Strategy: It’s not complicated

Harry Stonecipher
President and CEO


Lots of people ask me what the Boeing strategy means. They want to know how their piece of the business aligns with the strategy and how they and their teams can support it.

While the Vision 2016 statement is not as direct as I tend to be, our strategy boils down to this: We intend to be a broad-based aerospace company that competes in the most complex parts of aerospace markets.

It’s still the right path for us.

For the company to grow, we need to smooth out the cyclical peaks and valleys that inevitably result from any of the individual businesses that we’ve chosen to be in. Each business should act as a buffer for the others.

We also need to push the limits of both manufacturing and product technology and bring the latest and greatest to our customers’ tables—at the most competitive costs. This means that we will continue to evolve: The bulk of our focus must be on the most intricate and new tasks, while we delegate many of the tried-and-true tasks to our supplier-partners.

The better you and your team execute your part of the business plan, the better you support the companywide vision and strategy.

I hope our people will evolve with the strategy. If you are worried that your job will be outsourced or go away, you may want to take the initiative to learn a new, more in-demand set of skills that will help you become more competitive within Boeing and elsewhere. The company has a variety of programs to help you learn those new skills.

I’m perturbed that people still look back and grumble about “the merger” (of Boeing and McDonnell Douglas in 1997) or “the acquisition” (of any other companies, including the defense and space portions of Rockwell in 1996). By now it should be clear: Together (warts and all), we are much stronger and more competitive than any of us would be as independent companies.

Consider: Prior to the merger and acquisition, Boeing could not have won the Ground-based Midcourse Defense program on its own. Neither could McDonnell Douglas. Neither could Rockwell. But with the experts of all three companies combined, we achieved critical mass. The winning team consisted of about equal parts of brainpower from each of those three companies.

Later, Boeing didn’t acquire Hughes for its ability to make satellites; we acquired Hughes for the intellectual capital it brought to help Boeing win—and execute—complex, network-centric programs like Future Imagery Architecture and other classified projects (a significant and growing slice of our defense business).

Without the customer focus and people that both Integrated Defense Systems and Commercial Airplanes brought to the table, Boeing wouldn’t have won the Multi-mission Maritime Aircraft program—and we would have missed out on the opportunity to design and produce as many as 108 of these 737-derivative aircraft.

In all of these cases, we competed against companies that had long, established histories and expertise in these areas. We were considered the underdog and an upstart.

Now, let’s think about what might have happened had Boeing not been as broad a business after the terrorist attacks of Sept. 11, 2001. For years afterward, as the market for commercial airplanes remained in a valley, our stock price was valued essentially on the defense side of our business. If Boeing had been only a commercial-airplanes company, what do you think would have happened? The stock price, which fell considerably even with the buffer of our other businesses, would have tanked to almost nothing. As a result, our market capitalization would have made us an easy target for a takeover. Somebody else probably would own Boeing today. Instead, as the market begins to recover, we’re in a great position to compete.

When peace breaks out—and I hope it does—we should expect IDS to do what Commercial Airplanes has done: remain profitable even if defense budgets shrink. And as Commercial Airplanes’ market recovers, we should see BCA growing profitably and helping Boeing maintain stability if and when defense procurement declines.

It takes all of us to operate a broad-based aerospace company. And we’re better because of it.