Harry C. Stonecipher
The Boeing Company
"The Magnificent Seven (or any other Number: Learning to Think & Act as One"
Huntington Beach Management Club
Huntington Beach, California
October 15, 1997
Phil Condit has used a striking metaphor in talking about the "new" Boeing Company. He has compared the completion of the Boeing/McDonnell Douglas merger on August 4 to the historic moment when the wing was joined to the fuselage of the first 747 jumbo jet.
We have created the world's largest aerospace company. Now we have to show the world that this giant new bird will fly. And more than that, that it will fly farther, faster, higher -- and more efficiently -- than anything else in the world of aerospace.
There is no doubt in my mind that we can do just that. To do so, however, we must capitalize on the possibilities for synergy that exist in the new Boeing Company. And that is what I want to talk about tonight.
In its root sense, synergy simply means working together. But as I am going to use the word, it means something more that. You can work alongside someone for many years and hardly get to know the person. That's not synergy. You can divide a task with an equally competent person and do it in half the time. That's not synergy either.
Synergy occurs when people with different skills and talents come together in doing or creating something where the whole is somehow greater than the sum of the parts. One example that springs to mind is a symphony orchestra.
An even better example -- since this is Western night -- may be drawn from one of the greatest westerns of all time, The Magnificent Seven. This is the movie where a handful of good guys, led by Yul Brynner, saves a poor farming village by routing a small army of banditos.
You remember the all-star cast of characters assembled by Yul Brynner at the outset of the movie. There is the sharpshooter (Steve McQueen), the knife-thrower (James Coburn), the bounty hunter (Charles Bronson), and so on. Each is an expert at what he does.
Though badly outnumbered, the good guys prevail because of superior organization, motivation and -- above all -- because of the creative interplay between their different skills and talents. That, my friends, is synergy. It is what happens in a great group where individuals goad and inspire each other in pursuit of a common objective.
But the kind of bonding that results in collective effort marked by a high degree of inspiration and creativity is never easy to achieve. Here, too, the movie is instructive. As you may recall, Yul Brynner has a difficult time getting the different members of his band to accept each other . . . or even to refrain from killing each other . . . before he succeeds in melding them into a cohesive and effective team.
It is the job of the leader -- the Yul Brynner . . . or, in our case, the somewhat better coifed Phil Condit, with me as his second-in-command -- to make everyone see the need for thinking and acting as one. There is no more important job on our shared agenda. In a few minutes, I will tell you some of the things we are planning and doing to make sure that the new Boeing, truly, is "one company."
First, let's look at the outlook for -- along with the skills and capabilities of -- the various businesses that are grouped together inside the "new" Boeing. This includes businesses from the "old" Boeing, the old McDonnell Douglas, and the old North American Rockwell.
There is no doubt that we have brought together an all-star cast of people in terms of what we are able to do. That is why Fortune magazine pronounced the original announcement of our merger "The Sale of the Century." As Fortune commented, "It was at bottom a truly strategic merger" -- with "the potential to be fabulously successful."
The new Boeing is by far the biggest company that has emerged from four years of consolidation within the aerospace and defense industry. Our revenues will be close to $48 billion this year, compared with an estimated $28 billion for Lockheed Martin. More important than brute size, however, is the breadth and balance of what we do today, and what we may be able to do in the future.
There is remarkably little overlap in our product lines, given the fact that we have combined the forces of organizations numbering in the tens of thousands of people. We have brought together the long-time leader in commercial aircraft, the long-time leader in military aircraft, and put together the pieces of a broad-based space business.
In commercial aircraft, we are at the beginning of what figures to be a long up cycle. Over the next 20 years, we estimate the total market for commercial aircraft to be more than $1 trillion -- and we expect to take a 60% or more share of that. We also have a thriving new business in business jets. At the moment, our principal challenge in commercial aircraft is to stay on schedule, and on cost, while ramping up production and delivery of the highest quality products.
In military aircraft, we expect to gain a growing share of the shrinking pie. We have an extremely solid base of aerospace defense programs -- with great strength in ongoing programs, such as the F/A-18 C/D, the F-15, the Apache Helicopter, the AV-8B Harrier II, T-45 and C-17 . . . combined with an equally strong position in next-generation programs, such as the Joint Strike Fighter, F-22, the E/F Super Hornet, the Comanche helicopter, and JDAM.
Space is the ultimate high ground in the military world -- and, still more, in the future of human communications. We are there, in a big way, in everything from rocket engines to launch vehicles, spacecraft and our involvement in Teledesic -- creating the world's first satellite network to extend advanced, affordable information services to the far reaches of the earth.
We have three core competencies, and they support each other like the three legs of a stool. One is detailed customer knowledge and focus. Another is large-scale system integration. The last is lean, efficient design and production systems. Put them together, and the idea is to deliver superior value across the whole spectrum of major aerospace markets.
And this is where the different parts of the new Boeing Company share a common heritage. Though mostly in different product areas, all of us -- the Boeing of old, North American Rockwell and McDonnell Douglas -- have come to prominence as large-scale systems integrators.
This raises an important point of difference between the new Boeing and other companies that have emerged from the consolidation process. We have integrated more in the horizontal than the vertical direction. We have not gone out of our way to acquire subystems suppliers. Why? We want to maintain our flexibility and integrity as an integrator of big systems.
That said, there are tremendous opportunities for synergy running straight across all of our businesses -- from commercial aircraft to military aircraft . . . and back the other way . . . and from both of those to our space businesses, and back the other way again. With that, we have the ability both to strengthen the competitive edge we have in traditional lines of business, and to open up whole new aerospace businesses.
Let's talk about that.
- Teledesic draws upon the individual strengths of many parts of the new Boeing, and it puts us into the commercial information business in a big way.
- Information and Communications business unit under Jim Evatt.
- EELV/Delta IV and creative interaction that is going here and in other parts of the Boeing Space & Missile Systems Sector.
-- Commercial Aircraft.
- Developments in satellite-based information systems are bringing, and will bring, office-of-the-future to commercial jets and business jets. TodayÃs jets are already equipped with videos, phones and faxes, with power and internet access for laptop computers.
- Next is video-on-demand (not reruns, but watching live TV and being able to sort and choose from a library of programs). In the near future are things like high-definition TV and in-seat virtual reality . . .
- Further, certain technologies developed in military aircraft (such as heavy use of advanced composites) will be needed in the commercial aircraft world with the eventual emergence of large supersonic commercial jets capable of flying across both oceans.
-- Military aircraft.
- Boeing figures to be the clear leader in bringing commercial practices to defense contracting.
- Defensive avionics in B1B may figure in C-17 and other opportunities for creative interaction between newly joined programs inside McDonnell Aircraft and Missile Systems.
- Increasing importance of space-based communications in military aircraft.
Competition in today's world increasingly depends upon a combination of brainpower and speed-to-market. That is to say, it depends upon the ingenuity, genius and motivation of people at all levels of an organization. People are most likely to flourish in an environment that offers limitless opportunities for learning . . . for branching out in new directions . . . and for putting their creativity to work.
With this in mind, we have rolled out a series of new policies at a bringing people together across the length and breadth of the new Boeing Company, and making lifelong learning a central objective in the lives of all of us.
Under the new "Learning Together" program, the company will pay tuition and many related expenses for employees wishing to complete their high school education, to enter trade schools, or to advance their education at the college and university levels. What's more, as a special incentive, substantial quantities of Boeing stock will be awarded to employees for each doctorate, master's and initial bachelor's degree earned through the program.
Just the other day, we announced the creation of a New Office of Lifelong Learning. This office will bring together a number of previously separate activities, including the Learning Center in St. Louis, the people responsible for organizational development, and the Center of Leadership and Learning in Seattle.
There is great cinematic experience coming to a theater near you, and it's not, as you might suppose, The Magnificent Seven. On November 5 and 6, many of you will join 2,000 of your close friends from across the new Boeing Co. in our new "Taking Care of Business" program -- a full two-day learning experience using videoconferencing and two-way phone, fax and e-mail communications.
Over the next six months, we will reach all 22,000 managers in our company with this program -- and I guarantee you we are all going to know each other a lot better when it is completed.
In closing, let me just say that the leadership of the new Boeing is strongly committed to the goal of making this "one company" where there are no walls or silos. This will be a company that is constantly enriched and renewed by the learning that goes on within it.
I look forward to the day when the "new" Boeing is replaced . . . in all of our minds . . . by The Magnificent Boeing.