Please help

This is the third part of a continuing case on Boeing. Each part considers issues confronting Boeing as it attempts to manage problems associated with the Boeing 737 MAX tragedy. Part 3 integrates concepts covered in Chapters 5 through 7.

Read the part case and respond to the questions that follow.

CHAPTER 5: PLANNING: THE FOUNDATION OF SUCCESSFUL MANAGEMENT

Consider how Boeings planning process contributed to the two plane crashes involving the 737 MAX.

Planning for Success

An organizations strategic plans are based on its mission, vision, and values statements. Boeings website lists its values as:¹

• How we operate
  • Start with engineering excellence
  • Be accountablefrom beginning to end
  • Apply Lean principles
  • Eliminate traveled work
  • Reward predictability and stabilityeverywhere in our business

• How we act
  • Lead on safety, quality and integrity
  • Collaborate with humility, inclusion, and transparency
  • Import best leadership practices
  • Earn stakeholder trust and preference
  • Respect one another and advance a global, diverse team

A big part of Boeings planning process revolved around the focus of Boeings senior management to stop chief rival Airbus from taking away its market share by selling the A320 aircraft to key customers such as American Airlines. This strategic emphasis in turn tested the values listed above. For example, the values of safety and predictability were potentially pushed to their limits when Boeing decided to deliver a new plane to market at light speed, which required an overhaul of the existing 737. Lets dig a bit deeper to see whether or not Boeings values were aligned with the actions it took to meet its strategic goal:

• How they operated²
  • The Boeing 737 was conceived in the 1960s and has been pushed to its safety limits with every new variation the company has released. It makes you wonder if the platform that theyre working with is just so outdated at this point, said Patrick Smith, an airline pilot and blogger at Ask the Pilot.
  • Boeing designers pushed out MAX blueprints at double their normal pace. Often times, incorrect or incomplete schematics were sent to the production line.
  • The Maneuvering Characteristics Augmentation System (MCAS) developed for the MAX did not meet safety standards established by the FAA, but Boeing pushed for its certification anyway.

• How they acted
  • According to Forbes, Boeing knew that the technical modifications [made to the MAX] were material to the operation of the aircraft. The company, however, was not was not transparent with regulators or pilots about the modifications.³ I still havent been forgiven by God for the covering up I did last year, said a Boeing employee in 2018, referring to a lack of transparency with the FAA.⁴
  • Mark Forkner, a senior Boeing test pilot, complained of egregious erratic behavior during flight simulator tests of the MCAS. There is no evidence that Boeing took these complaints seriously and Forkner claims that the airplane maker resorted to Jedi mind tricks to persuade regulators to approve the MAX.⁵
  • Boeing rushed the MAX to market in order to meet sales goals. It did not even wait for its board of directors to approve the design before offering it to American Airlines, which was on the cusp of buying [A320neo craft] from Airbus, according to the Wall Street Journal.⁶

Indeed, it seems that Boeing was so keen on releasing the MAXin order to stay competitive with Airbusthat its goals were not realistic or attainable. Do you think these goals lead the airplane maker to sacrifice its values in pursuit of market share and profits?

CHAPTER 6: STRATEGIC MANAGEMENT: HOW EXCEPTIONAL MANAGERS REALIZE A GRAND DESIGN

Lets examine the role of Boeings strategic management process in the 737 MAX tragedy.

The Competitive Reality

Airlines can only reduce costs that are within their control. Labor costs, for example, largely stem from collective bargaining agreements and regulations, which limits Boeings ability to influence them. The price of fuelcontrolled by market factorsalso is outside managerial control. These limitations bring aircraft fuel consumption to the top of mind for Airbus and Boeings customers. Airlines loathe paying for fuel and will pay for planes that use less of it, making fuel efficiency a major basis of competition between manufacturers.⁷

Airbus took the first step toward fuel-efficiency and developed the A320neo (neo meaning new engine option). The new engines were much more fuel efficient than the A320s competitor, the Boeing 737. Airbuss new engines had a larger diameter, which contributed to their fuel-efficiency, and could still be mounted on the original A320 airframe. Boeing struggled with a strategic response. Even if it could engineer engines with a larger diameter for its aircraft, the 737 was lower to the ground. This meant wider engines would hit the tarmac and runway. And raising the aircraft would significantly increase costs while also reducing commonality with other 737s.⁸ (Remember, airlines needed their existing 737 pilots to be able to fly the MAX with minimal training.)

Boeing had two options in order to respond to Airbus. It could have retrenched and sold its 737s at a discounted price while designing a new plane. This would have been time-consuming and cost significant aircraft sales to Airbus, but it would have been the safest option from an engineering perspective. The second option was to force a larger engine on the existing 737 by reengineering a 1960s airframe and creating what ended up being the fatal MCAS.⁹ Boeing unfortunately chose the latter option.

A Failed Recovery Strategy

Dennis Muilenburg joined Boeing in 1985 and held a number of program management and engineering positions until he was named president in 2013. By March 2016, Muilenburg was president, CEO, and chairman of Boeings board.¹⁰ As Boeings top executive, it was Muilenburgs responsibility to develop a recovery strategy for the struggling airplane maker. Unfortunately, he did not have a strategy. For months, he said the MAX would quickly fly again and that the crisis would soon pass. He even doubled down on the infamous certification process, saying the aircrafts original certification, was done the right way. Muilenburg also underestimated the regulatory hurdles Boeing faced after two deadly crashes, and the tedious nature of the fixes necessary to make the MAX airworthy.¹¹

Experts told the Wall Street Journal that Muilenburg, who was ousted in December 2019, didnt understand the business he was running. He came to lead Boeing after a long stint at the companys defense business, which primarily dealt with governments. The former CEO was reportedly a linear thinker who did not fully understand consumer-facing airlines.¹² To what extent do you think that Muilenburgs experience handicapped his ability to think strategically?

CHAPTER 7: INDIVIDUAL & GROUP DECISION MAKING: HOW MANAGERS MAKE THINGS HAPPEN

Common sense suggests that decision making processes at Boeing played a role in this tragedy. Lets examine Boeings decision-making process as it embarked on the development of the 737 MAX.

Quick Decisions, Massive Repercussions

Middle and lower management had to make a series of technical decisions once Boeings senior leadership blessed the overhaul of the 737. These decisions had to be made quickly because Airbus was coming to market with their new A320neo and Boeing was on the verge of losing American Airlines as a customer.

The MAXs backup system was one of these important decisions. Once the new, fuel-efficient engine designs were developed, Boeing engineers had to decide whether or not the plane needed a backup system for calculating airspeed. This system, known as synthetic airspeed, could detect sensor malfunctions and would prevent MCAS from erroneously kicking in and sending a plane into a nose dive. According to an internal ethics complaint filed by Boeing engineer Curtis Ewbank, experts at the airplane maker wanted to study the possibility of adding the synthetic airspeed system to the MAX. A Boeing executive, however, allegedly shut down the idea because of the potential cost and time required for pilot training. I was willing to stand up for safety and quality, but was unable to actually have an effect in those areas Boeing management was more concerned with cost and schedule than safety or quality, said Ewbank.¹³

Data-Inspired Confidence?

Dr. Gleb Tsipursky, CEO of Disaster Avoidance Experts, attributes Boeings problematic decision makingparticularly when it came to backup systems and safetyto complacency.¹⁴ Prior to the MAX, the Boeing 737 had a 0.06 fatal crash rate per million miles, which was one of the lowest rates for commercial aircraft. (The Airbus 320 family crash rate was a bit higher at 0.08.)¹⁵ Supporters of the airplane maker argued that the company was making evidence-based decisions. Boeings leadership looked at the data, and the data told them that the 737 was one of the safest planes in the world. ¹⁶ So why go through the time, effort, and expense of additional safety systems?

Others point to decision-making biases. For example, Boeing may have had such confidence in their previous decisions that they felt it was impossible for them to do wrong, even as they tinkered with the 737s design. They saw the typical FAA certification process as simply another bureaucratic hassle that got in the way of doing business and competing with Airbus, as opposed to ensuring safety, says Tsipursky.¹⁷

Based upon what you know about developing strategic thinking, was former CEO Muilenburg a strategic thinker? Why or why not?