2 things hospital CEOs should know about Boeing's management pre-737 Max crisis

Two decades before Boeing faced its 737 Max crisis, changes to the company's leadership drove a division between engineers and managers that changed how the company operated — both geographically and culturally, according to The Atlantic.

In 2001, then-CEO Phil Condit and President Harry Stonecipher wanted to put space between high-level management and plane engineers. Of the strategy, Mr. Condit said: "When the headquarters is located in proximity to a principal business — as ours was in Seattle — the corporate center is inevitably drawn into day-to-day business operations." So Boeing moved its corporate headquarters to Chicago, nearly 2,000 miles from its engineering center in Seattle.

But as Jerry Useem wrote for The Atlantic, this separation of management from day-to-day business may have been the moment "Boeing's leadership decided to divorce itself from the firm's own culture." It's a cause and effect worth noting as major health systems base their headquarters in distinct markets, away from the majority of their hospitals.

Here are two things hospital CEOs should know about Boeing's management before the 737 Max crisis:

1. A financially focused management team forgot how to speak engineer. When Boeing moved to Chicago, it didn't only create a physical rift in the flow of technical information to managers, but degraded what used to be a person-to-person comfortability between subject matter experts and top leaders, aerospace analyst Richard Aboulafia told Mr. Useem.

Boeing managers, Mr. Aboulafia said, lost "the ability to comfortably interact with an engineer who in turn feels comfortable telling you their reservations, versus calling a manager [more than] 1,500 miles away who you know has a reputation for wanting to take your pension away. It's a very different dynamic. As a recipe for disempowering engineers in particular, you couldn't come up with a better format."

2. Managers began to rely on "remote readouts" instead of firsthand observation. After 2001, Boeing's three units — military, space and passenger jets — were in St. Louis, Long Beach, Fla., and Seattle, respectively, not in Chicago. With Boeing managers in Chicago, top leaders lost touch with what was going on at the frontlines, Mr. Useem wrote. 

"Never mind that the majority of its revenues and real estate were and are in [Seattle]," he wrote. "Or that Boeing's managers would now have the added challenge of flying all this blind — or by instrument, as it were — relying on remote readouts of the situation in Chicago instead of eyeballing it directly (as good pilots are incidentally trained to do)."

In hindsight, "It's now clear that long before the software lost track of its planes' true bearings, Boeing lost track of its own," Mr. Useem wrote.

Read the full article here.

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