Boeing's Real Problem With the Dreamliner: Bean Counter vs. Engineer

A timeless struggle affects America's leading exporter.

If you've read anything about the aerospace industry, odds are that you've seen quotes from Richard Aboulafia, of the Teal Group in Fairfax, Va. I've relied on his advice for years, including in my recent book.

So whose views would I like to hear about the causes and possible consequences of the ongoing Boeing 787 Dreamliner problem? Right: R. Aboulafia's. He does so in his latest client newsletter, now also available on line.

As discussed previously in this space, the Dreamliner's specific battery problem itself may or may not be diagnosed and resolved sometime soon. But according to Aboulafia the turmoil illustrates a larger trend within the company (emphasis in original):
Last summer, Boeing's top management axed the engineer CEO who had been turning around BCA [Boeing Commercial Airplanes] and making it better again. They replaced him with a non-engineer CEO. Then, management got into a confrontation with the engineer's union (which may also partly be the union's fault, but it's not a battle management can afford right now). Then Chicago put off the very promising 777X [new long-range, highly efficient model] until the next decade, which, from a customer perspective, might as well be an indefinite postponement. These moves were on top of a 787 development model that de-emphasized in-house engineering and relied on industry partners for much of the development work.

Since the 787 appeared to be out of the woods, and the 777X was put off until the next decade, Chicago likely didn't think it needed much from engineers. Then that damn 787 battery thing happened. Oops. Back in Seattle, engineers, represented by a disgruntled union and forced to report to multiple layers of non-engineer management, are working overtime on the problem, but after several weeks, nobody appears to be close to a solution. As this is written, there's a strong chance of a six to nine month grounding (due to the need for re-certification).

This terrifying state of affairs for the Dreamliner, of course, was merely background for Boeing's fourth quarter earnings call this month. The 787 fiasco wasn't discussed, except that (a) the investigation was continuing and couldn't be discussed and (b) 787 production was continuing full speed ahead, despite uncertainties about what needed to be done for the battery system, or any other aspects of the plane's design. If these planes being built need major retrofitwork in the future, well,
that's for the engineers to worry about. 

Meanwhile, there was no contrition or soul-searching on the call about how the 787 could have gone this wrong, or what could be done within the company to make it right (once again, 787 program analysis was left to the journalists). Instead, the call emphasized some impressive sales and profit numbers. It was like a farmer showing off a great crop, but not mentioning that the tractor just broke, he fired the mechanic, and outsourced tractor maintenance to Bolivia. And that customers for next year's crop had been promised penalty payments if the farm didn't deliver.... 

Boeing's problem isn't just that the engineers have been nudged aside by the bean counters. It's that the bean counters need to rethink the way they manage the company. 

In the long annals of business history, the tension Aboulafia describes -- engineer vs. bean counter -- occurs again and again. Like farmer vs. rancher, Roundhead vs. Cavalier, paleface vs. redskin (in the literary sense), yin vs. yang, it's one of the great divides. In the long run, companies where the engineers (and designers) win are stronger. Boeing "knows" this, from its history. Let's hope it can remember that principle in time.