Harvard Business School professor Bill George discusses the role of cost cutting, regulatory pressure, and CEO succession in the two tragic plane crashes of the Boeing 737 Max. He examines the cultural shifts at Boeing, the role of the FAA, and the importance of leadership during a crisis.
Boeing's decision to modify the 737 instead of designing a new aircraft, driven by competition and cost-cutting, led to fatal accidents and highlighted the danger of compromising safety for short-term gains.
The failures in the testing and certification process, including conflicts of interest and inadequate communication, emphasize the importance of rigorous testing, independent certification, and transparent communication to ensure aircraft safety.
Deep dives
The Boeing 737 MAX crisis: Leadership in a time of crisis
The Boeing 737 MAX crisis serves as a case study for leadership in times of crisis. The case highlights the cultural issues at Boeing and the pressures faced by CEOs in handling such situations. The root cause of the problem was Boeing's decision to modify the 737 rather than design a completely new aircraft, driven by short-term competition and cost-cutting. The modifications, including the MCAS system, were made without adequately informing and training the pilots, leading to fatal accidents. The role of the CEO in a crisis is crucial, requiring them to be proactive, empathetic, and publicly accountable.
The impact of culture on Boeing's crisis
The culture at Boeing underwent significant changes after the acquisition of McDonnell Douglas, shifting the focus towards cost-cutting and away from safety and design. The succession of CEOs played a role in this shift, with ethical scandals and a lack of long-term leadership stability. The case of Boeing highlights the danger of compromising safety for short-term gains and the slippery slope that organizations can fall into when prioritizing cost over safety.
Failures in testing, certification, and communication
The failures in the testing and certification process are a key issue in the Boeing 737 MAX crisis. Budget cuts at the FAA resulted in Boeing employees playing a role in the certification process, leading to conflicts of interest. Lack of effective communication between Boeing and the FAA, as well as inadequate training and information provided to pilots, contributed to the accidents. The case underscores the importance of rigorous testing, independent certification, and transparent communication to ensure the safety of aircraft.
How did the evolution of Boeing’s organization and management lead to two tragic plane crashes within six months, in which a total of 346 people died?
Harvard Business School professor Bill George discusses the long roots that ultimately led to the crash of Lion Air flight 610 in October 2018 in Indonesia and the crash of Ethiopian Airlines flight 302 in March 2019 in Ethiopia. He discusses the role cost cutting, regulatory pressure, and CEO succession played in laying the foundation for these tragedies and examines how Boeing executives responded to the crises in his case “What Went Wrong with Boeing’s 737 Max?“
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