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1998 Speeches

Harry C. Stonecipher

President

The Boeing Company

"Restoring Trust In Government"

Association of Government Accountants

Ninth Annual Federal Leadership Conference

Crystal City, Virginia

January 15, 1998

It is an honor and a pleasure to address the 1998 Federal Leadership Conference.

One of the roles of leadership is to create trust... which is to say, a strong belief in one another, linked with high expectations for the group or enterprise.

The word "trust" is stamped on all our coins. Unfortunately, as we all know, it is no longer something that is stamped in the hearts and minds of most Americans when they think about their government.

Back in 1964, more than three out of every four Americans said they trusted their government to do the right thing. That was down to less than one in five in 1994. According to a recent poll, only 6 percent of Americans say they have "a lot" of trust in the federal government.

This troubles me. On several counts.

It troubles me as the president of a company that is a major defense contractor. It is our reputation as well as yours that is at stake in this arena.

It troubles me as an informed citizen. I know there are all kinds of social and environmental problems that call out for energetic, creative action by people in both the public and private sectors.

Finally, it troubles me as someone who cares about the future of this country. In a free and democratic society, a highly negative attitude toward government is a sign of confusion and drift. We cannot afford to turn from a nation of optimists and doers into a nation of cynics and naysayers.

My topic today, therefore, is restoring a sense of trust in government. What do we need to do?

We could talk for hours about all the reasons for the decline in public trust -- everything from Vietnam and Watergate through the energy crisis, the S&L crisis, and a great deal else besides. But rest assured: I have no intention of subjecting you to a dissertation on such matters.

Instead, I will focus on one aspect of the problem.

In recent decades, there has been a massive proliferation of rules and procedures -- across all levels of government -- designed to protect against waste, fraud and abuse, and to guarantee universal fairness in the award of public contracts and the distribution of public goods and services.

What we have here is not just an increase in oversight and paperwork. It is a spiraling cycle of distrust and disempowerment.

Not trusting our public servants and the organizations they contract with to do the right thing, we have put all kinds of artificial and counter-productive limits on their ability to think and act in a responsible manner. Then, disillusioned with the results, we have put further strictures upon their judgment and capacity. And so on, all over again -- the spiral of distrust and disempowerment.

We have made "special prosecutors" a permanent part of our government infrastructure. Part of the role of government, it seems, is to seek out and promote public scandal... to plunge the dagger of distrust into its own heart at every opportunity.

Much of this is brilliantly captured in the book, "The Death of Common Sense." The author, Philip Howard, provides a compelling critique of the folly of trying to cover every possible contingency with pre-determined rules and regulations, with no quarter given for independent judgment or discretion by our public servants.

He cites the case of an agency in New York City which is so scrupulous and demanding in its contract requirements that it is now in the position of having only one or two bidders for most contracts. Thus, "the hardened core that is left often show up at auctions with two sealed envelopes, one with a competitive bid and one with something more like a winning lottery ticket. If no one else shows up, it's the vendor's lucky day."

Howard cites dozens of other examples of procedural overkill. These range from labeling ordinary beach sand as poison to a city's refusal to allow Mother Teresa to convert an abandoned building into a homeless shelter.

The city turned thumbs down on Mother Teresa's project because she lacked the $100,000 needed to bring the building up to code by installing an elevator. Everyone agreed there was no need for an elevator. No matter. There was a rule requiring one. In a polite letter of regret to the city, the Missionaries of Charity wrote that the episode "served to educate us about the law and its many complexities."

As Howard writes:

"We have deluded ourselves into thinking that the right decisions will be ensured if we build enough procedural protection. We have accomplished exactly the opposite: Decisions, if they happen at all, happen by default. Public decisions are not responsible because no one takes responsibility."

If the problem is stated in this way, the solution seems clear. The solution is to put the rule book aside . . . or at least to stop using it as an excuse for inaction and resistance to change. Instead of asking our public servants to do things right (according to the rule book), we should return to the idea of asking them to do the right thing -- applying common sense and good business principles.

I said return. It is worth recalling a little history. In replacing the Spoils System, the Civil Service Reform Act of 1883 marked the beginning of modern government in this country. The idea was to hire qualified people who could be trusted to take responsibility, and to exercise discretion, in applying general rules in a variety of different situations. One of the sponsors of the act, Senator Hawley of Connecticut, spoke with admirable clarity when he said:

"Do not let us indulge an idea that we can make a perfect system and eliminate all evils or possibilities of evil. We can lay out some general lines . . . and say generally . . . "we hold you . . . responsible for the thorough administration of all affairs . . . under these general rules."

That may sound like good advice. But is it practical in today's environment? Can we effect sweeping change in the way we operate in and around the public sector?

I believe we can and must. In fact, I will go farther and say: It is almost inevitable . . . in many areas . . . given flat or falling levels of public expenditure.

Look at what has happened in our Armed Services. In constant dollars, the U.S. military budget, as a whole, has dropped by 37% since 1985. Broken into the different pieces, that includes a 21% cut in operations and maintenance, a 30% cut in military personnel and 65% cut in defense procurement.

Nothing concentrates the mind like a sudden shortage of funds. Under the banner of "better, faster, cheaper" there has been sweeping change across the field of defense procurement. There has been a huge reduction in detailed specifications, a new emphasis on teamwork and empowerment, and the development of closer and closer partnership arrangements between contractors and the services.

A crisis may serve to provoke change. But it takes strong leadership to push change in the right direction. We have been fortunate in defense and federal acquisition to have leaders like Paul Kaminski, Dan Goldin and General Ron Fogelman.

And I am proud of the role that people at McDonnell Douglas -- now a part of Boeing -- have played as champions of change. Indeed, if there is one procurement program that has served as a model for others to follow, I believe it is the C-17.

The C-17 Globemaster III is now recognized as a great procurement program in two important ways. First, it is a prime example of an efficient production program. It is on cost, on schedule, and it is meeting the highest quality standards. Second, it is a prime example of an aircraft that is performing excellently in the field. As President Clinton noted, it is "the world's best moving van."

A few weeks ago Boeing and the Air Force signed a new contract under which we will provide cradle-to-grave maintenance for the Air Force's C-17s. That's partnership.

Five years ago, however, it was a different story. We were far behind schedule and the program was in real danger of early termination. To save the program, McDonnell Douglas and the Air Force agreed to drastic changes -- beginning with the installation of new management, both inside the company and inside the Air Force's System Procurement Office.

At the top level, we agreed to share common objectives, and to start acting as partners in a long-term relationship rather than as adversaries in a continuing dispute. We would not allow problems to fester. To take one example: If mid-level managers from the company and the Air Force were incapable of concluding annual contracting negotiations on a specific date, the two top executives -- the McDonnell Douglas program leader and the Air Force SPO director -- would settle the outstanding differences themselves, without the help of their staffs.

That sent the message that we were serious about trusting each other. And this was carried down the line. The SPO gave up its practice of sending a person to monitor our work every time we were required to re-drill a hole or re-buck a rivet.

Still more importantly, we got on with the task of truly empowering the C-17 workforce and our suppliers to do their jobs with a minimum of interference and with genuine encouragement for teamwork and individual initiative at all levels.

Let me give you an example. The C-17 paint shop was a real problem area -- a cause of late deliveries, numerous customer complaints, and continuing friction between management and labor. So we installed a new director in the paint shop -- a former factory worker who had gained a reputation as a change leader.

The painting of a C-17 . . . as big as it is . . . and as geometrically complex . . . has been aptly described as "a ballet in the sky." It requires skilled players and great choreography. Consider: The tail of a C-17 is two and a half stories above the ground, and the entire plane is almost two-thirds the length of a football field from stem to stern. A number of devices called "stackers" are used to move the painters in vertical and horizontal directions. Each stacker has a crew of three: a driver, a spotter, and a shooter.

Ed Schaniel, the new director, began by asking the painters what they needed to do their jobs better -- and what he could do to make the paint hangar a better place to work.

First, the painters complained bitterly about the sequencing of work, which caused them to be laid off for a period of weeks every time they finished painting an aircraft. To their surprise, Schaniel went out on a limb in promising an end to the practice of temporary layoffs. In turn, he got them to promise to compete for other work inside and outside the company.

Loosening up, the painters voiced a pet gripe. This concerned a lack of spray nozzles in the showers. Despite repeated complaints in the past, they had to shower at the end of each shift from pipes sticking straight out from the walls. Reaching into his pocket, Schaniel pulled out his wallet, and emptied the contents -- sixty three dollars in all. He told the painters to take the money and buy as many shower heads as they needed . . . and to fix them to the pipes the next day. Amazingly, that was done, with no recourse to people in the procurement and maintenance functions.

At this time, the painters were in the process of finishing their work on the 18th production model C-17. There were 405 customer "squawks," or complaints, about the paint quality on that aircraft.

With all the changes that ensued following Ed's arrival, there were only 15 squawks on P-19, the next aircraft. Meanwhile, there was rapid improvement in every other important area as well. Cycle times have come down from 21 days to 14. The overall cost of painting a C-17 has been cut in half.

As for the painters, they are now organized in four self-directed work teams that operate autonomously in assigning people to different tasks. To put that in plain English, the painters are now their own bosses.

We have made similar changes in other parts of the C-17 program, and we have reaped similar benefits.

The organizers of this conference have raised the question: Can Government be made to operate like a business? There is no simple answer to that question. In many ways, the business of business is easy compared with the business of government. We have the task of satisfying our customers and our shareholders, whereas you have many different (and often conflicting) constituencies to serve.

Nevertheless, when it comes down to the basic issue of leading and motivating people, the challenge that faces you is the same as ours. The same four lessons apply equally well to organizations of all kinds, whether they are part of the public or the private sector.

First is the importance of trust. Nothing works without it. Trust, as Warren Bennis has pointed out, is "the glue that maintains organizational integrity."

Second, if you are in a position of authority, you must earn the trust of your customers and the people under you. As Ed Shaniel showed, you have to be prepared to do the right thing, and not just to do things right. You must be prepared to be a champion for change, if that is what it takes to do the right thing.

Third, trust depends upon empowerment . . . or letting go. Real leaders succeed as a result of making leaders of those they nominally lead. It is amazing how energetic and enterprising people become . . . when they are treated with dignity and respect . . . and allowed to do a good job.

Lastly, trust requires dependability . . . or always doing what you say you are going to do. With greater freedom and autonomy comes the requirement for more responsibility and better performance.

In closing, I would like to reiterate the point that I have witnessed a great deal of positive change in one area of government -- defense procurement. I should add that the Armed Forces in general have made enormous progress both in doing more with less, and in reshaping their organizations to empower people and to encourage greater risk-taking. As a result, the services constitute one public institution that does indeed command more trust today than it did several decades ago.

I don't know of any businesses that can match the recruiting ads that you see on TV for the different services. Watching them, you get a definite feeling that it would fun to be young again, and to have the opportunity to serve in the Armed Forces.

It is my hope that other parts of government -- whether federal, state or local -- will step out in the same way. We must break the cycle of distrust and disempowerment that hobbles government in many areas.

In government as in business, nothing succeeds like success. I therefore challenge each of you, in your capacity as a Government leader, to look for opportunities where you can achieve a successful outcome that will amaze your customers and colleagues. I challenge you to be a champion for change, in producing the kind of success story that others will want to emulate.