I watched a documentary on Netflix recently that alleged that a lot of this change came from importing McDonnell Douglas management into Boeing after the acquisition. I wonder if the book concurs on that, I don't have time to read it right now.
If this is the case I wonder if it could be reversible.
B was pressured to buy McD for 'national security' reasons. What would have been a better idea would have been, instead of doing an 'total' acquisition, is to wait for McD to go bankrupt, and then buy the parts that didn't suck.
When they did the acquisition, they also got the management folks… who ran McD into the ground in the first place.
That is correct. However MDD was manufacturing key military products (F-15, F-18) and it was doing bad financially, going bankrupt and jeopardizing the fighter plane production and maintenance was a "national security" problem that forced the Boeing acquisition of MDD.
Weird how you can be a "key manufacturer" yet "go bankrupt." Perhaps they should have just been auctioned off and other investors given an opportunity to create new lines of business out of the incompetent mess they had become. Taking the mess and wholesale buying it into another company and then keeping the management that created the problem in the first place is astronomically dumb.
Also, all the money in the world doesn't mean you spend it on things that make money later. If you spend your manufacturing budget on strippers, you won't have anything to sell later.
Late 1989 was the fall of the Berlin Wall and the end of communism in most of Eastern Europe and 1991 was the end of the Soviet Union itself. There’s a drop between 1990 and 1991, a slight increase in 1992 (replenishment after Desert Storm?) and then a gradual decline in nominal dollars throughout the 1990’s. Also remember that federal budgets were usually passed ahead of time; this was before the government normalized all the government shutdowns and other monkeyshines we have grown accustomed to today, so budget changes might be a year behind current events. Adjusting for inflation the drop in spending would be even more.
Spending does start to increase after 1998. I’m not exactly sure why, but a lot of things started happening in 1998 and 1999, ranging from Bin Laden’s attacks on American embassies, the Kosovo conflict, Saddam Hussein ejecting UN weapons inspectors from Iraq, the discovery of Chinese interference in the 1996 elections and China stealing nuclear secrets.
Also, at the end of the Cold War, there were a number of systems that were in the late stages of design and development that were either radically cut back or canceled outright. These included the F-22, B-2, and Seawolf class submarine, just to name a few big ticket items. This saved a lot of money and made sense at the time since these were all designed specifically for Cold War missions that no longer seemed relevant. But eventually the older hardware still needs to be replaced; instead of replacing the Los Angeles class submarines with the Seawolf class starting in the 90’s, you end up replacing them with the Virginia class starting in the 00’s.
Other cutbacks during the post-Cold War period included closing military bases (which was fraught with political difficulty; no congressman wants the base in his district to be closed!) and reducing the number of US forces permanently stationed in countries like Germany.
Dollars aren’t the only measure, either. One of Reagan’s goals was a 600 ship navy. It takes time to build ships so it wasn’t until 1987 that the US Navy reached a peak size of 594 ships. Currently the US Navy has 238 ships. Sometimes a higher defense budget means you’re building a larger military but sometimes it means health care has gotten more expensive or you need to buy more fuel and ammunition to support operations. This also explains the drop after Korea.
Umm, no we didn’t. We spent less as a percentage of GDP. But total spending barely shrank by the late 90’s. We hadn’t even started to shift spending away from piloted jets by then either.
Nowadays the reduction of the increase of military spending is called 'budget cuts'. Not the actual budget reduction, just increasing the budget slower than in previous budget somehow is a 'cut'. That's the reality we live in now.
If you change the endpoints on that graph to 1985 and 2000, the drop in spending in the 1990’s is a lot clearer. 325 billion to 287 billion is a sizable decrease—about 11%—, especially in non-inflation-adjusted dollars. It only looks small compared to the post-9/11 increase in spending, and a larger share of that spending was operations rather than procurement.
Right, but he said “massively drew down”. 11% would not qualify. It was relatively brief during a period of normally low inflation, so even in real dollars, it was not a steep decline.
At this point you’re just making a semantic argument about the word “massive”. The impact of that 11% cut in spending was massive; between 1990 and 1998, manpower dropped from 2.18 million to 1.59 million and the total number of active ships in the Navy dropped from 570 to 344. The total budget didn’t drop by a similar proportion because there are a lot of expenses that are much less flexible; it’s not simply a matter of employing fewer personnel and buying less equipment.
Boeing is in its position only because of a close relationship with government. They didn't get rich because of their brains. They will do anything for government to maintain the current benefits.
They did get rich because of their brains. But they then replaced those brains with accountants and since then it is a steady downward trajectory, which if it were any other company would likely result in controlled descent into terrain.
All the manufacturers of key pieces of military advanced weapons are on that list. Fighter jets are on the very top. When corporate America is now more about "business" than engineering, making a good plane is very expensive. It's just business :|
It may potentially harm the security of the nation's subject, but it does not harm the interests of the ruling elites - and that's the real "national security" in practice.
I’ve heard variations on this story a few times, successful company swallows failing company and gets infected by failing-culture. Isn’t that what happened to Netscape?
Google bought DoubleClick in 2008. Pretty much everything they started after that point has failed because the focus has been on selling ads rather than building something normal people enjoy using.
On the other hand how much of the things Google has built/bought and grew today we enjoy could exist without the firehose of money that ads represented? I'm not sure Youtube happens without the ad money.
AdWords was doing just fine before DoubleClick. That's how they got the money to buy DoubleClick in the first place.
The problem was specifically DoubleClick management, who then got inserted in high levels within the Ads organization, forcing out the very technically & economically savvy people who were there before.
This is a recurring problem in large organizations. People who spend their time learning to be politically savvy will be...politically savvy, and be at an advantage when playing power politics that determines who is in charge. The effort needed to become politically savvy usually comes at the expense of domain/technical/economic knowledge required to actually get the job done. Eventually the organization becomes very good at playing political games and very bad at getting stuff done, until it collapses.
I'm mostly wondering if they could have kept it as open as they do to non revenue generating users or would they have had to do something like Vimeo where after a certain number of views they come asking for money or would have had to limit the quality/quantity of uploads from small creators due to the costs of storing and serving their videos with limited ad returns.
Yes, ad money built a lot of the web. I’m not saying it’s evil on a conceptual level, but rather that a lot of companies start failing when they switch from thinking about what their users would like which happen to be ad supported as opposed to building products which are designed around ad revenue first. It’s what gives you things like Google+ but also things like social media sites optimizing for outrage or other low-quality interactions which maximize ad sales revenue.
YouTube has obviously done well, but look at everything they’ve done since the ad sales mentality dominated their thinking. Stuff like Google+ happens when you are thinking “we need X to keep Facebook from cutting into our ad revenue, therefore our users will use X” rather than asking “what will our users like more than Facebook?”.
The other side is what we saw with things like Stadia, GCP, or G-Suite where executives used to the ad model have trouble with other business models. The problem there again isn’t that ads are evil but rather that you need to understand your users and what they want so you can think about the product the right way.
That doesn’t say anything about whether it’s a good example: even if it’s true, the real question would be whether they looked for the right things and especially who they kept at the management level – at the time, Google announced they were laying off a quarter of the employees due to redundancy, which tends to mean that groups like HR and accounting get hammered more than senior managers. This is especially important to get right when you consider that the most damaging people aren’t comic book villains but rather people who sound like they know what they’re talking about and are charismatic – exactly the sort of people who would make it through an interview process.
The Google interview process at that time was definitely not tuned for selecting the charismatic lol. I was there at the time and I can't recall anyone from DoubleClick management surviving, only engineers. It was a bloodbath.
Not Collabora. Collabra was a groupware company Netscape acquired to shore up the E-mail portion of Communicator. It didn't work and ended up substantially delaying future development of the browser suite.
There's a long list of companies that died by being acquired into a bad culture. OP is talking about the opposite: an acquisition so toxic it rots the parent company.
By the time of the merger with Time Warner they were a joke among technical people. They were in the same category as Compuserve and Prodigy, but marketed specifically as an "easy" service for less technical users.
Netscape died because Microsoft bundled their browser with the operating system and made it free for commercial use, what essentially led to the huge antitrust case.
Only after that did browsers become utilities in the OS, with open source engines like Konqueror's KHTML (which later became WebKit, which later became Blink) and Netscape/Mozilla's Gecko
Microsoft was the overwhelming majority of all installations. So effectively, once Microsoft added it, it was a utility. I'm well aware of that history.
In a broad sense high level management tends to take care of it's own in a bit of self interest so when they screw up and run a company into the ground chasing short term quarterly profits they'll also get taken care of.
This is exactly it. The skilled politicians are the reason why the company failed in the first place. They then take over the acquiring company from within like a virus and destroy that next. Rule of thumb: If a company is failing and you purchase it, fire everybody. Either the culture or the people are poison, and they will infect you.
We just had a close call with this where I work. Bought a company, because they were failing and being crushed under their own weight. Somehow they convinced the management at my company that they knew the path forward and we've been in complete gridlock trying to get anything done for a couple years, eventually they hired outside management for the company we bought, set clear KPIs which they failed to deliver on (in some cases failing to even attempt to deliver on) and the got fired.
But god damn, when you buy a company that can no longer afford to support its own weight, don't let those fuckers convince you that they somehow know how to run your business too when they can't run theirs.
Yes absolutely - keep the skilled folks below the VP level and perhaps some of the Directors. Generally garbage flows from the top down, and they've been putting up with it this entire time.
Phil Condit only had his job through the influence of his wife at the time. Unfortunately, he was busy diddling his executive assistant at the time of the merger, clearing a path for Harry Stonechiseler to be CEO.
After seeng your comment, I just went ahead and watched the doc, and I frankly I find myself in a state of rage right now. From my limited understanding, I had this impression this was an engineering failure. And you know, when you have a complicated machine, sometimes shit happens.
But it wasn't that at all. Boeing knew clearly what the dangers of MCAS system were, they went to great lengths to completely hide the presence of the system from the world before delivery of the planes. Within days of the first crash, they knew it was MCAS, and kept trying to blame uneducated "foreign" pilots, kept trying to go on and tell the world again and again it was safe to fly, until that second crash happened. I understand greed, we all have that, but I don't understand how a company-wide culture can get so toxic, how utterly devoid of humanity do you have to be that your first concern after that crash and knowing there might be more deaths coming, is keeping wall street happy.
And what the hell FAA? 1) they didn't regulate properly before the plane was delivered, 2) After first crash they knew how dangerous the plane is, but didn't ground it (TAMARA report), 3) After second crash, you had the transportation secratary basically saying 737 Max was "innocent untill proven guilty" so let it fly before China forced its hand, 4) No criminal proescution in the end for those fanatic executives, just a cash fine.
You have to view all US regulatory goings-on wrt Boeing through the lens of Airbus-Boeing/EU-US trade rivalry (plus China's COMAC as a new entrant).
Boeing is the US's largest exporter (defense + civilian), and also the 65th largest US stock overall. Any US regulator action against Boeing would affect all that, plus US stock markets. You have to wonder how independent the FAA head can afford to be from Congressional interference, in the current setup. In the US, the FAA head is appointed (or, in recent admins, left vacant) by the Senate.
Back in the 2018/9 first 737MAX scandal [0], it was the Canadian, EU and Chinese regulators which were more aggressive about investigating and grounding, meanwhile the US FAA dragged its feet on taking action against Boeing while its donees like Congressman Sam Graves (R-MO 6) [1] continued to blame foreign pilot training, which was dishonest and adding insult to injury.
PS consider also in 2020, Rep. Mike Garcia (R-CA 27) secretly sold $50K Boeing stock ahead of his committee's damning 737MAX report; then avoided election scrutiny by simply blowing the deadline to report the stock sale... When he finally did disclose the sale, it was two weeks after the 2020 general election votes were cast, and three days after Garcia declared victory. He won by 333 votes. [2]
There's some scrutiny of Congressmen insider-trading biotech/pharma stocks esp. which their own committees (gasp) regulate, but really not a lot of scrutiny on aerospace. [3] Compare to George Santos, who wasn't implicated in a coverup that actually killed hundreds of people.
> I don't understand how a company-wide culture can get so toxic, how utterly devoid of humanity do you have to be that your first concern after that crash and knowing there might be more deaths coming, is keeping wall street happy.
The most garbage human being I know personally is a project manager at Boeing. Unfortunately the only way to get this person completely out of my life would be to move to a different neighborhood.
If this is the case I wonder if it could be reversible.