It was, in retrospect, probably inevitable.
Boeing announced Monday morning that its embattled chief executive Dennis A. Muilenburg had resigned, replaced by the company’s current chairman of the board, David L. Calhoun, who will become chief executive officer and president, effective January 13, 2020.
The move comes amid the worst period in the company’s history, one in which Muilenburg’s ambitious goals of explosive global growth were eclipsed by two air disasters involving the 737 Max aircraft. The company’s fastest-growing product line became an inescapable anchor amid investigations into how the company had handled the design, manufacturing, rollout and aftermath of the crashes.
Last week the company faced further public humiliation, this time on the space/military side of the business as their Starliner spacecraft failed to make it to the correct orbit during a crucial test, leading to the mission being aborted early. It proved to be too much for the board.
“On behalf of the entire Board of Directors, I am pleased that Dave has agreed to lead Boeing at this critical juncture,” Lawrence W. Kellner, the new Chairman of the Board, said in a company statement. He added, “Dave has deep industry experience and a proven track record of strong leadership, and he recognizes the challenges we must confront. The Board and I look forward to working with him and the rest of the Boeing team to ensure that today marks a new way forward for our company.”
It’s a very different route from the one Muilenburg laid out when he hosted Chief Executive for our Smart Manufacturing Summit back in 2017. At that time, he was riding high and saw a nearly unlimited future for Boeing’s growth, fueled by the rise of a travel-hungry Asian middle class.
“I expect to see changes in the technology of travel itself,” he told us at the time. “It’s difficult to predict how fast the technology will evolve, but you can bet that with the amount of capital investment it will happen. We’ll see revolutions in propulsion technology, electrically powered airplanes and maybe flying taxis.
“High-speed transportation will become more economical and offer the capability to go anywhere in the world in one to two hours on supersonic, hypersonic aircraft. That business model still needs some work, but the technology is moving fast enough that that will happen. We anticipate that a low-earth-orbit space travel business ecosystem will develop as access to space becomes more affordable. Also, low-gravity manufacturing in space will eventually become practical, and there will be a transportation network to do low earth orbit. I’ve always been a fan of deep space exploration—that will happen too. Before 2030 we’ll put the first person on Mars—and he or she will get there on a Boeing rocket.”
It was ambitious, exciting—and, at the time, seemed absolutely possible as Muilenburg, with his engineer-cool and energetic leadership, climbed the apex of American manufacturing, rallying more than 150,000 employees to his vision. The scope of what he wanted to achieve was daunting—we dubbed it “Muilenburg’s Moonshot” on the cover of the magazine—but the ambition was electric, especially as the nation slowly shook off the malaise of the Great Recession. The contrast between that imagined trajectory and the current state in which Boeing finds itself only exacerbates the tragedy. Even for those who criticize Muilenburg’s handling of the crisis, there’s nothing to cheer here today.
Under Calhoun, the company will need to refocus on earth-bound issues: Fixing or scrapping the 737 Max program, rebuilding confidence among customers, regulators, employees and the flying public—and managing a difficult leadership transition in the midst of crisis.
The company will need to do all that and more than to get back on track—it will need to continue to improve to stay relevant. As Muilenburg told us back in 2017, “To compete in this environment, we cannot continue to just improve incrementally. Incremental productivity improvements of 1 percent to 4 percent a year will not allow us to compete in the future. We are focused on step-function improvements that are measured in 20 percent, 50 percent, 70 percent to 90 percent increments in some of our key value chains inside of our factories.”
A tall order for anyone, especially a company—and a leader—in this situation. Muilenburg tried. Now it’s someone else’s turn. Can they do better? Maybe. But it’s hardly inevitable.