Boeing's new CEO, Kelly Ortberg, faces pressing challenges, including employee strikes. Ortberg will have to deal with decades of management problems and concerns from customers, workers and investors. Mr. Ortberg is focused on communication, trust and future innovation at Boeing. Guide the company on the right path.
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Kelly Ortberg took over the reins of Boeing with little time to spare.
Just two months into his job, he's grappling with employee strikes, billions of dollars in losses, and a drifting corporate culture while trying to develop a plan for one day developing a new aircraft.
Unlike some lucky new CEOs who can roam the factory floors and office hallways before pulling the levers of big change, Mr. Ortberg is trying to get back on track after more than 20 years of missteps by five previous CEOs. face pressure to do as much as possible and quickly.
Ortberg, who took over in August, is trying not to disappoint.
“I'm still in the process of traveling around and meeting people, especially people two and three floors down,” he said on an investor conference call Wednesday. “We need to get everyone in the right position, execute the right plays and focus on the right things. I think we have work to do there.”
There is a lot of pressure to perform. The company announced Wednesday that it had a third-quarter loss of $6.1 billion. On the same day, the machinists' union again rejected the company's proposal for a 35% wage increase over four years. One analyst group said the strike cost the company $50 million a day.
Boeing's customers want and need the company to succeed, Ortberg said in a letter released to employees along with the company's third-quarter results.
“With the right focus and culture, we can once again become an iconic corporate and aerospace leader,” he wrote.
The letter reminded Ortberg that it must balance pressures from workers, investors and Boeing's customers. For the company's commercial business, which makes aircraft for airlines, that ultimately means the flying public.
Bill George, the former CEO of medical device maker Medtronic and an executive fellow at Harvard Business School, told BI that Ortberg was focused on short-term initiatives such as worker strikes and strengthening cash flow. He said that while addressing global issues, we must also make “bold decisions” for the long term. semester.
“He can't just do one or the other,” George said.
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Restoring a culture of safety
George said that while the company's commercial, defense and space businesses face individual challenges, the broader issue to prioritize is restoring a culture of safety after high-profile failures. .
“That's the most important thing he has to do, but it's going to take time,” George said. He estimates that it can take three to five years to fix culture and quality concerns, and even longer to make them deeply ingrained within the company.
Mr. George said Mr. Ortberg's background as an engineer and the fact that he is not the finance person who previously ran the company should help him communicate with many of the company's employees.
“They know if you know what you’re talking about,” George said. “Otherwise they don’t feel confident.”
He added that unlike previous chiefs, Ortberg's decision to relocate to the Seattle area was a wise one. The company has deep roots there, especially in commercial business.
“We need to get all of our top teams together in Seattle and run it from there,” George said.
Rebuilding relationships of trust with employees
Rosalind Franklin, a partner in the global leadership consulting practice at executive search firm Boyden, told BI that Ortberg needed to be “vulnerable but not deceptive” to build trust and be most effective. “We need to make our strong voices heard,” he said.
That means being open about the “hurt” caused by the company's recent decision to cut 10% of its workforce, she said. Franklin said Ortberg needs to “convey honesty and acknowledge the fact that this is a really difficult time for the company.”
“When you feel that your CEO is with you and that he feels your pain, it makes it easier to bear the pain and gives you hope for the future,” Franklin said.
The need to convey empathy is greater than before the pandemic, she said, as many workers now expect more from their leaders.
Franklin said that doesn't mean avoiding difficult decisions.
“You can't give up on something you know you have to do. It's not what you do, it's how you do it,” she says.
stand in the lead from the front
Jeffrey Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management, told BI: “Usually the advice we would give someone is to not try to do too much too soon.”
In this case, Ortberg has no choice but to try to resolve issues such as labor issues, the company's “shaky” financial position and regulators' concerns, he said.
Mr. Sonnenfeld, who is also the founder of the Yale University Institute for CEO Studies, said the challenge before Mr. Ortberg was that of former General Motors CEO Mary Barra and former Boeing commercial executive director. He said the challenges are similar to those faced by former Ford chief Alan Mulally, who led the division.
Like Boeing, GM and Ford are complex industrial businesses that are in the public eye, Sonnenfeld said. He said that when the automakers' respective CEOs had to pull their companies out of crisis, both made “very bold” public statements that attracted a lot of attention.
“They valued leadership character, accountability and visibility, and demonstrated that with very good follow-up,” Sonnenfeld said.
In his letter, Ortberg encouraged senior leaders to bring management closer to those closest to the manufacturing process. “We need to be on the factory floor, in the back shop, and in the engineering lab,” he wrote.
This kind of leadership “shows accountability and shows accessibility,” Sonnenfeld said. “It shows a transparent, less formal style, but that's long gone.”
clear future plans
George, the former president of Medtronic, said one step Ortberg could take to restore confidence and get people excited about the future would be to announce a program for a new single-aisle aircraft that has been redesigned from the ground up.
“I think he has to,” George said.
The new aircraft could leapfrog older designs that have not kept up with advances in jet engines and avionics in recent decades, he said.
Ortberg hinted at such a future in his letter. He wrote that the company needs to fix its balance sheet “to ensure a path to the next commercial aircraft.”
Richard Aboulafia, managing director and aviation industry analyst at AeroDynamic Advisory, told BI it was important to discuss what happens next. He also said Ortberg needs to make clear that the planned job cuts will not compromise safety, increase delays in the company's defense business, or slow future product development. said.
“He has to reassure investors and others that the situation is stable, and he has to reassure the industry that he is ready to invest for the future,” Aboulafia said. “It’s hard to thread that needle.”
