Chairman, President and Chief Executive Officer
The Boeing Company
"How we're going to improve performance"
Highlights from 2005 earnings conference call with analysts and media
February 01, 2006
In January, the senior team charted our course for the next several years. Our objective can be stated simply: The Boeing Company aspires to deliver financial results that match the quality of our people and our technology -- which is a meaningful improvement from where we are today. In short, we expect to meet a significantly higher standard of overall financial performance. We intend to get there by finding ways to make Boeing bigger and better than the sum of its parts.
The foundation for this framework will be driving and nurturing a culture of leadership and accountability. We have started by setting challenging but attainable financial objectives and more strongly linking them to our own pay and career development. An intense but equal pursuit of productivity and growth will be the building blocks of our improved financial performance. We must have both growth and productivity -- simultaneously -- since they fuel each other. We will always remember that growth, our future, begins and ends with our customers. I am pleased that Boeing's teams have made significant strides in living at our customer's place and at our customer's pace.
And we won't stop there. Further, we will strive to address growth as a disciplined process, not as a series of intermittent opportunities. Through this approach, we hope to anticipate our customers' needs better and earlier than our competitors do, respond faster, and solidify our standing as the preferred supplier for our customers around the world. While we can still be better -- and will be better -- I'm impressed by our recent progress on growth through customer focus.
Commercial Airplanes has transformed its products into a clearly preferred lineup by the often messy, iterative, but ultimately disciplined process of listening to what customers need -- not just for today but for the future. As a result, Boeing is now offering the innovative airplanes with the efficiency and range airlines and consumers need. This focus on our customers produced a record order year for Commercial Airplanes in 2005, and added to Boeing's leadership position in the important twin-aisle market.
Our Integrated Defense Systems business has the industry's leading backlog because it listened to and adeptly met its customers' needs for transformational solutions. Witness the success of our Future Combat Systems program as an example. Now, however, IDS is transforming itself to reflect how our customers' future requirements are evolving -- still transformational, but now often with coordinated capabilities and across service organizations. This is evident in the IDS restructuring we announced last week that will further enhance the customer focus of our top management and improve productivity through some consolidation.
Also in support of our objectives, we are providing our business and functional teams with the tools in the form of four productivity and growth initiatives to build on the strong business positions they have already developed. These companywide initiatives will support our continuous productivity and growth objectives. The benefits from these initiatives will be built into our plans and support our financial guidance.
- Our first initiative is Internal Services Productivity. [Chief Financial Officer] James Bell will sponsor this effort. Through it, we will reduce indirect costs that are centrally managed or embedded in the businesses. We will also be improving functional productivity.
- Second is Global Sourcing, with [IDS President and CEO] Jim Albaugh as its sponsor. This is all about taking greater advantage of economies of scale and moving best practices deeper into the supply chain.
- Third is Lean+. [BCA President and CEO] Alan Mulally will sponsor this. As we continue to build on our excellent Lean practices, we want to take them to the next level in our production areas and move them into our offices and back shops.
- Fourth is Development Process Excellence. Jim Jamieson, our Chief Technology Officer, is its sponsor. Through this, we expect to improve both the yield of our R&D investments and the effectiveness and productivity of our development programs.
I want to point out that the initiative sponsors are acting in their role as corporate officers. On a day-to-day level we have assigned a senior executive to lead each initiative on a full-time basis. These leaders, drawn from across the company, will act as resources for our line organizations and will help us move both internal and external best practices across all of our businesses. Again, these initiatives will be measured by their contribution toward helping our businesses and functions meet their objectives.
Leadership development is the foundation of our management model and the key to sustainably growing our company. I consider it one of my top priorities. If we're going to achieve the performance we just discussed, we must take specific steps to strengthen the culture of leadership and accountability within Boeing. We have embarked on a major effort to do just that. We have defined our expectations for leaders -- our leadership attributes -- and we are spreading these throughout Boeing.
But we realize that just talking about them won't make them stick. That's why we're going to teach them to leaders and managers at our Boeing Leadership Center in St. Louis. We're going to make sure people know we expect them to live by these attributes, both the performance and values nature of them. We are going to measure performance against them. We're going to tie career and job-readiness assessments to demonstrate progress in these areas. And we are going to insist that our leaders be models for the entire company of what the attributes are all about. As our people grow, so will Boeing.
Now, let me summarize. The Boeing Company's businesses are well positioned in healthy markets. We are forecasting strong profitability and growth in 2006 and in 2007. With the great success we've had in winning new orders, we now have a record backlog that exceeds $200 billion. Our focus is on executing on that backlog better than we ever have and increasing the backlog at the same time.
We are focused like never before on productivity and growth. And we have the models by which we will manage and lead this company forward.