The Boeing Company (NASDAQ symbol as “BA”), founded in 1916, is world’s largest aerospace company with many very long-time employees among its nearly 170,000 work force worldwide. It is one of the largest employers in the US. It engages in two sides of the business: Commercial Airplanes (BCA) and Defense business (Defense, Space & Security). By Year 2012, BCA counts about 60% of the total revenue of $81.7 billion and half of its total employees, and Defense about 40% of its revenue.

The business model was set up after the major mergers with the expectation that the two sides of the business would weather each other- when the Commercial business going through the down cycles, Defense business can provide buffers and vice versa:  slow yet steady for years. With the acquisition of McDonnell Douglas in 1997, a big piece of defense industry was added to the original commercial focused plate. Besides the initial turmoil with Wall Street after the immediate marriage of the two distinct parties in a downward economy of the late 90s, things appeared never better or never more stable along with the rising economy. Therefore , within 10 years after the merger, the management must have gotten a little bit too complacent as scandals coming up from the top one after another.

After the MD merger in 1997, Boeing possessed the dominate presence in the aerospace industry in the US and in the world. The company culture started a paradigm shift as well. Two seemingly different types of businesses were merged together each with different needs and means to succeed. Commercial business faces market-driven competitions with innovative technologies and low-cost manufacture as the key to compete,  while Defense requires good relationship with the government for its lucrative long-term contracts although deals with its slow movements.  To the outside, it looked like a happily-ever-after marriage and Boeing became almost a bellwether company since then.

The seesaw model had worked fine for years. Did the top management ever foresee the danger of such a model in the longer term? While operating in two sides of the business with a much larger of defense contracts mixed into the revenue-generating venues, MD’s culture and management team seemed to have gotten a larger say inside the company while Boeing’s traditional culture was forced to change. Government contracts may have guaranteed terms of stable money flow, but it can also dominate the company’s culture from the process of dealing with government’s heavy and bureaucratic cycles instead of facing the ever-moving international market competitions, wooing officials to win contracts instead of focusing on building better airplanes, relentless number crunching and bottom-line calculations instead of people focus, culture focus, engineering focus like it used to be …

To modern age technology-driven businesses, government’s technology infrastructure and adoptions are almost always two or three generations behind the cutting-edge on the market. Their heavy regulations and bureaucracies can make everything move at a snail’s speed. That would not match well with the growth needs for a market-driven commercial business.

Nowadays, not only the economy crisis impacts every corner of the Commercial business, global competitions in every industry spring out like wild flowers. On the Defense side, government has started to tighten the defense budget and loads of regulations came up after the event of 911. Safety net is no longer safe and the seesaw all of sudden got pushed by heavy weights on both ends at the same time – getting stuck.

The winds are blowing from all directions. A company’s culture can decide its future path and survival rate under big storms.

“Culture trumps strategy, every time!”

See http://blogs.hbr.org/cs/2011/03/culture_trumps_strategy_every.html

Boeing has been facing many crises lately. The serious delays of 787 Dreamliners and many of its latest PR mishaps may be just the tip of an iceberg. There is no surgical solution to change a slow-moving, slow-adapting big elephant culture. The process will not be trivial to make an elephant dance again. It could be facing even more painful decisions ahead, to the company and to its people, esp. those people who have had their lifelong career rooted in the company. .

There are only few limited ways to transform such a large heavy company under crisis and there is also limited time. No matter which solution, predicted or totally unexpected, likely a fresher and more competitive culture is needed to ensure its future survival and growth.  Letting competitions and innovations be the main drivers again and hope it could dance very well once more. It is and will be a very good management case study for the 21st century.