The history of Boeing over the past thirty years is a story of a critical American institution that sold off its engineering culture and embraced an asset-light focus on margin instead of product vision, and then executed that strategy poorly. In 2024, Boeing is producing fewer planes than it did a decade ago and faces an onslaught of headlines about spectacular accidents, nagging regulators, and disappointing earnings.
A large part of the issues can be traced back to the Boeing-McDonnell Douglas merger in 1997. The deal seemed like a good idea at the time. By 1996, McDonnell Douglas commanded only 4% share in U.S. commercial aviation, and its production lines were languishing. Meanwhile, Boeing had a $100 billion backlog, and needed more assembly capacity to ramp deliveries and fulfill its orders. Yet in the event, the joke on Wall Street became that “McDonnell Douglas bought Boeing with Boeing’s money.” McDonnell Douglas CEO Harry Stonecipher and John McDonnell, the chair of McDonnell Douglas’ board, became the largest shareholders of the combined entity after a stock swap worth $13 billion and they brought McDonnell Douglas’ bureaucratic defense contractor culture of margin-focused, risk-averse financial engineering with them.
But DEI is only part of the problem. Historically, Boeing has achieved great results by centralizing authority and control in the hands of the most exceptionally talented engineers. Today, the culture at Boeing is the opposite: listening sessions with the downtrodden, coddling the broken, and tiptoeing around the oppressed. Authority diffused throughout an entire organization’s hierarchy is no authority at all; accountability to technical results becomes challenging, if not impossible, when managers are serving two masters.
Meanwhile, management is rearranging deck chairs to make them more diverse. In 2022, Boeing tied managers’ incentive compensation to the ‘diversity’ of their interview slates, meaning that their bonuses depended on whether or not they considered women, racial minorities, and the disabled for positions they were hiring for. In Boeing’s Global Equity, Diversity, and Inclusion (GEDI) 2023 Report, Sara Bowen, vice president of GEDI, Talent Intelligence, and Employee Listening, wrote: “We know diversity must be at the table for every important decision our company makes — every challenge we face, every innovation we design. Equity, diversity and inclusion are core values because they make Boeing — and each of us individually — better.”
Delusions of Adequacy 