Can Boeing Keep Up?
With radical change the new reality, even old news already, companies need to transform themselves just to compete. Bertrand-Marc Allen, president of Boeing International, describes how the aerospace company plans to become more nimble, more global, and more ready for the unforeseeable future—even when that means disrupting its own products.
Boeing, the world’s largest aerospace company, does a lot of things: commercial airplanes, defense, space, and services. But when you hear the word taxi, it’s unlikely that Boeing jumps to mind. That may change, along with what you think of as a taxi. Within a decade, Boeing along with several competitors including European rival Airbus and tech industry firms, aim to introduce self-piloted electric passenger drones—flying taxis.
This ambitious, cutting-edge push is part of a broader effort to define the firm’s future. With 150,000 employees spread across more than 65 countries, the organization could be an unwieldy behemoth. Boeing’s leaders aim to instill a culture that empowers local units to innovate and respond to customers while connecting across the country.
Is it possible, in a time defined by technological and geopolitical dynamism, for such a large organization to be truly agile? Can so many people in so many places doing such different types of work act as a single innovative organization?
To get the answers, Yale Insights talked with Bertrand-Marc Allen (a 2002 graduate of Yale Law School), president of Boeing International and a member of the Boeing Executive Council. He points to the irony that “to be a successful global company requires creating architecture that enables us to be agile locally,” and emphasizes the importance of culture and behavior in forming a global company.
Previously Allen led Boeing Capital, a subsidiary that provides financing for Boeing products. He also worked as general counsel to Boeing International and clerked for U.S. Supreme Court Justice Anthony M. Kennedy.
Q: What are the key characteristics of a successful global organization?
To be a successful global company, it requires creating an architecture that enables us to be agile locally, which means pushing decision making at the edges, and for teams to feel empowered. That is complicated when you’re a big institution, especially when you have a big anchor and home jurisdiction, which for us is the United States. It’s very easy not to empower the edges; technology allows you to pull decision making back very easily these days. But local capabilities, and local country-to-company relationships, are a real priority for us.
We’re spending a lot of time talking about culture and behavior as two of the key enablers that will help us to distribute decision making and as a result drive agility to really be local.
Boeing behaviors are all about how, as a company, we listen, collaborate, and work with integrity in everything we do. It’s about pressing forward with the focus always on the customer. These behaviors ultimately set a culture that enables us to be a successful global company.
Q: How do you shift the culture of such a large and established company?
Relentless communication. We have to make sure that all 150,000 people in the 65-plus countries where we operate understand Boeing. We want everyone thinking differently, behaving differently, really owning this One Boeing approach. That means going beyond structural changes in the organization to shifting how individuals behave.
We’re scoring these behavioral aspects as honestly as we can and constantly lifting up the new heroes. When people do things differently, we’re really giving them the chance to shine and demonstrating through their success what success in the new environment looks like. I’ve seen individuals who have been at the company for 40 years, who are just different people today than they were four years ago. That’s inspiring because it means they have understood how the company is driving success in this new operating frame.
The communication has to be persistent. It’s got to be so frequent and common that for those of us at the center, watching it play out, it’s almost irritating, but that’s how we can be sure the ideas are going all the way out to the very edge.
In addition, executives are being evaluated and compensated on how they are collaborating across business units. Are they acting as One Boeing or are they trying to optimize just inside their narrow functional responsibility? How does their team listen? Is there space for new ideas? Is there any track record of ideas that were not invented here succeeding? Or are they all shut down? As we look at specific behaviors and make them a part of management incentives and compensation, I hope we’re driving the change deep into the organization.
We used to act more siloed between business units and functions. We want to act with a One Boeing mindset that crosses the entire environment. We want the insights of an engineer working on a particularly hard problem to get to every relevant part of the company. And she should be recognized for the insight. Where we develop vertical capabilities, for example with avionics – the brains of the airplane – that can be supplied into our commercial business, our defense business, and our services business. If we just change the architecture, I’m sure we won’t win. That’s why we’re focused so much on changing culture, too.
Q: Who are Boeing’s competitors today?
A few years ago, it was very easy for everybody in the company to look to our European airplane competitor and our largest U.S defense competitor and see that as our competition.
Today, the Google, Apple, Facebook, and Amazons of the world are our competitors because they’re entering into disruptive mobility. They are entering into performance-based logistics and machine learning. Those will disrupt supply chains and the management of inventories which are things that we do.
The rise of China and other emerging economies means we have to expect commercial airplane competitors from third countries. Redefining who the competition is, is important. It’s part of how our executive team sets priorities.
Between the pace of technological and geopolitical change, the world is running a little ragged. Everybody is wrestling with how to adjust to such a dynamic environment. It comes down to, how fast can you respond sensibly? We don’t want to gyrate wildly in the face of changes; we do want to be agile.
Q: Beyond the culture and behaviors, what is Boeing investing in to be prepared for the future?
We recently created a third business unit focused just on services. Before, our services business played a subsidiary role to platforms. But in a world of data-enabled performance-based logistics, all of a sudden you have to have a different architecture in the company to address the change that’s coming in the technology.
We’re in the middle of a combination with Embraer, including its commercial aircraft unit and defense and services partnerships as well. That’s an example of us building out global scale and depth. We’ve reinvigorated our space business. We’re building a commercial crew capsule, which will take Americans back into space for the first time since the space shuttle was retired. We are in the middle of building new capabilities around advanced manufacturing and robotics that can disrupt how we build. Each of those is a piece of driving a change agenda inside the company.
We’re putting billions of dollars into disruptive programs, like personal autonomous flight vehicles. Five years ago, we weren’t necessarily looking to ourselves to be the ones who disrupted the 737 commercial aircraft program. Today we recognize that autonomy is a reality. Personal flight is a reality and doing it on electric propulsion is going to be a reality for small personal vehicles. We need to be the ones who are first into that space and build the muscle.
That commitment of money into leading-edge science is so important. Once combined, all these investments start pointing towards a company that will look very different 50 years from now than it does today.
These programs are capturing the imagination of a whole generation of new employees, who I think weren’t looking with the same interest and excitement at Boeing just four years ago.
Q: Transportation is key to the global economy. It’s also a key contributor to climate change. How is Boeing thinking about the issue?
Transportation is vital to the economy. Globally, aviation itself is 3.5% of total global GDP. But if you take away aviation, the global economy would shrink by nearly 4%. That’s remarkable when you think about the scale and the scope of its impacts.
At the same time, while 70% of the world has a cellphone, fewer than 20% of the people in the world have ever been on an airplane. There’s huge growth still to come as the remaining 80% of humanity gains access to air travel. So, how do we responsibly make sure there’s space to absorb that growth inside the environment?
Three out of every four dollars the company spends on R&D goes to emissions reducing technologies. More than a decade ago, we launched the most significant efforts out there on sustainable aviation biofuel. We’ve had great progress and that will continue. We are leading on trying different feed stocks that are adapted to different regions of the world.
We have made a commitment as an industry to reduce emissions by 50% by the year 2050. That’s not per kilometer or mile traveled, that’s total emissions that will be reduced by half, even as the industry is growing so quickly.
We’re taking on very aggressive goals, we have a lot of work to get there. Critically, it’s not just one company. It has to be the entire industry working in collaboration with the International Civil Aviation Organization, which is a UN agency.
Q: In addition to the focus on a single Boeing culture, what is the company doing to develop its global capabilities?
We’ve been a U.S.-focused company for a long time. Now, we’re making major investments in operating facilities around the world that will dramatically change the center of gravity for the company.
With 80% of our backlog going to customers who are outside the U.S., we are using this time to make sure we’re partnering with those customers. The countries that buy our defense products or our airplanes – many times the airlines are state-owned entities – don’t just want the best aerospace product, they want a partnership and pathway for their own country’s participation in aerospace. We’re building a set of strategies that enable us to be that partner.
In 2018, we opened our first manufacturing facility in Europe. We opened new training and support centers in Scotland and near London. That represents a quarter billion dollars in investment which creates scale on the ground.
We opened up a new completion and delivery center in China. We delivered the first plane – our new 737 MAX platform – out of that center in December 2018.
In Australia, we designed a clean sheet autonomous airplane system for their defense services. It’s the first time we’ve ever done a clean sheet airplane design outside the United States.
In India, over roughly five years we’ve gone from a couple dozen engineers to about 2,000. We’re headed towards 5,000 engineers in India working on the most difficult challenges we have in software engineering.
These commitments to scale and depth, the Embraer combination I mentioned earlier, these are radically changing the face of Boeing. We’re a more diverse and globally-talented organization than ever before. That changes the company’s DNA. We are necessarily thinking more global, because we are more global.