editor at Leeham News and Analysis, is even less sanguine about Calhoun.
“He’s been on the board since 2009. He’s been part of the board policy-making that led to the cost-cutting some say had deleterious impact on the development of the MAX,” Hamilton wrote in an analysis. “He’s been part of the board decisions that shareholder value is the No. 1 priority at Boeing.”
Hamilton noted that Calhoun has spent most of his career at General Electric, including GE Infrastructure, GE Aircraft Engines and GE Transportation.
“The GE cost-cutting culture in the executive ranks and the board that’s been prevalent for 20 years needs to go,” Hamilton wrote. “Crucial is a board that has fresh perspective and is not married to ‘shareholder value’ as the No. 1, 2 and 3 priorities.”
The next, next CEO
The 737 MAX crisis — and to some extent, the issues surrounding Starliner — highlight the challenges that Boeing has been facing when it comes to providing a clear-eyed assessment of the company’s technology.
Earlier this month, FAA chief Stephen Dickson took Muilenburg to task for putting out overly optimistic statements about the 737 MAX’s return to flight — and urged him to provide more timely, high-quality data for the FAA’s safety review.
Meanwhile, NASA Administrator Jim Bridenstine has been pressing Boeing to be more open about the Starliner testing process. Bridenstine noted that Boeing live-streamed last month’s Starliner pad abort test at his request, in the interest of providing “transparency for the taxpayer.”
Excessive optimism extended to other parts of Boeing’s frontier as well: One of the persistent criticisms of the development effort for NASA’s Space Launch System rocket, which has suffered cost overruns and schedule delays, has been the failure to hold Boeing accountable for shortcomings.
Muilenburg repeatedly predicted that the first humans on Mars would get there on a Boeing-built rocket. That led SpaceX CEO Elon Musk, who’s no stranger to announcing overly optimistic schedules, to tweet a reply: “Do it.”
Being transparent, and showing familiarity with Boeing’s technology and its limits, will be key attributes for any CEO seeking to rebuilding the company’s image in the days, months and years ahead.
And it wouldn’t hurt to have someone in the top ranks who’s familiar with Boeing’s software-centric frontiers — especially when you consider that the company is putting bigger bets on big data, automation, autonomous flight, artificial intelligence and even quantum computing.
Calhoun could well be the person to bring Boeing out of its current crisis. But the company’s leadership would do well to start thinking about its next, next CEO.