How to fix what's wrong at Boeing

Today's executive shake-up is like changing out an engine while the plane is flying. Here's what experts say Boeing should do next.



With no sign of an end to its problems with its most important product, the 737 Max, Boeing is abruptly switching CEOs, ousting Dennis Muilenburg.

79彩票注册网址Board member David  Calhoun will become CEO in January. Greg Smith, Boeing's chief financial officer, will serve as interim CEO during the brief transition period. Board member Larry Kellner, former CEO of Continental Airlines, will become board chairman.

No doubt things are broken at the Chicago-based aerospace giant, but this executive shakeup is the equivalent of changing out an engine while the plane is flying. 

What does Boeing needs to do to get things headed in the right direction? We asked the experts for their views.

"They can divide and conquer," says Jeffrey Sonnenfeld, senior associate dean for leadership studies at Yale University. "Kellner is perfect for the customers. Calhoun is credible with manufacturers and customers. For the employees, Greg Smith is perfect."

The top priority is getting the 737 Max back in the air, which requires approval of regulators, starting with the FAA. One of Dennis Muilenburg's failures was a

79彩票注册网址"The CEO needs to elevate someone who reports to him, someone from the engineering side, and go to Washington. Get on a plane and go to the FAA and be real cooperative," says Erik Gordon, a professor at the University of Michigan's Ross School of Business.

It's not the first time Boeing has hired a board member to fix a crisis. In 2005 the company hired Jim McNerney—who, like Calhoun, is a former GE executive. And Boeing's not alone in using this playbook: United hired board member Oscar Munoz after Jeff Smisek was unexpectedly dispatched amid a federal investigation.

79彩票注册网址Gordon doesn't think Calhoun is a permanent fix.

"They have a temporary person," says Gordon. "Now start searching. The board should have started that three to six months ago. When you have a crisis, the first time a CEO makes a misstep, the board needs to move into action—not that you necessarily have to remove them right then."

And he suggests Boeing look elsewhere to fill the job. 

79彩票注册网址"You need to bring in an outsider as CEO who has no baggage. If you go inside, they have to be high enough up that it would almost have to be someone who played a role in the current mess," Gordon says.

Richard Aboulafia, a vice president at Virginia-based Teal Group and a longtime Boeing watcher, also recommends the company look outside. 

"In terms of fixing long-term problems, there’s nothing about Calhoun's experience to suggest that he's the right long-term choice," Aboulafia says. "Private equity, Jack Welch-era General Electric management, are not experiences that Boeing has lacked. Commercial aviation experience, engineering, program management, and communications between management and engineering would be great skills to see.”

He says Boeing doesn't have a deep bench. "There's been an exodus of talent," Aboulafia says.

Scott Hamilton, managing director of Seattle-based aviation consulting firm Leeham, also says Boeing needs to change course at the top.

79彩票注册网址"The GE cost-cutting culture in the executive ranks and the board that's been prevalent for 20 years needs to go," he wrote in a "Crucial is a board that has fresh perspective and is not married to 'shareholder value' as the No. 1, 2 and 3 priorities."

79彩票注册网址He suggests Boeing look for fresh blood with deep aviation credibility. 

"Given what's happened, a former investigator from the National Transportation Safety Board or a former member of the EASA (European Aviation Safety Agency) might be a good addition."

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