Its More Than I Imagined: Boeings New C.E.O. Confronts Its Challenges

In a candid interview, David Calhoun largely laid the blame for the companys 737 Max crisis on his predecessor.

FLORISSANT, Mo. In his eight weeks on the job, Boeings chief executive, David L. Calhoun, has come to one overriding conclusion: Things inside the aerospace giant were even worse than he had thought.

In a wide-ranging interview this week, Mr. Calhoun criticized his predecessor in blunt terms and said he was focused on transforming the internal culture of a company mired in crisis after two crashes killed 346 people.

To get Boeing back on track, Mr. Calhoun said, he is working to mend relationships with angry airlines, win back the confidence of international regulators and appease an anxious President Trump all while moving as quickly as possible to get the grounded 737 Max back in the air.

Its more than I imagined it would be, honestly, Mr. Calhoun said, describing the problems he is confronting. And it speaks to the weaknesses of our leadership.

Boeings previous chief executive, Dennis A. Muilenburg, was fired in December after presiding over a series of embarrassing setbacks that culminated in the shutdown of the 737 factory this year.

Mr. Calhoun formally took over in January, but he has been involved in this mess from the beginning. A protg of Jack Welch from his time at General Electric, Mr. Calhoun has been on Boeings board since 2009, and was elevated to chairman late last year.

Before becoming the chief executive, he vigorously defended Mr. Muilenburg, saying in a CNBC appearance in November that Mr. Muilenburg has done everything right and should not resign. One month later, the board ousted Mr. Muilenburg and announced Mr. Calhoun as his replacement.

Boards are invested in their C.E.O.s until theyre not, Mr. Calhoun said, sitting in a dim conference room at the Boeing Leadership Center, a corporate campus outside St. Louis where Mr. Muilenburgs photo is still displayed prominently.

We had a backup plan, he added. I am the backup plan.

Now that hes in charge, Mr. Calhoun has become more willing to openly criticize Mr. Muilenburg. He said the former chief executive had turbocharged Boeings production rates before the supply chain was ready, a move that sent Boeing shares to an all-time high but compromised quality.

Ill never be able to judge what motivated Dennis, whether it was a stock price that was going to continue to go up and up, or whether it was just beating the other guy to the next rate increase, he said. He added later, If anybody ran over the rainbow for the pot of gold on stock, it would have been him.

Mr. Muilenburg declined to comment.

Mr. Calhoun and the rest of Boeings board never seriously questioned that strategy, in part because before the first Max crash off the coast of Indonesia in October 2018, the company was enjoying its best run in years. Whats more, the board believed that Mr. Muilenburg, an engineer who had been at Boeing for his entire career, was so deeply informed about the business that he was a good judge of the risks involved in ramping up production.

If we were complacent in any way, maybe, maybe not, I dont know, Mr. Calhoun said. We supported a C.E.O. who was willing and whose history would suggest that he might be really good at taking a few more risks.

It was only after the Max was grounded last March following a crash in Ethiopia that Mr. Muilenburgs optimistic approach became viewed as a liability. Airlines grew livid after he repeatedly voiced overly optimistic timetables about when the Max would return to service. The head of the Federal Aviation Administration, Stephen Dickson, was so frustrated that he reprimanded Mr. Muilenburg in a private meeting and publicly told F.A.A. employees to resist pressure from the company.

They felt like they were being pushed into a timeline, Mr. Calhoun said of the F.A.A., adding that the regulator was never there alongside of us, but apparently our team didnt quite come up to grips with that.

One of Mr. Calhouns initial tasks as chief executive was to go on an apology tour, holding a series of what he called greet-and-mend opportunities. The first stop was the White House.

At a private meeting with Mr. Trump on Mr. Calhouns third day on the job, the president told him that he liked Mr. Muilenburg but believed a leadership change had been needed. The president said he hoped Boeing was investing all of its resources into getting the plane back in the air.

He wants us to get back on our horse, Mr. Calhoun said. He wants us to get the Max flying again, safely.

Mr. Calhoun said he had recently asked Boeing employees to lay out in gory detail what needed to be done to get the plane certified. And then when they told me exactly what that was, I added a day or two to it, he said.

His conclusion was that the Max might be approved sometime this summer, pushing back again the likely return of the plane by six months.

Restoring credibility with the F.A.A. was not as hard as people think, he said. They just didnt want to be boxed in anymore. They were sick of it.

While he has been contrite about damaging internal messages released in January, Mr. Calhoun stopped short of saying the company has systemic cultural problems. He called the messages, in which Boeing employees ridiculed the F.A.A. and denigrated their own colleagues, totally unacceptable, but said they were not representative of Boeing more broadly.

I see a couple of people who wrote horrible emails, he said.

He also delicately maneuvered between accepting responsibility for the two crashes and pointing the finger elsewhere.

When designing the Max, the company made a fatal mistake by assuming pilots would immediately counteract a failure of new software on the plane that played a role in the Lion Air and Ethiopian Airlines accidents. But he implied that the pilots from Indonesia and Ethiopia, where pilots dont have anywhere near the experience that they have here in the U.S., were part of the problem, too.

Asked whether he believed American pilots would have been able to handle a malfunction of the software, Mr. Calhoun asked to speak off the record. The New York Times declined to do so.

Forget it, Mr. Calhoun then said. You can guess the answer.

He dismissed concerns about the boards decision to give him a $7 million bonus based in part on whether the Max returned to service. The objective is to get the Max up safely, he said. Period.

When asked why he didnt elect to forgo his salary altogether, he said, Cause Im not sure I would have done it.

Pulling Boeing out of the hole it has dug will take years, Mr. Calhoun said. He said that he would focus on insulating engineers from business pressures and that he wasnt done shaking up the companys leadership. At a meeting with his senior leadership team on Tuesday, Mr. Calhoun introduced a new set of values intended to guide the company, which he hopes will inspire employees still working on getting the 737 Max back in service.

You dont just win this one, he said. You dont just go out and fight and win and now youre a hero. One airplane at a time.

In the meantime, Mr. Calhoun is focused on the basics: producing jets at a pace the factory can handle, instilling discipline up and down the company, and hunting for bad news and acting on it.

If I dont accomplish all that, he said, then you can throw me out.

QUESTION 1

Imagine you are a senior manager at Boeing who has been tasked with putting together a cross-functional team that will decide on communication strategies to help improve this companys reputation.

Describe how you would put together your team and provide rationale for these steps based on relevant course material. (10 marks)

QUESTION 2

1. CEO David Calhoun wishes to "focus on the basics: producing jets at a pace the factory can handle, instilling discipline up and down the company, and hunting for bad news and acting on it." He has presented these ideas to Boeing's Board.

   Part A: Do you think David Calhoun will be able push forward with these ideas? Justify your answer by using ideas like the 5 bases of power and contingencies of power. (6 marks)

   Part B: Which influence tactic do you think David Calhoun should use to try to convince the Board that his ideas are good? Why? (4 marks)