I am by no means a Boeing insider. I also cannot vouch for
the veracity of Stan Sorscher’s conclusions regarding the Boeing culture just
from his July 5, 2019 Opinion article in the Seattle Times. I do, however,
recognize the plot-line of the story that he is relating as I had lived in a
parallel universe while working in the manufacturing world. His story sounds
remarkably like the story that I had been a witness to for most of my
engineering career, even though the product he was a part of: manufacturing passenger airplanes, is much
more complex than the product I had a part in manufacturing: electric motors. His
product is also purely a performance driven product, whereas the vast majority
of the product I dealt with had evolved into a commodity product. A very
important distinction, but not one that would disqualify the analogy.
Mr. Sorscher wrote the letter in response to the culture shift at
Boeing that eventually led to the raft of non-performance driven decisions which
may have caused two of the Boeing 737 Max airplanes to crash, killing 346
people; this culture shift also
seemingly encouraged engineers to cover up the problem rather than work to
solve the problems, especially from engineering managers; it also caused the
engineers to ignore the most basic tenet of engineering: getting it right
because of cost and schedule pressures. Cost and schedules have always been a
part of the engineering practice, they are a key part of the challenge of
engineering design and they are natural constraint that good engineers learn to
adapt to and overcome in their practices. This is what makes what engineers play
in the engineering sandbox rather than play in a pure science experiment
sandbox: engineers design performance driven products, not one-of prototype.
Economics is an important constraint in engineering, but
economics has always played a secondary role to getting the design right and getting
the performance right. The driving force for all engineering endeavors has
always about making the right decisions for performance and safety. Even though
engineers do not take the Hippocratic oath as the medical professionals do, the
vast majority of the engineers that I know pride ourselves in doing no harm.
In the letter, Mr. Sorscher spoke of Boeing being an
engineering company first and foremost during his time at the company, a
company that is driven by delivering performance. He spoke of how Boeing’s
devotion to this engineering centered culture enabled Boeing to become what
they had become, a trusted brand that delivered on the promise of performance
while rising in importance in the world economy and competing with the likes of
Apple and Exxon for investors. He spoke about the company culture turning to employee engagement, process improvement, and productivity in
the late 90’s; which followed the management trends of the day, taking the
quality centered approach of the Total Quality movement that came from Juran,
Deming, and Shewart. An American approach that ironically took a trip to Japan before
American management would deign to adopt it and even then, only as a Japanese
innovation. Fortunately for them, that new
emphasis on quality and customer satisfaction was perfectly aligned with the
engineering culture that was already in place.
I entered the manufacturing world at the end of the performance driven culture in the American
electric motor industry. Even though the industry I entered was not as complex,
there was a pride in the design and manufacture of our electric motors. The
cost pressures were never-ending, particularly from certain market segments
that are extremely cost sensitive: consumer products, white goods, commercial products
to name a few; but the driving philosophy has always been to deliver on the
promised performance. My corner of the world also went through the quality
revolution, although we did not embrace the siren’s song as completely because the
stakes were not as high in the electric motor industry since our failures do
not necessarily involve deciding the lives of hundreds of customers. The costs
associated with implementing quality measures and practices were a larger
fraction of the overall product manufacturing cost in the electric motor
industry and were constantly weighed against the product price. In addition,
there is always the incessant desire within the business to increase the replacement
business, i.e. why make the existing product better when we want the customer
to buy replacement products?
Unfortunately, electric motors were also tagged as a “mature” technology, an ignominious and ignoble designation.
It implied to management, marketing, and various other non-technical functions within
the corporation that there was no need to spend time and money to do research
or development, that the technology has reached the ends of the knowledge evolution.
Little did it occur to these decision makers that the technical world is ever changing;
the physics may be the same but the constraints on the design, the performance
requirements, and the material sciences all change. It boggled the mind to
think that this same comment was made of the airplane as Mr. Sorscher implied.
Technology maturity as designated for financial incentives is not a scientific
verdict, it is an excuse to economize and cut cost. A technology is labeled “mature”
when management is looking to spend their money elsewhere and invest in things
other than technology. This decision of course, was coming from non-technical or
barely technical decision makers who rely on rote beliefs that does not tke
into account technology evolution and assumes that there is indeed a finite
lifetime to scientific development.
Mr. Sorscher’s description of what came later in the evolution of the Boeing culture is where I
felt the greatest pangs of poignancy. Cost cutting and shareholder value became
the focus, performance and quality took a very far back seat. When Mr. Sorscher
asked the question: “Are airplanes commodity-like or performance-driven?”, I was shocked. It never occurred to me to think of an airplane as a commodity. I certainly would not put my life in the hands of aircraft engineers who believe that they are designing commodities. And yet, that is what happened.
In my own work experience, some electric motors, most electric motors that I worked with,
have evolved into commodities, or at least in the eyes of the corporate executive.
Emphasis on engineering and manufacturing went away and platforms which emphasized
commonality of components that imposed compromise performances became the norm.
Product characteristics that were defined by application and industry uniqueness
were sacrificed in service to the simpler manufacturing, bookkeeping, and warehousing.
As Mr. Sorscher recounts, the cost-cutting culture consists of super-stakeholders
doing what super-stakeholders do:
These
companies are super-stakeholders with market power over their supply chains.
The point of this business model is that the super-stakeholder extracts gains
from the subordinate stakeholders for the short-term benefit of investors.
Subordinate
stakeholders are made to feel precarious and at-risk. Each supplier should see
other suppliers as rivals. Similarly, each work location should know it
competes on cost with rival work locations. Each state or local government
should compete for incentives against rival states.
In this model,
subordinate stakeholders never say “no” to the super-stakeholder — not workers,
not suppliers, not state legislatures.
This is exactly what happened in
the electric motor world, contrary to point 4 of W. Edward Deming’s fourteen
points, which was: End the practice of awarding business on price
alone; instead, minimize total cost by working with a single supplier.
Indeed, the imposition of the cost-cutting culture degrades the performance and quality driven culture which
created the Boeing company up to that point. In my experience, this same
cost-cutting culture had diminished many of the electric motor companies to the
point that the true value of the company is but a shadow of its former self. Granted,
the electric motor is much closer to being a commodity than an airplane, but
the deleterious effects of the cost-cutting culture shows no preference, it is
a cancer that affects all industries the same way. As Mr. Sorscher stated:
This cost-cutting culture
is the opposite of a culture built on productivity, innovation, safety, or
quality. A high-performance work culture requires trust, coordination, strong
problem-solving, open flow of information and commitment to the overall success
of the program. In a high-performance culture, stakeholders may sacrifice for
the good of the program, understanding that their interests are served in the
long run.
The cost cutting culture obviated technical knowhow in deference to short term profits, it sacrificed fundamental
engineering practices rooted in the sciences at the altar of the sub-optimal
solutions that are just good enough and are based on guesswork, linear
extrapolation, and fictional beliefs.
In the case of the electric motor world, the cost-cutting culture caused the companies that were once dominant
in the business to fade and atrophy. Their share of the business eroding and
losing market shares to cheapest producer nations. The truth is you cannot cost
cut enough to compete with the lowest cost producer, you need to innovate enough
to cause your trajectory to bypass and short circuit their trajectory. Those
companies that could not only contain cost but also innovate, think
progressively, and pioneer new markets seem to do better; while those that
could only cut cost have de-evolved to the point of irrelevance in the global
market. The advent of new technologies
in power electronics, material sciences, and advanced computing are meeting the
needs of new applications and markets. In this case, the challenges of the
applications are taking the electric motor technology out of the “mature”
technology dustbin and putting them right back into the performance driven world.
I hope Boeing heeds Mr.
Sorscher’s criticism and acknowledge their mistakes. I hope that there are
enough technologists and engineers left in the significant ranks of Boeing to
enable the cultural shift for the better. The cancer is deep, however, and the
problem is complex. Every misstep costly, and every bad decision is life
threatening. The cost-cutting culture proved to be fatal to many electric motor
companies I certainly hope that it isn’t fatal for Boeing.
