REINVENTING Boeing — A True Story
The Ultimate End Benefit — Customers’ Safety Peace of Mind
As recently promised, this is my third REINVENTING post. All my REINVENTING publications are based on true stories and apply to a wide range of companies — large and small. I don’t care if CEOs collect $50MM annual salary, $5MM, or just $50K — and if they run public or private companies. My strategic advice is pertinent to all types of companies and to the VC/CVC/PE funds — that invest in such… So far, I covered my interactions with the following companies:
Indigo Books & Music Inc. — a $29MM Market Cap company
“Indigo Books & Music Inc. is a Canada-based book, gift and toy retailer. The Company operates stores in approximately 10 provinces and a territory in Canada, and offers online sales through its indigo.ca Website. It operates approximately 90 superstores under the banners Chapters and Indigo, and approximately 120 small format stores under the banners Coles, Indigospirit, SmithBooks and The Book Company” — CNBC
Booking Holdings Inc. — a $66B Market Cap Company
“Booking Holdings Inc., formerly The Priceline Group Inc., is a provider of travel and restaurant online reservation and related services. The Company, through its online travel companies (OTCs), connects consumers wishing to make travel reservations with providers of travel services across the world. It offers consumers an array of accommodation reservations (including hotels, bed and breakfasts, hostels, apartments, vacation rentals and other properties) through its Booking.com, priceline.com and agoda.com brands. Its other brands include KAYAK, Rentalcars.com and OpenTable, Inc. (OpenTable)” — CNBC
In this post, I will describe my past interactions with a much larger entity — a $106B Boeing…
The Past
According to ZACKS, “The Boeing Company is the largest constituent of the Dow Jones Industrial Average. The company’s premier jet aircraft along with varied defense products positions it as one of the largest defense contractors in the United States.
Its customers include domestic and foreign airlines, the U.S. Department of Defense (DoD), the Department of Homeland Security, the National Aeronautics and Space Administration (NASA), other aerospace prime contractors, and certain U.S. government and commercial communications customers. Currently the company operates in four segments:
Boeing Commercial Airplanes (BCA) Segment — This segment develops, produces and markets commercial jets, along with providing related support services. The company is a leading producer of commercial aircraft and has a series (737 Next-Generation narrow-body model and the 747, 767, 777 and 787 wide-body models) of commercial jetliners. Segment revenues in 2019 were $32.26 billion, representing 42% of the company’s top line.
The three units that comprise the Boeing Defense, Space & Security (BDS) Segment are as follows: Boeing Military Aircraft (BMA), Network and Space Systems (N&SS) and Global Services and Support (GS&S). The segment recorded revenues of $26.23 billion in 2019, contributing 34.3% to the company’s top line.
Boeing Global Services (BGS) Segment — This segment brings together certain Commercial Aviation Services businesses and BDS businesses. It provides parts, maintenance, modifications, logistics support, training, data analytics and information-based services to commercial and government customers worldwide. Revenues for this segment in 2019 amounted to $18.47 billion, comprising 24% of the company’s top line.
Boeing Capital Corporation (BCC) Segment — In the commercial aircraft market, BCC provides selective financing solutions for the Commercial Airplanes segment customers. In the space and defense markets, BCC arranges and structures financing solutions for BDS segment government customers. Revenues for this segment in 2019 amounted to $0.24 billion, comprising 0.3% of the company’s top line.”
The Present
Boeing’s recent predicaments are well summarized in just a few paragraphs on Wikipedia:
“After two fatal crashes of the Boeing 737 MAX narrow-body passenger airplanes in 2018 and 2019, aviation regulators and airlines around the world grounded all 737 MAX airliners. A total of 387 aircraft were grounded. Boeing’s reputation, business, and financial rating has suffered after these groundings, questioning Boeing’s strategy, governance, and focus on profits and cost efficiency.
In December 2019, Boeing announced it will suspend 737 MAX production from January 2020. Soon after, on December 23, then CEO Dennis Muilenburg resigned and was replaced by David Calhoun.”
COVID-19 didn’t help either and Boeing’s stock dropped to the levels of $89 per share — a far cry from peaking at the $391 per share during the last 12 months.
The crisis is far from over and the severity of the situation can be easily sensed by looking at just a few recent headlines. According to CNBC:
· “Two key U.S. senators are circulating a bipartisan draft bill that would reform how the Federal Aviation Administration certifies new aircraft in the wake of two fatal Boeing 737 MAX crashes that killed 346 people.
· The measure seeks to eliminate the ability of aircraft makers like Boeing Co. to unduly influence the certification process and marks the most significant step toward reforms following the 2018 and 2019 crashes, which sparked calls to change how the FAA approves new airplanes.”
· A bipartisan group of U.S. senators introduced a bill to reform aircraft certification following two fatal Boeing 737 Max crashes. The legislation called the Aircraft Safety and Certification Reform Act of 2020, would give the FFA new authority to hire or remove Boeing employees conducting FAA certification tasks, appoint safety advisers and grant new whistleblower protections to employees, among other provisions.
· Boeing’s backlog of aircraft shrank to 4,774, the smallest since 2013. New plane orders were for freight aircraft while most of the cancellations were for the 737 Max.
· Boeing expects to make its 737 Max recertification flight by the end of June, and the company has drawn up a flight plan that will demonstrate that the plane’s updated flight-control software allows the Max to safely operate in various scenarios.”
The Future
I have no doubts that Boeing can fix the technical problems and deliver a truly superb aircraft to customers around the globe. However, it became painfully clear to all that the entire world is watching Boeing like a hawk and that much more is needed than a software fix — to satisfy the public scrutiny and the regulators …
Yet better features and product enhancements will only take Boeing that far. The stakeholders demand to see a SIGNIFICANT END VALUE — which translates into delivering a PEACE OF MIND to Boeing’s customers! And the only way Boeing can deliver on its promises is by making a radical improvement to monitoring airplane’s SAFETY…
Considering the above, I contacted Boeing’s CEO, David Calhoun, and even Boeing’s Corporate Venture Capital arm (Damineh Mycroft and Brian Schettler). My messages were quite concise and straightforward: “It has been a very difficult year for Boeing, and COVID-19 didn’t make it any easier. So, I put myself in Boeing’s shoes and came up with the greatest growth opportunity! It’s a turnkey solution to elevate Boeing’s damaged brand & bring massive new revenues. Moreover, it will turn the tables on negative narratives in one fell swoop…”
In my previous posts, I described the REINVENTION PROCESS as a 5-legged stool that includes:
· OPM — Using Other People’s Money
· Push/Pull — Adding New & Untapped Revenue Streams
· Noncustomers — Focusing On New & Untapped Market Segments
· Business Model Innovation — As Important As Technologies Behind It
· Operating Advisor/Mentor — Hands-On Assistance With Strategy AND Execution
In this post, instead of describing the stage of acquiring noncustomers, I will focus on the Push & The Pull process — that brings new & untapped revenue streams. And in the case of Boeing, the secondary and tertiary revenue streams will not only generate new revenues but also significantly enhance the company’s brand. More importantly, the new service will also create a massive demand for existing products — which I call: The Pull Effect…
Reinventing Boeing’s Black Box
According to Wikipedia: “A flight recorder is an electronic recording device placed in an aircraft for the purpose of facilitating the investigation of aviation accidents and incidents. Flight recorders are also known by the misnomer black box — they are in fact bright orange to aid in their recovery after accidents.
There are two different flight recorder devices: the flight data recorder (FDR) preserves the recent history of the flight through the recording of dozens of parameters collected several times per second; the cockpit voice recorder (CVR) preserves the recent history of the sounds in the cockpit, including the conversation of the pilots. The two devices may be combined in a single unit. Together, the FDR and CVR objectively document the aircraft’s flight history, which may assist in any later investigation”
All around the world, the Transportation Safety Boards (TSBs) investigate aviation accidents and analyze the Black Box with great scrutiny. However, quite frequently, the black box cannot be found at all — as it may be resting at the bottom of the ocean. Or, it is so much damaged that it’s rendered completely useless to draw any meaningful conclusions about the cause for the accident.
But what if the black box data was constantly transmitted via satellites and relayed back to Earth — to the flight control centres on the ground? Flight data would have been readily available ALL THE TIME. And it would help not only in case of accidents but also in an ongoing diagnostics and preventive maintenance of the airplanes — 24/7!
Well, as it happens, Boeing also owns its SPACE UNIT. So, launching the entire constellation of satellites to cover every plane in the air — could also create a profitable service. Not only for the planes from Boeing but also for all the other planes from the company’s competitors, such as Airbus…
With Boeing’s new Black Box Services, it’s not just the individual airlines that would welcome such an offering. All the FAAs of this world and all the TSBs could turn into Boeing’s greatest champions and be EXTREMELY persuasive in front of the politicians. So, Boeing could benefit from a significant injection of public funding, too — to pull-through such an important development. What a great example of The Pull process — that doesn’t get much better than this…
BTW, if Boeing decides to ignore my advice — perhaps Elon Musk will step-up to the plate? He already REDEFINED the entire Space Travel VALUE INNOVATION by REDUCING COST of reaching the Space Station and by INCREASING VALUE of SpaceX services to NASA…
And in light of increasingly popular food delivery services right here, on planet Earth — Elon Musk turned SpaceX into the world’s most famous Uber Eats for NASA. And he did it VERY elegantly & EXTREMELY successfully!
Besides, SpaceX already applied for the telecommunication licenses in Canada — to provide high-speed Internet services to rural communities. So, if Elon Musk can use his satellites to offer Netflix binge-watching — what exactly prevents Boeing from offering data streaming from the airplanes? After all, the bandwidth of such data transfers is less demanding than streaming HBO videos…
In addition, let’s not forget that Tesla’s Market Cap is already hovering above $185B — which is much higher than Boeing’s $106B. So, companies like Boeing and their BODs should become much more open-minded to outside advice — in a hurry! Otherwise, they will follow the destructive path of GE — which Jack Welch described so eloquently in the past: Without BOD’s accountability, management begins to: “turn their faces toward the CEO and their asses toward the customer”
Granted, Boeing is at a serious disadvantage here in comparison to SpaceX — they don’t have their own Elon Musk. But they have the second-best — me…
I’m at that stage in my life where I don’t care about BOD politics and water-cooler gossips. Nor do I offer fake flatteries to CEOs. All I care about is how to solve CEOs’ problems & deliver results. So, I am in the business of joining Advisory Boards/BODs of the most innovative companies all around the world. And as one of the ultimate BusinessAI™ veterans on the planet w/ over 30-yr hands-on AI expertise, I also bring supreme business savvy to separate the wheat from the chaff.
As an Operating Advisor/Jack of All Trades, I work with VC/CVC/PE funds and the companies they support — at a granular as well as strategic levels. And in addition to focusing on organic growth, my ground-breaking RedCarpet™ revenue acceleration strategies include Design, Structure, Finance, and Deployment of Opportunistic Joint Ventures. It is delivered at no cost to the client company, as we leverage “other people’s money” — an ingenious alternative to costly acquisitions…
My turnkey approach helps to raise 10X more capital at 1/10 of the cost and it is based on structured finance expertise. We financed over $1B of Renewable Energy projects in the past and now apply our expertise to the Finance, Healthcare, Fintech, Construction & Manufacturing sectors. And if our unique value innovation does not generate the desired results — we do not get paid…
What I learned over the years is that it is not just technology innovation, but also the exponential increase in the value offered to clients at a much lower cost — that makes all the difference. Yet I see too many companies focused on pushing their product out the door — while losing ~70% of additional revenue streams.
My proprietary “The Push, The Pull and The AI Bull™” process, generates huge secondary and tertiary revenue streams. Such a strategy is scalable and sustainable — resulting in significant revenue smoothing. It allows me to tackle rapid innovation issues; disruptive marketing strategies; operational efficiency improvements; brand enhancement; and securing growth capital.
In some cases, I step-in as an interim CEO to significantly accelerate scale-up and expansion. The emphasis is on EBITDA & Revenue Acceleration, Margin Enhancement & Opening New Channels in diverse markets. Unique pattern recognition abilities allow me to see what is still missing & how to maximize business offerings & profitability.
SELECT ACCOMPLISHMENTS: Using AI in CT medical diagnostic, financial fraud detection, solar PV, wind, WTE, energy efficiency, etc. Finance skills: equity, non-recourse debt, balance sheet financing, and tax equity. I also took a tiny startup public, building a $135MM enterprise & received grants from NRC & DND. Academic R&D collaborations included: UW, UofG, UofT, and MCC Consortium in Texas.
