I said it before and I will say it again, yes the culture of profit focus has permeated every part of Boeing and it will need a total culture overhaul. Does replacing the guy on top with an Engineer will magically solve that issue? No, Dennis Muilenberg is an aviation engineer and he did jack shit
Nope, it’s usually the lawyers who figure out what a fuck up would cost versus the cost to fix. That’s how they decide how to fix things. Exactly how auto industry fixes things, they know the car will catch on fire and kill people but they decide on an acceptable number of wrongful death lawsuits before they do a recall.
What actually happened is that before the 1980s the goal of a corporation was to attain the best employees to make the best products to gain larger sales. After Friedman came out with the Friedman doctrine that the sole responsibility of a corporation was to provide financial benefit to its shareholders. Since then it’s all about the $$$. The Friedman doctrine picked up steam in the 90s and has pretty much ruined the world since then.
A good CEO would take the company private and focus on the product. This is exactly why Elon Musk said he wanted to take Tesla private again because he was tired of pleasing shareholders.
It’s not that Bill Allen was a great CEO because of who he was but it’s probably more of the time period he was as CEO. I’m sure if he was to be CEO now he’d run it into the ground like any other CEO.
The thing as well is they effectively had Pan Am acting as their own airline/guideline in the widebody commercial market. Juan Trippe effectively commissioned the 747, Pan Am was the launch customer of the 707, and got 727s within a year of launch. Outside of 20 DC8s (compared to over 150 Boeings), Pan Am bought no other plane than from Boeing from 1955 to the 80s. It can't be overstated how much it would have helped to have a loyal customer who at the time was such a premier example of jet travel. It would be like Boeing today having Delta or Lufthansa as a fiercely loyal customer who gave business insights about what might be needed in the coming years.
It’s ultimately the pathology that affects every publicly traded company. Quarterly earnings expectations makes a company focused on the short-term. Unfortunately this company in particular makes flying metal tubes that hold people and not iPhones. There is more to it than that as standards for employee competence have dropped as have standards for education. This is not an ESG/DEI rant this instead runs the whole gamut. Complex systems will not survive the competency crisis.
A YT video the topic by an engineering channel that I like. The entire point of their video is what you’re laying out.
https://youtu.be/URoVKPVDKPU?si=VxXjko45Y_Q1Jut_
Truly, same goes from Intel, Pat Gelsinger became the CEO of Intel in 2021. Gelsinger graduated from Stanford University with a master's degree in engineering in 1985 and was the chief architect of Intel's i486 microprocessor in the 1980s yet Intel is still on the struggle bus in terms of market dominance.
Intel’s problem is only like Boeing’s in that they both had market defining products that dominated for decades and did nothing (not enough) to keep up with R&D.
Intel used to be the leader in large form CPUs. AMD “came out of nowhere” and with this latest generation is currently out performing them in every metric except “share of hearts and minds”. Because AMD as a new product was wildly inferior, but they’re no longer. Which dovetails into small form factor CPUs where companies like AMD, Snapdragon, and Apple are at least a generation (or three) ahead of Intel in chiplet designs (rather than one perfect large silicone it’s many smaller silicone stitched together to increase yields of the wafers from the silicone foundries), and moving from the x86 architecture to ARM architecture.
Intel is super late to the game in GPUs as they just launched their first commercial product last year after years of development. Except no one cares (shareholder wise) because NVIDIA has proven beyond all doubt that the money in GPU designs is geared towards AI now.
Honestly, the only thing that seems productive for Intel’s long term viability is the national security interest to create a state side silicone foundry. It’s hugely important (example: watch what happened to Russia when it had its supply of advance circuitry pinched from the Ukraine war sanctions), and the federal government is funneling billions to them to “fix this strategic gap.”
As a gamer and a consumer I'm all for Intel getting into the GPU space. I've been team red with AMD since 2010 because at the time AMD was the underdog in terms of cost both on the CPU and GPU side. If you had money you got Invidia and Intel, but now Invidia pretty much nuked the GPU market raising prices beyond nose bleed territory. I'm hoping Intel will be able come back within a few years.
Some of that price increase can also be attributed to crypto farmers buying up video cards to farm with. I haven’t heard much on that lately, but I know for a while it was a major issue on video card pricing?
Miners were a big problem when it came to availability and secondhand pricing for the highest end cards. Now they’re less of an issue because the economics of mining doesn’t make it worth it for people running mining rigs in their bedroom. GPU prices still suck because Nvidia jacked up the prices with the 4000 series release.
It’s mostly to do with bitcoin being progressively harder to mine and the price collapsing. So it took more power to get additional bitcoin, which upped to cost to mine and then miners got paid in bitcoin that was less valuable. Many switched to Ether, but it’s no longer able to be mined, so now only small alt coins are mineable.
Things are better now, prices are still higher, but current MSRPs are about as good as we’re going to get. It’s the best time to build your own PC since before COVID.
Yeah, with an engineer only they could get caught up in some minor meaningless detail resulting in a product that never gets finished. With a business/finance leader they can ruin the core product/service by prioritizing profits. There are those engineers that get the bigger picture and can bridge that gap. Either way though when you’re a public company and have a board the decisions on who’s in charge are made by multiple groups with multiple different interests. Short term greed seems to often win out in these scenarios. The incentives just aren’t aligned when most C level execs get stock based comp and can cash out before their short term decisions ultimately harm the company.
Yeah. In a bizarre twist of fate, the idiot management of an almost bankrupt company replaced the management of the leader of the industry. Cutting cist everywhere to maximise short-term profit may be an okay strategy for a noname brand in consumer electronics, but not for the top company in a pivotal industry where lives depend on the quality of the product.
I'm not saying that companies only led by engineers are perfect. But I don't have the space to explain why. It would take me 11 chapters.
The key to success is balance between the two extremes.
But the fact the C level execs make it big from stock comp allows them to make decisions that look good in the short term, cash out on the stock and then move on before the consequences of those decisions impact the company. There’s simply no incentive for C level to make decisions that are impactful in the long term when they can cash out within 3 years or less (not sure the typical vesting period but I know it’s not that long).
I dont know the solution to this. How do you incentivize longer term thinking while still incentivizing capital markets to participate? Also were you making a bankruptcy pun?
Totally. I work for that company. Everyone is an accountant. They've got me out here building planes. I don't even know how to build planes. I'm an accountant.
Greed kills companies, not accountants.
A good accountant would have listened to the engineers. These guys did not, and focused on short term profit. That ain't an accounts thing.
Exactly, this is more about character. A greedy asshole who doesn’t care if they could kill a ton of people who trust them if it makes them money can have any degree
Yep - not just Boeing but any publicly traded company. The shareholders - especially institutional shareholders - have too much power and are more focused on the quarterly results rather than long-term results.
The accountants around me are the sane ones. They are often bound by ethics concerns. It is the accountants that are thinking long term. Finance usually gets a little shortsighted and it just goes downhill from there. Accounting and Engineering should team to be in charge of most industries.
Look at how much lucrative business CPA firms turned away while shady liars took 20-30% cuts on 200k to 1.5M in dubious ERC claims. Yet, accountants were prevented not just ethically and professionally, but in my experience drew the line at filing these claims morally (and in consideration of the long-term ripple effects of massive handouts of that size).
Accountants are the main people who understand just how quick the entire economy will rot to shit when it is built on meaningless sand. This growing scam economy of tax cheats and minimum viable products etc is a scaffolding of straw that is just begging to crumble. You can't maintain a successful society like this. It reminds me of portrayals of the ostrich approach seen around the final decade of the USSR.
Yeah, this is more a jack welsh GE culture than accounting. Calhoun destroyed many businesses before Boeing… short term quarterly profits over long term growth
As an accountat I I sort of agree with this statement I’m skeptical of the suitability of accountants to lead large organizations but can be done. However I don’t think it’s really accountants are the problem it’s the MBA Finance engineers are the problem - releasing stake holder value while strategically retiring capital to shareholders & deploying the balance sheet ….. it’s the people spouting that crap cause the problems and that’s not really accountants.
Why are accounting backgrounds typically not suitable to lead large orgs? What other backgrounds do people usually have that are more suitable? Genuine question, I’m clueless.
It’s a broad stereotypical statement but there are kernels of truth in it. Accounts tend to be conservative cautious & big on control, as someone else said in another reply about a hotel managing cash flow versus giving the room refund as a customer service issue.
An accountant that has sufficient experience supporting & been embedded in operational business functions module be better.
Many accounts struggle withe operational business execution the aspects - many go into supply chain (its big on logic & analytical also) but you don’t see many in front line customer functions or general management. When you gat an account that is well rounded to those aspects they are usually very good but hard to find.
Yeah after reading some comments, I can get why we’re not front line contenders for that.
This would be why I see accountants mainly running smaller accounting related businesses rather than something outside of their background like flying machines that transport people.
Because you generally need a wider more in depth skill set. I work in manufacturing, it is not uncommon to see engineers and product managers going back to school to supplement their degrees with an accounting degree or MBA, even though they will never work in the back office. This way they can understand all aspects of the production line and the business aspects and impacts of what they are designing, they then move into a position where they become "product owners" and own the product from inception to retirement. Now, they understand the R&D and intricacies involved in engineering a product as well as all of the business aspects.
You need to understand the in's and out's of the product. You can't get this with an accounting degree. Sure you can help guide someone along looking at the numbers and looking at market forecasts, but at the end of the day you lack the hard knowledge and background needed to bring a product to market. You don't even know what is achievable by your engineers, you've never set up a new production line, you don't understand your product or your competitor's, you don't know how to maximize efficiency, etc... Sure you can get a general understanding, but could you walk onto a shop floor and truly understand the process behind what is being made and why it is being done this specific way? At the end of the you are not an engineer.
Who'd you pick for your CEO? The guy that has been at the ground floor since day one with an engineering degree who has rised through the ranks taking on more responsibility or the CPA who has just done back office work rising through the ranks of financial reporting? Accounting is a decent career, but we need to be realistic about our limitations.
And after you're done being realistic with your limitations the guy with an economics undergrad degree and an MBA will be picked over the accountants and engineers...
Most accountants just know how to put together financial information after stuff has already happened. We make financial report cards. Most accountants dont really know how to make decisions about the future of the company.
In a microcosm, a hotel, I was the controller that found himself as GM, too. The things I concern myself with as controller are not the things I should as a GM. The two roles were in conflict. As an example, I'd make finance decisions when I should have made service decisions. Refunding a nights stay is the right call sometimes, even when I'm the one who needs the cash to fund operations
The two roles had different mindsets geared towards different goals.
Agree that the Feds need to sweep and clean house. Everyone loves to blame “bean counters”, which is only partially true. Yes, they (and every other publicly traded company) are constantly chasing fake and escalating forecasts; however, that pressure comes 100% from shareholders and 0% from finance departments. It’s very openly a race to the bottom, and everyone would be better off assuming that’s always the case. Because it very much is the case.
Expect to see much more of this with post covid fuckery.
I don’t think that the CEO being an accountant is a red flag for any business in and of itself. I think this guy is a corporate raider and I think that corporate raiders never get any punishment so there is no downside for them. When Boeing got fined for the issues with the 738s it did not matter to him because it didn’t affect his wallet and his pay went up.
The actual reason is that in a “cost saving” measure during the pandemic they encouraged the seasoned engineers to take early retirement, which they did. Now the junior engineers they hired to replace them don’t know what to do because the guys who were supposed to teach them retired
I agree but Boeing’s best CEO (during their prime, innovative years) was a lawyer, right? Maybe just anybody but an MBA would be better suited and less likely to cut corners.
These jacks failed to understand that Back when Boeing was founded, you would focus on quality not caring about finances and still won't go out of business.
But today, no matter if you sell plans made of gold and you don't manage finances properly, you would go out of business by noon. Financial environment is that much complicated now.
Accounting being their degree is pretty irrelevant compared to their focus and their character. Being an accountant wouldn’t automatically make you a cold, profit focused, narcissist who would probably kill whistleblowers.
Not to mention that most CEOs were accountants, I think it was 9/10 actually. This is really the market being amoral and going after profits regardless of good or bad and the government failing to stop it with safety regulations and enforcement
That’s fucking stupid, it’s clickbait written by dumbasses trying to drive engagement
Boeing’s faults are the continuous growth culture of the stock market. Shareholders wanting higher and higher returns and tying executive compensation to share price is the issue.
I mean accounting and finance are 2 different functions. Some of yall are acting like accounting built models for CapEx projects. That is all finance and project managers.
The McDonnell merger that came from the infamous 1993 "last supper" dinner at the Pentagon slowly killed Boeing. And frankly has done a lot of damage in general. But that's just my personal opinion.
I think this speaks to a larger issue in the US, where we tend to privilege profits over ethics. Think about the concept of ethics in general life and what it espouses. You think of whether you should or should not do something, unintended consequences, etc.
Then think about every single ethics training you've ever taken as a CPA. Every single one concentrates solely on legal earnings management and financial reporting fraud and completely ignores actual ethical business decision-making. It essentially waters down the concept of ethics to the legal definition, which is, "CAN we legally do this," as opposed to, "SHOULD we legally do this." It's not limited to Boeing, it's rampant in American business and legal culture. I know the term "late stage capitalism" tends to be a highly politically loaded term, but we're essentially back to the age of robber barons where whatever people can do legally to rip others off and make money is deemed to be ethically just fine.
True! I was in school for Aerospace Engineering and was hearing this back then, ~15 years now.
I never wanted to work for Boeing because of shit like this. I didn’t want to have any part in the business…
Yeah, this is hard to accept when many great companies are run by accountants. The good accountants would listen to what the engineers are saying about safety. It's a culture problem at The Boeing Company, not because Calhoun is an accountant.
Ehh accountants make great CEOs of cookie cutter companies in commodity like industries where raw efficiency and slow change leads to average profits. CPA CEOs tend to tank companies if a decent competitor gets aggressive and makes risky decisions to increase profits.
I have personally seen this happen. CPA CEO at the company I was at ran the place like a bean counter for the hedge fund overlords, the direct competitor was run by a level headed guy that was in the industry for decades.
The competitor blew our company out of the water, was something like 40% more value stock wise and eventually the entire C suite in our company got wiped out in a buy out.
If accountants are known for one thing by other folks in industry, is that they are horrible rule breakers and tell everyone to cut corners as much as possible.
One piece that happened is they sold some of their key parts divisions to a PE firm in a sort of sale leaseback situation for a burst of cash and then the PE firm that now became their supplier tanked their quality and workmanship.
Are you talking about the Spirit Aerosystems spin off? They primarily make raw fuselages and wings etc for Boeing and some airbus planes.
These are the 2 things that they haven’t had any real problems with…. They wanted to throw spirit aero under the bus for the door plug but there was nothing wrong with the actual part, just final assembly….
Hmm, interesting, the WSJ did a long story on the spin-offs to PE and the issues that arose but I don’t remember them all. Maybe there was something else
Yes and no...over time, private equity ownership erodes all of the characteristics that make organizations like Boeing successful.
BUT...I live in Everett, WA and am long time friends with a lot of guys who machine the parts that Boeing builds their airplanes out of...if you met some of these guys you'd never want to fly on a Boeing plane again.
Thank god all the machining gets run and checked by computer systems and not by the permanently stoned 20-something who's cranked on Monster energy, working his third 70-hour week of overnight shifts in a row.
Just need a ceo who has a long term goal and board that agrees. They need to be brave enough to say screw you to short term gains and stocks falling temporarily (or even years). That’s how you cleanse your stocks from short term gain seekers. I know this infinitely easier said than done but having a ceo who does not give a damn about his short term gain and potentially ruining his reputation is hard to come by.
Having an accounting background doesn’t mean someone will be a poor CEO. Being an engineer doesn’t mean someone will be a good one. A good CEO should have an understanding of both sides (plus many others), and most importantly have an ethical commitment to making a quality product, especially when a poor quality product will cost lives.
It's such a facile meme, that I'm growing annoyed the more I see it spreading around. Founder-led companies can be effective counter-examples to this idea that Boeing needs an engineer as a CEO. Just because someone can produce a good product says nothing about their ability to set and communicate vision/strategy or manage an organization. They may be accurate in terms of the trajectory of the company, they misattribute the cause to respective professions as opposed to something more ambiguous, like the personal values of the different leaders and shifting shareholder priorities as ownership changed.
Yes, let's reduce this problem to an individual level.
There's absolutely NO systematic reason why the short-term profit mentality got pushed to this point.
It's all just an evil accounting cabal who secretly coup'ed the engineers off the company! Like Shakespeare wrote: "The first thing we do, let's kill all the accountants!"
When I worked there (cash collection in defense during their push for buybacks) Dennis Muellenberg was the CEO. He was an engineer and definitely didn’t help their mess. Luckily I left with my 401k before their first major issue and he was fired.
Don’t know about Boeing, but I don’t trust any sort of analysis from anything tied to Wall Street Bets. Before covid it would get some occasionally decent DD, but after the whole GameStop scenario it’s basically the r/conspiracy of the finance world
Honestly I agree! I would rather the books be cooked unethically than my planes built unethically, bring back the engineer who can't account, at least the planes won't be super glued together
The actual downfall of Boeing is even easier to pin, it was the moving of the bulk of operations from Renton, WA, which was a robust union shop in a state where that matters, to the old Vought factory, which they bought in 2011 from Carlyle, in North Charleston, South Carolina, which is a scab shop in a right to work state. In the process, an unhealthy emphasis on cost accounting at the expense of build quality was definitely developed, but it's an open chicken-and-egg question which was the actual cause, the beancounting ethos they gained in the move or the factory move into a place that built moderately successful fighters (the F-8 and A-7 platform) and no passenger aircraft to speak of.
Medicine - 30+ administrators and clerks and accountants per doctor in the industry - and people are shocked by the cost of a $450,000 hospital bill for a handful of days or the outrageous settlement rates and spike charges and shit.......
Our profession, along with marketing and management consulting have absolutely created unbelievable amounts of drag and friction and bloat and non-tax deadweight loss.... For all of our good, we contribute a staggering amount of unnecessary impediment...
We do a lot of good and I love dominating... but uh, we also do some of the dumbest shit possible in industry we have no business doing.... A close family member works in a massive auto-chip maker. She helps design and stress-test chips and shit... The accountants who run purchasing have absolutely no freaking business conducting that part of the supply chain. They have cost her plant millions in failed and impotent inventory management and have fallen prey to a stunning amount of hoaxed fraud scams lol!!!!!!!!!!!!!!
She hates them and finds them stunningly incompetent and incapable. They don't have the first clue about electrical and mechanical engineering and hardware design and supply chain management with Asian suppliers. They cannot assess the products and they get got all of the time by the dumbest possible scams. This is a Fortune 100 publicly traded company......................................................................................
The accountants and finance bros in my hometown have annihilated the hospital and healthcare network as a function of the most pointless possible KPI's which have no bearing on good medicine whatsoever. The over-optimization of bad medicine has led to a reduction in talent, surgical and internists, lowered patient volume, objectively worse outcomes for patient visits................but an increase in officer compensation????!!!!
This is somewhat tangential but it is obliquely related. It's cute, but the best studies I have seen regarding CEO effectiveness conclude that CEO's have no statistically significant bearing on a company's earnings trend and performance... Yes, there are outliers, but on average, their increase in compensation has no bearing on increase in earnings or stock performance. For you desperate corporate simps out their and worshipers of 6 Sigma and shit, go read the literature.......... the trend lines and data analytics, which are extremely easy to graph or find clearly indicate that there is no relationship between the mammoth increases in CEO compensation and stock performance......
I said it before and I will say it again, yes the culture of profit focus has permeated every part of Boeing and it will need a total culture overhaul. Does replacing the guy on top with an Engineer will magically solve that issue? No, Dennis Muilenberg is an aviation engineer and he did jack shit
Bill Allen was CEO from 1945-1968 and oversaw the launch of the 707, 727, 737, and 747. Probably the best CEO they had. He was a lawyer.
Makes sense, he probably knew how much of an expensive headache it would be to fuck up the planes and get sued/bad publicity
Nope, it’s usually the lawyers who figure out what a fuck up would cost versus the cost to fix. That’s how they decide how to fix things. Exactly how auto industry fixes things, they know the car will catch on fire and kill people but they decide on an acceptable number of wrongful death lawsuits before they do a recall. What actually happened is that before the 1980s the goal of a corporation was to attain the best employees to make the best products to gain larger sales. After Friedman came out with the Friedman doctrine that the sole responsibility of a corporation was to provide financial benefit to its shareholders. Since then it’s all about the $$$. The Friedman doctrine picked up steam in the 90s and has pretty much ruined the world since then. A good CEO would take the company private and focus on the product. This is exactly why Elon Musk said he wanted to take Tesla private again because he was tired of pleasing shareholders. It’s not that Bill Allen was a great CEO because of who he was but it’s probably more of the time period he was as CEO. I’m sure if he was to be CEO now he’d run it into the ground like any other CEO.
The thing as well is they effectively had Pan Am acting as their own airline/guideline in the widebody commercial market. Juan Trippe effectively commissioned the 747, Pan Am was the launch customer of the 707, and got 727s within a year of launch. Outside of 20 DC8s (compared to over 150 Boeings), Pan Am bought no other plane than from Boeing from 1955 to the 80s. It can't be overstated how much it would have helped to have a loyal customer who at the time was such a premier example of jet travel. It would be like Boeing today having Delta or Lufthansa as a fiercely loyal customer who gave business insights about what might be needed in the coming years.
It’s ultimately the pathology that affects every publicly traded company. Quarterly earnings expectations makes a company focused on the short-term. Unfortunately this company in particular makes flying metal tubes that hold people and not iPhones. There is more to it than that as standards for employee competence have dropped as have standards for education. This is not an ESG/DEI rant this instead runs the whole gamut. Complex systems will not survive the competency crisis.
A YT video the topic by an engineering channel that I like. The entire point of their video is what you’re laying out. https://youtu.be/URoVKPVDKPU?si=VxXjko45Y_Q1Jut_
Truly, same goes from Intel, Pat Gelsinger became the CEO of Intel in 2021. Gelsinger graduated from Stanford University with a master's degree in engineering in 1985 and was the chief architect of Intel's i486 microprocessor in the 1980s yet Intel is still on the struggle bus in terms of market dominance.
Intel’s problem is only like Boeing’s in that they both had market defining products that dominated for decades and did nothing (not enough) to keep up with R&D. Intel used to be the leader in large form CPUs. AMD “came out of nowhere” and with this latest generation is currently out performing them in every metric except “share of hearts and minds”. Because AMD as a new product was wildly inferior, but they’re no longer. Which dovetails into small form factor CPUs where companies like AMD, Snapdragon, and Apple are at least a generation (or three) ahead of Intel in chiplet designs (rather than one perfect large silicone it’s many smaller silicone stitched together to increase yields of the wafers from the silicone foundries), and moving from the x86 architecture to ARM architecture. Intel is super late to the game in GPUs as they just launched their first commercial product last year after years of development. Except no one cares (shareholder wise) because NVIDIA has proven beyond all doubt that the money in GPU designs is geared towards AI now. Honestly, the only thing that seems productive for Intel’s long term viability is the national security interest to create a state side silicone foundry. It’s hugely important (example: watch what happened to Russia when it had its supply of advance circuitry pinched from the Ukraine war sanctions), and the federal government is funneling billions to them to “fix this strategic gap.”
As a gamer and a consumer I'm all for Intel getting into the GPU space. I've been team red with AMD since 2010 because at the time AMD was the underdog in terms of cost both on the CPU and GPU side. If you had money you got Invidia and Intel, but now Invidia pretty much nuked the GPU market raising prices beyond nose bleed territory. I'm hoping Intel will be able come back within a few years.
As a gamer I have pretty similar sentiments. As a business professional… uhh… yeah… not a lot spectacular going on with Intel right now.
Some of that price increase can also be attributed to crypto farmers buying up video cards to farm with. I haven’t heard much on that lately, but I know for a while it was a major issue on video card pricing?
Miners were a big problem when it came to availability and secondhand pricing for the highest end cards. Now they’re less of an issue because the economics of mining doesn’t make it worth it for people running mining rigs in their bedroom. GPU prices still suck because Nvidia jacked up the prices with the 4000 series release.
Interesting guess they got greedy and it didn’t help that congress was getting involved etc.
It’s mostly to do with bitcoin being progressively harder to mine and the price collapsing. So it took more power to get additional bitcoin, which upped to cost to mine and then miners got paid in bitcoin that was less valuable. Many switched to Ether, but it’s no longer able to be mined, so now only small alt coins are mineable. Things are better now, prices are still higher, but current MSRPs are about as good as we’re going to get. It’s the best time to build your own PC since before COVID.
Great documentary on them on netflix called Downfall: The Case Against Boeing
You need both an engineer and someone who knows how to do business. You can't have just one or the other it seems. Agree?
Yeah, with an engineer only they could get caught up in some minor meaningless detail resulting in a product that never gets finished. With a business/finance leader they can ruin the core product/service by prioritizing profits. There are those engineers that get the bigger picture and can bridge that gap. Either way though when you’re a public company and have a board the decisions on who’s in charge are made by multiple groups with multiple different interests. Short term greed seems to often win out in these scenarios. The incentives just aren’t aligned when most C level execs get stock based comp and can cash out before their short term decisions ultimately harm the company.
Yeah. In a bizarre twist of fate, the idiot management of an almost bankrupt company replaced the management of the leader of the industry. Cutting cist everywhere to maximise short-term profit may be an okay strategy for a noname brand in consumer electronics, but not for the top company in a pivotal industry where lives depend on the quality of the product. I'm not saying that companies only led by engineers are perfect. But I don't have the space to explain why. It would take me 11 chapters. The key to success is balance between the two extremes.
11 chapters.
11 charters?
But the fact the C level execs make it big from stock comp allows them to make decisions that look good in the short term, cash out on the stock and then move on before the consequences of those decisions impact the company. There’s simply no incentive for C level to make decisions that are impactful in the long term when they can cash out within 3 years or less (not sure the typical vesting period but I know it’s not that long). I dont know the solution to this. How do you incentivize longer term thinking while still incentivizing capital markets to participate? Also were you making a bankruptcy pun?
Totally. I work for that company. Everyone is an accountant. They've got me out here building planes. I don't even know how to build planes. I'm an accountant.
Please don’t commit suicide by a gun shot wound in the back of your head.
I NEED MORE DUCT TAPE!
Credit it yourself lazy
Just google it, no one wants to work these days
are u being fr or /s cuz i can’t tell this is crazy
It's true, I am one of the planes he built. My doors open every flight.
Sure blame the accountant turned engineer because you're an exhibitionist.... typical.
I thought all plane doors flapped like wings to generate thrust?
A magical talking plane 🤩
Greed kills companies, not accountants. A good accountant would have listened to the engineers. These guys did not, and focused on short term profit. That ain't an accounts thing.
Exactly, this is more about character. A greedy asshole who doesn’t care if they could kill a ton of people who trust them if it makes them money can have any degree
Yep - not just Boeing but any publicly traded company. The shareholders - especially institutional shareholders - have too much power and are more focused on the quarterly results rather than long-term results.
The accountants around me are the sane ones. They are often bound by ethics concerns. It is the accountants that are thinking long term. Finance usually gets a little shortsighted and it just goes downhill from there. Accounting and Engineering should team to be in charge of most industries. Look at how much lucrative business CPA firms turned away while shady liars took 20-30% cuts on 200k to 1.5M in dubious ERC claims. Yet, accountants were prevented not just ethically and professionally, but in my experience drew the line at filing these claims morally (and in consideration of the long-term ripple effects of massive handouts of that size). Accountants are the main people who understand just how quick the entire economy will rot to shit when it is built on meaningless sand. This growing scam economy of tax cheats and minimum viable products etc is a scaffolding of straw that is just begging to crumble. You can't maintain a successful society like this. It reminds me of portrayals of the ostrich approach seen around the final decade of the USSR.
They fired every engineer and had bookkeepers out there trying to weld planes together
Makes sense. Accountants are cheaper.
If they could read the blueprints they would know planes are supposed to be riveted and not welded.
Sorry Dr Rivets Cr Welds
Can I accrue the welding expense and just do it next month?
Yes but don't forget to credit Salvage and debit to Inventory.
Nah, they wouldn't have bookkeepers building planes; they offshored all of them a while ago
To be fair some might be better equipped for their new job
I took a shop class in high school and I was pretty decent at welding, so maybe I should apply.
Expecting accountants to fill in the gaap
The Accountant 2 with Ben Affleck I heard is about having lunch with whistleblowers.
Someone needs to figure out why 2 whistleblowers are dead, might as well be him.
Take a look at David Calhoun’s work history and tell me how similar it looks to yourself. Then still ask if you’d call him an accountant.
Yeah, this is more a jack welsh GE culture than accounting. Calhoun destroyed many businesses before Boeing… short term quarterly profits over long term growth
So... Who appointed him? Because pparently, he has a track record... So I doubt the "short-term profit over long-term growth" was an accident
There is nothing wrong with an accountant at the top. Provided that accountant is surrounded by people that know what they are doing.
As an accountat I I sort of agree with this statement I’m skeptical of the suitability of accountants to lead large organizations but can be done. However I don’t think it’s really accountants are the problem it’s the MBA Finance engineers are the problem - releasing stake holder value while strategically retiring capital to shareholders & deploying the balance sheet ….. it’s the people spouting that crap cause the problems and that’s not really accountants.
Why are accounting backgrounds typically not suitable to lead large orgs? What other backgrounds do people usually have that are more suitable? Genuine question, I’m clueless.
It’s a broad stereotypical statement but there are kernels of truth in it. Accounts tend to be conservative cautious & big on control, as someone else said in another reply about a hotel managing cash flow versus giving the room refund as a customer service issue. An accountant that has sufficient experience supporting & been embedded in operational business functions module be better. Many accounts struggle withe operational business execution the aspects - many go into supply chain (its big on logic & analytical also) but you don’t see many in front line customer functions or general management. When you gat an account that is well rounded to those aspects they are usually very good but hard to find.
Yeah after reading some comments, I can get why we’re not front line contenders for that. This would be why I see accountants mainly running smaller accounting related businesses rather than something outside of their background like flying machines that transport people.
Because you generally need a wider more in depth skill set. I work in manufacturing, it is not uncommon to see engineers and product managers going back to school to supplement their degrees with an accounting degree or MBA, even though they will never work in the back office. This way they can understand all aspects of the production line and the business aspects and impacts of what they are designing, they then move into a position where they become "product owners" and own the product from inception to retirement. Now, they understand the R&D and intricacies involved in engineering a product as well as all of the business aspects. You need to understand the in's and out's of the product. You can't get this with an accounting degree. Sure you can help guide someone along looking at the numbers and looking at market forecasts, but at the end of the day you lack the hard knowledge and background needed to bring a product to market. You don't even know what is achievable by your engineers, you've never set up a new production line, you don't understand your product or your competitor's, you don't know how to maximize efficiency, etc... Sure you can get a general understanding, but could you walk onto a shop floor and truly understand the process behind what is being made and why it is being done this specific way? At the end of the you are not an engineer. Who'd you pick for your CEO? The guy that has been at the ground floor since day one with an engineering degree who has rised through the ranks taking on more responsibility or the CPA who has just done back office work rising through the ranks of financial reporting? Accounting is a decent career, but we need to be realistic about our limitations.
And after you're done being realistic with your limitations the guy with an economics undergrad degree and an MBA will be picked over the accountants and engineers...
Thanks for breaking it down like this. I understand now and it makes sense.
Most accountants just know how to put together financial information after stuff has already happened. We make financial report cards. Most accountants dont really know how to make decisions about the future of the company.
In a microcosm, a hotel, I was the controller that found himself as GM, too. The things I concern myself with as controller are not the things I should as a GM. The two roles were in conflict. As an example, I'd make finance decisions when I should have made service decisions. Refunding a nights stay is the right call sometimes, even when I'm the one who needs the cash to fund operations The two roles had different mindsets geared towards different goals.
I would associate this more with consulting/private equity, they're the type to kill margin of safety
Agree that the Feds need to sweep and clean house. Everyone loves to blame “bean counters”, which is only partially true. Yes, they (and every other publicly traded company) are constantly chasing fake and escalating forecasts; however, that pressure comes 100% from shareholders and 0% from finance departments. It’s very openly a race to the bottom, and everyone would be better off assuming that’s always the case. Because it very much is the case. Expect to see much more of this with post covid fuckery.
I don’t think that the CEO being an accountant is a red flag for any business in and of itself. I think this guy is a corporate raider and I think that corporate raiders never get any punishment so there is no downside for them. When Boeing got fined for the issues with the 738s it did not matter to him because it didn’t affect his wallet and his pay went up.
Being an accountant isn’t the problem. Being a super greedy evil bastard is. Anybody from any profession can be an asshole.
The actual reason is that in a “cost saving” measure during the pandemic they encouraged the seasoned engineers to take early retirement, which they did. Now the junior engineers they hired to replace them don’t know what to do because the guys who were supposed to teach them retired
I agree but Boeing’s best CEO (during their prime, innovative years) was a lawyer, right? Maybe just anybody but an MBA would be better suited and less likely to cut corners.
Agree 👍
These jacks failed to understand that Back when Boeing was founded, you would focus on quality not caring about finances and still won't go out of business. But today, no matter if you sell plans made of gold and you don't manage finances properly, you would go out of business by noon. Financial environment is that much complicated now.
I blame every instance of this happening squarely on Jack Welch's shoulders.
Accounting being their degree is pretty irrelevant compared to their focus and their character. Being an accountant wouldn’t automatically make you a cold, profit focused, narcissist who would probably kill whistleblowers. Not to mention that most CEOs were accountants, I think it was 9/10 actually. This is really the market being amoral and going after profits regardless of good or bad and the government failing to stop it with safety regulations and enforcement
That’s fucking stupid, it’s clickbait written by dumbasses trying to drive engagement Boeing’s faults are the continuous growth culture of the stock market. Shareholders wanting higher and higher returns and tying executive compensation to share price is the issue.
A culture pushed and created by…the finance people
my thought is that you don't make a finance guy your CEO unless you have some money issues.
I mean accounting and finance are 2 different functions. Some of yall are acting like accounting built models for CapEx projects. That is all finance and project managers.
such an L take lol
The McDonnell merger that came from the infamous 1993 "last supper" dinner at the Pentagon slowly killed Boeing. And frankly has done a lot of damage in general. But that's just my personal opinion.
I think this speaks to a larger issue in the US, where we tend to privilege profits over ethics. Think about the concept of ethics in general life and what it espouses. You think of whether you should or should not do something, unintended consequences, etc. Then think about every single ethics training you've ever taken as a CPA. Every single one concentrates solely on legal earnings management and financial reporting fraud and completely ignores actual ethical business decision-making. It essentially waters down the concept of ethics to the legal definition, which is, "CAN we legally do this," as opposed to, "SHOULD we legally do this." It's not limited to Boeing, it's rampant in American business and legal culture. I know the term "late stage capitalism" tends to be a highly politically loaded term, but we're essentially back to the age of robber barons where whatever people can do legally to rip others off and make money is deemed to be ethically just fine.
True! I was in school for Aerospace Engineering and was hearing this back then, ~15 years now. I never wanted to work for Boeing because of shit like this. I didn’t want to have any part in the business…
Yeah, this is hard to accept when many great companies are run by accountants. The good accountants would listen to what the engineers are saying about safety. It's a culture problem at The Boeing Company, not because Calhoun is an accountant.
Ehh accountants make great CEOs of cookie cutter companies in commodity like industries where raw efficiency and slow change leads to average profits. CPA CEOs tend to tank companies if a decent competitor gets aggressive and makes risky decisions to increase profits. I have personally seen this happen. CPA CEO at the company I was at ran the place like a bean counter for the hedge fund overlords, the direct competitor was run by a level headed guy that was in the industry for decades. The competitor blew our company out of the water, was something like 40% more value stock wise and eventually the entire C suite in our company got wiped out in a buy out.
murdering whistleblowers makes me not want to fly on a boeing
Reminds me of a quote from Mad Men - “Who is in charge around here? A bunch of accountants trying to turn a dollar into a dollar-ten?”
Likewise BlackRock ceo has a degree in BA and is running a finance company it literally has nothing to do with any degree you have
absolutely agree
The headline is just facts
Dam accountants strike again!
[https://youtu.be/Q8oCilY4szc?si=rTJtrMtRZ7NVEvNv](https://youtu.be/Q8oCilY4szc?si=rTJtrMtRZ7NVEvNv)
The same thing happened at GE under Jack Welch, a PhD in chemical engineering. The only difference is that Jeff Immelt was left holding the bag.
well they "killed off" someone and no investigation hummmmmmmmmmm
If accountants are known for one thing by other folks in industry, is that they are horrible rule breakers and tell everyone to cut corners as much as possible.
Accountant lawyer or engineer incompetence is incompetence.
One piece that happened is they sold some of their key parts divisions to a PE firm in a sort of sale leaseback situation for a burst of cash and then the PE firm that now became their supplier tanked their quality and workmanship.
Are you talking about the Spirit Aerosystems spin off? They primarily make raw fuselages and wings etc for Boeing and some airbus planes. These are the 2 things that they haven’t had any real problems with…. They wanted to throw spirit aero under the bus for the door plug but there was nothing wrong with the actual part, just final assembly….
Hmm, interesting, the WSJ did a long story on the spin-offs to PE and the issues that arose but I don’t remember them all. Maybe there was something else
That guy usually has 0 knowledge about anything but still comments
Yes and no...over time, private equity ownership erodes all of the characteristics that make organizations like Boeing successful. BUT...I live in Everett, WA and am long time friends with a lot of guys who machine the parts that Boeing builds their airplanes out of...if you met some of these guys you'd never want to fly on a Boeing plane again. Thank god all the machining gets run and checked by computer systems and not by the permanently stoned 20-something who's cranked on Monster energy, working his third 70-hour week of overnight shifts in a row.
Just need a ceo who has a long term goal and board that agrees. They need to be brave enough to say screw you to short term gains and stocks falling temporarily (or even years). That’s how you cleanse your stocks from short term gain seekers. I know this infinitely easier said than done but having a ceo who does not give a damn about his short term gain and potentially ruining his reputation is hard to come by.
As an accountant, I would never want to be the CEO of my own company.
The CEO before the current one was a Boeing engineer with his masters in engineering and worked over three decades for the company.
Ya no shit... Different Perspective..
Having an accounting background doesn’t mean someone will be a poor CEO. Being an engineer doesn’t mean someone will be a good one. A good CEO should have an understanding of both sides (plus many others), and most importantly have an ethical commitment to making a quality product, especially when a poor quality product will cost lives.
100% accurate.
When hospitals try to put doctors in charge though
It's such a facile meme, that I'm growing annoyed the more I see it spreading around. Founder-led companies can be effective counter-examples to this idea that Boeing needs an engineer as a CEO. Just because someone can produce a good product says nothing about their ability to set and communicate vision/strategy or manage an organization. They may be accurate in terms of the trajectory of the company, they misattribute the cause to respective professions as opposed to something more ambiguous, like the personal values of the different leaders and shifting shareholder priorities as ownership changed.
Yes, let's reduce this problem to an individual level. There's absolutely NO systematic reason why the short-term profit mentality got pushed to this point. It's all just an evil accounting cabal who secretly coup'ed the engineers off the company! Like Shakespeare wrote: "The first thing we do, let's kill all the accountants!"
When I worked there (cash collection in defense during their push for buybacks) Dennis Muellenberg was the CEO. He was an engineer and definitely didn’t help their mess. Luckily I left with my 401k before their first major issue and he was fired.
Don’t know about Boeing, but I don’t trust any sort of analysis from anything tied to Wall Street Bets. Before covid it would get some occasionally decent DD, but after the whole GameStop scenario it’s basically the r/conspiracy of the finance world
Unfortunately, bean counters have been the demise of very crucial products
He's right. Accountants can't do anything except push numbers around in excel work sheets lmao. No business running an aerospace engineering company.
Boeing being run by accountants would be the same as a Big 4 being ran by engineers. Everyone should stay on their lane
Making money is important. Sticking to your mission statement is important. Doesn’t matter what your background is, just do those things.
Honestly I agree! I would rather the books be cooked unethically than my planes built unethically, bring back the engineer who can't account, at least the planes won't be super glued together
Well yea no shit. Airplanes are way too high risk a product to cut corners on. They needed an engineer to manage from top to bottom, not an accountant
The actual downfall of Boeing is even easier to pin, it was the moving of the bulk of operations from Renton, WA, which was a robust union shop in a state where that matters, to the old Vought factory, which they bought in 2011 from Carlyle, in North Charleston, South Carolina, which is a scab shop in a right to work state. In the process, an unhealthy emphasis on cost accounting at the expense of build quality was definitely developed, but it's an open chicken-and-egg question which was the actual cause, the beancounting ethos they gained in the move or the factory move into a place that built moderately successful fighters (the F-8 and A-7 platform) and no passenger aircraft to speak of.
Medicine - 30+ administrators and clerks and accountants per doctor in the industry - and people are shocked by the cost of a $450,000 hospital bill for a handful of days or the outrageous settlement rates and spike charges and shit....... Our profession, along with marketing and management consulting have absolutely created unbelievable amounts of drag and friction and bloat and non-tax deadweight loss.... For all of our good, we contribute a staggering amount of unnecessary impediment... We do a lot of good and I love dominating... but uh, we also do some of the dumbest shit possible in industry we have no business doing.... A close family member works in a massive auto-chip maker. She helps design and stress-test chips and shit... The accountants who run purchasing have absolutely no freaking business conducting that part of the supply chain. They have cost her plant millions in failed and impotent inventory management and have fallen prey to a stunning amount of hoaxed fraud scams lol!!!!!!!!!!!!!! She hates them and finds them stunningly incompetent and incapable. They don't have the first clue about electrical and mechanical engineering and hardware design and supply chain management with Asian suppliers. They cannot assess the products and they get got all of the time by the dumbest possible scams. This is a Fortune 100 publicly traded company...................................................................................... The accountants and finance bros in my hometown have annihilated the hospital and healthcare network as a function of the most pointless possible KPI's which have no bearing on good medicine whatsoever. The over-optimization of bad medicine has led to a reduction in talent, surgical and internists, lowered patient volume, objectively worse outcomes for patient visits................but an increase in officer compensation????!!!! This is somewhat tangential but it is obliquely related. It's cute, but the best studies I have seen regarding CEO effectiveness conclude that CEO's have no statistically significant bearing on a company's earnings trend and performance... Yes, there are outliers, but on average, their increase in compensation has no bearing on increase in earnings or stock performance. For you desperate corporate simps out their and worshipers of 6 Sigma and shit, go read the literature.......... the trend lines and data analytics, which are extremely easy to graph or find clearly indicate that there is no relationship between the mammoth increases in CEO compensation and stock performance......
I miss my dividends :'-(
Food for thought: every engineer is am accountant, but not every accountant is an engineer