Will Boeing’s Board Get It Right This Time?

It’s a bloodbath at Boeing, and a prime example of what happens when a board loses its way. On Monday, the company announced that Stan Deal, the its head of commercial planes, is stepping down immediately, and Boeing CEO David Calhoun is also expected to depart by the end of the year. Most striking, chairman Larry Kellner won’t seek reelection, a predictable result following Calhoun’s spectacular failure to turn things around.

The board—which has fiduciary and governance functions, including, critically, succession planning—has clearly determined that after four years of waiting on solutions from Calhoun, a radical change is needed. Now engineer and former Qualcomm CEO Steve Mollenkopf will step up as chairman and lead a search for a new CEO.

It's important that Boeing is making changes at both the board and C-suite levels.

It was no secret that Calhoun’s number one job was fixing the company’s reliability and safety problems following a pair of 737 Max 8 crashes in 2018 and 2019. Yet, in recent months, a door plug fell off an Alaska Airlines flight while it was in the air, and reports of quality control issues—including things as basic as missing bolts—have continued to pile up.

Calhoun wasn’t up to the task, and it’s now clear that the methods used to choose him back in 2020 weren’t effective either. New board leadership will, hopefully, result in the selection of a more effective chief executive.

A Board’s Number One Job

A corporate board’s number one job is succession planning—ensuring they have the right executive candidates lined up, either internally or externally, to step in when someone leaves or a problem arises. Do a bad job of it, and a company winds up where Boeing is today—forced to carry out a search while their current CEO, who has failed to fix the problem he was hired to resolve, is a dead man walking.

This situation is unfortunate. Rather than having a successor lined up and ready to take on the problem, the company is now in limbo while the board conducts its search. This leaves shareholders, Boeing’s customers, and the public wondering when things will change. Every day that goes by will delay fixing the company’s problems and makes it that much harder to rebuild trust.

Yet, Boeing didn’t arrive at this point overnight.

Internal board politics likely kept Calhoun in the job longer than he should have been while also delaying a proactive search for his successor. Clearly, he had his fans on the board when he was hired. Boards also tend to be very political places in general, and sitting CEOs have a lot of pull.

Now, Mollenkopf has his work cut out for him: quickly recruiting a new CEO capable of fixing the company, mollifying shareholders who may become frustrated by Calhoun’s lame duck period, and bringing the board along with him without reproducing the result of the last search. When a new CEO is appointed, it’ll be his or her job to win over the board, demonstrate a clear plan—and set clear expectations—with shareholders, deliver on that plan by fixing Boeing’s very real problems, and, most importantly, convince airlines and the public that things will be different.

It's no small task.

There are only so many times a company, even one with as storied a history as Boeing, can say they’re reforming even as problems persist. It will be incumbent on Mollenkopf and the board to begin succession planning for the next CEO as soon as the new one starts work.

It’s never too early to plan for the future, but it can quickly become too late.