5 ms·

Boeing is going to be the case study of what happens when you let 'business people' take over an engineering company. A bunch of MBAs deciding to move numbers a

Boeing is going to be the case study of what happens when you let 'business people' take over an engineering company. A bunch of MBAs deciding to move numbers around on paper and losing sight of the bigger picture. The 737 MAX and all the issues with the 787 isn't what happens when engineers are in charge, it's what happens at the end of a long line of non-technical people saying "well we can just do ______ right?" Cutting corners and working on influence rather than excellence. Article detailing the debacle with the 787. From which zero was learned. https://www.forbes.com/sites/stevedenning/2013/01/17/the-boeing-debacle-seven-lessons-every-ceo-must-learn/ https://www.forbes.com/sites/stevedenning/2013/01/17/the-boe... In 2001 there was an engineer that carefully analyzed the path Boeing was taking and detailed why it would cause nothing but increased risks and costs. A bunch of business guys outsourcing everything and not understanding why they don't have a working plane underneath all the contract language. http://seattletimes.nwsource.com/ABPub/2011/02/04/2014130646.pdf http://seattletimes.nwsource.com/ABPub/2011/02/04/2014130646... They had a goose laying golden eggs and they killed it to save the money on feeding it this quarter.

munk-a 7y ago
Maybe? But that case study has already happened time and again, yet these sorts of folks are allowed to slowly creep into working systems and break them still. I think it's just the classic aging business problems, most people are averagely competent, many companies fail, a company that happens to have an over abundance of particularly skilled people will succeed, but over time the average skill of those people will decrease and the company will flounder. There are ways to keep standards moderately high, and there are ways to tank it by allowing nepotism, encouraging CYOAism & turf wars, cutting salaries on highly skilled individuals relative to market rates (or laying them off to replace them with college grads)... I think companies (in line with the larger market) are just naturally cyclic and that incredibly long lived companies are quite the exception to the standard life cycle.
- TeMPOraL 7y ago
  I understand GP to be talking about something different - about consequences of putting behind the wheel people who don't care whether the company is making planes or toilet paper, but view it as a vehicle to turn money into more money. Goodhart's law states that "when a measure becomes a target, it ceases to be a good measure" - because people then start optimizing for the value of the measure, instead of what it's a proxy for. It seems that we've created a class of specialists, whose entire job is to do such optimizations. And we let them run companies, leading to predictable results.
  - munk-a 7y ago
    Oh I agree, but I think that that factor has been obvious and evident in the US economy since the 80's. Management people work to maximize their take home, their take home is highly bonus dependent, their bonus is highly dependent on quarterly performance (not long term investment or good foundational decisions)... thus our stock driven economy is maximizing for people who can sell two dollars tomorrow for a dollar today. I thought the other point (about the luck of selecting high skill employees early in a company lifetime) was also pretty interesting though.
    - TeMPOraL 7y ago
      > I thought the other point (about the luck of selecting high skill employees early in a company lifetime) was also pretty interesting though. It was. I never thought about regression to the mean in context of employees of a company before. So thanks for bringing that up.
trhway 7y ago
>Boeing is going to be the case study of what happens when you let 'business people' take over an engineering company. A bunch of MBAs deciding to move numbers around on paper and losing sight of the bigger picture. >The 737 MAX and all the issues with the 787 isn't what happens when engineers are in charge engineers are culpable in the 737 max too - i'm pretty sure many engineers and test pilots, like that Forkner who was saying one thing to FAA while the other to his colleagues, knew about that ugly situation and the risks entailed, yet didn't blow the whistle even anonymously. Those aspects remind the VW dieselgate.
defterGoose 7y ago
I remember reading an article back in June about how the Boeing/McDonnell Douglas merger was a watershed moment in the history of both companies going from a strong engineering focus to a business focus. Sadly, many companies have suffered a similar fate (I'm looking at you, Valve).
- erikpukinskis 7y ago
  Valve never had an engineering focus. It was always product/design. And they still have that focus. People just can’t handle that they’ve shifted from content (Half Life) to platforms (Steam, Vive). But that transition happened a LONG time ago. Even Team Fortress, Portal, and DOTA are less of Valve properties and more of Indie mods that Valve has nurtured into tentpole properties. They’re in their third act, from Game Producer, to Mod Publisher/App Store to Next Gen Hardware Platform Company. Don’t expect them to backslide from there. Nothing of your characterization rings true to me. But maybe I’m missing something.
  - yarg 7y ago
    To me, Valve seems more like a company that zoomed out to look at the bigger picture, and in doing so abandoned what they were. I don't think that they forgot about the technology side of things - but I do think that in leaving behind so much of what inspired them to expand in the first place, they may have drowned their muse. At very least, I think they have compromised their ability to dog-food what they're working on.
    - defterGoose 7y ago
      Sure, I'd agree with that. Obviously companies in different verticals are going to have different benchmarks for what constitutes innovation. But designing "platforms" (to my mind), while certainly a product design undertaking, falls towards the MBA-end of the business maintenance vs. innovation spectrum.
      - yarg 7y ago
cmlndz 7y ago
There’s already an excellent case study of exactly this: Sony. Forbes has a good article about it: https://www.forbes.com/sites/adamhartung/2012/04/20/sayonara-sony-how-industrial-mba-style-leadership-killed-once-great-company/amp/ https://www.forbes.com/sites/adamhartung/2012/04/20/sayonara...
- andreimuntean 7y ago
  Sony is actually a leader in the professional camera industry.
disordinary 7y ago
The other thing that happened was the separation between the defence and civilian parts of the business was removed. The defence part of the organisation was used to a lower standard of rigor and was used to delivering products which weren't up to quality standards because of the close relationship that the vendor and customer has in the military and the long timelines and large budgets for maintenance, etc.
- pnw_hazor 7y ago
  Though, Boeing seems to be having a hell of time getting the US Air Force to accept delivery of the new air tankers because of sloppy manufacturing.
chooseaname 7y ago
> They had a goose laying golden eggs and they killed it to save the money on feeding it this quarter. When are MBAs going to finally start admitting that returning every last penny they possibly can, and more, to shareholders just isn't sustainable? You have to treat employees and customers well. You have to make a quality product. I think (hope) that most people are starting to wake up and will give more push back on business; demand salary increases, better work environments, be able to take care of the customer, etc.

munk-a 7y ago

Maybe? But that case study has already happened time and again, yet these sorts of folks are allowed to slowly creep into working systems and break them still. I think it's just the classic aging business problems, most people are averagely competent, many companies fail, a company that happens to have an over abundance of particularly skilled people will succeed, but over time the average skill of those people will decrease and the company will flounder. There are ways to keep standards moderately high, and there are ways to tank it by allowing nepotism, encouraging CYOAism & turf wars, cutting salaries on highly skilled individuals relative to market rates (or laying them off to replace them with college grads)... I think companies (in line with the larger market) are just naturally cyclic and that incredibly long lived companies are quite the exception to the standard life cycle.

TeMPOraL 7y ago
I understand GP to be talking about something different - about consequences of putting behind the wheel people who don't care whether the company is making planes or toilet paper, but view it as a vehicle to turn money into more money. Goodhart's law states that "when a measure becomes a target, it ceases to be a good measure" - because people then start optimizing for the value of the measure, instead of what it's a proxy for. It seems that we've created a class of specialists, whose entire job is to do such optimizations. And we let them run companies, leading to predictable results.
- munk-a 7y ago
  Oh I agree, but I think that that factor has been obvious and evident in the US economy since the 80's. Management people work to maximize their take home, their take home is highly bonus dependent, their bonus is highly dependent on quarterly performance (not long term investment or good foundational decisions)... thus our stock driven economy is maximizing for people who can sell two dollars tomorrow for a dollar today. I thought the other point (about the luck of selecting high skill employees early in a company lifetime) was also pretty interesting though.
  - TeMPOraL 7y ago
    > I thought the other point (about the luck of selecting high skill employees early in a company lifetime) was also pretty interesting though. It was. I never thought about regression to the mean in context of employees of a company before. So thanks for bringing that up.

trhway 7y ago

>Boeing is going to be the case study of what happens when you let 'business people' take over an engineering company. A bunch of MBAs deciding to move numbers around on paper and losing sight of the bigger picture. >The 737 MAX and all the issues with the 787 isn't what happens when engineers are in charge engineers are culpable in the 737 max too - i'm pretty sure many engineers and test pilots, like that Forkner who was saying one thing to FAA while the other to his colleagues, knew about that ugly situation and the risks entailed, yet didn't blow the whistle even anonymously. Those aspects remind the VW dieselgate.

defterGoose 7y ago

I remember reading an article back in June about how the Boeing/McDonnell Douglas merger was a watershed moment in the history of both companies going from a strong engineering focus to a business focus. Sadly, many companies have suffered a similar fate (I'm looking at you, Valve).

erikpukinskis 7y ago
Valve never had an engineering focus. It was always product/design. And they still have that focus. People just can’t handle that they’ve shifted from content (Half Life) to platforms (Steam, Vive). But that transition happened a LONG time ago. Even Team Fortress, Portal, and DOTA are less of Valve properties and more of Indie mods that Valve has nurtured into tentpole properties. They’re in their third act, from Game Producer, to Mod Publisher/App Store to Next Gen Hardware Platform Company. Don’t expect them to backslide from there. Nothing of your characterization rings true to me. But maybe I’m missing something.
- yarg 7y ago
  To me, Valve seems more like a company that zoomed out to look at the bigger picture, and in doing so abandoned what they were. I don't think that they forgot about the technology side of things - but I do think that in leaving behind so much of what inspired them to expand in the first place, they may have drowned their muse. At very least, I think they have compromised their ability to dog-food what they're working on.
  - defterGoose 7y ago
    Sure, I'd agree with that. Obviously companies in different verticals are going to have different benchmarks for what constitutes innovation. But designing "platforms" (to my mind), while certainly a product design undertaking, falls towards the MBA-end of the business maintenance vs. innovation spectrum.
    - yarg 7y ago

cmlndz 7y ago

There’s already an excellent case study of exactly this: Sony. Forbes has a good article about it: https://www.forbes.com/sites/adamhartung/2012/04/20/sayonara-sony-how-industrial-mba-style-leadership-killed-once-great-company/amp/ https://www.forbes.com/sites/adamhartung/2012/04/20/sayonara...

andreimuntean 7y ago
Sony is actually a leader in the professional camera industry.

disordinary 7y ago

The other thing that happened was the separation between the defence and civilian parts of the business was removed. The defence part of the organisation was used to a lower standard of rigor and was used to delivering products which weren't up to quality standards because of the close relationship that the vendor and customer has in the military and the long timelines and large budgets for maintenance, etc.

pnw_hazor 7y ago
Though, Boeing seems to be having a hell of time getting the US Air Force to accept delivery of the new air tankers because of sloppy manufacturing.

chooseaname 7y ago

> They had a goose laying golden eggs and they killed it to save the money on feeding it this quarter. When are MBAs going to finally start admitting that returning every last penny they possibly can, and more, to shareholders just isn't sustainable? You have to treat employees and customers well. You have to make a quality product. I think (hope) that most people are starting to wake up and will give more push back on business; demand salary increases, better work environments, be able to take care of the customer, etc.