The Culture at Boeing!
Organisational culture impacts performance, but in the case of Boeing it literally impacted the ground, causing 346 deaths. How did the world’s largest aerospace company lose its way?
Boeing’s problems go back to their takeover of McDonnell Douglas in 1997. New CEO Phil Condit signalled a culture shift from a preoccupation with technological breakthroughs to a focus on financial benchmarks. He moved Boeing’s headquarters to Chicago, 1,700 miles away from Seattle where commercial aircraft assembly took place. Successive CEOs continued to push for lower costs and higher profitability. CEO Harry Stonecipher had the letters ‘RONA’ tattooed on his knuckles from his GE days: Return On Net Assets. His management philosophy was more returns, fewer assets. He planned to outsource as much of Boeing’s business as possible. This would enable him to fire engineers, get rid of factories, and boost RONA. The stock price would go up, shareholders could cash out, and the board would be happy. A feat of financial engineering. But not great plane engineering.
Many CEOs superimpose their previous experience on their new appointments: If it worked there, it should work here. In Stonecipher’s case, this was his GE experience and the cost-cutting culture at McDonnell Douglas. Culture is an emergent property of collective system 1 thinking (experiential, intuitive, gut-feeling). But system 1 thinking at Boeing was the 80-year experience of relentless focus on safety and engineering. Experienced Boeing engineers found themselves sidelined and their concerns ignored by the new system 1 thinking encoded in slogans such as, ‘a passion for affordability’, and ‘less family, more team’.
The clash of cultures was also evident in system 2 thinking (rational, deliberative, evidence-based). Boeing employees always knew they were an engineering-driven company, not a financially driven company. Cost-cutting and poor quality-control to get the product out the door as quickly as possible was not in their DNA.
What might have happened to Boeing if their CEOs had used more system 3 thinking (considerative, compassionate, good judgement) to counter the imbalances between system 1 and 2 thinking?
For a start, they could have recognised the strengths inherent in the diversity of values and talent within the company.
They might have been prepared to park their own life experience in order to listen and learn from the deep experience of the engineers at the core of the company’s culture.
Better emotional regulation could have afforded them a more inclusive dialogue in relation to the different claims from their employees, regulators, suppliers, and clients. Separating the headquarters from the main assembly areas revealed their ignorance of the emotional needs of employees.
Decisiveness is a quality requiring moderation. Rushing decisions can be just as destructive as taking too long. The desperation to get the 737 Max onto the market to head off Airbus resulted in design and quality decisions being overruled.
Where was compassion in the decision-making of CEO Dennis Muilenburg? It’s necessary to question why Boeing didn’t issue a grounding order as soon as they realised what had most likely caused the Lion Air crash. They knew. Yet they allowed the planes to keep flying while they worked on a fix, and 157 people who lost their lives in the Ethiopian Airlines crash might still be alive today.
And finally, focus. Should companies focus mainly on profits? British economist John Kay writes in his 2011 book, ‘Obliquity’ about how the most profitable companies are not the most profit-oriented. Boeing originally created the most commercially successful aircraft, not through love of profit, but through love of planes.
Boeing continues to experience flaws with the 737 Max, the 787 Dreamliner, and the 777X. It seems they are yet to regain the engineering culture which was the hallmark of a successful aeroplane manufacturing company. System 3 thinking could have given them wings.
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