Why did Boeing not create a new 737 instead of just upgrading the old model?
Other sources confirm the statement from your documentary that James &quot;Jim&quot; McNerney made the decision to build the 737 MAX rather than a new model:

When Airbus was about to land American Airlines with a huge order for the A320 family, both the ceo and neo, Boeing’s hand was forced. Within 48 hours, Jim McNerney, Albaugh’s boss, made the decision to go forward with what would become the MAX.

(Leeham News, emphasis mine)
The 737 MAX program was eventually launched as a response to the Airbus A320neo, the new engine option. If Boeing had started development of a new model immediately when Airbus announced the A320neo in 2010, they might have been able to come up with a competitive product in a similar time frame. But Jim Albaugh, who was head of the 737 program at the time, underestimated the A320neo and said:

I think Airbus will find re-engining the A320 more challenging than they think it will be. [...] When they get done, they will have an airplane that might be as good as the Next Generation 737. We think we can continue to make incremental improvements to the 737 to make sure that it is a more capable airplane than even the re-engined A320.

(Leeham News)
Boeing wasted valuable time here while Airbus was working on the A320neo. Boeing also struggled with the 787 at the same time:

Boeing was indecisive about which direction to choose.
The ambiguity was driven in no small part during this era by the continued 787 debacle, which at the time of this interview, had not entered service.

(Leeham News)
The final decision to re-engine the 737 instead of developing a new aircraft, came when American Airlines decided to purchase a large number of Airbus aircraft. Boeing realized they had to act quickly at this point:

Boeing faced an unthinkable defection in the spring of 2011. American Airlines, an exclusive Boeing customer for more than a
decade, was ready to place an order for hundreds of new,
fuel-efficient jets from the world’s other major aircraft
manufacturer, Airbus.
The chief executive of American called Boeing’s leader, W. James
McNerney Jr., to say a deal was close. If Boeing wanted the business,
it would need to move aggressively, the airline executive, Gerard
Arpey, told Mr. McNerney.
To win over American, Boeing ditched the idea of developing a new
passenger plane, which would take a decade. Instead, it decided to
update its workhorse 737, promising the plane would be done in six
years.

(New York Times, emphasis mine)