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Philip P. Condit: Technology and Ethics at The Boeing Company

Philip P. Condit is chairman and chief executive officer of The Boeing Company. Under his leadership, The Boeing Company has grown to be the world’s largest aerospace company. The leader in commercial aircraft, military aircraft and missiles, and space markets, the company employs more than 198,000 people and serves customers in 145 countries. Boeing is the largest exporter in the United States, with revenues of more than $51 billion in 2000. Long based in Seattle, Washington, Boeing recently decided to move its world headquarters to Chicago, Illinois.

Condit’s career has spanned more than 35 years of service to Boeing in almost 20 assignments. On the technology side, after receiving the B.S. in mechanical engineering from the University of California at Berkeley (1963) and M.S. in aeronautical engineering from Princeton University (1965), Condit joined Boeing as an aerodynamics engineer on the Supersonic Transport (SST) program. Over the next three decades, he played major roles in the engineering of the 747, 757, and 777 aircraft. He is the author of several published papers on commercial aircraft technology and holds a patent, awarded in 1965, for the design of a flexible wing called the sailwing. In 1997, he was the first Westerner to earn a doctorate in engineering from Science University of Tokyo. Rensselaer Polytechnic Institute and Cranfield (UK) University’s College of Aeronautics have conferred honorary doctorates on him.

On the business management side, Condit has served Boeing in sales and marketing, new program development, and planning. He took a year out to complete a master’s degree in management from Massachusetts Institute of Technology in 1975. As leader of the Boeing 777 program, he pioneered management concepts that integrate design/build teams of customers, suppliers and employees. The 777 “Working Together” team has received numerous aeronautical awards, including the prestigious Collier Award.

Elected president and member of the board of directors of Boeing in 1992, Condit added the title of chief executive officer in 1996. He was elected the seventh chairman in the company’s 82-year history in 1997. Among his many honors and awards, Financial World named him Chief Executive Officer of the Year for 1997. In 1998, he received the Peter F. Drucker Strategic Leadership Award and in 1999 the United Negro College Fund awarded him the prestigious Frederick D. Patterson Award for his work in education.

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Ethix: In what way has technology affected Boeing in the past and how do you see it changing in the future?

Philip P. Condit: There are two important aspects. The most evident piece is technology in the products we deliver to customers. For example, if we bring broadband data availability onto a commercial airplane, this is technology in a product application. The other aspect, which I suspect at its root is more important, is technology applied to how you do your job. Here the information technology revolution can have profound implications. The industrial revolution changed the way we built products — the assembly line being the most obvious. But this was machines making things. The information revolution changes how we design things, how we communicate among people, how we order things, how we transact business, things that lots and lots of clerks did before. This technology has, and will have, a very profound impact on the way we do business.

Do you foresee a backlash among people impacted with this technology as there was in the industrial revolution?

Yes. Without question. The impact of the industrial revolution was spread out over a couple hundred years and it was tremendously upsetting. The information revolution is likely to be spread over fifty years and impact more people. So my conclusion is that it will cause a backlash. You’re changing things that are very fixed.

GE leader Jack Welch was recently called “E-Jack” in an interview in which he emphasized that his particular, traditional business views the information revolution as very important. So too, many people probably don’t think of Boeing as closely related to the information revolution but I think you’re saying the same for The Boeing Company.

Absolutely. We estimate that about half of the activities at Boeing, things that people do everyday, are transaction related. A rough estimate was that you could cut the cost of transactions by a factor of two — using 1996 technology. That’s 25% of the activity of the company, $12.5 billion of change in a $50 billion company. A lot of jobs are radically changing.

Technology brings changes not just internally but externally, of course. As a big high-tech, global company is Boeing able to have a positive impact on the other cultures and nations of the world?

There is often a presumption that “our way” is the right way and that we are, therefore, influencing others in the right direction. In reality, I think the influence works both ways. We often do have a very positive influence on places we work but, as we become more global, we also have the advantage of being influenced by things that are good in another country or culture. Globalization provides opportunities for the best from everywhere to be associated. Of course, the risk is always that not the best but the worst might be adopted.

What would be an example of another nation influencing Boeing?

The Japanese have influenced us. They have set the standard for the work process. For example, the Toyota production system is clearly the best. We are also influenced by the longer-term viewpoint typically found in Asia. China has clearly influenced the way I think about problems.

Of course you did that doctorate in Japan.

And I learned a lot about the culture, both good and bad. There are wonderful opportunities to learn wherever we go. If we take advantage, we can benefit significantly.

Related to globalization is the general question of size. Boeing is a huge company preparing to get even bigger. Is bigger always better in business?

There’s clearly good and bad. As Jack Welch says, the only real advantage of being big is that you can take multiple swings. If you are a little company and you swing and miss on a market product, you’re gone, out of the game. A big company has the resources to be able to swing and miss and go on. So if you’re not using that advantage, taking a lot of swings, then you’re not using the only thing that’s really valuable about being big. Other than that big is not valuable.

Small tends to be quicker; the decision process is quicker. One of the things bigger companies struggle with is how to make decisions quickly in an environment which by its very nature is bureaucratic.

Organizational and individual learning must be key in this context. You created a policy at Boeing that reimburses tuition for employees who will pursue further studies. Not many companies have that policy. What do you think Boeing gains here?

The old model was that you could go to school, learn your trade, and then apply that skill for the rest of your career. We’ve built an educational model that tries to do it all at the front end. Not that long ago my dad was trained as a research chemist and then spent his life as a research chemist. I didn’t used to believe it, but the rate of technology change has clearly increased. The reality is that during my own career we will have gone from relatively minor analog computers and punch-cards to where, today, I have more power in my laptop than the whole Apollo mission had available. This is a phenomenal rate of change.

Whether we’re talking about genetics, microbiology, computing, or communication technology, the idea that we could put people through school, hire them, and then watch them work productively for the rest of their careers is clearly wrong. They must have opportunities to get new information, learn new things. Our view of this has gotten even broader. It used to be that if you were an engineer we would pay you to go get some more engineering education — but not a business education. So we took all of the restrictions off: we’ll pay the tuition for anybody who wants to go to school. At the margins out there, you’re going to get some strange results. We’ve had a couple of people get divinity degrees, and even one that got a degree in mortuary science!
The impact of the industrial revolution was spread out over a couple hundred years and it was tremendously upsetting. The information revolution is likely to be spread over fifty years and impact more people. So my conclusion is that it will cause a backlash. You’re changing things that are very fixed.

Now that could be frightening for airplane customers!

If you focus on the marginal stuff you won’t pursue the broad, lifelong learning approach we have taken. It is significant that we have over thirty-two thousand employees in school. That’s an amazing number, about 17-18% of our workforce is out there taking courses and pursuing degrees.

Many think that our technological and business skills are racing ahead — but our ethical wisdom is not keeping pace. How does Boeing teach its people ethical values and sensitivity to the human side of enterprise and business? I’m sure it is not the norm but some Boeing employees in the Renton facility apparently engaged in some kind of sabotage recently.

First, we have a formal ethics program. We engage various ethicists to come talk and give seminars. We begin there. But I think the most important thing is leadership. People must see their leadership behaving in a value-driven way. Now that’s even harder than it sounds because no matter what I do some people won’t think it is right.

For example, some say that you have been disloyal to your community by moving to Chicago. A few may then reason that if Boeing execs don’t practice loyalty, why should they? That may be a very facile way of approaching it, but you’re vulnerable to that kind of logic.

Exactly. I point out to people that we’ve got about 78,000 people here in the Seattle area and about 120,000 in other places — aren’t they part of this company too? Don’t they deserve the same treatment as people here? How about the 16,000 in St. Louis, the 20,000 in Wichita, and the 45,000 in Southern California? We are trying to build a headquarters that is able to treat each of the business units equally.

But change is tough. One of the challenges we struggle with is “family versus team.” This is the Boeing family; we care about each other. In a rapidly moving business world that paradigm brings into question some very fundamental issues: in a family you never terminate anybody! If uncle Bill has a drinking problem he’s still our uncle Bill; that’s just the way it is. But if in business you’re looking for the best player to do the best possible job, the team paradigm is actually closer to the one that you want. It isn’t very comfortable letting go of family.
We often have a very positive influence on places we work but, as we become more global, we also have the advantage of being influenced by things that are good in another country or culture. Globalization provides opportunities for the best from everywhere to be associated. Of course, the risk is always that not the best but the worst might be adopted.

The team paradigm carries one other thing with it today — most of the players are free agents. Managing a team made up of free agents is another part of today’s situation.

Companies must figure out how to deal with free agents because a lot of the current generation thinks in these terms. If we say “no, we’re running on the loyalty model!” — that’s really cool, but that ain’t the way it works.

As Alvin Toffler has pointed out, however, corporations can respond to change and do so faster than governments. Because of this ability, they are going to shape the future. For example, governments are stuck with the borders that they’ve got. They worry about sovereignty in a world where borders are disappearing rapidly. Corporations can move about much more freely in our world. Of course, when I go to China I still get about five notes that say “you shouldn’t be dealing with those evil Commie people.”

Global business does create social dilemmas and ironies like the dockworkers who demonstrate against the WTO.

… workers whose entire life depends on trade, picketing against trade.

The irony extends to our professed free trader, global business president who has just established restrictions on imports of foreign steel. When it’s in our interest to be global and have free trade we applaud it but we are quick to change our tune when the advantage shifts.

I agree. We sell airplanes in a world where the US says we ought to have open skies. But what we mean is that we can fly anywhere in your country but you can’t fly just anywhere in mine. We don’t let international airlines fly between points in the United States.

Let me go back to something that is rather profound about this information revolution. It creates a connected environment where you can work all the time. Now “Connexion by Boeing” will enable me to work on the airplane. How do we deal with this 24/7 connectedness and create a boundary between work and personal time?

We frequently use structure to create “free time”: “here’s the time I start work, here’s the time I finish work; I’m going to work two more hours of overtime.” We don’t just say “here’s the job I have to do — how long will it take to get it done?” Personally, I would much rather have a great Internet connection on the airplane and get all my e-mail done while I’m locked in my seat and can’t go anywhere. Then when I get off the airplane I can go sit on the back porch and read in an atmosphere where I want to read.

Right after I became president of Boeing I came in one morning and the chairman’s car was already there in the parking spot next to mine. I thought, “Oh gosh, the boss is here earlier than I am!” And late that evening the boss’s car was still in the slot when I left. I felt very guilty. The next morning his car was already in the slot and I felt even more guilty. Until I finally found out he was on a trip! That’s the environment of hours and expectations we’ve grown up with.

If I get up early in the morning in Washington, D.C., put in more than eight hours work, then fly back to Seattle and the clock says 4:00 p.m., should I go to the office for an hour? I think there will be profound cultural implications as we rethink what a job is. One day a week I may very well work from home and get a lot done. I may work late on my e-mail. I ought to feel totally comfortable taking four hours out in the middle of the day to go to a baseball game.

How will the company policies catch up with these changes?

We’ve got to work toward a program that reflects what we believe and what we expect. If people disrespect the rules there will be penalties but we’re going to put a lot of trust in our people. We took the rule away that said no games on computers and chose to trust our people. If a rule says “no personal use of the copier” do you really want somebody getting in their car and driving to Kinko’s to make three copies when they’re far better off making three copies at work and using the time better?

I think we’ve got to hire for attitude and expect people to take responsibility for doing the job they are assigned. There are some jobs where you’ve got to be there for certain fixed hours. You can’t just take off for a baseball game while you’re running a crew on a production line. But the rules have to have a lot of flexibility and we’ve got to have more trust in people.

How is Boeing doing moving towards these new kinds of policies?

A big corporation will always lag no matter how hard you try just because of how much is embedded in its history. One of my roles is to hold on to the throttle and turn it up until the place begins to vibrate. When it starts to vibrate you turn it down. When the system begins to sort of settle in, you turn it back up again. If you change too much too fast people lose their connection and don’t know where to go. We’re trying to find that point where change is occurring about as fast as people can absorb it.

You were saying earlier that successful communication of values to employees depends a lot on leaders who demonstrate the values to watching employees. I have read accounts of your schedule and it doesn’t sound like you guard much personal or family time. Does this mean that a CEO’s life is an exception to the need for balance? Is it impossible to run a major company or to be working toward being a CEO without putting in those famous 72 hour weeks?

The answer is probably yes. I wish the answer were different.

So in a sense you have to become a kind of “monk” — someone totally married to your job just like a priest is married to the church?

I think there’s a difference though. I’ve always felt and believed very deeply that I am not the job. I am still me. So I don’t believe a business leader must renounce who they are as they commit to their job — even though the dedication and time commitment are very real.

When I’m on the road doing a whole bunch of interviews and press stops, meeting with customers, and going to business dinners — I need some breaks in there. I need to be able to go and stand in the room and look out at the harbor in Hong Kong rather than just running flat out the whole time — or I will lose me. So you still have to carve out places for yourself and your needs to make sure that the entire thing works.

So you have to know yourself, know what you need, and you need to have a good assistant or two around you to help you keep on track with it.

Right. And you must know what’s valuable and what’s not. If I took every speaking invitation that’s all I would ever do. If I did every interview or gave time to every employee who wanted to take advantage of our open door policy, that’s all I would ever do. So you’re always balancing demands that are way in excess of the time available.

In moving to Chicago, you are getting closer to Washington, D.C. and New York where you travel a lot. But in this era of electronic communication and the “death of distance” why does physical proximity matter?

The idea that we could put people through school, hire them, and then watch them work productively for the rest of their careers is clearly wrong. They must have opportunities to get new information, learn new things.
The relationship-driven piece requires physical presence. The day-to-day operational piece works really well electronically. E-mail among Boeing executives is phenomenal; we never need to know where anybody else is. There will be a whole week or two when I don’t know where Harry Stonecipher is. In the old model I had to know where Harry was and what time zone he was in so I could have the secretary figure out when we could talk on the telephone.

Today when you wake up at 3:00 a.m. in Hong Kong you type out your e-mail and back comes an answer from somewhere out there and it works because I know Harry well. I know my colleagues well and short little e-mails communicate tons.

However, if I’m going to go talk to the prime minister of Singapore, or the chief administrator in Hong Kong, or the prime minister in Malaysia, or the president of United States, or the vice president or the secretary of defense — I’m going to do that personally, not electronically. But this does mean being on the road a lot.

When you were working on the 777, one of your guiding principles was to have fun. Do you still try to incorporate that into your work?

I’ve always felt and believed very deeply that I am not the job. I am still me. So I don’t believe a business leader must renounce who they are as they commit to their job – even though the dedication and time commitment are very real.
Yes. I think if you have a group that can’t laugh and relax and enjoy themselves then you couldn’t do the long hours. You’d burn out. I had a good friend who was a surgeon and I asked him about the television comedy MASH and all the joking in their operating room. He said it is absolutely true. Without it you just couldn’t do those 12 hour operations.

As The Boeing Company moves away from Seattle and the commercial airplane division, as you grow and diversify a global business, how do you maintain the tight culture and core values that books like Built to Last have praised you for?

The danger of books like Built to Last or In Search of Excellence is that they provide a rearview mirror look at your company. They describe what worked in your past — not what will work in your future. That’s the challenge: what is going to work in the future? Every leader has to struggle with what the future is going to look like in a very different world, with very different technology. Does the model that worked for us in the past still work? If you go back and look at all the firms listed In Search of Excellence, almost none of them kept that position. Your model always has to be moving. If it isn’t, you won’t succeed.

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