Boeing International President Marc Allen Discusses the Global Business Environment
Okay. Good afternoon I'm Ted Snyder welcome, to Yale School of Management. Our, mission is to educate leaders, for, business and society, and. Welcome. To. All of you to. The, 2019. Wharton, grand, lecture. Established. In, 1973. To honor Gordon, Graham who. Graduated. From Yale College in, 1936. He, was. President. And CEO of, the olden. Corporation, this. Lecture, is. A forum, for dialogue between, students. And business leaders, past. Distinguished. Guests, include, Janet. Robinson, of the New York Times, Danny. Meyer of Union. Square Hospitality, Ray. Kroc, from. Of course McDonald's. And one more food. Person. Victoria, Mars from, Mars Incorporated. Let, me now introduce the. 2019. Gordon, grand fellow mr. mark L, mark. Earned his JD from Yale Law School in 2002. After. Yl. S he went to clerk for, recently. Retired US, Supreme Court Anthony. And Kennedy. Mr.. Allens current position as president of Boeing International. And he's a member of Boeing's. Executive. Council mr.. Allen is directly, responsible, for Boeing's, international, strategy in corporations. Excuse, me corporate operations, outside the, US he oversees 18, regional offices, and key markets, he's. Also responsible for, developing, business, and industrial, partnerships. Throughout the globe. Previously. Mr., Allen served as president, Boeing, Capital, Corporation as, vice. President of Boeing international. As president, Bowen China as. Vice, president, for global law, affairs, and as general counsel to Boeing International, in. Fact mark. Is the person who developed the, international, legal of practice, for Boeing. So. Given his deep expertise. He's. An expert on obviously international. Business global, regulation, of business, international. Legal and policy matters, he, knows for example everything. Anyone. Could know probably about the World Trade organization's. And the kind of disputes, they have. Outside. Of Boeing, he is a Henry. Crown fellow for the Aspen Institute, member. Of the Council on Foreign Relations and, the trilateral, commission he. Is a member, of various boards. Including. The international, justice mission the, us-india, strategic partnership. Forum the, Atlantic, Council and the u.s. UAE. Business. Council, I'm. Going to skip your undergraduate, stuff, yeah. All. Right. For, the past two days. Mark, Allen has engaged. Enthusiastically. Energetically. With students, here, at the School of Management. At the Law School with Yale College with, faculty. We. Have as. He mentioned, when they, we. Were walking up we, put him through his paces but. Now now we're here for the the. Main event to, continue the conversations, on the industry, geopolitics. And maybe some more of your own professional, development so. Please join me in welcoming, mark. Allen back to you. So. My. Colleague david bach is the perfect. Person to moderate. This conversation. As. Many, know david is a political, scientist, as. Deputy, dean he's. The person who has the job that's most. Analogous. The marks he. Directs the school's executive, mba the, master of advanced management the, master of management studies, he, leads Global Strategy primarily. Through, our, engagement with, the global network for Advanced Management, he. Catalyzes. Curricular, innovation, in the area of global business guides. Online, education. Activities, and overseas Yale Center vision a, good, portfolio, so. To, get started, we're. Now going to have a one-minute, video, about, Boeing, and then. Mark, and David the floor is yours, so video. Now. Pressurized. Seconds. And counting. Astronauts. Report it feels good. And. Counting. Wow. I, know I. See. This we have a screen, an eye height right here I was like right in there I still, get excited. That. Was the point that was I, mean it is such a fun, and cool industry, so thank you Mark for being here and for sharing over the past couple of days you know thoughts with all of us and and you, know Ted thanks for the kind words I thought you had asked me to do this because I I love planes and I just want to make, sure you appreciate it this isn't merchandised, that marked, snuck, in here this is my prop okay so this is my plane because. I love aircraft, and, some of you know that both my dad and my sister are Lufthansa, pilots but, those. Of your experts will recognize is the special, edition that brought the German national team home, from Brazil in 2014. So it combines two of my passions which. Are global. Travel. And aircraft and sports so leaving, aside my, passion, for your, products, for the moment. The. Economist, recently, this, is my other prop so. The declare a globalization. Over or at least transformed. And argue that we're entering a period of, globalization. And, so. As somebody, who is very much at the. Frontier. Of all of this as a first row, seat. Front. Row seat and what do you see when you look out at the global economic and political landscape.
Well. I won't, be. Able to jump. On board just yet with slow belies a ssin you'll, see but what I do see. Is a massive. Inflection, point I, mean. I just feel as if the, all the data and all the experience, of trends show us that. There's more dynamic, change happening, right now than we've seen in the last 40 an argument 70 years since. The the post-world, War two order, was constructed, and, it, is. Sort of coming to your political science background for, a minute I mean it's it's. A number of things but you know the institution. Of the world are, ineffective, and just, aren't up to a challenge anymore you. Know you, mentioned the WTO. We've. Been in front of the WTO for over 15, years with our subsidies, case against, Europe and have, yet to get the final dispositive. Ruling that's. A system that doesn't work. When. Was the last time the United Nations was able to really play a significant, role on, a, major matter around the world it's been tough obviously. Things, like IMF, and World Bank are, greatly. Challenged, by the Asia, infrastructure, investment bank and the Bri out of China all the global institutions, are shaken, in that sense at. The exact same time that that's, happening you have these trends of nationalism, and populism, which. Lead to things like brexit which have significant. Economic consequences. And, at, the same time you also have obviously. A greater, lean, and governments, of the world towards, authoritarianism, which. Is starting to shake some of the question about what is a market economy which, affects firms like ours so. These global trends, in. Efficient institutions. And all, of it happening in the speed that you never could have predicted before, right so more, things happening, broader. Ripples. Than before, and. Companies. And governments. Having to react to more with less time to react and so, that the idea of speed and the nature of speed in the business community and the government community is a fact that it's also radically, transforming. This and. I think those things are all overlapping there. Are, many ways even mutually, reinforcing. And so. The change, that's being driven is, is, something that we're gonna have to come to grips with and we're gonna see a new order emerge, from it it won't take five months or five years it's a 15 or 20 year project, and and. Whether or not civilization, is in fact right is going. To turn on what. The architecture is yeah there's, the world hold, together and trading, remain, a global, unified. Frame. Of experience, or do, we start to see polls and divided. Realities, fragmentation. Across, the world order so for us as a business we're trying, to figure out how do we help in that, environment because we obviously vote, in favor of a. Global market yeah and the chance to participate really, broadly well you're in some ways connective, tissue in this world that is being pulled in different directions so talk a little bit about so. The the, global footprint, of a boy right you're you're an iconic, American company but, one that buy on so many measures, sort, of defines what it means to be a global enterprise you, know we came of age 400 years old we came of age at the same time that the US economy was of course coming of age through two world wars and. Now, if, you look at us we're still 75, percent of our people the United States. 150,000, people totally, and yet, we do have people, and operations, across 65, countries we. Have customers in 160. Plus countries. Remember, that 75 percent employee. Based in the US produces a. Hundred. Billion dollar revenue stream, of which 80 plus percent is, exported. So. We're of course still the nation's largest exporter, and that's both on the defense and the commercial space, businesses.
We. Are you use, the word iconic, I think that's fair I think Boeing's definitely iconic company, in a kind of US company, even and one, of the things that's meant is it as one of these factors, in the changing world has been the perception of the United States and. In the United States over the last several years has. It started to back away from this idea of keeper of the Commons, it. Leaves companies like ours having, to now redefine, our role out. In the world too and I think a real focus, for us has been building global scale and depth, establishing. Company to country relationships. They, can really create. Ballast. A counterweight. Even. As the the role the u.s. recedes, we, have to stay forward to boy in. Order to access those markets access. Technology, access town, and ideas and really, pull the best of the best from them so, how, do you do that so round numbers eighty percent of you please said seventy-five let's make it simple eighty percent of the employees in the u.s. 80 percent of sales outside. The US very. Much seen as an iconic US company, but very much a global footprint, and you're serving clients, globally you're accessing technology. Globally. But, a company that I think a lot of people here in the US think of as. You. Know it's ours it's an American company as an American icon certainly, policymakers, acting that way how. Do you balance these two, sort of need, to to. Be global, to operate globally to, to. Build relationships, everywhere, well at the same time. You. Know managing. The expectations, here at home. As. With every industry the first step is to listen to the customer right. To start very carefully, understand what the customers need is what the requirement, is and, take. The United Kingdom as one example the. Customer, they are on the defense side of course is the government the Ministry of Defense and one. Of their needs is for their defence industry, to partner with them not just to sell them product and so, you, know for us there were years where we were not in a position to sell into, the United Kingdom we had always sell through, a UK. Company and. It was only until the point that we invested. In the, UK and built up our operations. There that, we then became allowed to, sell directly to the government and what we were able to do is be able to show that a bronze away at home that. By investing, in the UK, developing. Content in UK and people, in the UK and being able to sell in the UK we, create a lot more opportunity, for our engineers and our scientists, back home in the United States and so, we tell the story of a win a bronze going at home to both sides to, the US government and to the UK government and, I think our ability to stand it's. Kind of a fulcrum the train to economies, demonstrate, a mutual benefit on both sides is part. Of the unique positioning, that companies, have to play in the, current moment that we especially get to play because, of aerospace so.
If, You've had to do that dance with, the UK, the. US and the UK I would. Imagine that it's more challenging when you're doing it with say. A Russia or China or, another place so does, it work the same way you just demonstrate. There's benefit, to both sides in the end the u.s. benefits, when Boeing, is more successful saying. In China, elsewhere in the world who does it get more complicated, with these they're perceived as rivals you're, gonna hate my answer the answer is yes yes. ., end of story it, really is about demonstrating. The, mutual, value and, so we've had the exact same conversations. Actually about, operations. In china operations, in Russia with, with US government and we demonstrate, the math and the math the, math is pretty strong and it really does stand on its own right, and, so, um, you know in that context, you were saying before how. In. A u.s. foreign policy or the. U.s. is standing in the world as a whole has been shifting, in this in this context. Of. These. Institutions, haven't just become weaker. On their own with what seems, to be happening and, and these are my words obviously I don't want to put words in your mouth is that the. Current administration seems. To be accelerating, perhaps their their decline. Or, pushing. Them to the side rather than making, them more more relevant how how, do you deal with that when. When, you often get linked, to whoever. Happens to be the the, current US administration the. The current administration, was very clear, first. During the campaign and then during the early days the administration, that, they wanted. To put you know partners, and friends as, well as others on notice, that the, United States thought there was a free-rider, problem in, the world you know and and, that's what an awful lot of that pullback and restructuring. And then the rhetoric has been about it's been about you know putting these people on notice to change what was perceived as a free rider environment. You. Can though look at institutions. Like NATO for example, which. Have you, know despite, the, difficult. Rhetoric at the beginning have. Actually managed to respond pretty well during, this time there, is in fact more investment, than ever from Europe and to NATO at this time the, Secretary General has done a wonderful job of, holding, the interests, of the members of NATO together, and keeping, him oriented on singularly. Defined, missions and. Maintaining. Us support, for NATO so there's. Clearly been. Rhetoric. And real. World you, know outcomes, and. I guess I guess if I step back and look at it I would say yes the the, the current administration. Took. Attack that. Was different than before and that was unexpected. By partners, and allies around the world but. Frankly what's, been, addressed. In this. You could call it restructuring. Was, something that was structurally. Going to happen at some time in some way and, then the fun of history or geo geo strategy and geopolitics is that ordinarily geography. Culture technology, you. Know some of these big elements. Are. They are the key drivers of an outcome that will happen irrespective. Of exactly, when and exactly who drives and I think that's true here so. You spoke before about, how, a company like yours and, other. Leading. Companies. At least that's what I what I understood. Then. Have. To step up and and have to sort of play, that role of reminding, people of the mutual benefit. Of integration. Does. That mean you you need to have a vision of what, global. Governance ought to look like I mean it sounds like you've been somewhat, dissatisfied say, with the WTO with, some of these institutions, I mean what.
Is The limit, to the role that you see, a company. Like yours play in in, in. Sort, of shaping the global environment in which you compete if there is a limit I think it's very important that we tell our story and I, think that if we if we don't then policy makers sometimes, miss the intersections. Of interest that. Would otherwise allow, for you. Know cross-pollination, across, cultures, and nations and, so telling the story being very proactive about. The demonstrated, value, of what we do is industries is important, aviation. Is just one example relates. To about three-and-a-half percent of global, GDP so. You take away aviation, and that's, not just the building of airplanes that's all the travel, and tourism that's, attached to it that's the movement of goods cargo. Transport. Small, fact for you all about, one percent of goods traveled. By air they, represent over 30 percent of the value of goods that, are in transport, so, you can see how aviation, plays an outsized role an economic. Movement and trade, it. Back to how we have. To respond as a company, in the face of some of these changing. Dimensions, you. Know the we. Had an example I'll share from a few years ago where. There is a relatively. Public. Dispute. Between Boeing, and Canada. We. Challenged subsidies, that. Industrial. Counterparts. Bombardier had received and that they, had used to dump airplanes, in the United States market it was an airplane that was just starting to get into the space of competition, with our 737. So we challenged it the International Trade Commission and. Canada. Reacted, by pulling back in a way defense business from us and. That was think that was an example where look, I think a company's. Appealing. To an established. Tribunal, to, get a ruling, on legal. Grounds. Was. Reacted. To in part, because, there was an impression that this was part of a broader, US. Economic. Strategy. It, wasn't, it was simply a company that had an issue that had not coordinated, with anyone else and that was seeking redress from from a court of competent jurisdiction but. That sense, was. Really a sense of skepticism, of our intentions, and, I think you do see that the, changing, role of the US has led to a change, in many's view of US, intentions, and that can sometimes be of company, intentions, so it becomes incumbent on companies, to, be on front explaining, what we're doing building. Partnerships, investing. In other environments around the world for this win-win. Situation. And. In part to overcome, that skepticism you know I was. In in. China a couple of weeks ago at Yeltsin. Our Beijing and had some conversations, there with business, leaders and with journalists, and the, conversation, very quickly came to talk Huawei and and. One of the things that people they're at a hard time understanding was. That. It. Wasn't, a given that, the White House had called the, Canadian authorities and, asked for the arrest of the. CFO, of a company that some. US companies have had disputes, with right. There is sort of a perception of the, way business government relations, might work in other parts of the world that is then imposed, on you. Know the, way how. Do you deal with that I mean you know you you. Use. One every separate entities, right what are the great. Lessons. For me of working, in China for those years at Boeing China yeah was, being. Able to recognize. How, much of the. Filter we all wear yeah and so as American companies we try to understand what's happening in pick your market. But, we we always are referencing. What, we would expect based. On our us experiences, and vice versa yeah so is another, market is looking at the United States they're connecting. Dots they are making inferences, based on their own understanding of their market and you, know we need more of what this school is doing in terms of the global, the. Global Opportunities the, strategic partnerships, with other business schools so. That students. Go and work and learn. In other environments to, be able to take off some of those filters or, he can't take them off at least realize you have them on that's, the very first step right. Much. Of our conversation, has been about how you're dealing with the turbulence, right now but, you're. Making decisions, in, the, enterprise you know looking what. 10 12 15 20 years, into the future right, what's the the average if I were to order a plane five, to seven years five to seven years and if you got me to the top, of the queue its what four to six maybe sure.
Okay. Working. Great all right all right so so. Five to seven years and of course new model development we're talking about a decade. Well, here's or 12 or 12 years so you. Have to make decisions right now what resource allocation. When. When we seem to be witnessing, this sort of you. Know maybe it's not snow slow ball ization but it's sort of it seems like a step change in in in in this context, so. This. Is the opportunity all right I mean cuz at, the end of the day you know if. There are two potential, outcomes fragmentation. Yeah or a more, unified, global trading system it. Will be those. Leaders. Nations. And companies, that are. The glue that help unify it that, will be in position, to best, service that market. Tremendous. Opportunity, right now to, position ourselves by, building, the kinds of solid, company to country relationships, that. Will give us another 50, 70. Years of markets I mean if you look around the world and think about where we've been we, arrived in Beijing in the form of a 707 flown, by President, Nixon Air, Force one when. He went to see then Chairman, Mao he's, influenced all did he why. Are they, no. He had, qualified individuals. But. You know he left there with an order for ten airplanes yeah in the back of the airplane and and, that was a starting point so that's now almost 50 years of history, and during, that time Boeing. In the United States the FAA hand and an I played a significant, role in helping develop air transport, in China and that's, the reason why it took us 40 years to deliver a thousand, airplanes to China we. Delivered the second thousand in six years, right. Because of that partnership developing, the market and if we can if we can hold on to that kind of partnership, not just with China but with the world and we. Can be a global, industrial, champion not just a u.s., industrial champion. There's, a tremendous, unlock, of opportunity, that's in front of us so so in other words if if if things are stable. Business. Isn't easy but, it's easier, than in these turbulent times it doesn't mean that companies that have the, capabilities, that have strong, leadership that have the kind of people who are globally connected, and and enlighten, critical thinkers this is this is their moment this is the opportunity, because. You know 20 years from now if. I could rattle off let's say six to twelve countries for you if you. Know 20 years from now those countries look at Boeing as their. Champion for aerospace the United. States will still be one for sure but, if that list. Of six to twelve also, does, the. Implications. For what we will be able to do from a research, and development and innovation perspective, from an investment perspective what. We will do together in, terms of create an efficiency of supply. Lines of. Really taking, advantage of. Differentiation. In our skill sets right so comparative, advantage, as a core that we are able to manage inside the bounds that company not just outside the bounds of the company there's. An explosive. Opportunity. There and that's what we are all trying to get through to and, so, you're right this moment becomes very important because who are the individuals, because all of this comes down to relationships, relationships.
Are. What you know yield that the. Oil. That can can lubricate conversations. And create trust you. Know when I, always, come back to marriage yes it's, the best analogy we all have and in, marriage when we believe the best in our spouse you. Know a, particular. Word is a good word, we believe the worst that. Exact same word is a terrible, word it whatever. The word is however it's conveyed, what we believe, about the speaker, matters and it's the same thing in terms of negotiations, between countries, and companies and until. We have a set of leaders that, are positioned to believe the best to know each other to really understand dynamics, context, and situational awareness will, be challenged I want. To open it up for questions, in just a moment but I want to ask you about one other. Issue. That that, you know we think about a lot here and we spoke briefly about yesterday, evening so. When you we've, talked about global challenges, we talked about. You. Know loss. Of credibility and institutions. Of. Global governance we've we've talked about economic nationalism. And populism, you, know quite a bit of it fueled. By the kind, of income, inequalities, that are. Associated. With, you. Know the impact of trade. And globalization and, then there's the other sort, of big global challenge which is, climate. Change and sustainability, and I know one of the statistics that that, you shared is that well. What's. The percentage of people on the planet who haven't flown, in an aircraft it's, less than 20%, have. Flown okay, so. Now. That's incredibly, exciting the idea that we could all become, sort. Of closer as a community, you know travel. More be more connected more, understanding. And and, yet. You. Know our planet. As fragile as it is and air travel travel. Is a. Fairly small fraction. Of global emissions but my understanding is a fairly quickly rising. One and so as. You're dealing with all of this and and you're promoting, you, know growth because, it's good for jobs and it's good for connectivity, and it's good for. Research and development we're, dealing with the. Environmental side of all of that and I know you, think about that hard so talk about that well I mean I think every industry has to think about what are the strategic constraints. To growth you, know and there. Is undoubtedly, for, every transport, industry that's out there whether it's ships, or cars or planes or trains there, is the question of will emissions. Regulation, but come growth constraint, and so, the. Good news is I think that focuses, the mind of all of Industry and, we were one of the leaders early on that, led the sustainable, biofuel, development. Programs. And we've, we, have found sustainable, biofuels, that are regionally based out, of all kinds of feedstock you'd be she'd be shocked we just we just had a flight.
Recently How the thing, was out Eddie hot Airlines of the Middle East our partners, there had created this as. A fish farm takes. In seawater from the Gulf feeds. These sea, weeds, as, it were which. The fish eat on fish, grow get big they harvest the fish turn to feed stood for, the population. Those. Weeds, that are growing they. Then can pull out once they reach maturity squeeze. Them get oils out and turn it into jet a and fly your airplane hmm, it's. An amazing, you know full loop closed-loop. System. That you know answers all these different needs energy food, and it's working not on water. Because you're in a desert but on the sea water that's, plenty, plenty plenty full and available. That's. Just one example and, I could give you another 20 where we've worked with partners all around the world figuring out what works in their region what's sustainable, that. Has happened in part because we understand, that. The the, industry, has to drive emissions down we. We have driven them down and if you look at the figures we, are far and away the, most advanced. Transportation industry, that, has reduced. Emissions. On a passenger. Per kilometer mile basis, and we've, made commitments as an industry through. ICAO which is part of the United Nations to, reduce a carbon. Emissions by the year 2050, by. 50 percent which. You say, to me will mark that's the you know 50 percent we need a lot more than that well that's 50 percent from a measure in 2005, and it's. In an industry that's been growing at a kegger of 8% for the last five years and that we project to grow at five percent through, 2050. So, when you think about the growth that's implied a natural. You know per capita, today, emission, standard wouldn't get you to to, have the total emissions by, 50 by 2050, is extraordinary but, we have to do that because that's part of what will enable growth and, will keep the industry in, a brain to, bear that economic, prosperity, that, it currently contributes, to the world so, we're very focused on it three, out of every four of our research dollars goes, into emissions, reduction, technologies, and it, doesn't matter if it's propulsion, or Aero structures or controls or air traffic management it's, a lot of a lot of investment a lot of money in that and.
We Will be at the forefront I'm very confident, of that Jiji, need a global. Price of carbon. For, that or can you do it without it so the the ICAO, structure, will ultimately lead to trading schemes Europe. Introduced a trading scheme I think it was in, 2007. Or eight you know which, bled over into a regional, trading scheme implemented, around 2011, which. Started frankly to fracture, the airline industry and they were there were some pretty tough. Fights well they're, sort. Of fleet age right and so if the airlines that had older, fleets, then, felt, they'd be at a competitive disadvantage there was some of that but the biggest fight frankly was non, European airlines flying into Europe yeah I'm gonna avoid the tax yeah and European, airlines her subject to the tax they flew out yeah and so all of a sudden you had an uneven, playing field on the economics, which, led to ultimately. The global, discussion that I can't which is the right way to address us so the regional frameworks don't work in our business it's a global business it needs to be managed, as such this, is why back, to where we started it is so important, to create a unified, global structure that can manage Freight issues like this so another area. Where as a global company you, have not. Just a responsibility. Or an opportunity but but a need to work an interest, in working with government, to create you know global governance yeah you see you saw the video I think about space yeah there is so much opportunity in space that'll be harvested over the next 25 years space. Is gonna be very difficult to solve alone. In. Space anything. That is a technological, advantage. He's. Also, fairly, understood. As a weapon, because. Think about it the two main things you care about in space or how to maneuver and how. To sense and. If you can maneuver something in space you can run into something else in space and. If you can sense in space you can gather intelligence, these. Are fundamentally, security, functions. And so, we're gonna live in a world where either. Nations. Look at evolving, space capability, as a threat. And respond, to it by believing the worst or. Create. Mechanisms. And, allow coordination. That. Allow them to believe the best and as, a result open up things like a mission to Mars it'll be very difficult I think for one nation to go to Mars I think, a multilateral, grouping. Could and. So this is gonna play out fastest, you know this is not 2050, stuff this is 2030, stuff. Let's. Open it up for a first round of questions and if you'd please. Just briefly. Say your name, what. Part of the university or the community your firm that'd be great please, hi. Mark thank you for count before coming here my name is Kai I'm a second year MBA I'm, curious to learn more about your career path kind of moving from being a lawyer to, be in corporate, law in the firm and then moving to the business side I'm, alone myself I left law and kind of you know did something less than the business side but not in the same firm and I feel like in the same firm it was kind of regarded oh you're the lawyer how, come we'll put you in business so if you can talk about that that's great, you. Know I start. With the premise that it's about really understanding yourself well. I'll tell you a story so when I was in second grade my mother, took my sister and I out - it, was summertime she took us out to a arts. And crafts shop and. She wanted she was trying to bring out the you, know the artistic side of mark and so, she said buy whatever you want go home and enjoy and so I said well I'd love these stencils, and spray-paint and, and.
So We took those home she had no idea what I was gonna do and I proceeded, to walk out the front door and go door-to-door. Through my neighborhood, offering. For $5.00 to paint those vertical, sidewalk, numbers for the addresses, for my neighbors that. Cleared up about 200 bucks in an afternoon it. Was 1980, and I had a throw out to here so I was just using sex appeal you, know to sell and, and. And a can, of spray paint. In. The rear and that kind of sense of creating. Something for value has just always been a part of my story I've just always loved business I've always loved creating, value and at the same time my father's a political scientist and we sat around the dinner table and we talked in second grade about Montesquieu, and, that. Was a hue and is a huge part of who I am and so, for me the real question was how was I ever gonna integrate these two and I believed for quite a while that I wouldn't that, they would be separate tracks so, when I came out of call. I actually went into business first I thought, to myself I'll do business first it'll kind of be the early Hobby and then I'll go be you know from right my Colleen my career I'll go into law and I, thought government as well and. That's what I was doing so I did five years before law school I had a wonderful business. Set of a business experiences, you. Know I learned, how to build PowerPoint. Models were the best of them you, know PowerPoint, you know Excel, just doesn't matter I can run it and do it I understood everything about a balance sheet or a financial statement so, I got the business strategy experience. In those first five years and then. Made the shift to law and thought to myself okay great set of skills I've got the muscle but, now professionally, I'm gonna focus somewhere else and and. I thought I would do that forever, and the the switch, back to business was very unexpected, but because. I had the muscle when. I ultimately went in-house to Boeing as a lawyer I think, that I, think that you know mentors, and people I worked with saw. The. Way I was, moving, in a relationship to the business not just the law of the business and so, they started to ask me hey would you be interested in, and once. Those questions started to come that ultimately is will have led to my. Winding up back on the business side which, I also loved but wasn't looking for and. You know someday I may wind up back in court trying cases who knows I try. To keep an open mind and you, know to me that's that's a very important, part of career. Progression. Having. The the, right risk. Adversity. You, know turned down don't have the risk-averse e2 high you, have to be one to let go of things good things to. Go do other things and so, that's I'd offer, you that which is know yourself and then be willing to let go of things take a risk and see what comes but follow that passion. Alex. Also a second-year MBA and it. Seems to me that firms like yours are subject, also to unbundling. Pressures, like whether you're you, know challenged, on the commercial side by skype or smaller. Drone manufacturers, on the defense, side or you know space startups like you on Moscow Richard Branson so I'm kind of curious how you see on bundling playing out both at the global scale and domestically, and how it factors in your thinking it's, a great question I will.
Start Off with just a reality which, is it's very hard to do the kinds of things we do. Startup mode it, just, is the integration of an airplane the, development, of a major satellite system, a. Major defense, platform, they take a certain scale that's, very hard to replicate outside. Of the environment one of the big big players having. Said that we. Are paranoid. About. A future reality where. What, is your, right now hard to replicate you. See the scale slide and, more of what we do becomes easier replicate because of unbundling and so, certainly, we think about Gaffa you know the Google Apple Facebook Amazon's. Of the world as, strategic, competitors now in. A way we did not five or ten years ago, we. Are investing. A significant. Amount in, disruptive. Mobility, you, know autonomy, and, personal, personal flying vehicles like electric propulsion, we're. Building prototypes we actually flew the first pav personal, autonomous vehicle our. First pav, last. Week for the first time and and. This is something that you. Know it will. Not be a product, you ultimately find in a store I don't expect but. It's the learning and it's the muscle development and it's be at the edge of that technology, and inside that in this industry, space that's. Going to help us disrupt, ourselves and not, watch somebody else do it so, we're very tuned in to, the risk of this evolution, and our, goal is to get there first before, others do I like. I like our chances remember. Every. Single day 12 million people go. 30,000. 40,000, feet up and every. Single one has, to come down safely it is. It is a grave tragedy, whatever. That doesn't happen and, that. That level of seriousness that, we, place, in, the. Legacy of, aviation. As a secure environment has. To be ported, into this new environment and I. Think that's ultimately a massive. Competitive. Advantage we have because. Of the way we think it's, a it's a cultural, reality. For Boeing I mean, it also means we know how to work well with regulators, all over the world and so, we have right, now either. Boeing directly or through some of our our. Subsidiary. Partners we. Have programs, that are work in places in the Middle East in Australia, and switch here, the United States and different states, there. So we're testing the bounds, from, a regulatory perspective, hand. In hand with a regulator using. Our experiences, of demonstrating. To them how we prove out the new systems, to. Make sure that we stay in front as we prove out new systems here because you know what those, airplanes. When they are pav's. Those. Are gonna be commodities. We. Understand that and so, you know we have our own theory of what's not going to be commoditized, and, we're. Working really hard to, make sure we own that. All. Right back there please. Hello. My name is Dan I'm a first year MBA student can. You speak to. The, future of unmanned aerial systems, and what. Boeing is doing to posture, for this potentially, significant, change to the aviation industry, we. Just launched a company called Sky grid and as a joint venture with, another company spark, cognition. And. This part cognition is a company we own a minority, interest in and have been partnering with for several years they're, an AI company, based, down in Austin Texas and we're. Bringing artificial, intelligence, into, the autonomous, air, traffic management space air. Traffic management is a bit of a misnomer we, don't think this, is, reflective. Of what we are used to thinking about is air traffic management when we start talking about urban mobility we. Think this idea of a sky grid or I like to call it the the, a, iOS, the air operating, system right this. The a OS is ultimately, what we need something. That integrates, every. Aspect, of aerial. Movement, in a. Close-in urban environment, and frankly, then that later ties to.
Every Other step in the transportation, system because someday you're. Not gonna want to think about the steps you're. Gonna want to plot your phone right now and, say. I want, to get to Cleveland, for dinner right now and, you. Want this phone to give you the solution and that solution. May, be a short, override, to, a spot where evita. A vertical, takeoff and landing aircraft, electrically. Propelled will, fly you to an airport put you into a plane move, you to a Cleveland, right. With the exact same, sure on the backside how. The consumer. Interfaces. How. The air. Traffic management for the e VTOL how, all those systems with autonomous, vehicles, are networked and work together and the synced that's. I think what the future is going to be about and so we're positioning ourselves by, making sure we're the front edge of that. Sky grid as, it gets developed and that's just, to give you a little bit of a sense obviously I mentioned the vehicles already those, attentiveness vehicles we're building, will. Be an important part of the opening, but, they're not ultimately the whole game and. I will say that you know from a company perspective you saw a little bit on the video now we, right now are the leader, in drones, in every category except, for one so, we make an underwater, autonomous. Vehicle that's the size of a small submarine, we. Make autonomous vehicles, that can go up and live in space for years by themselves, we, make the small and sit two drones, that you saw there that the military uses for surveillance. You know command and control and. The. Battlefield, awareness the, only thing we don't do is the large, drones that shoot things but. Everything else you know we lead, on in fact, one of my favorite programs with something we call QF 16. And. This has been taped so I'll be careful how I describe it but. That. We there's another, defense. Company in the in, this space that makes a different airplane called the f-16 we're, not a Boeing airplane and when. Those airplanes, get, old and tired, the. Air Force buys them and gives them to us and we. Turn them into autonomous. Drones. So. The Air Force can then use them for target practice, that's, fun. So. One of the hardest things in in business, and you see this time. After time is. Striking. A balance between, what. Is sometimes called managing, the present, and inventing, the future right because you need you, need different people, you need different you have different, metrics, right you're, dealing. You. Know with all of this turbulence, that we talked about in your existing, business and and, yet, you're working, on projects. That are, so. Different, or at least they sound to the outside, are so different from the. Things you're you're know for how do you how do you organize that, how do you how, do you set, incentives. For for for, for, folks how do you how, do you manage talent. Accordingly. Audi how do you build teams how do you do that it's really hard now. We were just having a conversation not. Long ago as an expo about. This very question, and. They basically. They the question that went around the table was okay you know around this table who owns X you. Know what three hands went up said, okay wait a second let's have a conversation obviously. Three hands are deeply, coordinated, but but what, are the lead and support roles you. Have to be willing to take that time to flush that out because you know large. Organizations. Are dynamic, they, are human. Competencies. Reside, all across the enterprise there's, nobody has a monopoly on the talent needed to solve some of these problems and we need to draw in all the places and if, you'd come into our company. Let's. Say 15 years ago you would have found a company that was very siloed, in fact when I started which was not longer I started in 2007, so 12 years ago when. I started and met people the company I said, I am mark I'm new they, would often introduce themselves by their heritage company, because, remember Boeing, is a product of its amalgamation.
Consolidation, Of US aerospace they'd say hey I'm Bob I'm a heritage you know Douglas, guy or. Hi I'm Suzy I'm from McDonnell aircraft, or, hi I'm Jack, I'm heritage Boeing and remember. The merger, was you, know at the late 90s, this. Is a decade, after the merger and, you still got that human, behavior today. That doesn't happen no one would ever introduce, themselves that way today one, Boeing is real. And it's one of our principal, strategic. Prongs one Boeing sounds, simple but it's meaningful, and so how do we incentivize the team we have a one Boeing score we. Did away with individual, business unit scores because, we were seeing that that behavior was persisting, too long so he said okay one company, scored. We. Made. Out of our way and go out of our way to this day to, reward the people who. Step forward and take on responsibilities. That are outside their natural Lane in a, way that's making some other part of the company successful, I was, doing a regional talent review in Southeast Asia recently I had, an engineer in Australia, who, was on the commercial side. Would play a big. Role helping a defense program. Which. Is doing some really exciting clean, sheet designs down there and in. This, engineer, you know it didn't it. Wasn't part of his job jar his. Boss didn't ask him to go do it he just knew there's a problem he said hey can I help they pulled him and he helped and so, as we were doing the compensation, review he said okay we, need to lean. Compensation. To this individual because of what he's done he's, demonstrated, the one bowing behavior so I think that's the first thing you have a culture of a whole company that, wants to see the enterprise, success, optimizes, at the enterprise level not inside, the business unit or functional levels and then, the second thing is you, do have to change people you, have to make sure that any old mindsets, are are, taken out and you have to bring in that, talent, that's excited, and eager to change and transform and I think our Chairman Dennis, Muhlenberg has done a great job of, leading, the way on that. How. Do you hedge against the risk of sort of taking your eye off off. They're. Not legacy, businesses, I mean they're very much you know still the future of the company but perhaps a little, bit less, exciting. Because of the lead times and the complexities. Of some, of these you know newer. Innovative. Product lines that you were talking about yeah we have to remind everybody and, I think your videos like the one we saw earlier important, part of that yeah there's, just nothing that's boring about aerospace. If. You if any of you have had the chance to go to where we build the 737. In Renton, Washington you'll. See a footprint, that's producing. Today 52 airplanes, a month and it. Is 1/3 the size 1/3 the size of, the facility we had about, 20 years ago when. We were producing 22, a month and, everybody. Said 22, is the max there's no way we could ever build more airplanes than 22 in this space so. How do you get from 22, to 52. And we're going to 57, later this year in a, third of the footprint right. You do it because you've. Got incredible engineering. Business, management program management.
Systems, That, are enabling, this acceleration, of flow time that. Are thinking through new inventory adjust, in time structures, that are learning, around the world from people like Toyota in the automotive industry, and. Are not giving up but trying to solve really hard problem and and. Say if you have a team that's excited about solving hard problems yeah, then you get them inspired and motivated on. That mission just as much as the, person is working on but the personal autonomous vehicle of God. Let's. Take another yeah please hi, my name is Tami I'm a fashio MBA. Obviously. We're us, om and our mission is to educate for, business and society so. My question is around bullying, societal. Impact, beyond, CSI. Especially, in the current. Environment and, in the locations, that you are in as offices. And units. It's. A big world and so, you're gonna have to just kind of settle into your chair now I didn't, tell you what we're doing, you. Know we take we take very seriously being a member of the community where we are I think. Today, you know corporations, have a very different view a stakeholder. Interest then probably, a few decades ago from u.s. perspective it's much more globally minded perspective, but. For us we, invest in so many different ways I mean the first thing is successful, businesses, really are win-win. I mean the segment went abroad as when at home when. We win, in, India, it helps our UK business that, creates jobs and, jobs and prosperity that's. The first order of interest in most most nations we go in to never. Ever forget that it's so important, for you and you're running a business that those cars in the parking lot those. Are families, you. Know those are those are holiday, meals where the dinner is provided, for that's a roof over, people's heads you. Have to really deeply, internalize, the weight of what it means to lead a large organization. And literally. Thousands, and thousands of people and families dependent. On you. Making, wise decisions now. The second, thing we do is you, know I'll say around STEM science technology engineering, mathematics. We're big investors, in in. STEM efforts, with, children from early early, elementary, all the way up through high school and university and so wherever you go around the world you'll find us as a leader in programs. And we've taught hundreds, of thousands of children in China millions. Of children you know in the United States we've. Had you know thousands, of university system students, in the UK been a part of our programs and I could, tell you a story everywhere and so that that impact through students, and Stan, is really important to us we also invest, pretty heavily around veterans because. Of our defense and security profile and. So we work with wounded warriors and Invictus, games and we're building housing, for veterans in Korea you, know in Spain we provide scholarships for the children of veterans, who are lost in action you. Can pick examples, everywhere because they're just ways we want to engage or on veterans and then, there are other things we do around just. What we call the interests of our home so whether it's the environmental, activity, we do in a lot of places or. Whether it's working, on health care and a few environments, we choose things that are specific. To the community you, know we make sure to show up in a way that matters to the community some, of the small things we do are. Sometimes, to me the most impactful, because, we can sometimes be a really, positive. Force. In a local community just. By how we operate, that, one example I like, to use is very important in Saudi Arabia one. Of the first companies. There at hire females, into the company and we, now have a finance, departments about eighty-five percent female, and, today. They're running circles, around the incumbents, that were there and a lot of them are now gone the incumbents, there's, a reason for that you know just that the dynamicism, the fire and the vigor and the energy and. And, that's fun because that has now changed the environment that. We've seen a real groundswell, in female. Employment, in Riyadh that's, that's neat to be able to be a part of that and, I'm walking down the halls and one. Of our one, of our off sites in California a year or two ago and I. Am come face to face with one of our female. Leaders who. Says market I don't recognize, her because. The only time I've seen her she's been in abaya and. Here she is and you know jeans and Western clothing and I just like it's just one of the hair. On the back of my neck kind of stands up and tingles that we, get to be a part of massive, cultural change that's happening around the world right now in good, ways so. So in the impact for, us you know comes in so many different ways we talked a bit about the environment we have, been a part of impact there noise and, communities where we have reduced noise significantly, this airplane.
I Think, reduced noise but about 40 percent from the prior version significant, upside. Effect for communities so, it's a constant, part of how we think through our responsibilities. Yeah. That's. A great question. Let. Me first kind of start on you know this it comes to different levels right a commercial business and our defense business, on. Our defense. Business you know what we do is, gated. By. A very rigorous control, system, the US trade control system and the, u.s. Alliance Network and so, we don't have to pick and choose in. That business so much as we, have we have a national. Interest from the US perspective, that guides us and where we start and follow we. Certainly choose, particular. Parts. Of industry, to be in and out so there are certain products you know that we don't build that, we could have chosen to be in so it ends up factoring, more into product, in product. Participation, decisions than, it does market, decisions most of the time having. Said that there there are some times there are some moments where. You know you'll. Never see it I'll never talk about it but, we're you know we may not be selling a particular, product or service to a particular, customer for whatever a particular set of reasons but, but I want to be very clear that is, a profoundly. Difficult, question. There. Is no easy answer and there, are no fast answers, because. In our business you heard. Earlier about the cycle, time 12. Years on products, right. Backlogs. In five to seven years and and, frankly. Histories. With nations, that ordinarily, date, in the 50 to 100 years depending, on the nation and so. The, Boeing relationship. With these markets, tends to transcend. Governments. And individuals, in. A way that's very important, to keep in mind we. Don't want to swing you. Know with the fashion, we. Want to be consistent and steady, and in that sense conservative, because. It's ultimately the right thing to do in our industry for all of our employees for. The customer, etc. And so so we're very thoughtful, about those that are very hard decisions, and. We take them extraordinary extraordinary. Seriously. But we keep our eyes up on the, horizon for those decisions. Time for one more question. All the way in the back yes please, hi. My name is Adriana I'm a first year MBA here. You. Talked, a little bit about like, the responsibility, that you have on your shoulders as an individual. Leader and I know we spoke a little bit about how, Boeing, makes decisions, about what business to go into I'm, actually curious just about your own ethical. Compass and your own kind of moral, compass. And I'm curious about how, you make, decisions as an individual, on what you when is like no go, no go great. Question oh when. I was when I first got to China, yeah. I was in China for three and a half years in Beijing I first, got to China I was interviewed, by. One. Of the local Chinese. Papers, as a standard, welcome. To the market kind of an interview and, the, very last question I was asked was when I wasn't prepared for and and. The question was you. Know mark. How. Did they frame it something. To the effect of mark what's. The most important, thing in your life. Like, wait a second you know this is a business interview, I mean what's the most important thing in my life and. I gave some some. Ridiculous, you know answer, that, I'm sure it sounded perfectly plausible at the time but, it wasn't the most important thing in my life and and I left, that moment. And I thought to myself I gotta come to grips with, this, and. The most important thing in my life is my faith in Jesus Christ and, so. I had to figure out how to speak, that as a representative of the company and in. An environment. We're talking about faith, wasn't. Naturally, going to be an easier. First order thing to do, but. It actually was a really healthy experience. For me because kind of failing in that moment gave. Me a chance to reflect, and to and, to spend time really thinking about how to talk about my, values, and what. I hold dear and. And that has allowed me to really own that. Base of Who, I am and what I value in prized most and. So you, know when you ask the question of you know what's, my, you, know core you know center for my values well my faith is my core, how. Does it express itself in. You know my work at, the company I hope. It does every day but. Obviously it's not something I talk about every, day and you, know if you hadn't asked a question I never would have said anything but you've, asked the question and, I'm gonna share all that I am and I, think that last point is really important you know sharing, who, you are as a leader is fundamental.
If, You're not willing to share yourself you, will be an ineffectual, leader and so. You have to have the courage to be rejected, for who you are and if. You can take that kind of courage turn into fearlessness, it. Drives you and whatever you do you, can have success in, a way that's very consistent with. What I'm sure are, the principles, that you hold most dear to yourself so, just understand. That there's courage, that's required that it's not easy that you will fail and, sharing yourself but. The more you do it the more strength, you will find in it and frankly the more fun you'll have is that, that's just a little part of my in my story, so. I was going to invite you as we wrap up to share. Some words of wisdom for. Soon-to-be. Graduates, entering. Professions. And and and you did that incredibly, eloquently, already you know because you asked a terrific, question. But. You. Know people are looking at at this sort of world of turbulence. You know opportunities, all, around the world in different sectors. We're. Not in the world of the Graduate anymore where it's like listen plastics. You. Know that's your wedding so thermoplastics. It just. So. You. Know advice. What. Should people be looking out for is they're thinking about you, know questions, like the one you asked you know I've always thought of myself as this but I'm pivoting to something else well what. What matters. I'm. Gonna share with you advice I got from somebody else because, I love this advice and so that's that's I have to multiply it out there an, early mentor, of mine had done a lot of venture capital work and he. Had invested in probably over 500 companies, and I sat down and I asked him I said you, know what have you learned if you could distill one lesson from investing, in 500, companies and losing. A lot of money making a lot of money what's, the lesson. And he said it's very simple he. Said you could send me you. Know a great plan, and. Mediocre. People and I, will lose money, or. You can send me a mediocre plan, and great people and. I will make money and I've. Internalized that, for myself in terms of job decisions, as trying. To have a soul. Decision. Point being people people, people who, am i working for who's, working around me who's working for me and if, I can put myself in a place where I've got great people in those dimensions, it's, always a great experience and I'm, gonna tell you it's a lot easier to say than it is to do because.
Title. Money. Geography. These. Things, become. Really. Hard to ignore. Remember. Strategy, is the art of choosing. What great thing not to do so. If you really if you believe my advice you. Would find a way to set those more, to the side and just. Choose based on people, and and. I think that means that whatever industry you go into. If. You go into with the right people you're. Gonna adapt it might be a terrible, plan for plastics, you, know in 2020, but. If you go into it the right people you're gonna wind up in thermoplastics. Partnering. With some incredible, engineers I know in the Netherlands, and being. A part of the aerospace supply, chain and it's. Gonna be sad and Boeing's gonna have to come buy you out because we didn't do it ourselves. You. Know I mean that that's the exciting opportunity, to, understand that great people will always pivot will. Always create rich rewarding, experiences, and will always make you better when, you're working with them go. Work with people who make you better that's. That's the best advice I can give it that I once got great well you've given us lots of advice there lots of things that I learned in, this conversation, and you, know you talked about when you win abroad win at home which, is a very elegant way of getting. Through some of the noise and the turbulence, and perhaps most importantly, the kind of zero-sum. Mindset, that seems to have set in you, were talking about opportunities, in turbulence, and these. Are in your awards but what I heard was, you, know when things are easy and and and stables, you know anybody can succeed but this is a time when when those who have, that ability. To connect, to look around them to to, engage to build personal relationships to, take risks to be innovative will thrive and then. I think you you, said that you know smart people are going to be drawn to difficult, problems and and you talked about the. Environment you talked about the future of aviation. As, a set of really, interesting, problems. That will draw good people and and one, thing that I keep. Is how. Many times you said fun this. Is fun and that's fun and and and, fun is so incredibly important, so I want to thank you for for, your passion, and and and for the fun that you've brought to this conversation, for the work that you do and. Most importantly, for for sharing two days precious. Days with us and educating, all of us about. About, your work thank you so much.
2019-02-17 02:11
