November 2005 
Volume 04, Issue 7 
Q and A

McNerney: Let's 'play bigger;

McNerney: Let's 'play bigger'

Jim McNerney has served as Boeing chairman, president and CEO for four months. During that time, he has been listening to customers and employees; diving into the programs, functions and businesses; getting involved with this year's commitments; and defining next year's operating plan.

McNerney recently spoke with Boeing Frontiers about how the process is going.

Q: What's been your primary focus during your first few months at Boeing?

A: First, I've been diving into the operations of the company. I've been visiting the larger sites and conducting in-depth reviews of key programs, functions and businesses. In the process, I've been meeting with Boeing people—sometimes in large groups, sometimes in smaller groups, where I encourage a free flow of discussion. I've also been meeting with various customers, and I've visited Washington, D.C., a number of times. In each case, I learn a lot.

Q: What issues and priorities are at the top of your agenda?

A: The company's performance—and how we can enhance it. Ethics and compliance—and how we keep them at the forefront of our values every day and instill them in all our business processes. And how we play "bigger" as a company, leveraging strengths across all of Boeing.

Q: What do you mean by playing bigger?

A: Driving improved growth and profitability—identifying and pursuing specific opportunities to gain more leverage in areas such as sourcing, technology, research and development. Applying Lean principles more broadly—for example, to front- and back-office operations as well as our factories. I've challenged the team with some new performance targets this year and next, because I'm convinced that controlling our future has as much to do with advancing productivity year-in and year-out as having the right products, services and solutions for our customers.

Playing bigger also involves making leadership development a central focus for the company.

Q: As you get more deeply involved with the Boeing culture, what do you think of it?

McNerney quoteA: It's a unique culture with unique strengths. The thoughts that come to my mind: pride, self reliance, enterprising spirit, putting the customer first and passion for how technology can change the world.

Q: Is there anything in our culture that you'd like to change?

A: Rather than change the culture, I'd like to simultaneously build on it and reinforce its strengths. But, like any uniquely strong culture that's driven historical success, it can lead to hints of arrogance in some cases and leave us out of touch with the external change that's going on around us—in our markets, our customers, our regulatory environment, our investors' focus, the world's economics and consumer preferences.

So, without prejudging the outcome, I'd like to open up our culture. That starts with valuing open, direct communication on the subject. I want to make sure our culture is tied to driving business performance, satisfying customers and behaving ethically and compliantly in all cases.

Q: What are your impressions of Boeing businesses and processes so far?

A: I'm very impressed with the energy, the intensity and the resourcefulness of the people of Boeing. Commercial Airplanes and Integrated Defense Systems are strong businesses; management and the teams have embraced growth and productivity as twin objectives. The people of Boeing are actively participating in and driving process improvement in key functions across the company to achieve more leverage. As I mentioned earlier, the Executive Council and I are looking for ways to turbocharge and accelerate that kind of effort.

Corporate control functions—like Finance, Human Resources, Law, Communications and Internal Governance—are tightening up control of processes across the company, but we can do more there. We still have too many functional-discipline "escapes."

McNerney quote

Q: What's more important—productivity or growth?

A: It's not an either-or proposition. To be competitive, Boeing must both grow as a business and be more productive. And we must embrace business and financial goals that reflect continuous improvement in both. I've seen a willingness in many Boeing people to expect a lot from themselves in this and many other areas.

Q: What kind of relationship do you want to see between World Headquarters and the business units?

A: A relationship that's collaborative and cooperative—one that's focused on reducing costs, supporting growth and improving our competitiveness. The corporate office's role is to set and model our values, set goals and objectives, allocate resources and find business leverage across the company—not to create edifices and layers of management. It's my conviction that if you're not designing, building, selling or supporting our products, your job is to help the people who do.

Q: How does stronger functional control help make the businesses more competitive?

A: As I alluded to earlier, weak functional control leads to incredibly costly mistakes—in terms of morale, money and reputation. One of the reasons that Boeing suffered from past ethical violations was that the functional disciplines weren't as strong as they should have been. I want to see our corporate support functions establish solid control of their processes and people while working with—not against—the business units. In fact, I want to measure us on how well we do both. This type of organization can work if people want to make it work. And it's my sense, from the people I've met, that they do.

Q: What is your reaction to the settlement that ended the strike by IAM-represented employees in Puget Sound, Wichita and Portland?

A: That contract is a result of give and take—compromise on both sides—negotiated with respect around a set of priority issues. It preserves BCA's ability to manage quality and productivity improvements. It is the right deal for both sides, and—as any contract negotiated with Boeing ultimately must do—it improved our long-term competitiveness. It would be a mistake to assume that every contract will be the same across the company, since many competitive situations differ.

Q: What have you been hearing from our customers?

A: I'm struck by two things. The customers you might think of as "traditional"—those who buy our products and services—really appreciate us. Even when they tell us where we've made mistakes, they're in our corner.

There's another set of customers who are also supportive—but with an element of skepticism, given past events. These include some members of Congress and government regulators. These nontraditional customers are just as important to our business as the traditional ones, and they should be treated with the same degree of respect. Because of the ethical issues the company has struggled with in the recent past, they're taking a wait-and-see attitude. That's why I keep repeating that "earning your way as an ethical company is an everyday thing." If we don't do all the right things today, we can wipe out all the good things we've done for years before that.

Q: Is that why leadership development is a priority?

A: It's one of several reasons. As we all develop and strengthen our leadership capacities, that will have a positive impact on the company's performance. Better leaders make a better company. Furthermore, I believe that we can define and measure what leadership attributes we want in ourselves that we believe will lead to a strengthened company. And as we define those attributes, we must embed the expectation of ethical and compliant behavior as an integral component.

But I'm getting ahead of myself. We're working on this, and you'll hear more from me soon on the subject!


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