Jim McNerney

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Walter James "Jim" McNerney Jr. (born August 22, 1949) is an American business executive who served as chairman and chief executive officer of Boeing from 2005 to 2015 and chairman of 3M from 2001 to 2005. His tenure at Boeing has become the subject of intense scrutiny following the Boeing 737 MAX crashes in 2018 and 2019 that killed 346 people, with critics arguing that McNerney's cost-cutting culture and decision to upgrade the aging 737 rather than develop a new aircraft contributed to the disasters.

McNerney rose to prominence as a star executive at General Electric under legendary CEO Jack Welch, leading GE Aircraft Engines to record profitability and becoming one of three finalists to succeed Welch as chairman and CEO. When Jeff Immelt was chosen in November 2000, McNerney left GE and became the first outsider CEO in 3M's century-long history.

At 3M, McNerney introduced Six Sigma methodologies from his GE experience, dramatically improving margins but allegedly damaging the company's innovative culture. Former 3M employees described his practices as "a creativity killer," and the revenue contribution from new products fell from 30% to 21% during his four-year tenure. His successor, George Buckley, worked to restore 3M's innovative spirit by exempting research processes from Six Sigma requirements.

McNerney became Boeing chairman and CEO in 2005, becoming the first chief executive in the company's history without an aviation background. He is credited with aggressive cost-cutting that improved short-term profitability but criticized for decisions that undermined Boeing's engineering excellence and safety culture. Most controversially, in 2011, he approved developing the 737 MAX—an upgrade to the 50-year-old 737 design—rather than investing billions in an all-new aircraft that aviation experts argued was needed.

According to The New York Times, McNerney's decision to rush 737 MAX development while managing the Federal Aviation Administration certification process to avoid pilot retraining requirements "contributed to the two fatal crashes in 2018 and 2019 that prompted the 737 MAX's grounding for nearly two years." Yale School of Management professor Gautam Mukunda called McNerney "arguably the worst CEO in American history."

McNerney also made the controversial decision to establish a non-union 787 Dreamliner plant in North Charleston, South Carolina, which the National Labor Relations Board alleged was retaliation against union workers in Washington State. The facility has been plagued by quality problems that continue to affect Boeing's production.

McNerney stepped down as CEO in 2015 and as chairman in 2016. He currently serves as president and CEO of the United States Equestrian Team Foundation and holds board positions at Procter & Gamble and IBM.

Early life and education

Birth and family

Walter James McNerney Jr. was born on August 22, 1949, in Providence, Rhode Island. His father, Walter James McNerney Sr., was a distinguished academic and healthcare executive who served as a professor of health policy and as president of the Blue Cross Blue Shield Association, the nation's largest health insurance organization.

The McNerney family moved frequently during Jim's childhood. He and his four younger siblings were raised in Ann Arbor, Michigan (where his father was associated with the University of Michigan), Pennsylvania, and Chicago, Illinois.

The elder McNerney's career in healthcare administration and his academic credentials established a family tradition of professional achievement that influenced Jim's own ambitious career trajectory.

High school

McNerney attended New Trier High School in Winnetka, Illinois, an affluent suburb on Chicago's North Shore. New Trier is consistently ranked among the top public high schools in the United States and has produced numerous notable alumni in business, entertainment, and public service.

McNerney graduated from New Trier in 1967, having developed interests in athletics and academics that would continue at Yale.

Yale University

McNerney enrolled at Yale University, one of the nation's most prestigious institutions. At Yale, he:

Joined Delta Kappa Epsilon fraternity: The same fraternity that included future U.S. presidents, business leaders, and other notable figures
Excelled in athletics: He played both baseball and hockey, demonstrating the competitive drive that would characterize his business career
Played baseball with George W. Bush: McNerney was a teammate of the future 43rd President of the United States on Yale's baseball team

McNerney earned his Bachelor of Arts degree from Yale in 1971.

Post-college work

After graduating from Yale, McNerney worked briefly at British United Provident (a British healthcare company) and G.D. Searle & Company (a pharmaceutical firm later acquired by Monsanto) before pursuing graduate education.

Harvard Business School

McNerney attended Harvard Business School, earning his Master of Business Administration in 1975. The Harvard MBA, combined with his Yale undergraduate degree, provided credentials that opened doors throughout his business career.

At Harvard, McNerney developed expertise in general management, strategy, and operations that would prove valuable in his subsequent roles at major corporations.

Career at General Electric (1982–2000)

Early years and brand management at P&G

McNerney began his professional career at Procter & Gamble in 1975, working in brand management. The consumer products giant was known for developing marketing talent, and McNerney gained experience in product management and consumer marketing.

From 1978 to 1982, McNerney worked as a management consultant at McKinsey & Company, the prestigious consulting firm. The McKinsey experience exposed him to strategic thinking across multiple industries and companies.

Joining General Electric

In 1982, McNerney joined General Electric, beginning an 18-year career at one of America's most successful and admired corporations. GE under Jack Welch was known for rigorous performance management, aggressive cost-cutting, and developing executive talent.

McNerney progressed through a series of increasingly senior positions:

President and CEO, GE Information Services
President and CEO, GE Electrical Distribution and Control
President, GE Asia-Pacific
President and CEO, GE Lighting
Executive Vice President, GE Capital

Each role tested his ability to manage different businesses and demonstrated the versatility that GE valued in potential senior leaders.

GE Aircraft Engines

In September 1997, McNerney was named president and CEO of GE Aircraft Engines, the company's jet engine manufacturing division. The appointment signaled that McNerney was being groomed as a potential successor to Jack Welch.

At GE Aircraft Engines, McNerney delivered exceptional results:

Revenue growth: Division revenue increased from $6.3 billion in 1996 to $10.6 billion in 1999
Profit growth: Profits nearly doubled, from $1.2 billion to $2.1 billion
Division ranking: GE Aircraft Engines became GE's second-largest profit-making division, behind only GE Capital

These results established McNerney's reputation as an operator who could drive growth and profitability in complex industrial businesses.

The succession race

By 2000, Jack Welch was preparing to retire after 20 years as GE's chairman and CEO. His succession became the most closely watched corporate transition in America.

Over a six-year search process, Welch narrowed candidates to three finalists:

Jeff Immelt: Head of GE Medical Systems
Jim McNerney: Head of GE Aircraft Engines
Robert Nardelli: Head of GE Power Systems

All three were considered outstanding executives who had delivered strong results in their respective divisions. The selection process became a high-stakes competition that captivated the business press.

In November 2000, Welch selected Jeff Immelt as his successor. As was Welch's plan, the unsuccessful candidates immediately left GE to pursue CEO positions elsewhere. McNerney was quickly recruited by 3M; Nardelli became CEO of The Home Depot.

In retrospect, the succession outcome has been extensively debated. Immelt's 16-year tenure as GE CEO was, in his own words, "controversial"—GE's market capitalization fell from $410 billion to $200 billion during his leadership. Some analysts argue that McNerney or Nardelli might have produced different outcomes, though both also faced significant challenges in their post-GE roles.

Career at 3M (2001–2005)

Appointment as first outsider CEO

In January 2001, 3M (formerly Minnesota Mining and Manufacturing Company) announced that Jim McNerney would become its chairman and CEO—the first outsider to lead the company in its century-long history.

The appointment reflected 3M's board's desire to bring new perspectives to a company that, while consistently profitable, was seen as lacking dynamism. McNerney's GE credentials and proven ability to improve operating performance made him an attractive choice.

Implementing Six Sigma

McNerney immediately began introducing Six Sigma methodologies throughout 3M. Six Sigma, a data-driven approach to reducing defects and improving efficiency, had been central to Jack Welch's management philosophy at GE.

McNerney's Six Sigma implementation included:

Workforce reduction: Eliminating approximately 10% of employees
Process standardization: Applying Six Sigma discipline to manufacturing and business operations
Performance metrics: Introducing rigorous measurement of quality and productivity

The results appeared impressive initially:

Operating margins: Improved from 17% in 2001 to 23% by 2005
Stock price: Nearly doubled between 2001 and 2004
Wall Street approval: Analysts praised the improved financial performance

The "creativity killer" controversy

However, McNerney's changes generated significant internal resistance and long-term concerns about 3M's innovative capacity.

3M had built its reputation on a culture of serendipitous discovery and tolerance for experimentation. The company's legendary products—Post-it Notes, Scotch Tape, and hundreds of others—emerged from a research environment that encouraged scientists to pursue ideas without immediate commercial justification. 3M's "15% rule" allowed employees to spend that portion of their time on personal projects.

Six Sigma clashed fundamentally with this culture:

Documentation requirements: Researchers bristled at requirements to fill out constant reports and justify their exploratory work.

Mistake intolerance: 3M had historically promoted mistakes as a method of discovery and learning. Under Six Sigma, mistakes had to be recorded and were viewed as threats to productivity.

Incremental focus: Applied to research and development, Six Sigma tended to favor incremental improvements over disruptive innovations and breakthroughs.

Former 3M employees described McNerney's practices as "a creativity killer." One manager said McNerney's "attention to cost efficiencies led to 'significantly greater [profit] margins,'" while an inventor of the Post-it Note said "innovation declined drastically on McNerney's watch."

Declining innovation metrics

The tension between efficiency and innovation became visible in 3M's new product pipeline:

Historical target: 3M had traditionally aimed to generate 30% of revenue from products introduced within the past five years
Under McNerney: By 2005, this metric had fallen to 21%
Concentration: Much of the new product revenue came from a single category—optical films for flat-screen displays—rather than the broad innovation that had characterized 3M historically

Departure and legacy at 3M

In June 2005, McNerney left 3M to become CEO of Boeing. He was succeeded by George Buckley, who faced the challenge of preserving Six Sigma's cost benefits while reviving 3M's innovative culture.

Buckley's approach was instructive: he exempted significant portions of the research process from Six Sigma requirements. As Buckley explained: "Invention is by its very nature a disorderly process... You can't put a Six Sigma process into an area and say, well, I'm getting behind on invention, so I'm going to schedule myself for three good ideas on Wednesday and two on Friday. That's not how creativity works."

By 2010, under Buckley's leadership, 3M had recovered its innovative reputation. In a Booz & Company survey of the world's most innovative firms, 3M ranked third, just behind Apple and Google.

The 3M experience raised lasting questions about McNerney's leadership approach: whether efficiency-focused management systems could be applied universally, or whether some organizations required different cultures to maintain their competitive advantages.

Career at Boeing (2005–2016)

Appointment as first non-aviation CEO

On June 30, 2005, Boeing announced that Jim McNerney would become its chairman, president, and CEO. The appointment made him the first Boeing chief executive without a background in aviation or aerospace engineering.

Boeing was facing significant challenges when McNerney arrived:

787 Dreamliner: The revolutionary new wide-body jet was behind schedule and over budget
Defense business: Several major defense programs were experiencing cost overruns
Ethics scandals: The company was dealing with fallout from defense contracting improprieties that had forced out the previous CEO
Labor relations: Tensions with unions in the Puget Sound region continued to simmer

McNerney's mandate was to apply his management and cost-control expertise to improve Boeing's operational and financial performance.

Strategic focus on cost-cutting

McNerney brought GE-style management practices to Boeing, with an intense focus on cost reduction and financial performance:

Supplier pressure: McNerney announced that Boeing would "squeeze suppliers" to extract cost savings.

Workforce management: He implemented rigorous performance standards and reduced headcount in various operations.

Outsourcing emphasis: Building on decisions made before his arrival, McNerney continued Boeing's strategy of outsourcing significant portions of aircraft development and manufacturing to external suppliers.

The 787 Dreamliner debacle

The Boeing 787 Dreamliner program was already troubled when McNerney arrived, but problems continued and worsened during his tenure.

Boeing had made an unprecedented decision to outsource not only manufacturing but design and engineering of major sections of the 787 to suppliers around the world. Many of these suppliers lacked adequate engineering departments for such complex work.

Critics alleged that McNerney's cost-focused culture discouraged internal engineering expertise. According to one account, McNerney "initially refused to let nearly any of these talented [engineers] work on the 787 Dreamliner, instead outsourcing the vast majority of the development and engineering design of the brand-new, revolutionary wide-body jet to suppliers."

The 787 was eventually delivered more than three years late and billions of dollars over budget. The aircraft subsequently experienced battery fire problems that led to the entire fleet being grounded in 2013—an embarrassing setback for a new aircraft.

Boeing ultimately had to take over several failing supplier facilities, including the North Charleston plant that would become the source of ongoing controversy.

The South Carolina controversy

In 2009, Boeing established a second 787 assembly line in North Charleston, South Carolina, at a facility originally built by a supplier that had failed to meet its obligations.

The decision to invest in South Carolina—a right-to-work state with no tradition of aircraft manufacturing—rather than expand operations in Washington State where Boeing's union workforce was located, sparked intense controversy.

The National Labor Relations Board filed a complaint alleging that "Boeing's decision to transfer a second production line for its new 787 Dreamliner passenger plane to South Carolina was motivated by an unlawful desire to retaliate against union workers for their past strikes in Washington and to discourage future strikes."

Critics characterized the move as an attempt to "bust Puget Sound unions." McNerney's approach to labor relations was described as gaining "tremendous leverage over the company's pugnacious labor unions" by threatening to shift work.

The NLRB complaint was eventually withdrawn as part of a settlement, but the controversy highlighted the tensions between McNerney's cost-focused management style and Boeing's traditional workforce.

The South Carolina facility has subsequently been plagued by quality problems. Workers there have been found to have left debris including tools and fasteners inside completed aircraft, raising safety concerns. Production quality issues have continued to affect Boeing's 787 program for years.

The 737 MAX decision

McNerney's most consequential decision came in 2011, when he faced a critical strategic choice about Boeing's single-aisle commercial aircraft lineup.

The Boeing 737, originally designed in the 1960s, was aging compared to newer aircraft from Airbus. When Airbus announced the A320neo—an upgraded version of its single-aisle aircraft with more fuel-efficient engines—Boeing faced pressure to respond.

McNerney had two options:

Option 1: New aircraft design: Invest billions of dollars over many years to develop an all-new single-aisle aircraft with modern technology, which aviation experts argued was ultimately necessary.

Option 2: 737 upgrade: Develop the Boeing 737 MAX by fitting larger, more efficient engines to the existing 737 design, which could be done faster and more cheaply.

McNerney chose Option 2—the 737 MAX.

The decision was driven by competitive and financial pressures. American Airlines was about to place a major order with Airbus, and Boeing needed a quick response. Developing a new aircraft would take a decade and cost tens of billions of dollars.

However, the 737 MAX decision created significant engineering challenges. The larger engines didn't fit under the existing 737's wings in the same position, so they had to be moved forward and up. This changed the aircraft's aerodynamic characteristics, making it prone to pitching upward in certain conditions.

To address this, Boeing developed the Maneuvering Characteristics Augmentation System (MCAS), a software system that automatically pushed the nose down. MCAS would later be implicated in two fatal crashes.

Managing FAA certification

A crucial aspect of the 737 MAX strategy was minimizing regulatory requirements. Boeing needed the FAA to certify that pilots already trained on earlier 737 models would not need additional training for the MAX—otherwise, the time and cost advantages of the upgrade approach would be lost.

According to The New York Times, "McNerney's decision meant rushing development of the 737 Max while managing the Federal Aviation Administration so that the certification of the redesigned jet—whose engines had been physically moved forward—would not require retraining of pilots, thus saving customers time and money."

This approach meant that many 737 MAX pilots were initially unaware of MCAS and its potential to push the aircraft's nose down.

Culture and engineering concerns

Under McNerney, Boeing's culture shifted further from its engineering heritage toward financial management. According to one account, McNerney used a pejorative term for longtime engineers and skilled machinists who prioritized safety and quality: "phenomenally talented assholes." He allegedly encouraged deputies to "ostracize them into leaving the company."

Some Boeing engineers contended that "their power and decision-making ability often was overridden by cost-conscious executives, including McNerney."

These cultural concerns would gain significance in the aftermath of the 737 MAX crashes, when investigations revealed that Boeing had prioritized speed and cost over thorough engineering review.

Compensation

McNerney was one of the highest-paid executives in American industry during his Boeing tenure:

2007: $12.9 million total compensation
2008: $14.8 million total compensation
2009: $13.7 million total compensation
2013: $23.2 million total compensation (including $12.8 million bonus)
2014: $29 million total compensation

Critics noted the disconnect between McNerney's compensation growth and the long-term problems developing in Boeing's products and culture.

Retirement

McNerney retired as Boeing CEO in July 2015, succeeded by Dennis Muilenburg. He remained chairman until March 2016.

His departure came before the full consequences of his decisions became apparent. The 737 MAX would not enter service until 2017, and the fatal crashes occurred in 2018 and 2019.

The 737 MAX crashes and legacy

The crashes

On October 29, 2018, Lion Air Flight 610 crashed into the Java Sea shortly after takeoff from Jakarta, Indonesia, killing all 189 people aboard.

On March 10, 2019, Ethiopian Airlines Flight 302 crashed near Addis Ababa, Ethiopia, killing all 157 people aboard.

Both crashes were ultimately attributed to the MCAS system that Boeing had developed for the 737 MAX. The system, designed to address the aerodynamic issues created by the engine relocation, repeatedly pushed the aircraft's nose down based on faulty sensor data. Pilots were unable to counteract the system effectively, in part because they had not been trained on its existence.

Following the second crash, the 737 MAX was grounded worldwide for nearly two years—the longest grounding of a major commercial aircraft in history.

Attribution of responsibility

Investigations and subsequent reporting linked the 737 MAX problems to decisions made during McNerney's tenure:

Strategic decision: McNerney's choice to upgrade the 737 rather than develop a new aircraft created the fundamental engineering challenges that led to MCAS.

Certification pressure: The emphasis on avoiding pilot retraining requirements shaped how MCAS was implemented and disclosed.

Cultural factors: The cost-cutting culture and diminished engineering authority allegedly contributed to inadequate testing and review.

Gautam Mukunda, a professor at Yale School of Management, called McNerney "arguably the worst CEO in American history"—a striking assessment that reflected the scale of the human tragedy connected to decisions made during his leadership.

Ongoing Boeing crisis

Boeing's problems extended well beyond the 737 MAX. The company continued to face quality issues with both the MAX and 787 programs, culminating in a January 2024 incident where a door plug blew out of an Alaska Airlines 737 MAX 9 during flight.

The book Flying Blind: The 737 MAX Tragedy and the Fall of Boeing by Peter Robison examined how decisions by McNerney and other executives contributed to Boeing's decline. Subsequent books including Rise and Fall have continued to analyze the leadership eras at Boeing, including McNerney's tenure.

Post-Boeing career

Board positions

After leaving Boeing, McNerney has continued to serve on corporate boards:

Procter & Gamble: Board member, returning to the company where he began his career
IBM: Board member
Boeing: Served on the board from 2001 (before becoming CEO) through his departure as chairman in 2016

United States Equestrian Team Foundation

McNerney currently serves as president and CEO of the United States Equestrian Team Foundation, reflecting his family's involvement in equestrian sports. His daughters Julia and Hilary are competitive riders in hunter and jumper divisions.

In 2024, McNerney was presented with the R. Bruce Duchossois Distinguished Trustee Award for his service to the USET Foundation.

Advisory roles

McNerney has served in various advisory capacities:

President's Export Council: Appointed chairman by President Barack Obama
Trump business forum: Joined a forum assembled by president-elect Donald Trump in December 2016 to provide advice on economic issues
The Business Council: Served as chairman in 2007 and 2008
Northwestern University: Board of Trustees member
Center for Strategic and International Studies: Trustee

Personal life

Marriages and family

McNerney has been married twice. His first marriage ended in divorce and produced three children. He subsequently married Haity McNerney, and they have two children together, for a total of five children.

His daughters Julia and Hilary are active in competitive equestrian sports, participating in hunter and jumper divisions.

McNerney and his wife Haity have been active supporters of show jumping advancement and events, with a particular focus on young rider development.

Residences

McNerney and his wife maintain homes in Lake Forest, Illinois (a Chicago suburb where many corporate executives reside) and Wellington, Florida (a center of equestrian activity).

Leadership assessment

Supporters' view

Defenders of McNerney's record argue that:

He improved short-term financial performance at both 3M and Boeing
He made difficult decisions necessary to remain competitive in challenging industries
Many of the problems attributed to his leadership were exacerbated by successors or external factors

Critics' view

Critics argue that McNerney's leadership exemplified problematic trends in American corporate management:

Short-term focus: Emphasis on quarterly results and stock price at the expense of long-term capability and safety.

Engineering marginalization: Reducing the influence of technical expertise in favor of financial management.

Cost-cutting culture: Prioritizing cost reduction even in contexts where quality and safety were paramount.

Union hostility: Using plant location as a weapon against organized labor.

The 737 MAX crashes have become a defining element of assessments of McNerney's legacy. While he was not CEO when the crashes occurred, decisions made during his tenure—particularly the strategic choice to upgrade rather than replace the 737—set the stage for the disasters.

References

External links

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