The High Strike and How to Avoid Unnecessary Disputes
by Harry C. Stonecipher, President and Chief Operating Officer, The Boeing Company,
U.S. Air Force Alternative Dispute Resolution Conference, The Marriott Riverwalk,
San Antonio, Texas, April 17, 2001.
Let's begin by examining a long-simmering
dispute that got out of control . . . and caused a lot of unnecessary damage.
My example is not drawn from the annals of defense contracting. It comes instead
from our national pastime major league baseball. I am talking about the great
controversy over the enforcement, or non-enforcement, of the so-called "high strike."
As a direct result of "the incredibly shrinking strike zone," as some have
called it, batters have been teeing off. They are hitting more home runs than
ever. Most fans like home runs. But there have been some unfortunate side effects
that no one likes.
Last year, 26.7 percent of all at-bats resulted in either
a walk or a strikeout. In other words, no ball put in play. With that, the average
length of a baseball game has grown to more than three hours, up from two and
half hours a couple of decades ago. In other words, there has been a horrific
increase in cycle times.
Even more amazingly, the Umpires Union tried to
shut down major league baseball last summer rather than submit to a directive
from commissioner Bud Selig reminding them of the parameters of the strike zone.
During the heat of pennant race last fall, the commissioner fired 22 umpires for
walking off their jobs and brought in replacement umpires from the minors.
in the world did things come to such a sorry impasse?
To tell you the truth,
it reminds me in some ways of the bad old days in defense contracting, when the
newspapers were filled with stories charging quote Waste, Fraud & Abuse close
quote and when relations between the defense industry and our government customer
were at an all-time low.
Let me point out a few morals from the umpires'
strike. I believe they are broadly applicable inside or outside baseball.
is the importance of having rules that are clearly stated and closely observed.
Following the 1968 season, when 21 percent of all games were shutouts, the commissioner
of baseball decided to lower the pitching mound from 15 inches to ten in order
to redress what was then seen as an imbalance between hitting and pitching. Nothing
wrong with an agreed change in the rules when everyone is clear about what you
are doing. The pitching mound might be lower, but it would be the same for everyone
and it would be strictly measurable.
What was not right, however, was
a new tendency on the part of umpires blinked at or tolerated by others in authority
to simply ignore the definition of the strike zone given in the rulebook.
leads me to a second moral. Where there is no respect for the rules, there is
no respect for authority . . . and everyone suffers as a result. Higher authority
looked the other way for years as umpires shrank the strike zone. When a new
commissioner tried to put things right, he discovered that the union's leadership
regarded the strike zone as something that was literally negotiable something
to be dealt with as part of the collective bargaining process.
moral should also be clear at this point. Something is very wrong when the parties
to a contract in this case, the umpires and the representative of the club owners
get themselves into a situation in which one side has to lose in order for the
other to win.
Sometimes it takes a crisis to bring people to their senses.
I can remember such a crisis very well. When I took over as CEO of McDonnell
Douglas in 1994, I parachuted into the C-17 crisis. Coming hard on the heels
of the A-12, the C-17 which resulted in over a billion dollars in write-offs
for McDonnell Douglas was open wound that had the potential to deprive the company
of a significant part of its future. At the same time, termination of the program
threatened by Congress would have been an absolute disaster for the Air Force
and the Armed Forces as a whole.
To save the program, McDonnell Douglas
and the Air Force agreed to drastic changes beginning with the installation
of new management, both inside the company and inside the Air Force System Procurement
At the top level, we agreed to share common objectives, and to start
acting as partners in a long-term relationship rather than as adversaries in a
continuing dispute. We would not allow problems to fester. To take one example:
If mid-level managers from the company and the Air Force were incapable of concluding
annual contracting negotiations on a specific date, the two top executives the
McDonnell Douglas program leader and the Air Force's SPO director would settle
the outstanding difference themselves, without the help of their staffs.
sent a message that we were dead serious about trusting each other, and this was
carried down the line. The SPO gave up its practice of sending a person to monitor
our work every time we were required to redrill a hole or rebuck a rivet. For
our part, we got on with the task of truly empowering the C-17 workforce and our
suppliers to do their jobs with a minimum of interference and with genuine encouragement
for teamwork and individual initiative at all levels.
In bringing points
in dispute to an end, the Air Force paid us some of the money that we felt we
were owed and we reinvested some of our own money in the program. As a final
and critical point, we all campaigned together the services, the company and
our suppliers for the needed support in Congress to keep the program going.
rest, as they say, is history. The C-17 went on to win both the Collier Trophy
and the Malcolm Baldrige National Quality Award for excellence in manufacturing.
The once-troubled C-17 became a shining example of how to take cost out of an
existing program and improve quality and performance at the same time. Needless
to say, the airplane has also done everything the Air Force and the other services
hoped it would do in providing rapid mobility for our warfighters and peace-keepers.
A couple of years ago, the Air Force and Boeing which of course includes
the former McDonnell Douglas came to an agreement under which we provide cradle-to-grave
maintenance for the Air Force's C-17 fleet. Now that's partnership. In fact,
Darleen (Darleen Druyun, Deputy Assistant Secretary
Acquisition & Management) has just come from visiting our Aerospace
Support facilities at Kelly where we take care of the C-17, the KC-135 and other
aircraft for our military customers.
I regard the turnaround in the C-17
program as a pivotal event . . . not just for Boeing / McDonnell Douglas . . .
but for defense contracting as a whole. It opened many eyes to the opportunity
for greater cooperation and partnership not just in the resolution of disputes,
but in the whole approach to program management and leadership.
C-17 predated the Alternative Dispute Resolution mechanism in defense contracting,
the changes that I have I described were clearly ADR-like in spirit, and they
help set the stage for the emergence of ADR under the leadership of General Anderson,
Darleen Druyun and others.
ADR facilitates open information exchange and
provides a variety of techniques and mechanisms for defusing or resolving conflicts.
Clearly, we all benefit when we resolve our differences in the fastest and least
costly manner. No one (except a lawyer) builds a business on lawsuits. And
litigation is not how you build an army or an air force, either.
I am very
proud of the excellent work that our contracting officers at Boeing and their
counterparts in the Air Force have done in making use of the Alternative Dispute
process. Working together, they have disposed of some long-running disputes .
. . in such programs as AC-130U Gunship and B-1B . . . and they have done so to
the satisfaction of both sides.
Life is full of uncertainty. From any starting
point in a business venture, there are going to be unforeseen circumstances and
possible misunderstandings. Contracting is one way a time-proven way of dealing
with uncertainty. But it is inherently imperfect.
Carefully crafted prenuptial agreements are not
the secret to great marriages. Nor do we find that artfully worded and detailed
addenda to commercial contracts are the secret to great business partnerships.
In fact, the deepest and most satisfying partnerships work in ways that transcend
anything that can be found in the fine print.
We are talking here about
mutual commitment, mutual respect, a common sense of purpose, loyalty, dependability
and trust. We are talking here about the kind of inter-dependence that exists
when one side freely and voluntarily measures its own success . . . and its own
happiness . . . from the success and happiness of the other side.
I hope those of us in this
room never make the same kind of mistake. We serve a common cause and a common
customer the men and women who risk their lives in our nation's defense and
in the defense of freedom around the globe. We are working together in their behalf.
Let us never forget that in our dealings with one another!