Dashboard: What Can We Learn from Boeing?

[Music] welcome to another 21 hats dashboard brought to you by our sponsor the great game of business I'm Lauren felin I'm here with Shan busy to talk about things we think business owners should follow this week as you probably know from our weekly conversations Shan is CEO and founder of Kinesis which is based in Portland Oregon and works with small businesses on marketing culture and strategy welcome back to the dashboard Sean hey Lauren good to be here great to have you uh Sean when you first joined the podcast uh we talked about why had taken the time and uh spent the money and energy to get Kinesis certified as a b Corp um among other things you told us that it had helped you with recruiting with attracting the kind of people you wanted to work with um but the nonprofit that that does the certifying of BC Corps I think it's called blab has been taking some flak lately and I guess well first I want to ask you whether this is on your radar but but first remind us all what what's a borp yeah so a b Corp is is really a commitment and it's a commitment to things Beyond just uh shareholder returns so it's it's the idea of more of a stakeholder capitalism so that Beyond just the the folks who own the business who you know are expecting a return on the business you also take into consideration um the community the environment the employees um even even vendors and you know it's a bigger more comprehensive pi picture of the of the good you're trying to do with your business that's that's the best way to put it and how onerous is it to apply for that and how much does it does it cost to get the certification yeah um it it varies depending on the size of the business both in terms of the complexity and the cost so you know I think for a sub5 million company which would which is the category we were under um you know it's somewhere in the neighborhood of you know $2,000 a year for renewal of the certification you have to get certified every three years now I think it's on a threeyear cycle when we first became B corpse in 2016 I think the recertification was every two years so it was a little bit more frequent but the certification was also easier and it has gotten harder over over the years so at the time when you first talked about it you were pretty positive about the impact that it had on the business is that still the way you feel yeah I mean I'm I'm definitely still bullish on the positive impact it's had on our company I can trace three current employees to being a b Corp you know and so of a company of our size that's a pretty big percentage um our director of strategy her job search um started by looking at the borp community and then evaluating what companies were BC Corps and then she went from there to look at who was hiring as as opposed to a more broad search of all companies and then oh that company's a borp that's even better so she was very strategic about it which is why she's our director of strategy yeah says a lot and then she also referred um my president Ana Taylor uh so Andrea was hired and then later Andrea referred Ana to Kinesis and we hired her and not as the president initially but she's just been a phenomenal uh employee and has become a great leader so uh super beneficial to us so you know I've read uh a couple of stories that talk about some uh some annoyance among the bore companies who are concerned about the way um blab is is picking uh new B corpse uh there's I think there have been accusations of greenwashing uh um some suggestions that the standards have dropped is is that something that's on your radar you know it it kind of was more as kind of like this like little grumbling I had heard here and there when I would talk to other BEP members and then you know I saw a story recently that was much more comprehensive as to like what's the frustration and it seems like what's happening is uh the growth of B corpse has been exponential in the from the pandemic onwards so like I I think we were like number 1,000 in terms of you know certified B Corps uh somewhere in that number and 2016 you know they were adding I don't know they had added like 3,000 in a couple I mean it was just it was a really big amount of growth in the sector and and I think that's reflective of you know the fact that businesses are now really taking into account uh gen z uh which is very very cynical I would say about capitalism in general and also Millennials you know thinking about things like global warming and environmentalism and they care about these things and so consumer Brands especially are interested in B Corp status because it's it's a values alignment uh it's it's a public values alignment and so I think there's a marketing play there for a number of them well it kind of makes perfect sense in a post uh great resignation world where where you know everybody's focused more on the mission yeah 100% so you're you you're continuing with it you're not thinking that there's no nothing's giving you cause to to rethink your I I have actually been I don't know I mean the the the real halalu was especially around Nestle which does not have a very good track record in terms of that's the one that set off the uh the warning Bells yeah that's that really upset a lot of longtime very prominent members of the borp community like uh Dr Bronner for example who's probably the highest scored borp there is um but there are others you know Patagonia is a borp and Ben and Jerry's a borp so so you know this you know portion of the community was pretty upset about well gosh you know what what are the standards to get in and and so then there's been some you know questioning of you know well can just anybody become a bcorp if they manage to kind of work the system effectively and so I think I've started to have some questions myself and and and it's really important for people to understand that being a b Corp and being a certified borp are two different things so for example we are registered with the state of Oregon as a as a a Ben a public benefit Corporation so our corporate charter says we have you know commitment to things of kind of a stakeholder nature not necessarily A shareholder nature and you can do that you you don't have to do certification you know it's it's it's just the certification is is more of a public brand than it is actually what you how you behave and how you operate so I think I've started to see now even kind of a smaller movement of folks who are either using alternative certification methods or are just saying hey we're a public benefit Corporation we're not we didn't go go through certification and you know I'm starting to kind of Wonder you know do the you know the cost and complexity uh is the is it worth it you know I'll probably be vot outvoted but you know it's just something I'm I'm thinking about well something we'll keep an eye on going forward yeah next topic uh I know you've been paying attention to the struggles of the Boeing Company um let me just start by asking you I'm I'm curious why you're interested in that we've talked about it a little bit um other than the fact that we all get on planes from time to time uh which is a big deal uh why are you interested in the struggles of a big corporation like that well I'm getting on a Boeing plane to come visit you in like a month did you check to see if it was a Boeing plane I don't know I I I I'm a little nervous it's an Alaska Airlines plane which oh my gosh but I my theory is like this is the best time to get on an Alaska Airlines play right right it's other airlines that are flying boeings that you might want to be worried about but um so yeah why do I pay attention to Boeing so a couple reasons one is we're in Portland you know Seattle's our much much prettier neighbor to the north I use that sort of factiously but um Boeing is a massive employer in that area and so I have had you know past clients I have have present clients I have friends I have business colleagues I've gone to conferences that are you you know all about Boeing and related Aerospace industry so it's a big deal in this part of the country big deal so I think about it you know I definitely have thought about it through the lens of safety but I've also thought about it a lot through kind of the lens of all these small businesses who really depend on Boeing uh for their existence um and you know some of these companies if if Boeing if Boeing's you know it's the whole classic if if if uh if Boeing catches a cold you know basically you get typhoid you know and like die so it's uh it's a big deal here you know for sure even in Portland not just around seatt really oh tons of suppliers down here in Portland um you know machine shops uh anybody in the supply chain you know there's so many parts that go into a plane um that you're you're going to have you know tons of connection and and even like uh there's a company called insitu which is in the um Hood River was founded in Oregon they make these drones and uh Boeing bought them eventually and so there's a huge ecosystem around drones that's in the uh Portland area and and related areas so a lot of folks don't realize you know Boeing doesn't just make these Jets they make a ton of stuff for the military so so we're woven into Boeing's tapestry in lots of ways so is there evidence of that typhoid spreading already or is it just people are a little nervous uh you know I have seen the typhoid that goes I it goes back to when the 737 Max had that software problem that caused more than one plane to crash into the ground and I you know I try not to make that sound like a joke because it's not funny you know like to just have such a such a disastrous quality control issue and then and now it's continuing right so first it was the software and now it's it's the actual planes themselves and the bolts the bolts I mean and what's really kind of frightening about this Lauren is that I remember when the software thing was going on and I would hear kind of hushed Whispers because nobody wants to talk ill of Boeing because so many of people rely on them but I heard hush Whispers of like hey you know it is not the same company it used to be and they would talk about you know pictures of partially assembled planes with like crash in the in the walls of the plane and just lot things that are just real signs of poor quality control um and this was back you know this was several years ago but these are the same planes right these are people were talking about what they saw happening with the Assembly of these planes what would this have been I remember now this would have been almost four years ago to the day and so now you're seeing these planes now they're in use and and what's happening is all of those decisions that were made made back then and and lack of decision like oh we're just going to hire this guy to do this job because we need to get it done as opposed to really thinking about oh yeah right we're going to be carrying people's lives up in the air we need to really care about that so that's tough when you talk to these people who were in The Boeing ecosystem did you get a sense of what had happened did something change at Boeing universally what I heard and I've heard this over and over and over again is that Boeing was a story tradition in manufacturing for many many years and the reason for its Excellence was that they were a company for engineers by Engineers ran by Engineers you know you had a lot of folks who probably came out of NASA and the Space Program you know you just think about the care and concern for making a great product and I think by and large that's how Engineers operate like they real the engineers I have known in my life and I know many of them they really do care about what they work on and what happened is you know classic acquisition thing Boeing um purchased uh a rival a competitor years ago called McDonald Douglas and McDonald Douglas even though it was smaller kind of ended up infecting the host to to kind of continue our typhoid conversation so you know my understanding is what happened is is Boeing became run by the former Executives of McDonald Douglas who were a combination of Jack Welch GE disciples um uh spreadsheet guys right you know the NB who wanted to dis squeeze as much value out of the company as they could as opposed to building a lot of value which is what the engineers were concerned with and so that was I think the beginning of what you're seeing today you know was a culture class and the winning culture was the culture that was was the one that cared more about the bottom line than they did about the the great product or even the reputation of the company over the long run it's interesting we're talking about huge corporations here merging which is obviously a very challenging thing to do but but that can happen with smaller businesses as well yeah I mean I'm sure you know at your time at you know Inc and Forbes and New York Times and all those places you've seen this right where you have a company that's great and then one day you look up and like whoa that's a different company you know and I think a lot of times that can be the result of an acquisition or being Acquired and I what I've seen in my experience is that folks will start to look at an acquisition first through the lens of finance will this make us more money will this expand our size will this you know allow us to be a bigger company and then they might look at it through the lens of strategy you know hey can we do can we can we add capacity new types of services can we create alignment you know that that dreaded word Synergy often comes up you know oh we don't need two accounting departments so we'll get rid of one and we'll save money and all that kind of stuff and and often like the last thing that people look at is the culture of the organization and I think they sort of assume that if the finances and the strategy are working that the culture must be working to and the problem with that mindset is that it actually can be kind of easy to hide the bad culture and in fact many times when companies go to sell what they'll do is they'll do a bunch of things that are really bad for the culture but make the bottom line look really good so they'll fire longtime employees that have a lot of institutional knowledge because they're expensive uh they will um do things with customers that in the short term generate Revenue but in the longterm generate frustration and disloyalty and so then you start to see customer churn so so the goal of the the business selling and this is often you know if you get private Equity or an investment Bank involved they'll often kind of push this type of behavior so you get this you know sort of package you know the presentation of what the thing is is is actually kind of a a house of cards and and so then when you grab this business business and put it into your business you've got a business that's actually kind of limping along culturally and then you're trying to shove these two cultures together which is in it of itself is very hard so I think it's it's have you seen that with businesses in Portland oh totally yeah I mean I I've had clients where they've done that and like they were a great customer and then they get acquired they became like a really terrible company um I've seen businesses you know I have a good friend who ran a really phenomenal business um you know he built it into that like $50 million and up kind of size you know he's it was a um a furniture company so like think ergonomics and and stand to sit desks and he just was a brilliant operator really really good you know he ran it for 15 years and and when he exited you know he exited with a you know big pile of cash 3040 million um and everything looked great and he even he even paid attention to culture he found a buyer he was a b Corp you know to make it full circle he was a b Corp he found a buyer who really he felt aligned with him and it was actually really good in the beginning it was really good was he looking to exit and and leave the company totally or did he stick around eventually eventually but he stuck around that was kind of part of his earnout was to and and I think he felt that he could really get thing as he as he put it to me he thought we can infect the host we can even make the host better like we can make them better and he said it was actually working which is pretty rare because it usually doesn't work so he was bought by another furniture company uh he was bought by a much bigger company and and it was going really well and then the pandemic hit and unfortunately the acquirer they sold commercial office from fishings and with all the shutdowns their business was just decimated and so the only thing that was kind of working was was David's business and so what happened was the acquirer um null uh Furnishings they ended up having to sell and they sold null along with his business fully to Herman Miller and that's when the problems happened that's when things went sideways um because it's a very different culture what happened in the end I mean it's it's sad you know it's like one of these great tragedies of business where you know David builds this company that's really remarkable part of the community he gives he would donate tons of money give back you know people loved working there super talented and a you know a nice place to work great place to work um I mean they they were they were if you wanted to find an inclusive company that was a financial you know killer it was David's company I mean he he defied all this kind of like blah blah blah you can't this inclusivity and stuff is nonsense he he really truly ran an inclusive you know company that really celebrated everybody for their differences and made a lot of money you know and and what happened was as the pandemic wore on the the the products he sold which were you know stand to sit desks and chairs the market tapped out right he he saturated the market and it became really competitive because others were had been selling into this market and so his business was struggling but not massively but in the end Herman Miller just decided you know uh we're just going to shut it down because we get a better tax benefit if we close this operation down and we fire everybody so so they fired everybody they closed the operations down it's completely gone it's gone it's gone it's gone and I mean it is so sad you know to think about this awesome thing he built and all the people who went through the doors and did really great work and all the businesses like mine I had tons of his furniture you know and I really was thankful for it because it made my employees more productive and happier um but you know it came down to you know Herman Miller only cared about satisfying its shareholders and satisfying you know Wall Street and so they made that decision that I don't think any privately help business owner would have made because you know it was still making money it was still making plenty of money it just wasn't making enough money you know for Herman Miller so I don't know well let's hope Boeing figures it out um and especially doesn't have any more problems before you get on that Alaska Airlines flight to Fort Worth uh next month I don't know man yeah it's a it's a good question I mean I think a lot about I think a lot about you know Boeing you know they're publicly traded company and they've got to do quarterly earnings calls and every quarter needs to be better than the last quarter and and I think this kind of gets me back to the whole kind of conversation of of shareholder capitalism versus stakeholder capitalism and you know they are PR Boeing is practi in shareholder capitalism which means return maximum return to the shareholders and those have that has consequences to customers to the public um so I think it's worth something it's something worth thinking about you know especially for small businesses you know in terms of what they want to do with their business and who they want to sell it to and what kind of Legacy they want to have Sean busy is CEO of Kinesis which is based in Portland Oregon and works with small businesses on marketing culture and strategy this episode was brought to you by the great game of business which helps businesses use an open book management system to help build healthier companies you can learn more at Great game.com thank you Sean thanks Lauren appreciate you taking the time have a great week everyone [Music]