In December 2003 Boeing faced a leadership crisis. Phil Condit, the 62-year-old chairman and CEO, stepped down after a scandal in which Michael Sears, the company's former CFO, was accused of offering a job to a Pentagon official who was then head of procurement for the air force. These problems, which caused Boeing to lose credibility with the U.S. department of Defense, a major customer, came at a time when the company was already under severe competitive pressure from Europe 's Airbus in the commercial aviation industry. To make matters worse, Boeing was also losing money in its satellite and space businesses.

To help resolve the crisis, the board of directors called upon Harry Stonecipher, Boeing's former chief operating officer, to come out of retirement to take on the job of CEO. In addition, Lew Platt, former CEO of Hewlett Packard and Kendall Jackson Wine Estates, who had been a Boeing board member, became the company's non-executive chairman. In a conversation with Michael Useem, director of Wharton's Center for Leadership and Change Management, Platt discusses how he and Stonecipher are trying to ensure that Boeing's steep nose-dive doesn't turn into a crash landing.

Platt will be one of the presenters at the Wharton West Leadership Conference in San Francisco on March 23. The conference focuses on how great leadership can be applied and developed in an era of uncertainty and change.

What follows in an except from the full interview compiled by Knowledge@Wharton editor Mukul Pandya, and it can be found on Knowledge@Wharton.

Useem: On Dec. 1, 2003, Boeing went through a leadership change in which Phil Condit resigned as CEO, you became non-executive chairman and Harry Stonecipher was named the CEO. Could you speak about the factors that led to the leadership change?

Platt: You probably know from reading the press that there were a number of incidents that contributed to that change. The most troubling incidents centered around standards of business conduct. On a couple of occasions, we had material from competitors that we should not have had, and that situation was not dealt with properly. This was followed by a disclosure that our CFO Mike Sears had entered into improper discussions with a former government employee [Darleen Druyun] -- who was at that time the head of procurement for the air force -- and had discussed employment opportunities at Boeing with her before she recused herself. This was an obvious violation of standards of business conduct; as a matter of fact, it was a felony offense as far as she was concerned.

Phil was never implicated in any of these incidents, but there was a general overall loss of confidence in Boeing among employees and certainly among our customers -- particularly among our very important government customers. As we were working through these issues, Phil said to the board that he would be willing to step down if we felt that that would help clear the decks, get some of this behind us, and lead to restoration of confidence more quickly. That's what led up to the leadership change.

Useem: Let me ask a related question. The events involving Mike Sears and Darleen Druyun were, in a sense, one level removed from the board. But thinking about the lessons for governance, could the board have done anything before these incidents that could have averted the problem?

Platt: Probably this might sound self-serving because I'm a board member, but I think it would have been very difficult for the board to see these things. But since these incidents have taken place, and even before we uncovered the Sears-Druyun issue, we decided that we would have our own independent look at a number of things that were going on at the company: The handling of sensitive data, the overall ethics tone in the company, record keeping, and all those things. We [the board] hired an outside firm to come in and do a thorough audit of the entire company. The audit turned up a number of things, most of which did not point to the board's lack of vigilance, but to the overall ethics tone of the company, which was not where it should be. The audit also uncovered a lot of record-keeping issues. There were many, many, many of these; even where we had done the right thing, it was hard to prove that we had because the record-keeping was so sloppy.

We have extended this outside audit to all our procurement practices, especially those that surround government procurements. That part of the study will be wrapped up this month. It will be reported publicly and copies of our report will be given to people in the government who are working on investigations. We are trying to cooperate with them by showing that we will share all the data that we have with them.

At the end of the day, other than the fact that we could have somehow detected an overall lax tone within the company, it would have been very difficult for the board to understand the details about having documents from competitors or the details about the hiring of Darleen Druyun by Mike Sears.

Useem: You have a division of responsibilities between yourself as non-executive chair and Harry Stonecipher as CEO. Could you speak to the division of labor between the two of you and what each of you is doing to restore confidence and credibility at Boeing?

Platt: As you know, Harry and I have both been board members. Harry was the former chief operating officer of the company, so he knows the internal operations of the company very well, and that is what he remains focused on. He focuses on getting performance within the company tuned up. I have taken on the role of overseeing all the board activities, which helps him because it takes that load away from him.

It's not easy to chair the board of a company these days. There's a lot going on because of new SEC regulations and new NYSE regulations, Sarbanes-Oxley, and so on -- and I am dealing with all that. I set up the board agenda and run the board meetings. In addition, I have told Harry that I am available to do whatever he would like me to do that could help, such as visiting customers. I have gone to Washington and spoken to several of our government customers. I have told them what we are doing inside the company to restore confidence. I have also spoken to employee groups.

So Harry focuses on performance and on restoring the reputation of the company, and I focus on the board. We are operating as a team to get a lot of work done quickly. We haven't drawn up charts or anything; he gives me a call and says, hey, can you cover this for me, or could you go and see so-and-so? Sometimes there may be a customer visit coming up that he cannot attend, and he might ask me to cover that for him. That is how we work together.

Useem: One of the great debates in corporate governance at the moment is whether to have a non-executive chair. Can you speak about how you plan to manage a relationship that is unusual in American business? Do you see this as an enduring arrangement, or is it in effect something to get Boeing through the crisis and then return the chair's position to the CEO?

Platt: Let me take the second of the questions first. When we made the announcement in December, we signaled very carefully to the world that this is a structure that we have chosen at this point in time. We wanted to be very clear with everyone that we do not necessarily believe that we will have a separate chair and CEO going forward. But certainly as long as Harry and I continue in these roles -- and that, by the way, is indeterminate; we've said probably at least a couple of years -- we will continue to have those jobs divided. I do not personally believe that one must divide the job of the CEO and chairman in order to have good governance. I just don't believe that. But it is a convenient way to get a lot of work done in a short period of time. He and I have a great relationship, and we know how to stay out of each other's way. It's two hands on deck instead of one, but that is not meant to signal that it will be that way forever.

Useem: Harry Stonecipher, aged 67, is one of several executives in Corporate America who has been called back to service after retirement. This has happened in another half dozen companies in the past year or two -- with Larry Bossidy, famously, at Honeywell, for example. Harry Stonecipher is the former vice chair of Boeing. Why did the board decide to invite him back to become CEO? Why did it not go to the next tier to bring in a younger executive from the ranks below?

Platt: There's a simple answer. We just did not feel that there was anyone in the next level below Phil who was ready to take on this job at this point in time. Therefore we either needed to go outside and find someone or choose someone who was familiar with the business and involved with it, and Harry was a natural choice. The bottom line is that we really don't have anyone at the next level who could have taken on what is a really difficult job right now. These are not even normal times at the company....

Useem: Before you became chair of Boeing, you ran Hewlett Packard and then Kendall Jackson Wine Estates. How does leading Boeing differ from leading HP and Kendall Jackson?

Platt: Honestly, it's not that much different. Leadership is leadership. It is interesting that when I went to Kendall Jackson from Hewlett Packard, I found that most of what I had learned and used to lead HP was very useful at Kendall Jackson. Now I can say exactly the same thing as far as Boeing is concerned. It's about setting clear objectives, motivating people, recognizing and rewarding people. Frankly, it doesn't make much difference what business you are in; these fundamentals are the same.

Useem: What made you step up to the hot seat at Boeing?

Platt: My wife has asked me the same question (laughs). Well, I was on the board, and I was playing the role of lead director, though we did not have an official lead director. So I was in the thick of things. Then the call came, and I love this company, I really want to see it restored to its former glory and the luster it has always had, so when I was asked [to be non-executive chair] I said, 'Sure, I'll serve.' It wasn’t something I had planned on doing, but it needs to be done, and I guess I am the right person to be working with Harry at this point, so why not?