The news that Ray Conner is being replaced at the helm of Boeing commercial comes as no surprise. Since January last year there was a definite sense of inevitability following the rise of Dennis Muilenburg as CEO.
It is logical and expected that Mr Muilenburg would surround himself with his own team and begin to shape it to begin moving forward with his own strategy. To that end, it became clear that Mr Conner and Mr Muilenburg were not singing the same tune for the past few months.
The appointment of Kevin McAllister to replace Mr Conner is the latest phase in what we would call the “financialization” of the Boeing company. Namely, a gradual migration away from core industrial activities towards a more balanced portfolio of production and service capabilities. This gradual shift had been initiated under the leadership of Jim McNerney and will now extend fully into the commercial division, which has been culturally resistant to some of Mr McNerney’s much needed transformational initiatives.
Boeing is shaping itself into a financial organization, focused on ensuring near term shareholder value, maximizing current product portfolio, responding to Airbus initiatives and grow its critical services portfolio.
We however feel that Boeing trails Airbus in several areas and has become too reactive of late. The much used term “Innovation” capability is now squarely with Airbus. Innovation does not solely mean technical innovation, its also about anticipating market trends, shaping and creating new models that can positively and fundamentally alter its business. In that regard, Airbus is leading while Boeing is playing catch up while trying to transform and develop new solutions. That change initiative may be best coming out of a GE leader.
