Welcome aboard, fellow travelers! 

We are often warned that over focusing on cost-savings and profitability can have dangerous consequences. It appears we’re watching this situation play out in real-time with Boeing’s ongoing mishaps - including the door plug blowing out of a 737 Max 9 over Alaska. Read more on Boeing’s bungles below.  

In career-related news, research has confirmed what many of us suspected - fully remote workers risk missing out on promotion opportunities due to managerial proximity bias. Meanwhile, the word on the street is that the mass layoffs of 2023 were only just the beginning as organizations wade deeper into cost-cutting and efficiency mode.

As usual, we have plenty of other bits and pieces for your in-flight entertainment, including recommendations for podcasts, books, shows, charts, and tweets of the week, and a final chuckle.

Let’s take off.

Industry Highlights: Boeing Blunders

Here's what went down: On January 5th, right after takeoff, a Boeing 737 Max 9 experienced explosive decompression when a door plug made a break for it and popped out of the fuselage. Before that flight, there were three other trips where warning signals about cabin pressurization went off. The National Transportation Safety Board is on the case and has grounded 170 MAX 9 jets while they investigate. The FAA is also digging into Boeing's manufacturing processes. The incident followed two fatal crashes involving the 737 Max, which killed 346 people in 2018 and 2019. 

Unbelievably, the nose wheel fell off a Boeing 757 as I was putting this issue together.

Were these accidents the result of an over-emphasis on cost savings? As the Financial Times writes, Boeing has faced criticism that its “shift in priorities from engineering to financial performance over the years had affected its focus on quality control and safety.” 

The FAA has its own problems. Besides dealing with the immediate Boeing crisis, the challenge is to rebuild public trust in air travel, which has taken a hit due to flight delays, cancellations, and close calls. In a report released in November, the FAA found an alarming increase in serious runway incidents and pointed out that the air traffic control systems suffer from a lack of funding for staffing, equipment, technology, and facilities. The upcoming FAA reauthorization bill could offer the chance to beef up staffing levels and meet an urgent need for more agency inspectors, especially in light of the recent Boeing debacle.

Meanwhile, Boeing faces a steep ascent to restore its reputation before attempting to return to profitability. One of its customers, AerCap CEO Aengus Kelly, told reporters: “Boeing must now focus 100 percent on quality and safety metrics. Financial metrics are completely secondary to the company's future at this point.”

What does this mean for the company’s performance in the year ahead? Major airline customers are currently conducting inspections on existing 737 MAX 9 planes, while federal air safety officials are delving into the company's broader manufacturing processes. They are also investigating Spirit AeroSystems, the supplier responsible for the plane's door plug and fuselage.

Several aerospace analysts have revised their financial forecasts for Boeing. The extent of the financial impact will depend on how long it takes to identify the cause of the accident and obtain the necessary certification for other MAX models.

Boeing and Spirit have launched internal reviews and expressed their full support for the ongoing government investigations. Investors can expect an update on Boeing's latest financial results on January 31.

The WSJ reports that Boeing had set an ambitious goal to increase production to about fifty 737 aircraft per month. However, recent data shows a slower start in January, with only five deliveries from its Renton, Wash., factory. It's worth noting that delivery rates can fluctuate, and a slow start to the month may not necessarily indicate long-term delays. Previous problems, such as mis-drilled holes in Spirit fuselages, have disrupted production in the past and impacted the company's profits.

Boeing reported a net loss of $2.2 billion in the first nine months of 2023, with revenues totaling approximately $55.8 billion. During that period, the company generated about $1.5 billion in free cash flow and aimed to reach a full-year target of $3 billion to $5 billion.

The mishaps have created uncertainty regarding when the grounded MAX 9s will be allowed to resume flying. Additionally, the scrutiny may further delay the certification of two new models, the MAX 7 and MAX 10, which were already facing initial delays. 

What is certain is that if these delays persist, we’ll see Boeing's share price going into a tailspin. The price declined more than 17% since the beginning of the year and has not yet fully recovered to its pre-pandemic levels.

It's worth noting that in 2019, Boeing lost its title as the world's largest plane maker in terms of orders following a second fatal crash involving a MAX 8 aircraft. This incident led to a global grounding and a temporary halt in production. In contrast, Airbus has continued to extend its lead by delivering 735 jets to customers in 2023, while Boeing handed over 528 aircraft.

Despite the production challenges, both Boeing and Airbus have enjoyed strong demand from airlines seeking more fuel-efficient models to accommodate the resurgence in travel. This high demand has resulted in longer wait times for deliveries.

The Future of Work: Fully remote workers are missing out on promotions

The remote work battle continues to rage. Emboldened by labor market conditions, more employers insist workers return to the office. Hybrid arrangements are becoming the norm, but nearly 20% of all employees with college degrees still work fully remotely.

That’s right; one-fifth of our best and brightest workers are fully remote. But is remote work killing their chances for promotion?  Let's dive into the key takeaways from a recent WSJ article and explore how remote workers face unique challenges in advancing their careers and building strong workplace relationships.

Remote workers were promoted 31% less often than their in-office counterparts, according to an analysis of two million white-collar workers by Live Data Technologies. In 2023, only 3.9% of remote workers received promotions, compared to 5.6% of office or hybrid workers. The problem lies with proximity bias, where executives tend to reward employees who show up at the office.

Here are two insights from the WSJ article that caught my attention:

• “Some workers who aren’t required to do their jobs on site say they are opting for the office anyway, mindful of the impact on their careers.”

• “Remote work tends to be a better fit for people who are already more established in their careers and have the skills and relationships to help them win promotions.”

A KPMG survey of 1,325 CEOs revealed that nearly 90% were likelier to offer promotions to physically present employees. Take the opinion of Egnyte Chief Executive, Vineet Jain, who argued: “If you don’t show up and work with the rest of your colleagues, it’s showing a lack of connectivity and a lack of ownership.”

In-person interactions matter for feedback and collaboration. Software engineers in the same building as their teammates received 22% more feedback on their code. Female engineers working on-site received 40% more comments on their code than those not on the premises. This disparity can impact skill development and hinder career growth.

A Gallup poll found that if a substantial number of employees at a company work remotely some or all of the time long term, the culture of the company will be perceived as worse by 27% of leaders, 20% of managers, and 13% of non-managers.

The tougher line from employers reflects the reality of the labor market and an environment where job cuts are expected to continue into 2024. BlackRock plans to cut 3% of its roles, Amazon is eliminating hundreds of jobs across its film and television studio, and Audible is laying off 5% of its employees. Citigroup plans to cut 20,000 jobs by the end of 2026, Xerox Holdings is reducing its workforce by 15%, Universal Music Group plans to lay off around 100 to 300 employees globally this year … the list goes on. The point is that we’re in an employer’s market and cost-cutting cycle, which means that benefits, including fully remote working and rapid promotions, will no longer be a given. 

What about promotion opportunities for hybrid workers? Good news: the Live Data report found “the data shows no difference in promotion rates between hybrid workers and those who come to the office five days a week.” 

So, if you don’t want to end up reporting to less-talented colleagues who are promoted ahead of you simply for showing up, it may be a good idea to be seen in the office two or three days a week.  

Oh, and while we’re talking about promotions, be sure to check out ADP’s Hidden Truth About Promotions report. The results can be best described as counterintuitive. You’d think that promoting someone would be good for retention, but it turns out that promotions increase the risk of people leaving, at least in the short term:

What’s going on? The data suggests two things: firstly, a promotion makes an employee more marketable when searching for a new job in another company. Secondly, people who are given more responsibilities (thrown in the deep end) without adequate preparation or resources become more likely to quit. 

This doesn’t mean employers should stop promoting people, but they should take this risk into account and have a plan in case a recently promoted employee leaves. By all means, promote your top performers, but bonuses or merit pay increases may be more suitable in many cases.  

AI Insights

• OpenAI CEO looks to reduce dependency on Nvidia chips: CEO Sam Altman is reportedly in discussions with investors and manufacturers worldwide to establish a network of chip fabrication plants. The goal is to decrease OpenAI's reliance on Nvidia chips, which are currently scarce and expensive, with prices reaching $30,000 each. Nvidia produces the graphics processing units (GPUs) powering major AI models, including OpenAI's GPT-4. Altman's initiative may reduce dependency and potentially cut chip costs for OpenAI by over 50%.

• Everything you wanted to know about AI: The WSJ has published a helpful article answering readers’ questions about AI. I found it interesting; for example, it’s always bothered me that ChatGPT can’t (or won’t) provide a clear list of sources for its outputs. It turns out that this is due to how AI bots are trained to recognize patterns rather than simply store facts and because of the mathematical formulas they use rather than text searching to generate responses. 

• University of Minnesota helps farmers detect aphid infestations with AI and satellites. Aphids are tiny nuisances that can wreak havoc on fields, and range from 1mm to 7mm in length. Who would have thought we could spot them from space? The university uses satellite-based remote sensing to snap pics and measure light wavelengths. They collect the data in summer and analyze it during winter, with the data flowing into an app for farmers to use. 

The Supply Aside

📕 Read - The Accidental Equalizer

According to sociologist Jessi Streib in her book The Accidental Equalizer, landing a great job after college is more about “dumb luck” than anything else. Employers hide crucial information about how to get ahead, making grads from all walks of life face the same odds. This luck-based system challenges the idea of class privilege and makes us rethink how higher education fits into the picture. While plenty of points can be disputed and some contradictions throughout the book, it was still an interesting read. With my eldest starting college this year, this was timely reading. 

What Else I’m Reading

• How different generations in the workplace respond to stress: A UK study found that middle-aged people are more likely to numb themselves with wine and vodka, while younger people succumb to depression. At the same time, younger people are better at talking about mental health. Keep in mind that the UK has a boozier culture than the US. 

• Early mover nations are finally seeing inflation fall: A group of eight countries including Brazil, Hungary, New Zealand, and South Korea moved faster and more aggressively than the rest of the world to tighten monetary policy during the pandemic. After discouragingly high inflation for much of 2022 and 2023, inflation is now falling fast and central banks are cutting interest rates. 

• PE Firms plan exits in rush to return cash: Private equity investors seek ways to divest large investments and find new opportunities, but the current market conditions are making it difficult. This situation has led to a remarkable $2.8 trillion of unsold investments for buyout groups, creating what Bain describes as a "towering backlog" of companies waiting to be exited.

📺 Watch - American Nightmare (Netflix)

Sometimes, law enforcement will run with their own narrative to close a case. We saw it in Making a Murderer, and again in American Nightmare. The Netflix true crime series depicts the ordeal of Denise Huskins, who was abducted and subsequently accused of orchestrating the abduction. Initially, law enforcement raised suspicions about Huskins' account and implicated her boyfriend, which resulted in public scrutiny and drew parallels to Gone Girl - did Huskins abduct herself? The case unraveled when evidence revealed the actual kidnapper, leading to Huskins and her boyfriend receiving compensation and an apology from the city.

👂 Listen - How To Keep Time (Podcast)

This six-episode podcast season explores our relationship with time and how to reclaim it. Topics include how to waste time, how to leave work time at work, how to rest (a disappearing art), and how to better keep time. The hosts offer a mix of philosophical thinking about putting our priorities into perspective, and practical, actionable tips. 

💡 Think - Big Government and Big Business 

The recurring spotlight on Boeing makes me think about the fraught relationships between big government and big business. It amplifies the risk of cronyism and corruption from subsidies and contracts courtesy of increased government involvement. This isn't just a US problem but also prevalent in Europe, Asia, and Brazil. It makes you question the effectiveness of industrial policies where inefficiencies negate the perceived benefits. There's no denying that some government involvement is vital in sectors like national defense, aviation, AI, etc. However, it does need to be balanced so we don't have more Boeing issues in government-industry relations. 

Charts of the Week

Quote of the Week

Tweets of the Week

The Final Chuckle

Thanks so much for reading. I’d love to know what you think about this issue and how I can make it more useful to you.

If you have suggestions or topics you want to see me address, email me at [email protected]!

Want more?

If you’d like to read more of my writing on the supply chain, entrepreneurship, or the future of work, check out my website.

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Happy reading this weekend!

-- Naseem