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I hate the "everything must be a profit center" MBA attitude. Boeing is a profitable company because they make machines that fly people from place to place safe

I hate the "everything must be a profit center" MBA attitude. Boeing is a profitable company because they make machines that fly people from place to place safely and efficiently. Part of that is having training, support, service, replacement parts, sales, manufacturing, IT, R&D, and all the other things required to make things fly. It's easy to sit in a conference room and say "gee, IT hasn't made any money, instead they've spent a lot of it! Let's downsize, outsource, and make our own divisions pay for IT, we'll see whether we're successful by measuring the IT department's profit next quarter." Inevitably, that department makes more money under that regime, but the company is worse at flying people from place to place. If you're a hardware company, the software should be free. The support should be effective. You should be hosting training events at nice facilities with free pizza because people who know how to use your hardware will buy more of it. If I have to pay for your software, I'm going to be pressured to buy the Light version instead of Enterprise, and I'm going to pay for only one training class and not learn about your next iteration, and you will sell less hardware.

BelleOfTheBall 7y ago
It feels crazy to me to see 'make training profitable'. A) Not everything has to bring you a profit, jeez. B) You know how you profit from training? By actually providing solid training to pilots who then fly your planes skillfully and don't crash and don't have any trouble landing. You not only get money from customers paying you for those pilots to fly them, you also save money by not getting sued into oblivion for your negligence.
- ljm 7y ago
  It feels crazy to me that there's no proper accountability for it. "Let's make training profitable" + every other decision on the software side = 346 dead people. Those deaths weren't an accident, they were a result of Boeing's desire for perpetual growth at any cost, and to try and beat Airbus at their game. No one except the families of the victims will suffer from that. But go ahead and carry a bag of weed and be prepared to spend your life in the system. Maybe it's time we rethink how limited liability works; and we get rid of this notion that corporations are beyond reproach (and they are, because the fines cost less than the profits).
  - andrepd 7y ago
    Sadly it's not a feature of Boeing, but a feature of unchecked capitalism.
    - ljm 7y ago
      I think all of us here remember the setup for the Wall Street crash in 1929. That was influenced heavily by unchecked capitalism, along with the pressure of WW1 going on in Europe and other world events. One of the responses was to restrict capitalism (it became fettered vs. unfettered at the point). And it was a good one, one that has seemingly been forgotten or ignored. Unfettered capitalism, through history, is a net loss for society. But the more we deregulate and seek profit at any cost, the more we re-align with that old view. In this instance, Boeing seems to be ok with the death of ~350 people.
      - TaylorAlexander 7y ago
        So I’m a leftist. So I sympathize with what you are saying. But you have to be careful using the term “capitalism”. It’s a highly overloaded term. For example I’ve come to realize that libertarians use the term quite differently from leftists. So if you use the term in mixed company you will find a lot of confusion results. It can be helpful to use other terminology which is less confusing. For example, Marxist economist Richard Wolff describes “capitalism” as the mode of production where a small elite own and control the means of production, inevitably shifting the focus of production to satisfy the needs of that small elite (endless growth being one). But libertarians describe “capitalism” as free economic exchange through markets. Richard Wolff was recently in a debate with a prominent libertarian and the man agreed with Wolff on almost everything. And Wolff is not opposed to markets, he’s opposed to elite control of the means of production. So it’s best not to use “capitalism” in the leftist sense and expect people to understand you. I also think there is a very serious and legitimate concern over the power of the state. The US state killed the leader of the Black Panthers, for example. We need regulatory control in the hands of the people. You may do well to study leftist critiques of the state. Mikhail Bakunun was active at the same time as Marx and was a critic of Marxism. Bakunin famously said in 1873: When the people are being beaten with a stick, they are not much happier if it is called "the People's Stick"
- ragerino 7y ago
  I think what they meant was making training less costly for their customers. It's a lost opportunity, when pilots train instead of sitting behind the wheel/stick flying goods or customers around the world.
fzeroracer 7y ago
You have to keep in mind for these companies keeping the customer happy is not the intent. It's merely a coincidental side effect of any potential profit seeking they do. The only people they really care about and are accountable to are the shareholders and investors. And they want infinite profit at the sake of everything else. If you want to solve this problem then you need to remove them from the equation entirely because given enough time they will run a company into the ground and run away with the proceeds.
- yummypaint 7y ago
  All publicity traded companies are the same. The only distinction is the means they use to make money at first. Making money is the only goal, and shareholders demand growth quarter over quarter. This is why the fate of successful public companies is to become broader in scope while leveraging anti-competitive practices. The possible end results are either that the company is killed off, or that it effectively becomes the government or otherwise forces its host country into in oligarchy.
  - pcurve 7y ago
    "Making money is the only goal, and shareholders demand growth quarter over quarter" I think shareholders of Boeing would also expect stable growth through sound risk management Nickel and diming on safety features and training is playing with fire.
  - colonwqbang 7y ago
    Blaming the share holders for something like this is a bit weak. Share holders of a big, established company want long-term and stable profit. Short-term profit at the cost of increased risk is not something that share holders of a company like Boeing are looking for.
    - TazeTSchnitzel 7y ago
      In theory they should want that, but if the company spends money on preparing for the future and its profits decline as a result, then the share price drops. The incentives aren't there.
markus_zhang 7y ago
That's what Capitalism does, to make as much money as possible. And it's up to the government to regulate them, and it failed to do so.
- mopsi 7y ago
  > That's what Capitalism does Not so fast - scroll through it, to 2019: https://en.wikipedia.org/wiki/Aeroflot_accidents_and_incidents https://en.wikipedia.org/wiki/Aeroflot_accidents_and_inciden... Be sure to expand sub-articles.
  - resfirestar 7y ago
    What do you suggest is the cause that underlies poor aircraft design in both capitalism and not-capitalism then? The article you link is not very informative on this question since it is about an airline, not an aircraft manufacturer.
- Retric 7y ago
  Boing has lost a lot of money on this, which capitalism should avoid no government intervention required. Instead, this is not really capitalism at work but internal forces inside a giant organization. The risk reward calculation for internal management does not track the company’s overall risks vs reward resulting in company wide losses.
  - blotter_paper 7y ago
    Timescale matters here. If Boeing becomes an example of an organization which suffered greatly, competitors will become more cognizant of the need to make internal incentives match external ones.
  - yardie 7y ago
    And 346 people lost their lives plus whatever its costing their families. But fuck the humans, profits are in the line.
- kibwen 7y ago
notreallymee 7y ago
Using a throwaway account. A few years ago I did some consulting work for British Airways. It was interesting in that as far as the planes themselves, and the operational risk of the planes was concerned, the company had their shit together. Decisions made from a safety first point of view. Engineers making the calls. Everything else no object. But ALL the software around the planes, from the ops to ALL of the b2c was outsourced to hell. Cue a few months later their entire datacenter went down for 3 days, then a massive security breach. Their idea of agile was to release stuff once every 3 months in a 2 week window. The thing that I found odd was that they didn't really perceive software engineering as engineering. They had time, money and patience on the aero engineering, but software to them was just another cost center.
- hkmurakami 7y ago
  This mirrors my experience in automotive regarding the sentiment for hardware vs software.
  - WWLink 7y ago
    I think that's often the case in any company that doesn't sell software as a product/service. I know automotive companies are really terrible at it. That said, I'm not sure what level of engineering they do anyway. It seems like at best they design the chassis and maybe the engine. Everything else appears to be contracted out to some other firm. Is that the case?
    - x1ph0z 7y ago
      Not sure about other car companies but my last job was at GM where I worked on their android auto platform. GM had before outsourced their development, but found the quality to be lacking so they have started to move software development in-house.
    - icedistilled 7y ago
      Agreed, my company's biggest problems all come from a lack of basic software/programming skills which they've decided is not something they need to spend any effort on. In the words of my managers, "we are not a software company" and "learning to code is easy" and "eughhh I don't want to learn any of that computer science stuff". That latter one was when I mentioned something about clean code.
softwaredoug 7y ago
Is this an "MBA attitude?" I get the urge to rant, but I feel like even a good MBA would have seen training as a liability to mitigate in the larger business, not a profit center in its own right. A competent exec doesn't structure a business so that "everything is a profit center", as that drives specific behaviors, and you have to be careful about the accountability you put in place and how you're measuring those departments. Competent management should understand that. That said, there's an annoying fetish from human beings to obsess over what's easy to measure, which is not always what's important. Profit being one of those things...
- rapsey 7y ago
  This is unfortunately a very naive point of view. An exec in charge of training is an exec in charge of a cost center. No one likes costs, so no one appreciates his job and his career is hampered. Turning it into a profit center earns him respect and promotions.
  - mschuster91 7y ago
    This is why some orgs did an "internal outsourcing" of their IT / training / other "shared services" - they bill the other departments for what they do. It both disincentivizes waste for the client departments and prevents the "IT department is a cost center" mindset, at the downside of a boatload of bureaucracy if every purchase of, let's say, a broken HDMI cable has to go through countless approval loops.
    - rdtwo 7y ago
      Our department once tried to buy a 200$ fiber optic cable... it took 2 engineers, a manager and a director 9 months of paperwork to request one... and in the end we never got the cable.
muse900 7y ago
I can't stress enough about the first sentence and how important it is. Metrics have become the goto into having a business nowadays and we min/max everything, squeeze every little bit we can out of things. Its an open market and anyone is able to do however he pleases with his company, but I hate it. The most recent example that comes to mind is Activision-Blizzard where they exceeded their revenue and profits for 2018 but they went on and downsized the company letting people go and cutting down the overall experience. I hate when this happens really, especially when its crucial to safety like airplanes. I think Boeing should have gotten more than a slap on the wrist for the max's that crashed.
starpilot 7y ago
It's because these machines and industries have existed and in fact thrived for 50-100 years without any software at all. Software engineers are often seen as glorified IT in aerospace companies.
jimkleiber 7y ago
I appreciate you pointing this out. Reminds me of a book called Obliquity where I think the author specifically mentions Boeing in a story talking about how companies make more money when they don't specifically focus on making money. If I recall correctly, he mentions how Boeing used to focus on making really good planes and when they did, they made a lot of money. When they shifted to focusing on profit, they started to make less money because they made worse planes. The book is a few years old but feels quite prescient.
- dmix 7y ago
  That's because we as a culture over-analyze and study businesses as if they are living entities that are the sum of all of it's different internal divisions/parts/stockholder-connected output, instead of fundamentally about delivering value to customers and getting back a greater amount of value in return. The universities and pop-business books has made everyone so obsessed with the business processes themselves and their management, particularly the stuff that has commonalities across various niches: finance, management culture, 'innovation', etc. But the all of the various unique fundamental value propositions are what really drives the companies, everything else is just helping deliver and execute that, but the core of the business often goes to the way-side in favour of obsessing over perfecting all of the the small processes in between. An ideal organization should put its primary business front and centre, above the various small processes which it is composed of mostly just for practical reasons of running a business. It's sometimes difficult to distinguish between the two but I do very much think that it's possible to lose sight of that distinction in the day-to-day running of things, especially once the business gets really larger and running the business itself becomes the biggest time-sink for everyone involved.
  - jimkleiber 7y ago
    I agree. I think we often get too focused on the small details of life and forget the big picture. And by we I mean me as well thank you for your words
- tome 7y ago
  Is it this? https://www.johnkay.com/2004/01/17/obliquity/ https://www.johnkay.com/2004/01/17/obliquity/

BelleOfTheBall 7y ago

It feels crazy to me to see 'make training profitable'. A) Not everything has to bring you a profit, jeez. B) You know how you profit from training? By actually providing solid training to pilots who then fly your planes skillfully and don't crash and don't have any trouble landing. You not only get money from customers paying you for those pilots to fly them, you also save money by not getting sued into oblivion for your negligence.

ljm 7y ago
It feels crazy to me that there's no proper accountability for it. "Let's make training profitable" + every other decision on the software side = 346 dead people. Those deaths weren't an accident, they were a result of Boeing's desire for perpetual growth at any cost, and to try and beat Airbus at their game. No one except the families of the victims will suffer from that. But go ahead and carry a bag of weed and be prepared to spend your life in the system. Maybe it's time we rethink how limited liability works; and we get rid of this notion that corporations are beyond reproach (and they are, because the fines cost less than the profits).
- andrepd 7y ago
  Sadly it's not a feature of Boeing, but a feature of unchecked capitalism.
  - ljm 7y ago
    I think all of us here remember the setup for the Wall Street crash in 1929. That was influenced heavily by unchecked capitalism, along with the pressure of WW1 going on in Europe and other world events. One of the responses was to restrict capitalism (it became fettered vs. unfettered at the point). And it was a good one, one that has seemingly been forgotten or ignored. Unfettered capitalism, through history, is a net loss for society. But the more we deregulate and seek profit at any cost, the more we re-align with that old view. In this instance, Boeing seems to be ok with the death of ~350 people.
    - TaylorAlexander 7y ago
      So I’m a leftist. So I sympathize with what you are saying. But you have to be careful using the term “capitalism”. It’s a highly overloaded term. For example I’ve come to realize that libertarians use the term quite differently from leftists. So if you use the term in mixed company you will find a lot of confusion results. It can be helpful to use other terminology which is less confusing. For example, Marxist economist Richard Wolff describes “capitalism” as the mode of production where a small elite own and control the means of production, inevitably shifting the focus of production to satisfy the needs of that small elite (endless growth being one). But libertarians describe “capitalism” as free economic exchange through markets. Richard Wolff was recently in a debate with a prominent libertarian and the man agreed with Wolff on almost everything. And Wolff is not opposed to markets, he’s opposed to elite control of the means of production. So it’s best not to use “capitalism” in the leftist sense and expect people to understand you. I also think there is a very serious and legitimate concern over the power of the state. The US state killed the leader of the Black Panthers, for example. We need regulatory control in the hands of the people. You may do well to study leftist critiques of the state. Mikhail Bakunun was active at the same time as Marx and was a critic of Marxism. Bakunin famously said in 1873: When the people are being beaten with a stick, they are not much happier if it is called "the People's Stick"
ragerino 7y ago
I think what they meant was making training less costly for their customers. It's a lost opportunity, when pilots train instead of sitting behind the wheel/stick flying goods or customers around the world.

fzeroracer 7y ago

You have to keep in mind for these companies keeping the customer happy is not the intent. It's merely a coincidental side effect of any potential profit seeking they do. The only people they really care about and are accountable to are the shareholders and investors. And they want infinite profit at the sake of everything else. If you want to solve this problem then you need to remove them from the equation entirely because given enough time they will run a company into the ground and run away with the proceeds.

yummypaint 7y ago
All publicity traded companies are the same. The only distinction is the means they use to make money at first. Making money is the only goal, and shareholders demand growth quarter over quarter. This is why the fate of successful public companies is to become broader in scope while leveraging anti-competitive practices. The possible end results are either that the company is killed off, or that it effectively becomes the government or otherwise forces its host country into in oligarchy.
- pcurve 7y ago
  "Making money is the only goal, and shareholders demand growth quarter over quarter" I think shareholders of Boeing would also expect stable growth through sound risk management Nickel and diming on safety features and training is playing with fire.
- colonwqbang 7y ago
  Blaming the share holders for something like this is a bit weak. Share holders of a big, established company want long-term and stable profit. Short-term profit at the cost of increased risk is not something that share holders of a company like Boeing are looking for.
  - TazeTSchnitzel 7y ago
    In theory they should want that, but if the company spends money on preparing for the future and its profits decline as a result, then the share price drops. The incentives aren't there.

markus_zhang 7y ago

That's what Capitalism does, to make as much money as possible. And it's up to the government to regulate them, and it failed to do so.

mopsi 7y ago
> That's what Capitalism does Not so fast - scroll through it, to 2019: https://en.wikipedia.org/wiki/Aeroflot_accidents_and_incidents https://en.wikipedia.org/wiki/Aeroflot_accidents_and_inciden... Be sure to expand sub-articles.
- resfirestar 7y ago
  What do you suggest is the cause that underlies poor aircraft design in both capitalism and not-capitalism then? The article you link is not very informative on this question since it is about an airline, not an aircraft manufacturer.
Retric 7y ago
Boing has lost a lot of money on this, which capitalism should avoid no government intervention required. Instead, this is not really capitalism at work but internal forces inside a giant organization. The risk reward calculation for internal management does not track the company’s overall risks vs reward resulting in company wide losses.
- blotter_paper 7y ago
  Timescale matters here. If Boeing becomes an example of an organization which suffered greatly, competitors will become more cognizant of the need to make internal incentives match external ones.
- yardie 7y ago
  And 346 people lost their lives plus whatever its costing their families. But fuck the humans, profits are in the line.
kibwen 7y ago

notreallymee 7y ago

Using a throwaway account. A few years ago I did some consulting work for British Airways. It was interesting in that as far as the planes themselves, and the operational risk of the planes was concerned, the company had their shit together. Decisions made from a safety first point of view. Engineers making the calls. Everything else no object. But ALL the software around the planes, from the ops to ALL of the b2c was outsourced to hell. Cue a few months later their entire datacenter went down for 3 days, then a massive security breach. Their idea of agile was to release stuff once every 3 months in a 2 week window. The thing that I found odd was that they didn't really perceive software engineering as engineering. They had time, money and patience on the aero engineering, but software to them was just another cost center.

hkmurakami 7y ago
This mirrors my experience in automotive regarding the sentiment for hardware vs software.
- WWLink 7y ago
  I think that's often the case in any company that doesn't sell software as a product/service. I know automotive companies are really terrible at it. That said, I'm not sure what level of engineering they do anyway. It seems like at best they design the chassis and maybe the engine. Everything else appears to be contracted out to some other firm. Is that the case?
  - x1ph0z 7y ago
    Not sure about other car companies but my last job was at GM where I worked on their android auto platform. GM had before outsourced their development, but found the quality to be lacking so they have started to move software development in-house.
  - icedistilled 7y ago
    Agreed, my company's biggest problems all come from a lack of basic software/programming skills which they've decided is not something they need to spend any effort on. In the words of my managers, "we are not a software company" and "learning to code is easy" and "eughhh I don't want to learn any of that computer science stuff". That latter one was when I mentioned something about clean code.

softwaredoug 7y ago

Is this an "MBA attitude?" I get the urge to rant, but I feel like even a good MBA would have seen training as a liability to mitigate in the larger business, not a profit center in its own right. A competent exec doesn't structure a business so that "everything is a profit center", as that drives specific behaviors, and you have to be careful about the accountability you put in place and how you're measuring those departments. Competent management should understand that. That said, there's an annoying fetish from human beings to obsess over what's easy to measure, which is not always what's important. Profit being one of those things...

rapsey 7y ago
This is unfortunately a very naive point of view. An exec in charge of training is an exec in charge of a cost center. No one likes costs, so no one appreciates his job and his career is hampered. Turning it into a profit center earns him respect and promotions.
- mschuster91 7y ago
  This is why some orgs did an "internal outsourcing" of their IT / training / other "shared services" - they bill the other departments for what they do. It both disincentivizes waste for the client departments and prevents the "IT department is a cost center" mindset, at the downside of a boatload of bureaucracy if every purchase of, let's say, a broken HDMI cable has to go through countless approval loops.
  - rdtwo 7y ago
    Our department once tried to buy a 200$ fiber optic cable... it took 2 engineers, a manager and a director 9 months of paperwork to request one... and in the end we never got the cable.

muse900 7y ago

I can't stress enough about the first sentence and how important it is. Metrics have become the goto into having a business nowadays and we min/max everything, squeeze every little bit we can out of things. Its an open market and anyone is able to do however he pleases with his company, but I hate it. The most recent example that comes to mind is Activision-Blizzard where they exceeded their revenue and profits for 2018 but they went on and downsized the company letting people go and cutting down the overall experience. I hate when this happens really, especially when its crucial to safety like airplanes. I think Boeing should have gotten more than a slap on the wrist for the max's that crashed.

starpilot 7y ago

It's because these machines and industries have existed and in fact thrived for 50-100 years without any software at all. Software engineers are often seen as glorified IT in aerospace companies.

jimkleiber 7y ago

I appreciate you pointing this out. Reminds me of a book called Obliquity where I think the author specifically mentions Boeing in a story talking about how companies make more money when they don't specifically focus on making money. If I recall correctly, he mentions how Boeing used to focus on making really good planes and when they did, they made a lot of money. When they shifted to focusing on profit, they started to make less money because they made worse planes. The book is a few years old but feels quite prescient.

dmix 7y ago
That's because we as a culture over-analyze and study businesses as if they are living entities that are the sum of all of it's different internal divisions/parts/stockholder-connected output, instead of fundamentally about delivering value to customers and getting back a greater amount of value in return. The universities and pop-business books has made everyone so obsessed with the business processes themselves and their management, particularly the stuff that has commonalities across various niches: finance, management culture, 'innovation', etc. But the all of the various unique fundamental value propositions are what really drives the companies, everything else is just helping deliver and execute that, but the core of the business often goes to the way-side in favour of obsessing over perfecting all of the the small processes in between. An ideal organization should put its primary business front and centre, above the various small processes which it is composed of mostly just for practical reasons of running a business. It's sometimes difficult to distinguish between the two but I do very much think that it's possible to lose sight of that distinction in the day-to-day running of things, especially once the business gets really larger and running the business itself becomes the biggest time-sink for everyone involved.
- jimkleiber 7y ago
  I agree. I think we often get too focused on the small details of life and forget the big picture. And by we I mean me as well thank you for your words
tome 7y ago
Is it this? https://www.johnkay.com/2004/01/17/obliquity/ https://www.johnkay.com/2004/01/17/obliquity/