Data as jet
fuel: An interview with Boeing’s CIO
It isn’t always comfortable, but data
analytics is helping Boeing reach new heights.
Boeing CIO Ted Colbert is
something of an evangelist for the power of data analytics. He recently spoke
with McKinsey’s Aamer Baig about how he has been spreading the word within
Boeing, and why even companies overflowing with analytical talent sometimes
have to work hard to reap its full rewards.
The Quarterly: Does a company like Boeing,
renowned for its engineering prowess, have a head start when it comes to
harnessing the power of digital analytics?
Ted Colbert: To some extent, yes. We have
a company full of engineers, mathematicians, scientists, and statisticians who
achieve amazing things. And data analytics is certainly not a new field to the
company. When I first started to raise its growing importance, we probably had
about 800 people we could classify as data scientists, which was a great start.
But when we started to ask how data driven our decisions were, whether we
really used the insights we had to drive productivity and the capabilities of
the company, we quickly discovered there was much more we could be doing.
For example, we’d been
using data-science capabilities to improve maintenance decisions for a decade.
But we hadn’t been pulling data from the factory floor to understand how well
Boeing’s production system was working. Take the 787. I visited our factory in Everett
[Washington] at a time when we were under pressure to improve productivity. I
wanted to better understand how the mechanics worked. I was told, quite
reasonably, that they followed processes that are documented in a procedures
manual, and everything anyone did was logged in a system, as required for
certification. We took a more concerted effort to find improvements for
factory-floor disruption, such as mechanics spending a quarter of their time
identifying parts, plans, and tools to start their jobs.
At first, many people
told me there was nothing new in what I was saying about data analytics. “We
already do that,” was the common response. It’s only when you can produce these
kind of proof points in areas that matter that the light comes on for people—when
they are under pressure to drive margins, for example, but realize that the
playbook they’ve been using for years just doesn’t deliver anymore. It changes
the mind-set. People come to understand that there is a ton of richness trapped
below all the capability that already exists in the company.
Getting to that
understanding isn’t always a comfortable journey. For example, we wove together
about 13 systems to show how much inventory was sitting in our systems that
didn’t have a demand pull. In a company our size, you might expect it to be
worth tens of millions of dollars. But we found it added up to hundreds of
millions of dollars. That made a few people very uneasy, and their first
instinct was to dispute the data. Let’s face it, when you highlight this kind
of stuff, you are highlighting the need for cultural change. But Boeing is a
100-year-old company, and I don’t see my role as one of simply reinforcing how
great it is. Rather, it’s to figure out where truth lies in data that will help
us flourish for the next 100 years.
The Quarterly: How do you move from
demonstrating data analytics’ power in a handful of projects, to embedding it
across a company the size of Boeing?
Ted Colbert: Demand for data-analytics
resources mushrooms as you demonstrate its value. At one time, we had over 100
data-analytics projects in the queue related to improving productivity, be it
in design, engineering, manufacturing, or product support. But you have to be
very strategic and deliberate about how to scale up. On the one hand, you have
to build momentum with a portfolio of projects—some small, some medium-size,
and a few in bigger, important areas. At the same time, you have to think long
term. The portfolio might yield tens of millions of dollars here, and maybe a couple
hundred million there—and you still could be only scratching the surface.
Analytics will take billions off the bottom line if you figure out how people
across the entire organization can grasp the opportunity—and how to democratize
the capability.
That can be tricky,
because what you don’t want is people trying to go create their own data
platforms all over the place. It’s that fragmentation that went wrong in the IT
world 20 years ago and that makes it so hard today to get at data. So you need
to keep working on projects that prove the power of data analytics and at the
same time, in the background, plan the foundational architecture and work
toward a common platform. That platform will eventually allow you to stratify
data-analytics work. You can still put the most expensive, smartest data
scientists on the biggest problems, but you have unleashed the power of the
platform to one and all.
The Quarterly: A high-performing digital
culture is one that is agile, that can move quickly to embrace technological
developments, all the while testing new ideas and products and services, and
learning in the process. How do you square that with the way of working at a
company like Boeing, whose products take decades to develop?
Ted Colbert: It’s a fundamental issue. Boeing’s
DNA is built around a long business cycle and one that puts safety first. So
whether you are developing airplanes, fighter jets, or satellites, progress can
be barely perceptible, like a giant cog rotating. Digital developments, on the
other hand, are tiny cogs, moving 100 times faster. My job is to make sure both
function together—that the smaller cogs don’t break the big one. Often that
means isolating our “fail fast” activities.
Boeing’s services
business is essentially a digital business, and it’s often a better place to
learn than our commercial and defense businesses. If we give our engineers and
other people an opportunity to work there, it will help move the culture
forward. Ultimately you can introduce agile ways of working
and speed up processes even for products that are as complex and important as
ours—and the result will be a better product. But it helps to begin with things
that are far away from that big cog and work our way toward it over time.
There is another level
of complication for us, too. At Boeing, we start designing new products decades
in advance. We don’t continuously roll out new ones that can be tweaked with
our latest know-how. Let’s say we’re looking ahead to a new plane we’re likely
to build in two or three decades’ time. The engineers would want to know,
today, the efficiency-enhancing tools that would be available in order to build
their business case for the plane. I can’t just say, “Trust me, we’ll be using
machine learning in the design process.” No one can sign up to big productivity
gains if there is any doubt they will materialize. It would destroy the whole
cost and sales model.
We can’t completely
solve this. It comes back to proof points. So we are setting up a series of
what we call pathfinders that will demonstrate data analytics’ worth. These
bring data-analytic capabilities and agile ways of working to bear on mature
production programs such as the 737, where we need to raise the rate of
production, and the 787, where there’s an opportunity for additional margin
expansion. This is the only way we are going to get buy-in to future programs.
The Quarterly: Has Boeing’s hiring culture
changed? Traditionally, Boeing’s senior managers have been internal
promotions—people who have been with the company throughout their careers. Is
that model still tenable?
Ted Colbert: What keeps me awake at night
is whether we have the right talent. On one of our projects, I simply couldn’t
find someone on the business side who understood all the end-to-end processes
well enough to deliver. So you absolutely have to build the skills of the
people who know Boeing well, who have so much expertise. And if you want them
to work differently, you also have to build credibility with them. Many have
been around for 20 or 30 years. That can be hard for people like myself from
outside the industry—I came via the car industry and banking. We do the usual
things like trips to Silicon Valley to demonstrate different working
environments. But fundamentally, the only way to change minds is to prove that
there’s value in doing things differently.
The Quarterly: What would success look like
for you in a couple of years?
Ted Colbert: Reaching escape velocity! By
that I mean that I don’t want to find myself pushing as hard as I’ve been
pushing the last couple years for changing the way we work. If that were the
case, gravity would still be pulling us back toward the status quo. I want to
be a catalyst for change. I want to have established the foundational
capabilities that will help senior business leaders harness the power of
digital analytics to better deliver on their objectives. Then I can step back
and watch take-off.
https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/data-as-jet-fuel-an-interview-with-boeings-cio?cid=other-eml-alt-mkq-mck-oth-1801&hlkid=3ca9b8390deb4f6da7001bd24f7f424c&hctky=1627601&hdpid=45e27f69-eb97-4cd8-9774-da8cf6d2d0f3
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