Boeing's Fall
What Happened
Boeing was once the gold standard of American engineering. "If it ain't Boeing, I ain't going" wasn't marketing â it was earned reputation, built by engineers who had decision-making authority.
Then came the 1997 merger with McDonnell Douglas. On paper, Boeing acquired McDonnell Douglas. In practice, McDonnell Douglas's financial-management culture took over Boeing. The headquarters moved from Seattle (where the factories were) to Chicago (where the money was). Then to Arlington, Virginia (where the government contracts were).
Engineers lost power. Finance gained power. The metrics changed: stock price, quarterly earnings, cost reduction. Not: engineering quality, safety margin, innovation investment.
The result: the 737 MAX. 346 people dead. Not because of one bad decision â because of twenty years of structural decay.
PAMO Analysis
Skin in the Game â Systematically Removed
The executives who cut engineering budgets, who moved headquarters away from factories, who pressured engineers to certify faster â none of them flew on the planes. None of them lost their jobs when the planes crashed. The payoff structure was asymmetric: cut costs â bonus goes up. Plane crashes â "industry tragedy," no personal consequence.
Principal Absent
Who was Boeing's principal? Shareholders? They wanted short-term returns. The board? They were agents of shareholders. The CEO? Agent of the board. There was no one in the system whose personal fate was tied to "planes don't crash."
The original Boeing principals â the engineers who founded the company â were long gone. What remained was a principal-free structure where agents optimized for agents.
Coordination â Control Death Spiral
What began as necessary coordination (managing complex supply chains) became pure control (overriding engineering judgment with financial targets). The coordination layer stopped serving the Makers and started governing them.
The Counterfactual
If PAMO existed at Boeing in 1997:
- Skin in the Game test: "Does the person cutting safety budget fly on these planes weekly?"
- Separation Principle: engineering judgment and financial optimization would live in separate authority structures
- Four Roles: the Makers (engineers) would have structural veto on safety decisions â not just advisory input
- Structural Immunity: drift from "engineering company" to "financial company" would trigger alerts years before tragedy
The Principle
When the people who make life-or-death decisions bear no life-or-death consequences, death becomes a matter of accounting, not engineering.