Less thAN two years later, A layoff-happy Welch protege considered to possess the brightest mind to have ever emerged NAmed HARRY Stonecipher, McDONNell Douglas's former CEO, out of Flint, Michigan, About the depraved New MANAgeRiAl grabbed the Reins At Boeing, And the same dysfunction took culture that had taken hold of his company, when UNcle SidNey hold in Seattle. cut him off, looked him straight in the eye, ANd, with A kind The line ON Stonecipher WAS that he had "bought Boeing of precision ANd clARity SORscheR hAd ONly ever seen in "like, with Boeing's money." INdeed, Boeing didn't ultimately get Nobel Prize-wiNNing physicists," told his Nephew: much for the $13 billion it spent ON McDONNell Douglas, which had Almost gone under A few years earlier. But the You ARE IN A mature industry that is NO longer INNOVAtive; it's McDONNell BOARd loved Stonecipher for engineering the Mc- A commodity business. The last great INNOVAtiON CAPAble of DONNell buyout, ANd Boeing's came to love him As well. This driving major growth iN AviAtion WAS the jet engine back iN WAS IN NO small PARt because Stonecipher cast himself As the the 1950s, AND every technologicAl AdVANce since has been SAVIOR of Boeing And kNew just how to exploit A bad situA- INCRementAl. And so the emphasis of the business is going tion to get his way. When he ARRived in Seattle, AN unwieldy to switch AWAY from engineering And toWARd supply-chaiN New computer system WAS CONSpiring with A sudden spike MANAgement. Because every mature company has to isolate IN ORdeRS ANd A clueless New WORKforce hired to fill them to which parts of its business Add value, And delegate the more WREAK HAVOC ON Production. FACTORy mANAgers pleaded with commoditylike things to the supply chain. The more you look Stonecipher to marshal Resources to fix things, but he ignored to the market for pricing signals, the more the Role of the them until things got so bad they had to halt the Assembly engineer will shrink. lines-At which point he begAN whatThe Seattle Times called A "cultural Revolution." Sidney DavidSON WAS A pioneering University of Chicago AC- The first suitably MAOist edict of the New ERA WAS A bAN ON counting professor who viewed his profession, in the Words the term "family," which had first been Rolled out As MANAge- of one of his textbook titles, As "the LANguAge of business.' RiAl precept At A 1998 Boeing Retreat. (This move WAS cRibbed And while he WAS WRONg, SORscheR kNew, About Airplane from JACK Welch, who famously detested "loyalty" AS A CON- MANufActuRing, his glib ANAlysis WAs compelling iN lARge PARt cept Among his subordinates.) The New idea for describing because fin de siecle Boeing WAs being devoured by the trendy iNtRACORPORAte interdependence WAS "team.' ACCOUNTing stANdARds of the day. The New model for meASURing Stonecipher's other big cultural tRANsformation WAs focused long-term profitAbility in CORPORAte America hAd boldly eclipsed ON mAligning And marginalizing engineers As A class, And the old WARREN Buffett-style metrics like eARNings And opeRat- Airplanes AS A business. "You CAN make A lot of money going iNg margins. Companies with traditional eARNings fell out of out of business" was something he liked to say. Welch had fAVOR-NOW, businesses that wereN't Overcapitalized tech stARt- been famous for TRANSferring upper MANAgers from, say, GE's ups clamored to position themselves As tuRNAROUNd stories. locomotives division ONe yeAR over to plastics the Next, And Boeing was telling its OWN version of this story, with the Aid to jet engines After that. Stonecipher WANted Boeing's upper of ANOther Stonecipher initiative that Naysayers dubbed "the MANAgement to view planes with that same cold detachment, cult of RONA," OR Return ON Net Assets. o Not, AS theN-chief fiNANciAl OfficeR Debbie Hopkins explained TheoreticAlly, Return ON Net Assets, which WAS called "Re- IN A 2000 Bloomberg interview, "get overly focused ON the sidual income" At GE, is A quantification of how efficiently A box"-i.e., the Airplane. company is using its factories, WARehouses, office buildings, No one At Boeing ReAlly kNew what hAd hit them After the stoRefRONts, AND other elements of its physical plant. TheoRet- McDONNell merger. STAN SORscheR WAS At A family Reunion when icAlly, the metric CAN be used to make the case that A factory he started putting the pieces together. He'd been talking (OK, would be better served by shutting down And CONverting to RANting) to his UNcle SidNey, A gentle And brilliant MAN widely CONdos AND AMAZON WARehouses-OR that A fighter jet fAc- toRy And A fuel tANker factory would be better off consolidating production lines into ONe, OR (depending ON the year that A company is iN the AIRplane mANufacturing business) it CAN be You can say that a fatal design WORth more dead thAN Alive. IN ReAlity, All you had to do to make RONA go up instANtANeOusly, flaw killed all these people, but NO matter what, WAS to sell off your Assets indis- CRimiNAtely, ANd outsource whatever functions that's actually just another way they used to serve to other strategic points Along the "supply chain." of saying that money did. The McDONNell Douglas engineers had seen it All before: IN the NAme of RONA, Stonecipher's team had driven the last NAil in the coffin of McDONNell's flailing commercial jet business