Nov. 28, 2016, © Leeham Co.: Boeing last week named an outsider, Kevin McAllister, as the chief executive officer of Boeing Commercial Aircraft (BCA).
I think this has the potential to be an invigorating move.
McAllister comes to BCA from his position as CEO of GE Aviation Services.
I don’t know McAllister and have no opinion whether he will be good, bad or mediocre. But I do like the idea of bringing an outsider in to run BCA. (My insider favorites were Stan Deal and Beverly Wyse.)
For years, people I’ve talked with inside Boeing Longacres (BCA’s headquarters) on a candid basis complained, sometimes bitterly, of the stagnant, Not-Invented-Here culture that, in their words, permeates the thinking in marketing and product development today.
Those I’ve talked with complain that contrary views to the ingrained thinking not only were discouraged but the contrary thinkers often were isolated. There’s been a talent drain as a result, they say.
Aerospace analyst Doug Harned of Bernstein Research, one of the most positive ones toward Boeing on Wall Street, put it this way in his note last Tuesday, following McAllister’s appointment:
“We see this decision as an important positive step for Boeing. We have long viewed the BCA organization as too insular, with senior positions almost always filled by managers with 20+ years of experience in the company. The problem is that Boeing’s views of its competitors and the market become too Boeing-centric.”
Ray Conner was a dedicated life-time employee and a cracker-jack salesman. He understood the challenges Boeing has with its product line, most particularly the 737-900ER/9, and the growing product gap in the Middle of the Market.
But it is obvious he wasn’t getting any traction in Chicago on these points. Nor was he CEO Dennis Muilenburg’s “man.”
Although Muilenburg was effusive in his praise of Conner last Monday on the media call, analysts and consultants I talked with before and after the announcement believe there was tension between Conner and Muilenburg.
Whether there was or wasn’t, to me, is beside the point.
McAllister is Muilenburg’s choice and with him comes a fresh perspective and fresh ideas, two reasons Muilenburg cited on the media call for going outside BCA. Muilenburg went to great pains to claim McAllister wasn’t totally an outsider. He pointed out that over his 27 years at GE, McAllister interacted with Boeing. McAllister may well be familiar with Boeing, but there’s no getting around he is an outsider.
McAllister’s biggest challenge will be to break up the stagnant, NIH culture and bring fresh thinking through the executive ranks at BCA. Muilenburg gave a clear signal that the latter is pending. He said there will be more leadership changes in the months to come. McAllister’s personnel moves will be interesting to see.
Among the inbred thinking within BCA leadership is that it can do no wrong. Market share loss is only through dastardly Airbus cheating, low-ball pricing and those illegal subsidies. (Stay tuned on this one.)
The fact is that Boeing’s once industry-leading narrow-body product strategy has been eclipsed by Airbus. Even though Airbus continues to have weakness in its wide-body product line, the sales numbers over the last 10 years clearly show Airbus reached parity.
The proposed 737-10 is a bad idea that doesn’t fix the problem vis-à-vis the A321neo. The prospect of a 777-10 is dubious at best. A Middle of the Market airplane is sorely needed; Boeing must figure out how to make the numbers work.
McAllister faces these questions in his first months as CEO of BCA.
It’s not an envious position to be coming into.
Remember the movie Firefox? It’s a 1982 Clint Eastwood movie about a US pilot (Eastwood) who steals an advanced Soviet fighter that is flown by mind rather than physical control.
Fast forward to 2016. Wired magazine just published a story in which the writer flew a Beech King Air using mind control.