An alternate explanation for Boeing's failures

Any simple explanation of an outcome in a complex system is guaranteed to be wrong to some degree.

To blame Boeing's recent failures on outsourcing or DEI alone, as many commentators like to do, is likely wrong to a degree as well. I believe I can offer additional context on Boeing's recent problems with the 787 and 737 MAX, with some takeaways for leaders of other large corporations who wish to avoid a similar fate. This isn't a story about outsourcing either. It's a story about hubris. I can guarantee that Boeing isn't the only corporation to suffer from this institutional flaw; they're just the ones in the news right now.

In 2003, an anonymous "forwarded" email was posted on airliners.net, claiming to be written by current Boeing employees who wished to stay anonymous but identified themselves as engineers in the Boeing Commercial Airplane division.

Their claims can be summarized as follows:

• Boeing has been outsourcing aircraft design overseas, allowing Boeing to lay off US staff. The layoffs were leading to an institutional, irretrievable loss of knowledge about aircraft design and engineering.

• Soon, Boeing may reach a "'point of no return' where irreversible damage has been done to the company's ability to design and build safe airplanes"

• In short, firing key, experienced engineers and replacing them with outsourcing centers (and the additional process that goes along with outsourcing complex work) will lead to quality and safety issues. Considering the long lead time between an aircraft being designed and that aircraft entering production, these effects won't be visible for years. By that time, it will be too late. Decisions that look good on paper today (in 2003) will look very different in 10 or 20 years. Even hints of quality issues will have disastrous results for a company's commercial airplane business.

• Additionally, giving away Boeing's ability to build commercial airplanes to future foreign competitors is strategically bad as well. At what point do the major suppliers decide they no longer need Boeing and start building airplanes to compete?

As interesting as those claims are, the reaction posts in that forum match the reactions anyone gets if they call out their own organization today.

Reactions:

• "That's written by some very disgruntled employees."

• "A passionate argument made by persons with a passionate interest in protecting their jobs. I truly take offense (and find unprofessional) the suggestions that safety is being compromised. Any employee making that suggestion could and should be terminated on the spot."

• "Sounds like a frustrate who desperately tries to save his job." [sic]

• "If you read through the bullshit, it's clearly a labor issue. Full stop."

• "Clearly, they are setting up how unsafe it will be in order to protect their union job. It's a typical union tactic. Shame on them." and by the same user, Greg: "Those with half a brain see right through it"

• "We all have gripes about our jobs. GET OVER IT!"

• "From the inside, this is BS.. probably just some disgruntled employees."

• Finally, the user "gigneil" shows up with some sense and explains that the letter is reasonable, actually, and worth considering. He is either attacked or ignored as well.

The negative comments question the motive of the authors and levy personal attacks against their character, going so far as to suggest they should be fired. Clearly, the authors were right to stay anonymous if that was the most common reaction.

Some big questions emerge as a result of this 2003 email:

Why were these engineers ignored?

The management believed they had the most accurate map of the territory in which they were operating. Anyone dissenting from their view didn't fully understand the industry as well as they did, and their concerns could be discarded as useless or even counterproductive.

And yet, the engineers were right.

They were the ones with the more accurate map of the territory in which they were operating. They saw their current position and the direction of the company and were able to accurately predict future outcomes decades in advance.

If you are operating with an accurate map of your territory, you can literally predict the future.

Of course, if the future you predict doesn't align with the future that those around you predict, you should expect the types of comments the Boeing engineers received in 2003.

Your argument itself will be ignored.

Your motives and your character will be questioned.

If you're outspoken enough in a corporate environment, you will be singled out as a troublemaker. Don’t expect to keep your job.

If you question the socially acceptable view in life, expect resistance and threats even (especially) if you're actually right. We aren't past this as a society; just look at the enthusiasm of "Trust & Safety Experts" for banning heterodox theories which later turned out to be correct.

Reality can be ignored, but that doesn't make it go away.

The lesson for managers and owners

If you own a company, you should care above all else about having the most accurate map of your territory and being objectively right. To pursue anything else leads to suboptimal outcomes.

Some companies (Apple & SpaceX) are better at this than others, and these companies consistently win against competitors who are operating with a less accurate model of their territory.

Apple, for example, understands who their customers are and what they want better than their competitors.

In 2006, Microsoft released the Zune: a better iPod with all the features that iPod owners wanted. Soon after, Apple released the iPhone. Meanwhile, Blackberry knew their customers loved their smartphone keyboards, so they built the smartphones with the best keyboards. It was clearly the responsible and logical thing to do. In the next two years, all of their customers went out and bought iPhones.

On the manufacturing side, SpaceX understands that rapid, iterative contact with reality is the fastest way to build safe, cheap, and reliable rockets. They're dominating the space launch industry for the same reason agile software companies beat waterfall-driven software companies.

How do you develop an accurate map? How do you avoid making the mistakes of Boeing's management?

1. Drop your ego.
   Contact with reality frequently feels bad. Most people learn to avoid it and to avoid the people who make them experience contact with reality. SpaceX gets endless negative press for having their rockets blow up during the development phase, yet they're beating their competitors in cost to orbit by massive margins. One could criticize them and feel comfortable, or one could investigate why their process seems to be working better than ULA or any other competitor.

2. Be on guard for cognitive dissonance in yourself.

   When someone presents a credible argument that your plan is going to result in bad outcomes, engage with the argument itself, not the motives of the person. If the argument is wrong, explain why it is wrong. It should be easy if you're as smart as you think you are.
   If there are valid arguments for which you have no response, it's possible the other person is correct. Their warning could save your job. It could save lives.

3. Pay attention to the people who are the best at predicting the future.

   Everyone has a different model of the world driving their actions. If someone is consistently right or able to predict problems long before they happen, make it your priority to figure out what they know and how they know it.

4. Encourage a culture of epistemic humility

   Ray Dalio's Dot Collector, and the principle of believability-weighing, is an excellent example of how this can be implemented.
   This will not be popular unless you establish this culture from the start.

Your job is to be right, not to feel validated.

The lesson for employees

You're unlikely to change the culture of your company. If you believe you're right and the entire company is on the wrong path, it is wiser to leave and find a work environment with a higher chance of success. That battle is not worth fighting unless lives are on the line.

After all this, a thought experiment:

Would the actions of Boeing's management in 2003 have been different if they could more accurately predict the future consequences of their decisions?

If you manage to build a corporate culture that is consistently effective at predicting the outcomes of future decisions, you'll have a better chance of navigating towards a good outcome for all.

If Boeing had this, it would come down to whether the executives had the best interests of Boeing and its customers at heart, or their own best interest at heart. Their outsourcing decision undoubtedly led to short term profitability increases for the company. Perhaps it allowed the company to survive when it otherwise wouldn't have been price competitive.

If you can make a decision that will make you rich today and no one will connect your decision to the downfall of the company in 30 years, you're well insulated from being blamed for the negative outcome. You'll retire with a large bonus, and future generations will take the blame for the company's future problems. The moral hazard is enormous. Only transparency and honest conversation can allow managers to say, “We did the best we could with the information we had at the time.”

This decision gets darker in the commercial airplane business. A decision that knowingly leads to a consistent increased chance of errors will eventually, almost inevitably, cause a loss of life.

No manager wants to hear that their decision is going to lead to suffering. It's easier to fire the person who speaks out and claim "It's a typical union tactic. Shame on them."