Harry Stonecipher has gone and Boeing needs a chief executive. The US manufacturer should take its time over its choice
How is it possible that the world's largest aerospace company can find itself, for the second time in 15 months, with a short-term solution to its need for a chief executive. Is the succession planning process at scandal-ravaged Boeing so broken that the company has no a suitable candidate to replace Harry Stonecipher after he was forced to resign? Or is Boeing, which believes itself to be close to emerging from two years of turmoil, simply taking a breather in the hope that its new leader, whoever that may be, can take over a company that is clear of the legal logjam created by a slew of ethics violations.
Stonecipher was supposed to be the man who led Boeing out of the wilderness, but he has stumbled on the last mile of the trek. Perhaps Boeing believes that chief financial officer and interim chief executive James Bell, respected by Wall Street, is the best man to lead efforts to agree a comprehensive settlement with the US government for the company's wrongdoing – which could cost upwards of $700 million – before handing over the reins of a reborn Boeing.
It has been a turbulent two years that have seen Boeing's efforts to seal a KC-767 tanker deal fall apart amid accusations the US Air Force leadership violated procurement procedures, and a 20-month suspension of its satellite launch business for illegally possessing competitor's documents. Chief financial officer Mike Sears was fired for illegal employment talks with senior USAF procurement official Darleen Druyun and, accepting responsibility for the company's missteps, chief executive Phil Condit resigned. Former president Stonecipher was brought out of retirement to restore Boeing's reputation with its principal government customer, the US Department of Defense. He required every employee to undergo ethics training and sign a code of conduct. Now he has been held up to his own standards of behaviour and found wanting. The Pentagon should be impressed by Boeing's zeal in adhering to its new ethics code.
In the spirit of praising Caesar, rather than simply burying him, it is worth pointing out the progress Stonecipher made in barely 15 months. He oversaw the launch of the 787 – Boeing's first all-new airliner in more than a decade. He also decided to end the 717 programme, oversaw the closure of 757 production and took firm action to re-energise Boeing's flagging sales force. Stonecipher also successfully "raised the rhetoric" on Airbus subsidies, leading to the negotiations now under way between the European Commission and the US government.
On the military side, Stonecipher failed to secure a KC-767 tanker deal with the US Air Force, but the USAF did lift its suspension on the company's Delta booster business, citing the progress made in tackling the ethics problems that led to the ban on bidding for government satellite launch contracts. The fallout from the Sears/Druyun conflict-of-interest case could still cost the company dearly, but the pair have been imprisoned and Boeing believes all the skeletons are out of its closet. But with a criminal investigation by the US Department of Justice in progress, Boeing does not yet have its get out of jail card. Had Stonecipher remained chief executive until his planned retirement next year, he would most likely have handed over the reins of a company finally free of any tarnish. Instead, the board must begin its search for a long-term replacement with everything not quite resolved.
Taking a few months to survey the best external, as well as internal applicants, may be in both the company's and the candidates' best interest. Boeing counters criticism of its succession planning process by pointing out that, until Stonecipher departed, it was "way premature" to begin the search for a chief executive. Clearly the company has two leading internal candidates, Boeing Commercial Airplanes chief executive Alan Mulally and Integrated Defense Systems chief executive Jim Albaugh. Ironically, Mulally missed last month's roll-out of the 777-200LR because he was working on succession planning. But there are several strong external candidates, and it is clear Boeing's board plans to take the time required to get it right – even if that means going outside the company.
Succession planning, and the choice of chief executive, is crucial to the continuity and vitality of any company's business strategy. As the recent nationalistic manoeuvring for the top jobs at EADS, and now Airbus, makes clear, it is better to plan for succession than leave it to chance – or to politics. But it is also vital to make the right choice.
Source: Flight International