Large Ideas Expressed In Small
Boeing Flies High
NFC: What was the impetus for Boeing Airlift and Tanker establishing over 100 IPTs (Integrated Product Teams)?
Collard: The impetus was an impetus that I hope most companies never have. We had really bad relationships with our customers, specifically the Department of Defense and the Air Force. They basically told us that unless we started performing better that there would be no C-17 program. We had to do something different. IPTs were one of the things we did differently. We set up a team-based organization and at the same time our Air Force counterpart set up the same organization so that they were mirrors.
NFC: What was the customer unhappy about?
Collard: The timeliness of our product, the quality of our product, the fact that they said we never listened to them. We weren't doing what we needed to be doing. We didn't care about customer satisfaction. It would be easier to tell you what they were happy with.
NFC: And was that all true?
Collard: It was all true.
NFC: So why did they just not find another supplier?
Collard: We have a unique product. And they wanted this product. They needed this product. They were willing to say, "forget it", if we didn't improve what we were doing. So by working with them, we came up with processes and ways of doing business that increased customer satisfaction. That was a big aspect because it was such an adversarial relationship. Previously, the customer would come to us and say we want this thing changed on the aircraft and we would say, "Yeah, bring money," instead of saying, "Well why do they need it? Is it a good thing? Should we be implementing it for other programs?" We had to change a mind set and a culture, which as I'm sure you know, is not an easy thing to do.
NFC: You are a unionized workforce.
Collard: Yes, we have seven unions.
NFC: What about the challenges of getting union buy-in throughout this change process?
Collard: When we had these crummy relationships with our customers, we also had it with our people, our union and our suppliers. We didn't discriminate. When we implemented the IPTs, we set up an employee involvement office. It was the focal point office for making sure that we kept moving forward in this team-based structure, and the support and training that people needed was there. And part of that was working with our union relationships. Now it didn't turn from bad to good overnight, but it did finally turn around when they saw that we were serious. They wrote language right into the contracts that we would be a team-based workforce. I imagine that there was at first some really healthy skepticism - this is just the flavor of the day, the latest thing to get us to negotiate better. But they really do live it her now. In fact the presidents of UAW (United Aerospace Workers) union and of the Southern California Professional Engineering Association sat with the leadership team when we were interviewed by the Baldrige examiners.
NFC: Were there any reductions in workforces during this process?
Collard: Yes, we had a couple. In fact, we've had one just recently. We happen to share a union with the commercial side of Boeing. In fact, they are literally right across the runway from us and so in Southern California we share a union with them. If they lay anyone off on the commercial side then there are roll through and bumping capabilities over to our side. So that happens sometimes.
NFC: So some of these employees are coming over from across the runway and some of your employees have to be let go? How do you handle that?
Collard: When it happens, I would say what that impacts more is the salary workforce. When we have to do reductions in force, then the hourly, and the reason why is because being members of unions, they understand that everything is based on seniority and that we are shared between two locations. I would never say that they are happy about it, you're never happy when you don't have a job anymore. But they're not surprised so much when it happens, because they always know where they stand on the union seniority list.
NFC: I would imagine that seniority is not necessarily the best way to do this in terms of the interests of the company.
Collard: Absolutely, and every time they negotiate I am sure that is one of the discussion items they have on the table. But it remains the number one factor.
NFC: I would anticipate that there would be even more disgruntlement with salaried workers. They might think, "I have these tremendous reviews and now you are letting me go." How does Boeing Airlift and Tanker address the dichotomy of the wonderful values that are there and the times when those values seem to be trampled on by the demands of the business?
Collard: I would argue that point just slightly. I don't think that the demands of the business trample on the values. I think that the values are embodied in how you do what you do. So if the demands of the business say, "I am sorry, but you can only have ten people doing something that used to take 12 people," and, "I am sorry, but you two are the people we have to let go." I question how you deal with what embodies the values. So what we do is provide training, we provide placement assistance for those people. What we do is we have a skills mix here, so we try to cross train them and use them some place else. Actually this is both salaried and hourly employees, this is everybody. All I was saying in differentiating between salaried and non-salaried was their reaction because salaried are not represented necessarily be union.
NFC: How does Boeing incorporate the concepts of open-book management - employees understanding the economics and finances of the company?
Collard: Let me explain one way we communicate. We have many different venues. Quarterly we hold what is called an all-leadership meeting. This is everybody from team leaders to vice presidents, here in southern California that is about 900 people. They crowd into our cafeteria and the leadership team, specifically David Spong, our vice president and general manager, presents a quarterly status of where we are and where we are headed. It includes the strategic plan, the goals' status, the financials within the goal status and a section titled "Next Step" which explains what is happening next and what we have to do. When we have something like a workforce reduction coming he is very honest with them. He will say we have to reduce by X percent and here's why. If it is a business need, if it is driven by the mother ship, just different things. So that is one venue for getting that information out.
NFC: So that information has gotten out to those 900 leaders there…
Collard: Yes, and they are required to flow it down.
NFC: So I can be effected by how that information is flowed down. I could have the boss that comes back and says, "Hey everybody start looking." That sends fear immediately into everybody's heart.
Collard: And if someone did that it would not be condoned. And we would find out because there are no secrets around here.
NFC: On a slightly different note, at Boeing Airlift and Tanker the priorities, which employees understand, are quality is more important than cost, schedule is more important than cost. So out of quality, schedule and cost - cost is the least important?
Collard: In the aircraft industry, it
is schedule first. Traditionally you have to get so many
out to meet your demand. This was a big cultural change
for us. The reason for schedule driving or how it
manifests itself in the aircraft manufacturing industry
is that there are positions for every job to be performed
on the production floor. And so if it wasn't performed
there, they would go ahead and move the aircraft to the
next position in whatever state of assembly it was in.
Then they would have to rework whenever that particular
part came in or subassembly to put it in there. Which
means they may have already put some stuff in there and
have to take that out, put this in and put it back in
again, therefore causing a lot of potential quality
NFC: One of the planks for leadership in your organization is being a good corporate citizen. How does that get carried out?
Collard: Let me take you back to those
adversarial relationships, and one of them was with the
community. They thought we weren't being friendly to the
community; that we were this big corporate giant that
didn't care about what happened to the community we lived
in. We are located right at the airport in Long Beach.
And The Long Beach Press Telegram, if they ever wrote
anything about us, you knew it wasn't going to be good.
And that has changed. And the reason that that has
changed is because we have worked on our relationship
with the community. Working with the local mayors,
working with their community organizations, the symphony,
whoever it is, working on those relationships is what
made the difference about how they feel about us.
NFC: For you personally, what has been a key thing that you have learned? If you had to do it over again, you would say, I really would have done this.
Collard: Let me answer that two ways. The first way is that the key thing that I have learned is how important leadership is to anything that you take on. The second part being if I had to do it differently what would I do? I would get the entire leadership team focused and involved earlier on in the process. Now they are focused and they are involved, but that took time too. And the importance, I can't tell you how important it was, is that we had a leader and his successor, David Spong, was the same kind of leader who said that this is important. It is important that quality is our first priority. It is important that we use the Baldrige criteria. It is important that we have some sort of strategy and plan and a way of doing business. It is important that we have a leadership system and model for everything that we do. Quite frankly we can't afford not to do this stuff. You have to have a plan to continuously improve the organization. I would just do all of this earlier.