I'm surprised almost no one is also talking about the 2010 Boeing subcontractor Ducommun 737 NG (-600/700/800/900) critical structural elements deficiencies scandal and coverup Al Jazeera exposed. Several passengers have also already died from this on runway overruns and hard landings when the fuselage breaks up whereas it didn't used to happen on previous 737's.
It's somewhat amusing to see the pilots in that thread criticise airbus for having computer systems that take control away from the pilot, given what we now know about MCAS.
"If you're Boeing, you realize you have a multi-billion dollar liability on your hands that will bankrupt your company 10 times over if you actually had to tear apart and inspect or rebuild all the suspect aircraft. So, you bury the reports, fire anyone involved, call in all your favors and unleash your lawyers with all the political power you have as a major defense contractor to make it all go away. (The program suggested that's exactly what they were doing)."
I just watched it. This is bad. Boeing, with the help of the American government, is covering up serious issues with how the 737NG is being built with faulty parts.
In both cases, management appears to have applied significant pressure to the teams doing the work, pushing them to achieve extremely unrealistic targets. And in both cases, the results of that incentive ended up being extremely detrimental to basically everybody (to the general public in the form of identity fraud / unsafe aircraft, to the companies in the forms of fines / grounding / PR / etc).
I doubt anybody in Boeing’s offices woke up and thought “what a nice morning! Time to go to work and build some dangerous airplanes that will kill people, so that I can get slightly richer”. I suspect the execs involved were just amazingly (and potentially even criminally) negligent: in their minds, they were pushing their employees to make the airplane actually similar enough to qualify as a “minor” change, without any of the oversight that would have caught what was actually happening. They turned a blind eye any time somebody told them that the new plane would require larger changes, and the results are unsurprising: their teams declared all the changes “minor”, not because they’d successfully made only minor changes, but because exec pressure mandated that all changes be “minor”.
While reading your text I was thinking about Volkswagen, diesel cars and their defeat devices. This article (sorry for German only writing)
https://www.auto-motor-und-sport.de/verkehr/audi-abgasskanda...
states exactly opposite! The VW guys were writing poems for their clever defeat device! I am pretty sure, that some people at Boeing were also clapping hands about sales potential and cost savings of the new planes. There are more evil people in the corporate floors than you think. And top management plays with them!!! There is no way to build in defeat device in millions of cars without top management agreeing. I can guess, that Boeing’s management had enough clues, that their software wasn’t in the best shape.
I think you're probably correct but shaming the engineers in the hopes they'll stop it has repeatedly failed to work: that's why this isn't a thread about VW. IMHO it's because actions from a single individual carry too much risk for enough to accept. It needs collective bargaining.
I don’t think anybody is arguing that Boeing execs hate money, or weren’t excited to make loads of money. And, as I wrote, the incentive structure the Boeing execs created has an incentive structure whose outcome was incredibly dangerous. Realizing those incentives required that the executives turn a blind eye to how the problems were being solved. But I think it’s pretty implausible to suggest that the “evil people” at Boeing we’re clapping their hands about savings with an understanding that they were trading human lives for those profits. It’s tempting to imagine that the executives of corporations are all comic villains, sitting in their offices plotting the demise of humanity, but to imagine them in that way is detrimental to the goal of actually avoiding these problems. If we treat corporations as if they’re comic villains, we ignore that they’re actually made up of normal people with a variety of social and economic incentives, and being aware of those incentives is crucial if we’d like to actually change corporate behavior.
I agree with you that it doesn't have sense trying to discuss about the abstract evilness, but I claim that the Boeing's top brass should be brought to the court!
If those who make decisions aren't held accountable, the results are provably terrible.
"I was ''just'' securing the profit for my shareholders" shouldn't be an excuse.
Why should Boeing and Wells Fargo executives be afforded sympathy and mercy routinely denied to people far less fortunate and whose actions have far fewer consequences?
Carrie Tolstedt of Wells Fargo is as close to a comic villain as you're going to get, designing a system which forced multitudes of employees into unethical actions. And even after clawbacks Tolstedt ended her career tens of millions of dollars ahead.
Executives are already so coddled and protected from failure that terrible actions are rewarded and inevitable.
Speaking morally, I believe in having empathy for everybody. The fact that some people don’t behave that way doesn’t cause me to act in kind towards them. That said, empathy (which is what I’m suggesting above) is not “sympathy and mercy”. I haven’t suggested at any point in this thread that we should feel sympathy or mercy for anyone at Boeing (or Wells Fargo).
Speaking practically, treating execs as comic villains gets in the way of actually fixing their behavior. There are a variety of ways to force corporations to behave differently, but they all start with actually figuring out why they act this way in the first place. Otherwise we end up making the same mistake as Wells Fargo and Boeing: if we apply pressure on them to act better without clearly understanding why they’re doing what they’re doing, we’re just going to incentivize them to misbehave differently to get around the new rules.
> Speaking morally, I believe in having empathy for everybody.
I take you at your word. It's just hilarious that a post urging empathy for executives floats to the top while it's bootstraps for everyone else. [EDIT: in other upvoted HN posts, not necessarily yours.]
> There are a variety of ways to force corporations to behave differently, but they all start with actually figuring out why they act this way in the first place.
It starts with whittling down the outrageous soft power enjoyed by corporations, their owners, and their agents — and which you are contributing to by delaying, denying, and softening accountability for the most outrageous of executive actions.
Not the op, but this is a schism in attitude that I frequently face:
- I believe that "understanding your enemy" ("Empathy") is absolutely positively crucial in successfully fighting your enemy
- This frequently gets interpreted as "Sympathizing with your enemy", being too soft, making excuses,etc; by those who want simple action.
So for example, I think we need to understand what makes a terrorist, how they come to their beliefs and motivations, and what we can do to prevent that. Others interpret that as being 'soft on terrorism', and we just need to 'bomb them into oblivion'; whereas I fear that while actual physical fighting is definitely a critical part of the overall campaign, there's a tremendous danger it'll just create more terrorists because we haven't eradicated the actual root source.
To me, striving to understanding an enemy doesn't prevent direct, firm action, if that is then convincingly found to be the most effective and efficient way of fighting them. In turn, I feel understanding your enemy prevents random, ineffective, emotionally-satisfying but results-lacking action. Others, of course, will disagree.
So - to the point of the article and discussion: I agree with op, if that is their intention, that you have to look at incentives; I've worked in corporate world for decades and I fully agree that you can have whatever value pledges, official goals, mission statements, and even official rules you darn well want to; and they're completely irrelevant if actual incentives, when summed out, reward a different behaviour. External and internal rules, and power, and statements, and goals, are all factors in incentives; as are the more subtle, emergent incentives. Going for a blunt approach may shift those incentives insufficiently far, or in an incorrect direction.
100% agreement with how you put it. I believe it’s crucial to empathize with everyone. Sympathy is fully separate, and not something that I have for the relevant management staff at Boeing/WellsFargo/etc. But empathy is what allows us to understand why somebody wants to do something, which is pretty necessary if we intend to alter that behavior.
That Wells Fargo article you cite above vilifies low-level bankers as the true bad actors:
> “The real crime here is that low-level retail bankers set up fake accounts in order to scam Wells Fargo out of their modest paychecks” just doesn’t work as a story of the scandal, even if there is a certain partial truth to it as a mechanical matter.
Meanwhile, the upper managers who put in place the incentives that guaranteed fraud would occur by low-level bankers are only guilty of "mismanagement":
> In the case of Wells Fargo, though, I suppose it’s possible that the attorney general thinks the shareholders really were the victims. They didn’t benefit from the fake accounts, and it is not crazy to say that they were harmed by Wells Fargo’s mismanagement.
Carrie Tolstedt took home tens of millions of dollars for inducing fraud, but only the scapegoats who did the dirty work for her are held morally culpable. The author doesn't even notice that just like those low-level retail bankers, Tolstedt scammed shareholders out of her (enormous) paycheck.
It's a perfect example of extending excessive empathy to executives while hypocritically withholding it from others.
And that is exactly what's happening in this thread. Executive malfeasance gets endlessly excused away as the product of poor incentives, because in your quest to humanize executives, you succumb to the perfectly natural human foible of "to know all is to forgive all".
Now, I'm not saying you're a mustache-twirling villain. But people who are unable to apply their principles when the chips are down and hold executives accountable are at the root of the problem.
Even the quote you cited doesn’t “vilify” anybody. It points out exactly what I described above: Wells Fargo execs created a situation with perverse incentives, no oversight, and reckless disregard for both, which led to low-level bankers predictably misusing the system. It’s not in dispute that the low-level bankers were the ones creating the fake accounts, and as the article notes, this wasn’t even desirable for the execs: they wanted the accounts because accounts lead to income, but faked accounts do not lead to income.
Your comment again points to some perceived inability on my part to “hold executives accountable”, citing some flaw with my principles. I’d invite you to review the site guidelines and my comments: at no point have I suggested that the executives aren’t culpable in both the Boeing and Wells Fargo examples. You seem to be inferring that empathy is incompatible with judgement, and that misconception is basically the heart of what I’m trying to call attention to in this exchange.
> they wanted the accounts because accounts lead to income
Why is it a given that low-level retail bankers wanted faked accounts for the sake of their income, yet it is outside the realm of possibility that Carrie Tolstedt wanted faked accounts because they led to income for her — to the tune of tens of millions of dollars?
Why is it utterly inconceivable that Carrie Tolstedt is corrupt?
You seem pretty dead set on imagining that the only options are cartoon villainy or total innocence. I’m not sure how else I can frame the above points, given the continued selective quoting and misreading of the cited articles (notably, the Wells Fargo incident was not net-profitable for Wells Fargo, and was barely profitable at all even before all the government-imposed penalties).
I guess we’ll have to agree to disagree about the strength of my principles.
I love this, and 100% agree with this. People are just so impulsive and immediately flame you if you dare to say you emphathize with terrorists, or gun shooters. It's that impulsiveness that leads us to never make any progress in solving the root cause. Reactionary judgements accomplish absolutely nothing.
> I take you at your word. It's just hilarious that a post urging empathy for executives floats to the top while it's bootstraps for everyone else. [EDIT: in other upvoted HN posts, not necessarily yours.]
In some ways, having empathy (or even sympathy) for executives in situations such as this is a more damning call to action.
If a problem is a result of evil people doing evil things, then the obvious solution is to punish the evil people. If instead a problem is a result of good-natured people following a system with broken incentives, then the only effective response would be large-scale, systematic change.
Unfortunately, we don't often see things this way as a society. Our drive to action seems directly correlated to our sense of moral outrage, and we skip over the "broken system" step between "freak accident" and "mustache-twirling villain."
They're not mutually exclusive. Broken incentives reward broken individuals and punish those who act in more ethical ways.
The legal system distinguishes between deliberate premeditated murder and accidental or negligent manslaughter.
Corporate ethics seems oddly resistant to understanding the distinction. If your actions cause significant harm the profit motive gives you very strong legal protection - a literal get out of jail free card. While it's not completely reliable, it's certainly more powerful than any non-corporate defence where culpability is obvious.
You're far more likely to go to jail for corporate fraud - which is an outrage against the profit motive - than for life-terminating harm inflicted on innocent bystanders.
This has the predictable effect of selecting executives who either don't understand that their actions cause harm, or don't care.
The system selects the people, and the people propagate its values. Neither is wholly innocent.
Every so often someone with a genuine ethical sense says "I'm not doing this." And they often lose their job when they do.
Maybe I'm wrong but it feels a bit simpler than people being evil or malevolent. It's more like squeezing a juice out of a lemon: at first, it only requires light pressure to get the juice, but as you want more and more juice, your grip must get increasingly tighter. At some point it becomes clear you need a new lemon to get more juice, but for some reason it seems cheaper/more effective to keep squeezing the one that has nothing left to give.
So it is with businesses extracting value (/making as much money as possible).
The tricky part is figuring out the “for some reason” in your metaphor, and then designing a system that causes them to rethink that calculus instead of just finding a different way to keep squeezing the same lemon.
> Maybe I'm wrong but it feels a bit simpler than people being evil or malevolent. It's more like squeezing a juice out of a lemon: at first, it only requires light pressure to get the juice, but as you want more and more juice, your grip must get increasingly tighter.
It's like the idea of "pot odds" in poker: Boeing here wasn't just looking at the marginal return on investment, it was looking at the cost of essentially deprecating an entire line of aircraft. It would lose value from its entire "installed base" of customers, as competition from Airbus would become more viable.
In economic terms, the marginal value of the investment was probably close to nil, but it protected profitable infra-marginal investments. Interestingly, this seems like a problem that large companies face far more often than startups, which is perhaps why conventional wisdom thinks the latter are far more 'agile'.
I dont believe your point at all. Do you know how high the psychopath rate amongst managers is? You would be shocked.
I really dont believe that someone having fought their way up to a job that pays a 7 figure number per year actually cares about normal human people anymore. I just dont.
> Do you know how high the psychopath rate amongst managers is?
What I've always wanted to know is: do psychopaths make better managers? Do they somehow gravitate towards management positions in some other way? Or is it the management position that brings out the psychopath in people?
I've had 2. No, they're horrible to work for. Indifferent to you as a human, bullying, lying, destructive (edit: and manipulative). The best bosses I've had, the ones that got the most out of me, were humane and decent (Also 2 of them).
> Do they somehow gravitate towards management positions in some other way?
I guess so. Power, control, money (all of these really boil down to power).
> Or is it the management position that brings out the psychopath in people?
No. A psychopath is a definite mental phenomenon that AFAIK is something you're born with. It is thought to be perhaps made worse by bad childhoods, but it certainly isn't something you develop if you weren't born with it.
What I do see in those psychopaths that I recognise as such is that they often really driven for money/power. They're often great fun to be with because they're so impulsive, but wear you down with constant demands.
Above is just my personal understanding and experiences.
They were probably not thinking about human lives at all, merely about how to game the regulations they had to meet. It's not mere negligence, but intentional short-sightedness. Forget that this is about human lives, it's merely about red tape you need to get past.
That's the real corporate evil: losing sight of the big picture of what your product is supposed to accomplish in the world, and see it merely as a vehicle for profit, where the regulations are merely obstacles you need to bypass, rather than a necessary good that ensures your product is safe and provides real value to the world.
And I fear this kind of thinking is incredible common in large corporations. It doesn't always lead to disasters like the 737 Max, the VW emission scandal, or the Fukushima or Deepwater disasters, but losing sight of the larger context of what you're doing does enable those kind of disasters.
After the mortgage crisis and other banking misbehaviours, all people working at Dutch banks (including developers like me) are required (and trained, to some extent) to always keep this big picture in mind: what does this decision mean for the company, the customers, the shareholders and also society in general. All 4 need to be balanced. Maybe this should be more common among all industries.
Corporations certainly do need to be held accountable for their actions, and for the corporate culture they create, because that will impact the actions of the corporation as a whole. If everybody just focuses on the immediate requirements (passing that emissions test no matter how, making the plane pretend to be the same in order to pass certification) without considering the larger picture, that is a result of the corporate culture and the way performance of employees is measured. The corporation is absolutely responsible for that, and yes, maybe it should be considered evil when upper management fosters or allows a culture of this kind of short-sightedness.
While I don't mean to defend the multi-step process that led to the 2 737 Max crashes, I think this is a case where many actors combined, with most every individual action apparently seeming fairly reasonable, to achieve an outcome that was unreasonable in aggregate. (This excludes a high-level systems engineering oversight function, of course.)
The airplane needs more efficient engines.
The new engines are physically larger and the space underwing too low.
Let's move the engines forward.
That causes the stick force curve in an uncommon region of the envelope seen mostly only when hand flying and out of normal envelope.
We could fix the stick force curve by actively displacing the horizontal stabilizer under those conditions.
We can limit the authority of the stab under MCAS to 0.6°, a figure which would only be a slight hazard to flight as pilots could easily override.
We can prevent the need to retrain pilots (even if only differences training), but this requires us to use only a single angle-of-attack sensor to drive the system. That's OK, because the 0.6° limit is safe.
Later, someone else decides to give MCAS a little more control authority. It's not clear (to me) that the 0.6° prior limit was documented as something that was being relied on by regulators or not. A "safe" system being given a little more authority in the name of safety doesn't sound so bad, after all.
No analysis appears to be done for the case of multiply resetting the MCAS system, allowing for progressively more authority.
No analysis appears to be done for the fact that line pilots were relying on the "control breakaway" to interrupt automated trim motion on legacy 737s. Pilots using this undocumented technique may have become overly accustomed to it and assumed the plane was designed that way. Of course, MCAS, being a system to protect the stick force curve during manual flight, could not reasonably be disabled by a control column breakout switch, because it's designed to protect the aircraft exactly during hand flying situations where the pilot had the column in an aircraft nose up attitude (where the column breakout switches would be activated).
I agree with your overall point that the holistic outcome was bad, that it's a systems problem, but want to amplify the fact that a great many people were working diligently to accomplish their goal(s) in the face of their constraints. Very few (to perhaps none of them), pilots included, likely realized that they were acting in a short-sighted way.
I think those individual actions only seem reasonable because we're so used to this corporate short-sightedness. People should be taking responsibility for the whole, and not just their little cog in the big machine.
For the 737 Max, moving the engines forward meant changing the aerodynamic balance. That alone should mean recertification, and every attempt to cover that up in order to save money, is part of the problem.
The 737-700 is ~10 feet longer and ~20 foot wider wingspan than the -200. Surely that has a greater impact on aerodynamics than the -Max engine change. It’s not that there is no certification but rather that they are built on a common type certificate (and flown by a common type rating).
Everything that adds cost to aviation has a safety balance. Why do we allow 0 and 1 year olds to fly as lap children (without buying a seat)? Because displacing the fraction of families who would substitute a car trip if forced to buy more tickets would mean greater overall injuries and fatalities. Saving money has its own real safety benefit that needs to be balanced holistically.
Just to take things to another extreme — our society seems to believe the death penalty works as a deterrent — so why shouldn’t we seek the death penalty for executives when their neglect kills people ...?
> But I think it’s pretty implausible to suggest that the “evil people” at Boeing we’re clapping their hands about savings with an understanding that they were trading human lives for those profits.
Yet it's entirely plausible that they were consciously making that trade off. I see a lot of similarities to cases like these:
> Ford (..) Pinto became a subject of controversy after Mother Jones magazine exposed that it was prone to deadly fires in rear-end collisions; Ford’s internal documents showed the company knew of the potential problem but chose not to fix it, calculating that it would be cheaper to pay out possible injury claims.
> The Japanese manufacturer of airbags has recalled airbags in some 19.2 million vehicles in the U.S. due to a tendency of the device to deploy with too much force, sending metal scraps flying into the passenger cabin. Eight deaths and about 100 injuries in the U.S. have been attributed to the defect. According to a New York Times report, Honda, one of the companies using the bags, and Takata knew about the dangerous airbags for years before disclosing it to the public and issuing recalls.
Haha, thanks for the poem link. It's fairly funny and indicates that a) they knew exactly what they were doing and b) that they knew it was somewhat likely that they'd get caught. Actually it says they already got a slap on the wrist from TÜV but could somehow carry on?
I mean it was pretty clear that everybody who really wanted to know could discover the cheating, but somehow it was covered up for a long time. Everybody knew about gas mileage results drifting further and further away from reality, too... And finally we got WLTP, which is somewhat less bad but still pretty bad.
Those clever enough to discover the cheating were clever enough to understand that regulations are rather inadequate, and should not be followed à la lettre.
The competitors must have known as well. They all buy competitors cars and disassemble them to reverse engineer the car. They probably also spotted the cheating device, and thought: ok the leading company is cheating, so do I.
The "cheating device" was just a feature flag that could be enabled on the engine computer made by Bosch, who also makes engine computers with similar software for most other car companies. Bosch told them about the feature, educated them about what it would do, what it would mean, how it's not really legal etc, and then Volkswagen decided to turn it on.
Bosch sells engine hardware (ECU, pump, injectors etc..), but the software is custom made. The automaker pays Bosch to implement the SW they want, as a lot of features differentiating automakers are SW features that they do not want their competitors to have.
Hence it doesn't mean that every diesel engine with a bosch ECU had the cheating device from VW.
It reminds me of the reaction to the Five Eyes reveal. If someone had presented it as a conspiracy theory beforehand and asked me if I thought it was happening, I'd have said it probably was.
It's probably quite easy to justify to yourself if you see everyone else doing it, even though it has abhorrent consequences[1]. Like people dropping cigarette butts.
[1] Which they should have known existed - the oligarchy of car companies ensures a huge impact from just one company playing unfairly.
I'm not a real engineer, just a software guy, but situation feels similar. Responsiblity of outcome and to save money is placed on management who pressure the workers to save money without sharing the bigger picture.
Would it still happen, if responsbility was placed directly on the worker? Why isn't there a review teams were senior enough and given the time to critique an outcome?
Why is it management doesn't understand the consequences of these actions, or are too shameless to admit them and plow ahead?
Because at a certain level of complexity and scale, it is possible to have managers in charge who no longer understand cause and consequences, especially if the time between the two is in years. Sometimes they don’t even want to understand due to the incentive they receive and the dilution of responsibility in such large organizations. The first thing such managers usually do is fire / sideline the senior engineers who complain all the time. And then...
This is easily fixed by governments doing their jobs. In this case, FAA (or whoever the regulator is) should verify if the "minor change" is a new coffee machine on board, or has the engine been moved.
And then, progressively larger fines (comparative to potential damage caused in the event of failure) to offset the "savings" by misdeclaring the scope of changes.
It's not at all easy for government to do its job because corporate soft power is ridiculously out of whack in the US, thanks to Citizens United and similar decisions. If you are an effective regulator, corporate money and influence will converge with a vengeance to neuter you and those who appointed you.
I'm not saying it's easy... I'm just saying that the parts of the government, that should be controlling this, are not doing their jobs. But I agree, that with a high enough level of corruption (from low-key bribing an inspector, to higher up lobbying at highest government levels), doing this efectively is impossible..
> with a high enough level of corruption (from low-key bribing an inspector, to higher up lobbying at highest government levels), doing this efectively is impossible.
That's a great way of putting it — nice!
What I'm looking for is a way to put responsibility where it truly lies. Blaming regulators alone is reductive, because the architects of the regulatory framework and the context in which it exists have ensured that corruption will occur. Those architects are the ones most at fault, starting with the Roberts Court.
IF the government did their job, it would be easy.
Catching speeders on the road is easy (trivially, you just need a radar gun, or an automated radar mounted in a car). Getting the police out of their offices and to actually do their job is hard (atleast here, in my country).
What I object to is complaining about "government" officials as if there is only one type.
In the US, regulators may not do their jobs because it is can be extremely financially advantageous to look the other way. But the system of legalized bribery is in place because of deliberate choices by the system architects who made the problem much worse than it had to be.
The US government has been sabotaged. Blame the saboteurs.
>> I doubt anybody in Boeing’s offices woke up and thought “what a nice morning! Time to go to work and build some dangerous airplanes that will kill people, so that I can get slightly richer”.
It is the other way around. People should understand that adding pressure on teams delivering mission critical systems is dangerous. Intentions matter very little in this context, the outcome does.
I'm seeing it as closer to the Challenger accident (1986): management overriding engineering concerns (in the Challenger case it was Thiokol overriding internal engineers, in the 737 case it is Boeing trying to work around external safe-guards) to Get The Job Done and save money/face/other, at the possible expense of endangering peoples lives.
Not sure if this rings true. You kind of assume that management "only" set unrealistic gial and then lower level employees decided by themselves to come up with MCAS as it was them implemented.
Based in my aerospace experience, it is mire likely that lower level employees raised concerns about certification which where then subsequently ignored by management (TM) as they asumed rightly to have a lot of leaway with the FAA. All that of course i usually documented extensively.
I suspect the above scenario because I took part in quite a few change boards affecting much smaller and less critical tickets. And everyone is informed and changes are signed of by the relevant peiple quite high up the food chain.
I'd suggest some other issue here, willful ignorance by upper management. At Boeing it is a fair bet for managemet to have solid certification knowledge (as shown in their creative approach to it). Thus taking the risks they did with MCAS involves a lot of ignorance. And potentially panic when they realized the commercial risk a failing 737 MAX would have. So they chose to take shortcuts, ignore warnings and hope for the best.
Its all a slippery slope. If you had shown this outcome to the execs prior to starting down the path they took, none of them would have chosen said path. Execs think they are being "good managers" when they push for more from less, because they force the worker bees to be innovative. Yeah, sometimes that happens, but many times the restriction is just arbitrary and causes corners to be cut. What seems to have happened in my mind is that the managers pushed people down a path, and there was a knowledge gap combined with a lack of oversight that caused people to die. To walk back what I said above slightly, I think that the execs really screwed up here, and there is some house cleaning in order at minimum and possible criminal liability. I think this really stresses the importance of thorough if not downright adversarial oversight by the FAA.
> I doubt anybody in Boeing’s offices woke up and thought “what a nice morning! Time to go to work and build some dangerous airplanes that will kill people, so that I can get slightly richer”.
It's been thought for a while that the suits of McDonnell Douglas have "ruined" the engineering company that Boeing once was:
> Where on earth did Boeing go? Directory assistance does list an aerospace concern by that name in Chicago, but surely it's not the American icon that boldly launched the world into the jet age. That company's president once received a standing ovation from a Senate committee. This "Boeing" has boldly violated Pentagon rules, broken new ground in industrial espionage, and somehow made an enemy of the U.S. government--all while falling behind its foreign rival. Besides, everybody knows that Boeing is in Seattle.
[...]
> Now that Condit has pulled the ripcord on yet another bad relationship, the "reverse takeover" theorists seem prophetic: Harry Stonecipher, 67, is Boeing's CEO. While he might be the man to mend fences with the Pentagon, his pit-bull routine seems unlikely to mend Boeing's broken culture. "We have the right strategy," he declared at a news conference. "The task before us is to execute."
> If there's one bright spot, it's that Boeing finally looks poised to launch its first new plane since 1990: the hyper-efficient 7E7 "Dreamliner," so dubbed after a global naming contest. If it gets the go-ahead, the $7 billion project might restore some of Boeing's once-famed esprit de corps--maybe even enough to lure its severed head back to Seattle. If, on the other hand, the company loses its nerve, it might consider another naming contest--this one for itself.
Thank you. I’m also that, when a company presents an unfit plane so many times for take off, there is a problem with its traditions. If a big company fails and the competitir buys it for cheap, it corrupts the competitor.
Which begs the question: If a big company fails (or some Boeing branch in a near future), even if Airbus doesn’t buy it, should it dodge job applications from the former employees of that competitor?
> If a big company fails (or some Boeing branch in a near future), even if Airbus doesn’t buy it, should it dodge job applications from the former employees of that competitor?
That depends on the reason for the failures: was it management or engineering?
A NYTimes article this weekend had multiple anonymous sources stating that management actively supressed warnings and Boeing lobbied extremely aggressively for being their own regulator. It was very very intentional.
This is why, if you're in upper management and concerned with long-term corporate health, you WANT a regulator (or, better, internal auditor) with real teeth. It's by design that you're going to put pressure on teams to perform and meet high expectations. You need someone to check and validate the output of those expectations before it blows up and kills someone.
An internal auditor will forever be at risk by executives focused on the short-term. So long as executive compensation is decoupled from long-term health, no auditor can endure — eventually somebody's going to force out the auditor for the sake of padding their paycheck.
This is unfortunate because external regulation introduces lots of inefficiencies.
Right, I meant "better" from the perspective of the execs :D There's a lot wrong with external regulation, as you indicate, but it's often (sometimes? always?) the least bad option.
For once i hope these x employees come forward before these incidents...Nothing new in this article, article is being posted for this “Watch BBC Panorama: Boeing's Killer Plane, on 29 July at 8.30pm on BBC One.”
The dark side of that is that in contrast to management, employees face far harsher penalties than a million dollar settlement. You will only get that if you have "responsibility".
Actually, it looks as if it wasn't that strictly regulated, hence the hundreds of deaths because Boeing was allowed to self-certify. The magic of the free market was indeed at work here, producing value for shareholders.
Their competitors were highly regulated, preventing them from existing in the first place. As always in incumbent firm wrote the regulations and defacto decides who is in violation or not.
The economy cannot be separated from the government. If large capitalist interests exist, they will exert power with the government, in the form of influencing regulations or other rent-seeking. Thus you cannot have a "fair" capitalist economy.
It would be nice if capitalism worked as it did in econ classes, but it doesn't with real humans.
>>Since 2013, Boeing has paid $17bn (£13.74bn) in dividends to shareholders and has spent a further $43bn buying its own shares - a spending spree that has helped Boeing treble its share price in just five years.
Are share buy backs a common strategy for large companies?
For the last ~10 years yes.
Almost all big companies that are profitable do it.
This is actually a major problem for innovation and investments in general, there are lots of economist who talk about this issue: Mariana Mazzucato has some very convincing arguments for public investments based, among other things, on this very problem.
(neo-liberal) Governments lower corporate taxes to boost corporate profit in the (unfunded) hope that this will drive massive investments in innovation and create job, and bigCo just buy their stock back because it is by far the most profitable short-term for their shareholders and their executives.
Major reason is : they don't know what else to do.
There was a very cool article on HN about the specific Boeing case that went over how it changed in the last 20y to go from engineering company to finance-driven company
> Major reason is : they don't know what else to do
no, they just don't like the risk of innovation. A share buy-back program is guarenteed to increase the share price, which is benefitial to executives who hold their bonuses in shares (and share holders would also like it).
Doing innovation comes with risks - which may or may not pan out. If it doesn't pan out, the executives would get chewed for it, and if it does pan out it is unlikely to pay off for a long time (in terms of bonuses - at least, not within their tenure).
Gov'ts should just invest in startups, rather than give tax breaks. Invest in up and coming students who show promise, and get to claim a share of their innovation as taxes as well! And if it fails, it fails - the gov't doesn't need to be profitable.
Yes, it is prudent to invest capital back into the company (R&D), but it may not be the best use of money or have the best ROI.
It should also be noted that share buy-backs are also useful to shareholders as an alternative to dividends. Whereas a dividend creates a tax event that an investor may nor may not welcome, the same investor can choose to sell their stock or hang on to it.
Financially speaking, if you start with $1000 in stocks, it does not matter whether you end up with $1000 in stock and $100 in cash from dividends, or $1100 in stocks (from the price going up).
And yet companies that payout dividends are not vilified the same was as buy-back companies--in fact dividend payers are lauded in an almost fetishist way due to human psychology:
> the issue here is that gov't lower corp taxes in the hopes that ...
This is what the GOP said was the reason for the tax cut. This is what the GOP has been saying since 1980 is the reason for the tax cuts.
Given this has never worked for several decades, do you think the (non-naive) members of the GOP actually believe this is the reason for the tax cuts? Or is it simply to give their plutocrat supporters what they want?
Financially speaking, if you start with $1000 in stocks, it does not matter whether you end up with $1000 in stock and $100 in cash from dividends, or $1100 in stocks (from the price going up).
It can if capital gains are taxed lower than dividends, which is the case in much of the world.
> Doing innovation comes with risks - which may or may not pan out. If it doesn't pan out, the executives would get chewed for it, and if it does pan out it is unlikely to pay off for a long time (in terms of bonuses - at least, not within their tenure).
You really nailed the problem. It is faced by all companies with sizeable middle management (read, all companies above a certain size).
Let's look at the incentives. A middle manager with an entrepreneurial spirit who tries to enact change, try new ideas and stay ahead of the curve has a chance to make it to the top, provided they have allies already at the top who are also willing to bet their reputation on the underling and also that none of the bets backfire badly.
On the other hand, let's take a pointy haired boss type middle manager who does jack-all, avoids responsibility where possible and therefore by definition they also don't participitate in any cockups. They sort of coast by, being too average to notice either for outperformance or underperformance. After 20 years at the company, they retire.
Which of these two are going to be the majority? In my experience, the latter outweighs the former by a large margin. Being in the latter, you don't have to do anything, just stay away from trouble. Squash any ambitious projects your group comes up with, maintain some token efforts that look good on quarterly presentations, but keep it all fairly toothless.
Over time they get entrenched in the company and whether consciously or not, they ensure that only similarly minded people are promoted to middle management, since anyone more ambitious is a direct threat. None of these people are individually evil, and they perhaps aren't even consciously impeding the company. They become a product of the environment. A natural selection of sorts.
Mazzucato is brilliant and well worth reading but I'm clear why share buy-backs are any different than dividends from the point of view of balancing shareholder rewards vs reinvestment. The difference is in taxability but that is a separate question.
It can really be seen as another form of dividend (or payout) depending on how you look at it. And yes it is fairly common when capital is available especially when no major re-investment opportunities present themselves that would utilize the capital in more efficient ways than mere buybacks.
Edit: a bit off topic but this "discussion" between Theil and Schmidt in my opinion highlights why companies are buying back their stock
https://www.youtube.com/watch?v=PsXFwy6gG_4
I'm not a finance person, but there are reasons why a stock buyback would make sense. Returning money to investors is one. Another is that the more of its own stock the company owns, the easier it is to give stock (or options or whatever) as bonuses to employees.
> Are share buy backs a common strategy for large companies?
Yes. They’re a transfer of money from the company to its owners but they have tax advantages over dividends because instead of all owners paying tax twice, once on profits and again as income they’re only taxed as corporate profits unless you’ve actually sold your shares. The owners who don’t sell have a larger share of the remaining company by virtue of the smaller number of shares outstanding.
> a spending spree that has helped Boeing treble its share price in just five years
This seems like a totally irrelevant metric. Wouldn't the relevant one be market capitalization? That's up about 2.5x over the last five years... all of which seems to be due to something that happened in the fall of 2016 (and continued through early 2018).
> Are share buy backs a common strategy for large companies?
Dividends used to be the be-all and end-all of giving back capital to investors. However, the 'problem' with dividends is that by receiving cash, it creates a taxable event that not all investors are happy with.
With share buy backs, an investor could choose to either sell their share (at the presumably higher value) or hang onto them (again, assuming the price goes up).
Financially/mathematically speaking, whether a company does share buy backs or dividends does not matter:
Yet for some reason there is an idea the dividend-paying companies are better than those who do not, and that share buy backs are bad/evil in some way.
On the contrary this will probably be one of the safest planes to fly once they fix all issues (assuming they can) since no other plane would have undergone such in depth review and testing ever.
How do you know they fixed all issues? Surely all issues will be fixed which the regulators can find. But I am sure there will be cover-up still. And more to it regulators have clearly demonstrated their incapability and unwillingness to find something.
How do you know all the previous planes have no issues at all? The only way you truly know is the track record and we do need to give the Max or its successor the benefit of doubt at some point. What's the point of having regulations of we don't believe in them anyway and depend on feelings? Of course, the regulations allowed 300+ people to die, but that's a thing to be fixed and improved.
It could go as something like this - since we know how much safety was omitted in chase of profit, we see the most common problems. But airplanes are massively complex, and compromises could have been done on thousands of other places. Those could start failing after 10+ years of service for example, or in some rather unusual corner cases.
Faith is a funny thing - once lost, it needs to be massively overcompensated to come to similar levels as before, and even after that things are just not the same...
> And more to it regulators have clearly demonstrated their incapability and unwillingness to find something.
How can you claim that since the plane has not been allowed to resume flights around the world since it was stopped? Are you privy to the current investigation? Any secret you'd like to share?
> Surely all issues will be fixed which the regulators can find
Funny you say that, since this is precisely how aviation has progressed over time: we keep finding failure modes and fixing them so that we make flying a little more safe every time. If all companies were fined to death every single time they made a mistake/had an accident, there would be no one flying anymore.
I fully agree with your last two sentences. However, it has come to light that the FAA has handed over almost all oversight to Boeing. Therefore, I wouldn't trust the FAA being either willing or (after a decade of deregulation) even capable of finding issues. The MCAS deficiencies where glaring obvious. They weren't noticed. Why should I trust the FAA this time?
Why are they showing the compensation vs Boeing revenues in the beginning? Does Boeing pay for compensation directly? I thought this was rather paid by insurance companies, and had nothing to do with manufacturers?
Boeing voluntarily paid compensation to the victims and their communities directly. This is in addition to the travel insurance claims that the victims could file for.
>We have always held true to our values of safety, quality and integrity and those values are complementary and mutually reinforcing with productivity and company performance
It says something very bad about the state of accountability in this country when someone's negligence can kill hundreds of people and they have absolutely nothing to fear from putting out a completely horseshit statement like that. Half a dozen different Boeing executives should be in prison for the rest of their lives on 346 counts of manslaughter but I'd be amazed if Boeing faces so much as a monetary fine.
Indeed I do. For example, the Takata corporation negligently ignored many warnings that its airbags were unsafe. This resulted in hundreds of injuries and the deaths of 24 people. The Takata corporation was fined ~250% of its annual EBIT and three of its executives were prosecuted. For Boeing, a comparable fine would be thirty billion dollars. If you multiplied the fine by the ratio of deaths, the fine would be over 420 billion dollars.
That would bankrupt Boeing. That's probably not a desirable outcome for such a company - and this would discourage any investment in aviation moving on.
If there was no malicious intent in the first place you cannot really say they were playing games with human lives. Cutting corners happen everywhere, and in a space as regulated as aviation Boeing cannot be the only one to blame either.
It is the job of the federal government to protect the lives of its citizens by enforcing the law. It is not the job of the federal government to protect the existence of certain corporations by giving them special exemptions to the law.
But even if you wanted to do that, you can still have your cake and eat it too. Boeing's yearly profit is 4.2 billion dollars. Take three billion of that per year and let them pay off the fine over ten years.
Thats all good and dandy but the Federal government has not just one mission but several hundreds of them. They also have to protect their citizen from foreign threats and Boeing is also huge in the military space. Conflicts of interests everywhere.
Anyone surprised that an U.S. company was actively trying to bypass regulations to boost commercial success? If money is all you are aiming for, putting people at risk is suddenly not a problem at all.
"Boeing said it wasn't relying on the single sensor, because the pilots were there as back up."
Pilots are part of the redundancy package?! NO! Pilots are not part of your hardware!!
Imagine the contrast from what we've been told for years that aviation hardware is about redundancy and what really is going on in their management offices.
It is my hope that whatever bureaucratic process that allowed that to happen will be chopped into pieces, burned into ashes and scattered into the four winds.
Whatever will remain can continue building planes if it still can.
What will the certification process for the next plane from Boeing look like?
The FAA certified a plane that had obvious flaws. From what I understand they out sourced the certification process to Boeing but that doesn't remove their responsibility, it's still their "stamp". The real certification process started after the accidents and only needed a few weeks to find additional flaws. I'd assume the process is normally months long so "a few weeks" would be finding it early.
But why should I trust the FAA? They seem to be working hard now projecting an image of a for-the-people agency while throwing as much dirt as they can on Boeing but I haven't really seen anything addressing their own problems with out sourcing, corruption, and political interference.
> Canada and the European Union say they are re-examining the approval it gave Boeing 737 MAX jets, following reports of a U.S. investigation into the Federal Aviation Administration certification of the aircraft.
Canada and the EU have already lost trust in the FAA. They're going to certify the Max and probably other planes more independently now.
As a consumer, I'm happy to have more oversight on the planes.
As a Boeing shareholder, I'd be pissed the company demolished the trust that allowed for a lot of cost savings during the certification phase.
Time and time again, we see that companies are terrible at self-regulation. They'll abuse it to save pennies today at the cost of dollars and lives tomorrow.
What happens most of the time with the big companies (Boeing, Cessna, Bombardier...) is that it is cheaper to have an in-house DER (Designated Engineering Representative) for the part of the aircraft that they are certifying. DERs themselves
You have Mechanical DERs, Electrical DERs, Software DERs, and others.
A good example for the HN crowd, the Software DER. Per regulations, the software standard is the DO-178B. The DER isn't actually spinning up the dev environment, or building the piece of software used; just checking to make sure the process was followed. (the dev environment was documented, what dependancies...) These people are a step up from code reviewers and just check paperwork more than software.
The FAA itself isn't concerned with safety; it is just there to make sure there is a papertrail to follow in the event of a safety issue.
I think that's a rewriting of the role of the FAA. A papertrail is a strong prerequisite to being able to adequately review the safety of an aircraft. Without strict conformance to both complete written instructions on how to build, assemble, and configure an aircraft, how would one ever know a plane, no matter how many tests you do is the same design that is later flown vs what was certified?
BTW when the plan was floated to let Boeing self certify more in the process, in the name of 'efficiency' there were objections made to the political appointees driving that.
This is an excellent point. FAA says it's too arduous to certify these planes, so they let Boeing do it. But, after some people die, the magically have the ability and capacity to do it?
Want to see senior management laser focused on safety? Require forfeiture of all benefits, options, and bonuses, plus all personal cap gains from stock sales in the event of an engineering flaw resulting in loss of life. Claw it back from all senior management who worked during the lifetime of the airliner, even if they left or retired. You'll see the midnight oil being burned on walnut row, and fanatical effort going into testing and design reviews.
That’s a terrific way to ensure no want ever wants to work on aviation or infrastructure projects ever again. I guess they can come work on adtech like the rest of us.
It is a bit tongue in cheek, but giving the top couple of layers some serious skin in the game is the only way to align their interest with safety rather than the next 10-Q.
I am so called self taught developer.I learned how to write software out of boredom at work. Subsequently,I wrote some parts of the system,my current employer uses,that range from 'nice to have' all the way to 'mission critical'. I allowed myself a lot of freedom in terms of errors, mistakes and etc. The company provides training to people,so the worst that can happen is someone may not get a correct email or internal user won't see an update on training they were expecting.Now if I were working for Boeing and had to write code that'd go into production,aka a working plane,I'd probably either say I couldn't do it or do so many iterations that they'd would sack me...I couldn't sleep for the rest of the life knowing that I pushed some update that ultimately controls some parts of the plane and that it can go wrong any time...
141 comments
[ 3.8 ms ] story [ 199 ms ] threadSome details:
https://www.flyertalk.com/forum/16150378-post10.html
"If you're Boeing, you realize you have a multi-billion dollar liability on your hands that will bankrupt your company 10 times over if you actually had to tear apart and inspect or rebuild all the suspect aircraft. So, you bury the reports, fire anyone involved, call in all your favors and unleash your lawyers with all the political power you have as a major defense contractor to make it all go away. (The program suggested that's exactly what they were doing)."
Also, the link to the program summary:
https://www.aljazeera.com/programmes/peopleandpower/2010/12/...
I just watched it. This is bad. Boeing, with the help of the American government, is covering up serious issues with how the 737NG is being built with faulty parts.
In both cases, management appears to have applied significant pressure to the teams doing the work, pushing them to achieve extremely unrealistic targets. And in both cases, the results of that incentive ended up being extremely detrimental to basically everybody (to the general public in the form of identity fraud / unsafe aircraft, to the companies in the forms of fines / grounding / PR / etc).
I doubt anybody in Boeing’s offices woke up and thought “what a nice morning! Time to go to work and build some dangerous airplanes that will kill people, so that I can get slightly richer”. I suspect the execs involved were just amazingly (and potentially even criminally) negligent: in their minds, they were pushing their employees to make the airplane actually similar enough to qualify as a “minor” change, without any of the oversight that would have caught what was actually happening. They turned a blind eye any time somebody told them that the new plane would require larger changes, and the results are unsurprising: their teams declared all the changes “minor”, not because they’d successfully made only minor changes, but because exec pressure mandated that all changes be “minor”.
I think you're probably correct but shaming the engineers in the hopes they'll stop it has repeatedly failed to work: that's why this isn't a thread about VW. IMHO it's because actions from a single individual carry too much risk for enough to accept. It needs collective bargaining.
We are aware how the hierarchies function: "I was just following the orders"
https://en.wikipedia.org/wiki/Superior_orders#Nuremberg_Tria...
I agree with you that it doesn't have sense trying to discuss about the abstract evilness, but I claim that the Boeing's top brass should be brought to the court!
If those who make decisions aren't held accountable, the results are provably terrible.
"I was ''just'' securing the profit for my shareholders" shouldn't be an excuse.
Carrie Tolstedt of Wells Fargo is as close to a comic villain as you're going to get, designing a system which forced multitudes of employees into unethical actions. And even after clawbacks Tolstedt ended her career tens of millions of dollars ahead.
Executives are already so coddled and protected from failure that terrible actions are rewarded and inevitable.
Speaking practically, treating execs as comic villains gets in the way of actually fixing their behavior. There are a variety of ways to force corporations to behave differently, but they all start with actually figuring out why they act this way in the first place. Otherwise we end up making the same mistake as Wells Fargo and Boeing: if we apply pressure on them to act better without clearly understanding why they’re doing what they’re doing, we’re just going to incentivize them to misbehave differently to get around the new rules.
I take you at your word. It's just hilarious that a post urging empathy for executives floats to the top while it's bootstraps for everyone else. [EDIT: in other upvoted HN posts, not necessarily yours.]
> There are a variety of ways to force corporations to behave differently, but they all start with actually figuring out why they act this way in the first place.
It starts with whittling down the outrageous soft power enjoyed by corporations, their owners, and their agents — and which you are contributing to by delaying, denying, and softening accountability for the most outrageous of executive actions.
- I believe that "understanding your enemy" ("Empathy") is absolutely positively crucial in successfully fighting your enemy
- This frequently gets interpreted as "Sympathizing with your enemy", being too soft, making excuses,etc; by those who want simple action.
So for example, I think we need to understand what makes a terrorist, how they come to their beliefs and motivations, and what we can do to prevent that. Others interpret that as being 'soft on terrorism', and we just need to 'bomb them into oblivion'; whereas I fear that while actual physical fighting is definitely a critical part of the overall campaign, there's a tremendous danger it'll just create more terrorists because we haven't eradicated the actual root source.
To me, striving to understanding an enemy doesn't prevent direct, firm action, if that is then convincingly found to be the most effective and efficient way of fighting them. In turn, I feel understanding your enemy prevents random, ineffective, emotionally-satisfying but results-lacking action. Others, of course, will disagree.
So - to the point of the article and discussion: I agree with op, if that is their intention, that you have to look at incentives; I've worked in corporate world for decades and I fully agree that you can have whatever value pledges, official goals, mission statements, and even official rules you darn well want to; and they're completely irrelevant if actual incentives, when summed out, reward a different behaviour. External and internal rules, and power, and statements, and goals, are all factors in incentives; as are the more subtle, emergent incentives. Going for a blunt approach may shift those incentives insufficiently far, or in an incorrect direction.
...My 2.4 Canadian Pennies :-D
> “The real crime here is that low-level retail bankers set up fake accounts in order to scam Wells Fargo out of their modest paychecks” just doesn’t work as a story of the scandal, even if there is a certain partial truth to it as a mechanical matter.
Meanwhile, the upper managers who put in place the incentives that guaranteed fraud would occur by low-level bankers are only guilty of "mismanagement":
> In the case of Wells Fargo, though, I suppose it’s possible that the attorney general thinks the shareholders really were the victims. They didn’t benefit from the fake accounts, and it is not crazy to say that they were harmed by Wells Fargo’s mismanagement.
Carrie Tolstedt took home tens of millions of dollars for inducing fraud, but only the scapegoats who did the dirty work for her are held morally culpable. The author doesn't even notice that just like those low-level retail bankers, Tolstedt scammed shareholders out of her (enormous) paycheck.
It's a perfect example of extending excessive empathy to executives while hypocritically withholding it from others.
And that is exactly what's happening in this thread. Executive malfeasance gets endlessly excused away as the product of poor incentives, because in your quest to humanize executives, you succumb to the perfectly natural human foible of "to know all is to forgive all".
Now, I'm not saying you're a mustache-twirling villain. But people who are unable to apply their principles when the chips are down and hold executives accountable are at the root of the problem.
Your comment again points to some perceived inability on my part to “hold executives accountable”, citing some flaw with my principles. I’d invite you to review the site guidelines and my comments: at no point have I suggested that the executives aren’t culpable in both the Boeing and Wells Fargo examples. You seem to be inferring that empathy is incompatible with judgement, and that misconception is basically the heart of what I’m trying to call attention to in this exchange.
Why is it a given that low-level retail bankers wanted faked accounts for the sake of their income, yet it is outside the realm of possibility that Carrie Tolstedt wanted faked accounts because they led to income for her — to the tune of tens of millions of dollars?
Why is it utterly inconceivable that Carrie Tolstedt is corrupt?
I guess we’ll have to agree to disagree about the strength of my principles.
In some ways, having empathy (or even sympathy) for executives in situations such as this is a more damning call to action.
If a problem is a result of evil people doing evil things, then the obvious solution is to punish the evil people. If instead a problem is a result of good-natured people following a system with broken incentives, then the only effective response would be large-scale, systematic change.
Unfortunately, we don't often see things this way as a society. Our drive to action seems directly correlated to our sense of moral outrage, and we skip over the "broken system" step between "freak accident" and "mustache-twirling villain."
The legal system distinguishes between deliberate premeditated murder and accidental or negligent manslaughter.
Corporate ethics seems oddly resistant to understanding the distinction. If your actions cause significant harm the profit motive gives you very strong legal protection - a literal get out of jail free card. While it's not completely reliable, it's certainly more powerful than any non-corporate defence where culpability is obvious.
You're far more likely to go to jail for corporate fraud - which is an outrage against the profit motive - than for life-terminating harm inflicted on innocent bystanders.
This has the predictable effect of selecting executives who either don't understand that their actions cause harm, or don't care.
The system selects the people, and the people propagate its values. Neither is wholly innocent.
Every so often someone with a genuine ethical sense says "I'm not doing this." And they often lose their job when they do.
So it is with businesses extracting value (/making as much money as possible).
It's like the idea of "pot odds" in poker: Boeing here wasn't just looking at the marginal return on investment, it was looking at the cost of essentially deprecating an entire line of aircraft. It would lose value from its entire "installed base" of customers, as competition from Airbus would become more viable.
In economic terms, the marginal value of the investment was probably close to nil, but it protected profitable infra-marginal investments. Interestingly, this seems like a problem that large companies face far more often than startups, which is perhaps why conventional wisdom thinks the latter are far more 'agile'.
I really dont believe that someone having fought their way up to a job that pays a 7 figure number per year actually cares about normal human people anymore. I just dont.
What I've always wanted to know is: do psychopaths make better managers? Do they somehow gravitate towards management positions in some other way? Or is it the management position that brings out the psychopath in people?
> do psychopaths make better managers?
I've had 2. No, they're horrible to work for. Indifferent to you as a human, bullying, lying, destructive (edit: and manipulative). The best bosses I've had, the ones that got the most out of me, were humane and decent (Also 2 of them).
> Do they somehow gravitate towards management positions in some other way?
I guess so. Power, control, money (all of these really boil down to power).
> Or is it the management position that brings out the psychopath in people?
No. A psychopath is a definite mental phenomenon that AFAIK is something you're born with. It is thought to be perhaps made worse by bad childhoods, but it certainly isn't something you develop if you weren't born with it.
What I do see in those psychopaths that I recognise as such is that they often really driven for money/power. They're often great fun to be with because they're so impulsive, but wear you down with constant demands.
Above is just my personal understanding and experiences.
They might not be clapping hands at the death of few humans, but they would not be crying either.
That's the real corporate evil: losing sight of the big picture of what your product is supposed to accomplish in the world, and see it merely as a vehicle for profit, where the regulations are merely obstacles you need to bypass, rather than a necessary good that ensures your product is safe and provides real value to the world.
And I fear this kind of thinking is incredible common in large corporations. It doesn't always lead to disasters like the 737 Max, the VW emission scandal, or the Fukushima or Deepwater disasters, but losing sight of the larger context of what you're doing does enable those kind of disasters.
After the mortgage crisis and other banking misbehaviours, all people working at Dutch banks (including developers like me) are required (and trained, to some extent) to always keep this big picture in mind: what does this decision mean for the company, the customers, the shareholders and also society in general. All 4 need to be balanced. Maybe this should be more common among all industries.
Corporations certainly do need to be held accountable for their actions, and for the corporate culture they create, because that will impact the actions of the corporation as a whole. If everybody just focuses on the immediate requirements (passing that emissions test no matter how, making the plane pretend to be the same in order to pass certification) without considering the larger picture, that is a result of the corporate culture and the way performance of employees is measured. The corporation is absolutely responsible for that, and yes, maybe it should be considered evil when upper management fosters or allows a culture of this kind of short-sightedness.
The airplane needs more efficient engines.
The new engines are physically larger and the space underwing too low.
Let's move the engines forward.
That causes the stick force curve in an uncommon region of the envelope seen mostly only when hand flying and out of normal envelope.
We could fix the stick force curve by actively displacing the horizontal stabilizer under those conditions.
We can limit the authority of the stab under MCAS to 0.6°, a figure which would only be a slight hazard to flight as pilots could easily override.
We can prevent the need to retrain pilots (even if only differences training), but this requires us to use only a single angle-of-attack sensor to drive the system. That's OK, because the 0.6° limit is safe.
Later, someone else decides to give MCAS a little more control authority. It's not clear (to me) that the 0.6° prior limit was documented as something that was being relied on by regulators or not. A "safe" system being given a little more authority in the name of safety doesn't sound so bad, after all.
No analysis appears to be done for the case of multiply resetting the MCAS system, allowing for progressively more authority.
No analysis appears to be done for the fact that line pilots were relying on the "control breakaway" to interrupt automated trim motion on legacy 737s. Pilots using this undocumented technique may have become overly accustomed to it and assumed the plane was designed that way. Of course, MCAS, being a system to protect the stick force curve during manual flight, could not reasonably be disabled by a control column breakout switch, because it's designed to protect the aircraft exactly during hand flying situations where the pilot had the column in an aircraft nose up attitude (where the column breakout switches would be activated).
I agree with your overall point that the holistic outcome was bad, that it's a systems problem, but want to amplify the fact that a great many people were working diligently to accomplish their goal(s) in the face of their constraints. Very few (to perhaps none of them), pilots included, likely realized that they were acting in a short-sighted way.
For the 737 Max, moving the engines forward meant changing the aerodynamic balance. That alone should mean recertification, and every attempt to cover that up in order to save money, is part of the problem.
Everything that adds cost to aviation has a safety balance. Why do we allow 0 and 1 year olds to fly as lap children (without buying a seat)? Because displacing the fraction of families who would substitute a car trip if forced to buy more tickets would mean greater overall injuries and fatalities. Saving money has its own real safety benefit that needs to be balanced holistically.
If I could get prosecuted for accidents my code coused I would never work which such tasks.
Yet it's entirely plausible that they were consciously making that trade off. I see a lot of similarities to cases like these:
> Ford (..) Pinto became a subject of controversy after Mother Jones magazine exposed that it was prone to deadly fires in rear-end collisions; Ford’s internal documents showed the company knew of the potential problem but chose not to fix it, calculating that it would be cheaper to pay out possible injury claims.
> The Japanese manufacturer of airbags has recalled airbags in some 19.2 million vehicles in the U.S. due to a tendency of the device to deploy with too much force, sending metal scraps flying into the passenger cabin. Eight deaths and about 100 injuries in the U.S. have been attributed to the defect. According to a New York Times report, Honda, one of the companies using the bags, and Takata knew about the dangerous airbags for years before disclosing it to the public and issuing recalls.
-- https://fortune.com/2015/09/26/auto-industry-scandals/
I mean it was pretty clear that everybody who really wanted to know could discover the cheating, but somehow it was covered up for a long time. Everybody knew about gas mileage results drifting further and further away from reality, too... And finally we got WLTP, which is somewhat less bad but still pretty bad.
Bosch sells engine hardware (ECU, pump, injectors etc..), but the software is custom made. The automaker pays Bosch to implement the SW they want, as a lot of features differentiating automakers are SW features that they do not want their competitors to have.
Hence it doesn't mean that every diesel engine with a bosch ECU had the cheating device from VW.
It's probably quite easy to justify to yourself if you see everyone else doing it, even though it has abhorrent consequences[1]. Like people dropping cigarette butts.
[1] Which they should have known existed - the oligarchy of car companies ensures a huge impact from just one company playing unfairly.
Didn't know that one; nice.
Would it still happen, if responsbility was placed directly on the worker? Why isn't there a review teams were senior enough and given the time to critique an outcome?
Why is it management doesn't understand the consequences of these actions, or are too shameless to admit them and plow ahead?
And then, progressively larger fines (comparative to potential damage caused in the event of failure) to offset the "savings" by misdeclaring the scope of changes.
That's a great way of putting it — nice!
What I'm looking for is a way to put responsibility where it truly lies. Blaming regulators alone is reductive, because the architects of the regulatory framework and the context in which it exists have ensured that corruption will occur. Those architects are the ones most at fault, starting with the Roberts Court.
But that's literally what you said?
"This is easily fixed by governments doing their jobs."
Catching speeders on the road is easy (trivially, you just need a radar gun, or an automated radar mounted in a car). Getting the police out of their offices and to actually do their job is hard (atleast here, in my country).
In the US, regulators may not do their jobs because it is can be extremely financially advantageous to look the other way. But the system of legalized bribery is in place because of deliberate choices by the system architects who made the problem much worse than it had to be.
The US government has been sabotaged. Blame the saboteurs.
It is the other way around. People should understand that adding pressure on teams delivering mission critical systems is dangerous. Intentions matter very little in this context, the outcome does.
Based in my aerospace experience, it is mire likely that lower level employees raised concerns about certification which where then subsequently ignored by management (TM) as they asumed rightly to have a lot of leaway with the FAA. All that of course i usually documented extensively.
I suspect the above scenario because I took part in quite a few change boards affecting much smaller and less critical tickets. And everyone is informed and changes are signed of by the relevant peiple quite high up the food chain.
I'd suggest some other issue here, willful ignorance by upper management. At Boeing it is a fair bet for managemet to have solid certification knowledge (as shown in their creative approach to it). Thus taking the risks they did with MCAS involves a lot of ignorance. And potentially panic when they realized the commercial risk a failing 737 MAX would have. So they chose to take shortcuts, ignore warnings and hope for the best.
It's been thought for a while that the suits of McDonnell Douglas have "ruined" the engineering company that Boeing once was:
> Where on earth did Boeing go? Directory assistance does list an aerospace concern by that name in Chicago, but surely it's not the American icon that boldly launched the world into the jet age. That company's president once received a standing ovation from a Senate committee. This "Boeing" has boldly violated Pentagon rules, broken new ground in industrial espionage, and somehow made an enemy of the U.S. government--all while falling behind its foreign rival. Besides, everybody knows that Boeing is in Seattle.
[...]
> Now that Condit has pulled the ripcord on yet another bad relationship, the "reverse takeover" theorists seem prophetic: Harry Stonecipher, 67, is Boeing's CEO. While he might be the man to mend fences with the Pentagon, his pit-bull routine seems unlikely to mend Boeing's broken culture. "We have the right strategy," he declared at a news conference. "The task before us is to execute."
> If there's one bright spot, it's that Boeing finally looks poised to launch its first new plane since 1990: the hyper-efficient 7E7 "Dreamliner," so dubbed after a global naming contest. If it gets the go-ahead, the $7 billion project might restore some of Boeing's once-famed esprit de corps--maybe even enough to lure its severed head back to Seattle. If, on the other hand, the company loses its nerve, it might consider another naming contest--this one for itself.
> May we suggest McDonnell Douglas?
* https://archive.fortune.com/magazines/fortune/fortune_archiv...
Which begs the question: If a big company fails (or some Boeing branch in a near future), even if Airbus doesn’t buy it, should it dodge job applications from the former employees of that competitor?
That depends on the reason for the failures: was it management or engineering?
An internal auditor will forever be at risk by executives focused on the short-term. So long as executive compensation is decoupled from long-term health, no auditor can endure — eventually somebody's going to force out the auditor for the sake of padding their paycheck.
This is unfortunate because external regulation introduces lots of inefficiencies.
It would be nice if capitalism worked as it did in econ classes, but it doesn't with real humans.
Are share buy backs a common strategy for large companies?
This is actually a major problem for innovation and investments in general, there are lots of economist who talk about this issue: Mariana Mazzucato has some very convincing arguments for public investments based, among other things, on this very problem.
(neo-liberal) Governments lower corporate taxes to boost corporate profit in the (unfunded) hope that this will drive massive investments in innovation and create job, and bigCo just buy their stock back because it is by far the most profitable short-term for their shareholders and their executives.
Major reason is : they don't know what else to do. There was a very cool article on HN about the specific Boeing case that went over how it changed in the last 20y to go from engineering company to finance-driven company
no, they just don't like the risk of innovation. A share buy-back program is guarenteed to increase the share price, which is benefitial to executives who hold their bonuses in shares (and share holders would also like it).
Doing innovation comes with risks - which may or may not pan out. If it doesn't pan out, the executives would get chewed for it, and if it does pan out it is unlikely to pay off for a long time (in terms of bonuses - at least, not within their tenure).
Gov'ts should just invest in startups, rather than give tax breaks. Invest in up and coming students who show promise, and get to claim a share of their innovation as taxes as well! And if it fails, it fails - the gov't doesn't need to be profitable.
It should also be noted that share buy-backs are also useful to shareholders as an alternative to dividends. Whereas a dividend creates a tax event that an investor may nor may not welcome, the same investor can choose to sell their stock or hang on to it.
Financially speaking, if you start with $1000 in stocks, it does not matter whether you end up with $1000 in stock and $100 in cash from dividends, or $1100 in stocks (from the price going up).
* https://www.youtube.com/watch?v=UpXI_Vd51dA
And yet companies that payout dividends are not vilified the same was as buy-back companies--in fact dividend payers are lauded in an almost fetishist way due to human psychology:
* https://en.wikipedia.org/wiki/Mental_accounting
Instead, gov't should use the taxes (rather than returning it to corps) and pay startups for innovation, rather than hope companies use it on R&D.
This is what the GOP said was the reason for the tax cut. This is what the GOP has been saying since 1980 is the reason for the tax cuts.
Given this has never worked for several decades, do you think the (non-naive) members of the GOP actually believe this is the reason for the tax cuts? Or is it simply to give their plutocrat supporters what they want?
It can if capital gains are taxed lower than dividends, which is the case in much of the world.
*edit copy/pasted the quote wrong
You really nailed the problem. It is faced by all companies with sizeable middle management (read, all companies above a certain size).
Let's look at the incentives. A middle manager with an entrepreneurial spirit who tries to enact change, try new ideas and stay ahead of the curve has a chance to make it to the top, provided they have allies already at the top who are also willing to bet their reputation on the underling and also that none of the bets backfire badly.
On the other hand, let's take a pointy haired boss type middle manager who does jack-all, avoids responsibility where possible and therefore by definition they also don't participitate in any cockups. They sort of coast by, being too average to notice either for outperformance or underperformance. After 20 years at the company, they retire.
Which of these two are going to be the majority? In my experience, the latter outweighs the former by a large margin. Being in the latter, you don't have to do anything, just stay away from trouble. Squash any ambitious projects your group comes up with, maintain some token efforts that look good on quarterly presentations, but keep it all fairly toothless.
Over time they get entrenched in the company and whether consciously or not, they ensure that only similarly minded people are promoted to middle management, since anyone more ambitious is a direct threat. None of these people are individually evil, and they perhaps aren't even consciously impeding the company. They become a product of the environment. A natural selection of sorts.
Edit: a bit off topic but this "discussion" between Theil and Schmidt in my opinion highlights why companies are buying back their stock https://www.youtube.com/watch?v=PsXFwy6gG_4
Microsoft announcing in 2016 an increase to their existing buyback plans: https://www.bloomberg.com/news/articles/2016-09-20/microsoft...
Google stock buyback from 2016: https://www.businessinsider.com/google-stock-buy-back-858986...
Facebook stock buyback from 2016: https://www.businessinsider.com/facebook-is-doing-a-6-billio...
So, yes, definitely a thing.
I'm not a finance person, but there are reasons why a stock buyback would make sense. Returning money to investors is one. Another is that the more of its own stock the company owns, the easier it is to give stock (or options or whatever) as bonuses to employees.
https://www.bloomberg.com/news/articles/2019-07-25/alphabet-...
Yes. They’re a transfer of money from the company to its owners but they have tax advantages over dividends because instead of all owners paying tax twice, once on profits and again as income they’re only taxed as corporate profits unless you’ve actually sold your shares. The owners who don’t sell have a larger share of the remaining company by virtue of the smaller number of shares outstanding.
This seems like a totally irrelevant metric. Wouldn't the relevant one be market capitalization? That's up about 2.5x over the last five years... all of which seems to be due to something that happened in the fall of 2016 (and continued through early 2018).
Dividends used to be the be-all and end-all of giving back capital to investors. However, the 'problem' with dividends is that by receiving cash, it creates a taxable event that not all investors are happy with.
With share buy backs, an investor could choose to either sell their share (at the presumably higher value) or hang onto them (again, assuming the price goes up).
Financially/mathematically speaking, whether a company does share buy backs or dividends does not matter:
* https://www.youtube.com/watch?v=UpXI_Vd51dA
Yet for some reason there is an idea the dividend-paying companies are better than those who do not, and that share buy backs are bad/evil in some way.
Faith is a funny thing - once lost, it needs to be massively overcompensated to come to similar levels as before, and even after that things are just not the same...
How can you claim that since the plane has not been allowed to resume flights around the world since it was stopped? Are you privy to the current investigation? Any secret you'd like to share?
> Surely all issues will be fixed which the regulators can find
Funny you say that, since this is precisely how aviation has progressed over time: we keep finding failure modes and fixing them so that we make flying a little more safe every time. If all companies were fined to death every single time they made a mistake/had an accident, there would be no one flying anymore.
[0] https://boeing.mediaroom.com/2019-07-03-Boeing-Pledges-Suppo...
It says something very bad about the state of accountability in this country when someone's negligence can kill hundreds of people and they have absolutely nothing to fear from putting out a completely horseshit statement like that. Half a dozen different Boeing executives should be in prison for the rest of their lives on 346 counts of manslaughter but I'd be amazed if Boeing faces so much as a monetary fine.
That's the point. The idea is to inflict the death penalty on any company who plays games with human lives like this.
But even if you wanted to do that, you can still have your cake and eat it too. Boeing's yearly profit is 4.2 billion dollars. Take three billion of that per year and let them pay off the fine over ten years.
Pilots are part of the redundancy package?! NO! Pilots are not part of your hardware!!
Imagine the contrast from what we've been told for years that aviation hardware is about redundancy and what really is going on in their management offices.
Whatever will remain can continue building planes if it still can.
The family and friends of 346 people would beg to disagree.
The FAA certified a plane that had obvious flaws. From what I understand they out sourced the certification process to Boeing but that doesn't remove their responsibility, it's still their "stamp". The real certification process started after the accidents and only needed a few weeks to find additional flaws. I'd assume the process is normally months long so "a few weeks" would be finding it early.
But why should I trust the FAA? They seem to be working hard now projecting an image of a for-the-people agency while throwing as much dirt as they can on Boeing but I haven't really seen anything addressing their own problems with out sourcing, corruption, and political interference.
Have I missed something?
https://globalnews.ca/news/5072383/canada-eu-reviewing-certi...
> Canada and the European Union say they are re-examining the approval it gave Boeing 737 MAX jets, following reports of a U.S. investigation into the Federal Aviation Administration certification of the aircraft.
Expect the procedure to change, a lot.
As a consumer, I'm happy to have more oversight on the planes.
As a Boeing shareholder, I'd be pissed the company demolished the trust that allowed for a lot of cost savings during the certification phase.
Time and time again, we see that companies are terrible at self-regulation. They'll abuse it to save pennies today at the cost of dollars and lives tomorrow.
https://www.reuters.com/article/us-ethiopia-airplane-canada/...
You have Mechanical DERs, Electrical DERs, Software DERs, and others.
A good example for the HN crowd, the Software DER. Per regulations, the software standard is the DO-178B. The DER isn't actually spinning up the dev environment, or building the piece of software used; just checking to make sure the process was followed. (the dev environment was documented, what dependancies...) These people are a step up from code reviewers and just check paperwork more than software.
The FAA itself isn't concerned with safety; it is just there to make sure there is a papertrail to follow in the event of a safety issue.
BTW when the plan was floated to let Boeing self certify more in the process, in the name of 'efficiency' there were objections made to the political appointees driving that.
After two crashes and the groundings, i would say they did. Of course that's not what all of this is about, just their pr dept.