Could Ford's Mulally fix Boeing's 787 woes?

Alan Mulally, the 64-year-old Ford Motor Co. (F) CEO, says he has no intention of retiring until Ford returns to sustained profitability -- which he believes will be 2011.

But the former Boeing (BA) executive may be one person who could turn around Boeing's troubled 787 Dreamliner aircraft, which has suffered five production schedule delays over two years (and some sources have recently told me could suffer even deeper delays). I spoke on-the-record yesterday with a Boeing insider who told me about Mulally's style and suggested he could do a better job than Boeing's current CEO.

My source, Stan Sorscher, is a physicist by training who worked as an engineer at Boeing from 1980 to 2000 when he signed on with the Society of Professional Engineers in Aerospace (SPEEA) where he is now legislative director. He has agreed to go on the record with his comments about Boeing's culture after calling me yesterday afternoon following a comment he made on my article about the technical problems with the 787's electrical system.

Sorscher is a big fan of Mulally's problem-solving focus. He believes Mulally would invite people from all levels of Boeing to share information and work towards solutions that are in the best interests of Boeing.

Sorscher noted that Boeing's last successful new aircraft was the 777, which employed this problem-solving approach in 1995, when Frank Schrontz was CEO. According to Sorscher, "The 777 had the opposite corporate culture [of the 787], with a strong emphasis on early awareness of problems, close coordination of all stakeholders and global optimization on the overall program, instead of sub-optimization on each organization's localized interests."

Sorscher does not have such kind things to say about the 787 program, which he believes is suffering because information is not flowing up the line to management. And the reason information is not flowing is that management sends a strong signal that it only wants to hear good news.

Sorscher notes that this lack of information flow began after Boeing's 1997 take over of St. Louis, MO-based McDonnell-Douglas. Ironically, since Boeing was the name that survived, this takeover brought Boeing a CEO, Harry Stonecipher, who employees such as Sorscher claim have ended conversations with the phrase "do it or else I will fire you and get someone who can."

Sorscher has observed that current CEO Jim McNerney has preserved this culture. He told me a story about an engineer who told his supervisor that he thought a supplier would not be able to deliver on time. The supervisor asked the engineer if the supplier has delivered anything late yet. The engineer said no and the supervisor told him not to bring up the situation again unless the supplier actually missed the schedule.

By punishing people close to the action for bringing up bad news, Boeing management is teaching lower level people that keeping your mouth shut about problems will let a person avoid punishment. So, not only is Boeing management shutting off information flow within a functional area -- e.g., designing and building the electrical system -- but the program managers who are supposed to know what is going on across all the functional areas are in the dark.

As a result, Sorscher believes that the 787 program is being managed in a dysfunctional way. As he wrote me, "The 787 program was launched as a "snap-together" plan [meaning that Boeing suppliers were intended to design and build the components and Boeing would assemble those parts in its Everett, WA-integration facility]. We skipped the required up-front coordination, with the expectation that "the market" would solve all those problems. We are now paying those coordination costs downstream where they are most expensive and most complex."

This is where Mulally comes in. In Sorscher's view, he is a little too intense and does have a "volcanic temper." However, Mulally will "tear your head off if you hide information" and he encourages people to work together to solve problems. Sorscher believes that Mulally represents the pre-McDonnell-Douglas Boeing culture which helped it develop the 777 so effectively.

If Sorscher is right, that earlier culture of aggressive problem-solving is what Boeing needs to bring back if it hopes to deliver those 787s.

Peter Cohan is amanagement consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter. He has no financial interest in the securities mentioned.

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