Indirect Flight to Ford

Friday, April 13, 2007

A couple of months ago I had a great conversation with a local colleague about the news of Ford Motor Company naming Alan Mulally as its CEO. In case you didn’t follow this story when it first came out, Alan Mulally was the head of Boeing’s commercial aircraft unit. Many credit him with spearheading the successful development of Boeing’s innovative new aircraft, the 787 Dreamliner.

My colleague has worked for both Ford and Boeing and had some very interesting insights into what may have gone into the selection of Mr. Mulally at Ford. Here are some things to keep in mind:

• Boeing and McDonnell Douglas merged in 1996, forming the current Boeing.
• The first CEO of the merged Boeing-McDonnell Douglas enterprise was from the Boeing side (Phil Condit). His replacement was the former McDonnell Douglas CEO, Harry Stonecipher.
• Condit resigned in December 2003 in response to the Pentagon-Boeing contract scandal.
• Stonecipher resigned in March 2005 as a result of violating the company’s code of business conduct stemming from a relationship the married, 68-year-old Stonecipher had with a female Boeing executive.
• Alan Mulally was passed over twice (2003 and 2005) for the Boeing CEO job.
• Jim McNerney, Jr., CEO of 3M, was named CEO of Boeing in June 2005 (had been a Boeing director since 2001, had not worked for either Boeing or McDonnell Douglas).

What my colleague shared with me is both the Boeing and McDonnell Douglas cultures had self-imposed nicknames and the two couldn’t have been more different. The Boeing guys called themselves “the boy scouts” and the McDonnell Douglas guys called themselves “the mercenaries.” (I guess from too many brutal negotiations with Pentagon procurement officers.) Isn’t this a great contrast in style and perception? Business Week alluded to this difference in 1998 in an article about the post-merger woes Boeing was experiencing at the time:

Part of the problem is the culture clash at the top, says Jon B. Kutler, president of Quarterdeck Investment Partners Inc., a Los Angeles aerospace investment bank. Stonecipher, who spent 26 years at General Electric Co., built a reputation there and at McDonnell Douglas as an aggressive, cost-oriented executive. Woodard and Condit, two career Boeing vets, come from a tradition that stresses more collaborative problem-solving.

It seems that Condit and Stonecipher embodied these cultural differences perfectly. Here is an excerpt from a New York Times article from December 2003 after the Boeing board fired Condit for the Pentagon contract scandal and installed Stonecipher as CEO.

Mr. Stonecipher is not likely to copy the tactics of Mr. Condit, who once hired a poet and summoned senior managers to his house, where he urged them to write down negative statements about the company, then burn them in a bonfire to banish the unhelpful vibrations.

I looked it up in case you’re interested -- “collaborative problem solving” and “symbolic burning of negative vibrations” don’t qualify for Boy Scout merit badges. Even so, such behaviors are not going to be taken seriously by a culture reflected in the following leadership style:

Stonecipher's jowly, grandfatherly looks belie a blunt-talking, demanding nature that can alienate those around him. The 67-year-old son of a coal miner has earned millions of dollars piloting aerospace companies through turbulent times. He slashes jobs in downturns, pulls the plug on weaker businesses and pushes out executives who fail to deliver financial results. His e-mails arrive in all capital letters.

He came to Boeing after its 1997 merger with McDonnell Douglas Corp., where he was CEO. He said the changes that followed the merger made him a "lightning rod" for employee discontent. "When people say I changed the culture of Boeing, that was the intent, so that it's run like a business rather than a great engineering firm," he said. "It is a great engineering firm, but people invest in a company because they want to make money."

That Boeing's future rests with Stonecipher angers some current and former Boeing workers. They blame the McDonnell Douglas legacy for the ethics scandals and question whether an unrelenting focus on results prompted some employees to feel they had to succeed at all costs. None of the managers implicated in the scandals was a longtime Boeing employee. They came to Boeing from McDonnell Douglas after the merger or were recruited by a former McDonnell Douglas employee. Mike Sears, the fired CFO, was a protégé of Stonecipher's at McDonnell Douglas. (source: Chicago Tribune, February 29, 2004)

Contrast this with a description of Alan Mulally in USA Today back in March of 2005 when the Boeing board was looking to replace Stonecipher.

Gregarious, polite and the married father of five, Mulally also has one other key qualification: a spotless personal life.

So why was Alan Mulally passed over twice for the Boeing CEO job? Speculation is that the mercenaries had their hands on the wheel in 2003 when Stonecipher got himself anointed and then by 2005, with numerous scandals rocking the company, the board gave up on the culture clash and went outside the company for its CEO. Was it, therefore, a culture clash that drove Mr. Mulally to Ford?