Boeing’s new CEO passes the ultimate management test

• Boeing’s still new CEO, Kelly Ortberg, faces urgent challengesincluding a workers’ strike.

• Ortberg is trying to change the company’s culture while in crisis.

• He focuses on communication, trust and future innovation at Boeing to put the company on the right path.

Kelly Ortberg he took the helm at Boeing with no time to waste.

Just two months in and fighting striking workers, losses of several billion dollarsand a corporate culture adrift—all while trying to create a plan for the day develop a new aircraft.

Unlike the lucky new CEO who walks through factory floors and office hallways before pulling big levers of change, Ortberg is under pressure to act quickly to correct course after more than two decades of missteps by five executives previous ones.

Ortberg, who started in August, is trying to build anticipation.

“I’m still on the journey, meeting with our people, especially two or three levels down,” he said during a call to investors on Wednesday. “We just have to put everybody in the right position, run the right game, focus on the right things, and I think we’ve got some work to do there.”

The pressure to perform is significant. On Wednesday, the company reported a loss of $6.1 billion for the third quarter. That same day, the machinists’ union again rejected a company proposal that would have brought a 35 percent pay rise over four years. According to a group of analysts, the strike has cost the company 50 million dollars a day.

Ortberg, in a letter sent to employees along with the company’s third-quarter results, said Boeing customers want — and need — the company to succeed.

“With the right focus and culture, we can once again be an iconic company and aerospace leader,” he wrote.

The letter provided a reminder that Ortberg must balance pressures from Boeing workers, investors and customers. In the case of the company’s commercial business, which builds aircraft for airlines, that ultimately means the flying public.

Bill George, the former CEO of medical device maker Medtronic and an executive fellow at Harvard Business School, told BI that Ortberg needs to address near-term challenges such as the workers’ strike and sustaining cash flow, while also taking “ bold decisions’ in the long run. term.

“He can’t just do one or the other,” George said.

Restoring a culture of safety

George said that while the company’s commercial, defense and space businesses each face challenges individually, the broader issue that needs to be prioritized is restoring a safety culture after major failures.

“That’s the most important thing they have to do, but that’s going to take time,” George said. He estimates that it could take three to five years to fix the culture and quality issues and even longer to embed them deeply in the company.

George said that Ortberg’s experience as an engineer – and not to be the financial guy who previously ran the company — should help on the communication front with many of the company’s workers.

“They know if you know what you’re talking about or not,” George said. “If you don’t have it, they don’t have any confidence.”

He added Ortberg’s decision to move to the Seattle area unlike previous bosseshe was wise. The company has deep roots there, particularly in its trading business.

“You have to have all the top team in Seattle and get it out of there,” George said.

Rebuilding trust with employees

Rosalind Franklin, a partner in the global leadership consulting practice at executive search firm Boyden, told BI that to build trust and be most effective, Ortberg needs to strike a note that is “both vulnerable and yet strong,” without to be deceptive.

She said it meant being open about the “hurt” the company’s recent decision had taken cut 10% of the workforce will cause Ortberg needs to “communicate honesty and acknowledge that this is a really difficult time for the company,” Franklin said.

“When you feel like the CEO is with you, and the CEO feels your pain, it makes it more tolerable and gives hope for the future,” Franklin said.

The need to convey empathy it’s higher than before the pandemic, she said, because many workers have come to expect more from their leaders.

Franklin said that doesn’t mean shying away from tough decisions.

“You can’t give up on what you know you have to do. It’s not what you do, it’s how you do it,” she said.

Leading from the front

Jeffrey Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management, told BI that “usually the advice we would give someone is not to do too much too soon.”

In that case, he said, Ortberg has no choice but to try to fix labor issues, the company’s “precarious” financial situation and regulatory concerns.

Sonnenfeld, who is also the founder of Yale’s Chief Executive Leadership Institute, said the task before Ortberg is similar to those once faced by General Motors CEO Mary Barra and former Ford chief Alan Mulally, who he once headed Boeing’s commercial division.

Like Boeing, Sonnenfeld said, both GM and Ford are complicated industrial businesses that sit prominently in the public eye. When the CEOs of the automakers had to pull their companies out of the crisis, both made “very bold” public statements and were very visible, he said.

“They relied heavily on leadership character and demonstrated it with accountability and visibility, with very good follow-through,” Sonnenfeld said.

In his letter, Ortberg encouraged senior leaders to reduce the distance between those in management and those closest to the manufacturing process. “We need to be on the factory floors, in the back shops and in our engineering labs,” he wrote.

That kind of leadership “shows a responsibility, it shows an approachability,” Sonnenfeld said. “It shows a transparent and less formal style, and that’s long overdue.”

A clear plan for the future

George, the former head of Medtronic, said one step Ortberg could take to restore confidence and get people excited about the future would be to announce a program for a new redesigned single-aisle aircraft from zero.

“I think he must do that,” said George.

A new aircraft could surpass older models that he said have not kept up with advances in jet engines and avionics in recent decades.

Ortberg hinted at such a future in his letter. He wrote that the company needs to fix its balance sheet “so that we have a path to the next commercial jet.”

Richard Aboulafia, an aviation industry analyst who is managing director at AeroDynamic Advisory, told BI that it’s critical to talk about what’s next. He said Ortberg also needs to make clear that the planned job cuts will not compromise safety, contribute to delays in the company’s defense work or affect future product development.

“He needs to reassure investors and everyone else that the situation is stable and also reassure the industry that they are ready to invest in the future,” Aboulafia said. “It’s hard to stick that needle.”

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