Different problems at Boeing and Starbucks, but similar messages from the CEO

Both managers are trying to solve a difficult problem: how can we best revive a company that is in trouble?

The twin turnaround efforts happening at the same time and in the same place—Seattle—are drawing the attention of management gurus and CEOs, along with employees, investors, coffee drinkers and fliers, all eager to decipher how executives will transform their organizations. .

The leaders took over their jobs within weeks of each other. Boeing’s Kelly Ortberg started on August 8, while Brian Niccol’s first day at Starbucks was on September 9. They face completely different problems. (Only Boeing, for example, has a union that is on strike and burning its cash reserves.) But the playbook for turning around the companies so far appears to be remarkably similar.

When the two CEOs addressed investors and employees in recent days, they used some of the same language and highlighted familiar concerns.

“First, we need a fundamental culture change within the company,” Ortberg wrote to Boeing staff on Wednesday. A day earlier, as Starbucks suspended its financial guidance and announced weak fourth-quarter results, Niccol said in a video message: “We must fundamentally change our recent strategy.”

Boeing has been hampered by quality problems, plane delays and a machinists’ strike that has halted most production. Starbucks is struggling with long wait times at its cafes, a continued sales decline in the U.S. and competition in once-promising markets like China.

The executives have repeatedly invoked the legacy of their brands and how the path forward should include a return to what made them powerhouses in the first place. Niccol has said Starbucks will review its prices and menu offerings, but his key message is that the chain will focus on improving the experience of visiting its cafes.

“We need to re-establish ourselves as the coffeehouse of the community,” he said.

At Boeing, Ortberg has said he wants to change the way the company operates and restore the manufacturer’s technical prowess. That plan includes job cuts to slim down the company and restore confidence.

“We will remain true to our roots and the values ​​that defined our legacy,” Ortberg said. Likewise, Niccol said Starbucks is strong when “we stay true to our core identity.”

That Niccol and Ortberg remain relatively short on details is understandable, says Bruce Avolio, who is watching Seattle’s turnaround efforts from his nearby post as a professor at the University of Washington’s Foster School of Business.

“It’s quite early, and that may be part of the reason why their statements are somewhat general at this point,” Avolio said. “I don’t think they have all the information they probably need to determine, what is the strategic transformation? ?”

Both executives have said solutions will come by focusing on the front lines, whether that’s in an aircraft factory or behind an espresso machine.

Ortberg said Boeing officials needed to be on factory floors and in engineering labs to better understand what is going on with its products and workers. Niccol asked the company to do more to help its baristas.

“Every person at Starbucks must work harder to support our retail teams, respond more quickly to their feedback and give them what they need,” said Niccol.

That the rhetoric among the companies is somewhat similar doesn’t surprise veteran CEO watchers, and those who help craft messages for them. Early on, executives often take pains to tout companies’ strengths, explain to investors that transformation will take time, and make it clear that they are still refining their strategies.

Nike, another Pacific Northwest company hoping for a turnaround, is following aspects of the playbook. New CEO Elliott Hill has promised that the sports brand will focus on its core: athletes.

When Nike does that, “we create the right discussions, debates, dialogues and ultimately make the best decisions – for the consumer and our company,” Hill said. This month he returned to lead the company where he previously worked for decades.

Years ago, bosses said very little early in their tenures, taking time to tour operations and listen — as Starbucks and Boeing executives do now — without feeling obligated to communicate a broader vision and strategy to the world to explain.

“There used to be a thing where you had 100 days before you were expected to say anything meaningful about where you wanted to take the company,” says Darren Brandt, co-CEO of communications consultancy Sloane & Co. I don’t think that exists anymore.”

Now, investors and concerned employees in particular want to hear from leaders sooner to determine whether the company is taking a meaningful new direction and whether they want to stay, Brandt said.

“You have to get your people to understand what you want to do more quickly, and you have to communicate about it much more often,” he said.

To address the problems, Ortberg moved to Seattle, where Boeing was once headquartered and where the company has factories that build its 737 and 777 planes. When Starbucks hired Niccol, he said he could live in his home in Southern California and commute regularly to Starbucks headquarters by corporate jet.

Bill George, a former CEO of Medtronic and executive fellow at Harvard Business School who has written case studies on Boeing and Starbucks, said he is impressed that both leaders have been transparent about the problems. However, real business turnarounds take years, especially at companies like Boeing, where challenges are deep-rooted.

“It’ll take time,” George said. “People are skeptical until you start getting results.”

Write to Chip Cutter at [email protected]