The 737 MAX 8 Case: What happened to the Leadership compass of Boeing?



On October 29, 2018 and March 10, 2019, two aircraft of identical type, one taking off from

Jakarta (Indonesia) belonging to the company Lion Air, the other from Addis Ababa (Ethiopia) owned by Ethiopian Airlines, crashed shortly after take off.


The only thing in common between these two accidents was that they were relatively recent planes of the Boeing 737 Max 8 type. Two crashes of a similar model with little time apart, that was enough to raise suspicions about the nature of these crashes. And at a time when one is quick to look for exogenous human causes to this kind of disaster, it is the "good old" technical error that has proven to be at the origin of the problem.


But this technical error was in the end only the visible last chainmail of a bigger chain of event, which when started to be pulled out turned out to be much longer than originally planned!


This article is not intended to look at the technical elements related to this crash. Some elements of investigations are still ongoing and anyway, this blog does not pretend to deal with aeronautical engineering.


But the case of the 737 MAX 8 (not to mention the "scandal" of the 737 MAX 8) gives us many lessons on decision-making processes, the need for a strong and consistent ethics within a company and issues related to the slightest drift in the ethics and values of the company, but also how the context in which the business operates can be generator of catastrophic ethical drifts.


So this case study comes with the lessons that are needed in human affairs, to avoid

tragedies of the magnitude of those two crashes that killed 346 people (respectively 189 and

157).


We will see consecutively the elements relating to:

  1. The history of the case and what has, from small decision to small decision, led to important flaws,

  2. Crisis management and lack of effective communication,

  3. The overall context and how institutional safeguards have fallen into the ease and accompanied the descent into free fall of Boeing's ethics.


1. A brief history: from a commercial success to an over-exploited product


The Boeing 737 is a plane that was created in 1967 by the Boeing company. It’s been more than 50 years so this commercial success furrows the skies of our planet and its success has never been denied. So much so that in 2018 more than 7,300 models of this plane took to the air daily.


Airlines such as SouthWest Airlines rely entirely on this unique model and their business plan and their spectacular success are largely due to the efficiency of this model, its ease of maintenance and its economic cost.


But like many other economic sectors, the last decades have been, for Boeing as for other aircraft manufacturers and especially its historical rival Airbus, a difficult period of increased competition, the hardened demands of customers and the complex global context. At the heart of the 2008-2009 economic crisis, aircraft orders crashed and in parallel oil prices skyrocketed and their volatility have imposed strong constraints for the manufacturers.

In this context, competition has become increasingly fierce and the pressure on prices and on the need to create new models became more and more intense. As for the automobile industry, it has become increasingly difficult to design completely new models (the case of the Airbus A380 is an obvious example). Instead, manufacturers have tried to continue to grow their star models (the 737 at Boeing and the A320 at Airbus) by making modifications to modernize and maintain them by including only the latest technological innovations in the components of the plane and also trying to meet the expectations of their customers in terms of comfort and services.





It is in this context that the 737 MAX 8 series was considered. Boeing's main argument for this model was that, compared to the original model so popular with airlines and pilots, nothing changed and that the developments made represented only developments without major consequences. By and large, the MAX 8 was a product sold off the shelf, comparable to the original model that was known since the late 1960s.


The argument was a good sales’ pitch... But totally wrong.


Quite quickly indeed, from the first models delivered during 2017 and in the months that followed, the pilots of these planes traced back to their employers and the manufacturer of confirming that the model was very different. Technically, and without going into details, one of the major modifications of the 737 Max was its engine: the jet engines of the aircraft were larger and positioned much more at the front of the wings, which had the effect of modifying the lifting ability of the plane. As a result, pilotage was modified and, according to some pilot unions, required further learning... and therefore real additional costs.


The truth is that an aircraft with new features such as modifying the way the plane is flown would have required a new certification by the civil aviation authorities (FAA). This was not done for the reasons that will be mentioned below. So, the plane was supposedly identical to the previous one: it could be developed and sold on the go, without waiting for the lengthy administrative procedures of certification. And the customers had value for money. To compensate for the impacts on the structure of the aircraft, Boeing had developed a software supposed to compensate for these changes, software that was to recreate the experience and flying sensations of the original model among other things.


This system was intended to work in "background" without even the pilots feeling it was here. It was based on the aircraft's sensor data, located outside the fuselage, but without any redundancy system to intervene and make sure the data transmitted to the software were consistent with reality.


In addition to this, a data inconsistency alert system had only been provided as an option in the purchase conditions of the device, and a recent study showed that this option was offered more clearly, even recommended to airlines based in the United States more than to airlines based abroad.


A system based entirely on algorithms, without redundancy or human control, whose commissioning was done in a discriminatory way ... already the first elements of studies shows us that in Boeing's decision-making processes, some questions should have been asked internally or externally.


Thus, according to some experts, choosing a "software" solution to solve a "hardware" problem was not the most appropriate and secure solution.

But in a difficult and constraining economic context where the revenues and margins of companies are limited and faced with tough competition, the choices made seem to have privileged the economic, financial, security and "best practices" in engineering. This goes against the traditional principle of "KISS" - Keep It Short Stupid - wanting to find solutions by always favoring the simplicity to complexity. In this case, the introduction of "ghost" software

to compensate for purely physical problems did not seem to be the most simple, but it was certainly the most economical!


Yet, historically, Boeing was known to be an innovative company, at the search for technical solutions. Unfortunately, little information was provided on the decision-making elements and which led to these final decisions.


But that said, the situation itself is very much reminiscent of the case of the Ford Pinto and it is interesting to return to this case and see what were the parallels and difficulties encountered by Ford, to try to understand the challenge facing the company Boeing.



The Ford Pinto is a vehicle created by the car brand in the 1970s. innovative and sporty design had a major design problem: such as the gas tank was placed, at the rear of the vehicle, any shock received from the rear led to the explosion of the vehicle.


It turned out that Ford engineers knew early on, in the process of creating the vehicle, that there was a serious design problem. Of the 40 crash tests performed, none had succeeded.

But Ford was then faced with a simple economic equation: what would be the cost of a recall operation and an upgrade (with new certification) of this model sold to several million copies?


The proven cost per vehicle was $ 11, a total cost of approximately $ 130 million final.

Faced with these cost elements, Ford calculated the financial cost that would be incurred by

compensation paid to the families of victims in the event of accidents calculations made by insurance companies). The total was about 50 million dollars.


The final decision, purely economic and financial, was curiously easy to take for Ford.

One can ask the question of why such coldness in the decision for Ford? All simply because, taken from the everyday life of the company, the people in charge of recall decisions did not feel the need to push the company to recall the defective models, stop production and correct the design.


Lost in regular recalls, between the Ford Pinto and other models, the engineers of the "call back" cell of the vehicles did not take the ethical dimension of the problem: was just another problem, another vehicle, another model, in a tide statistics and daily cases.


Faced with the complexity, quantity and habit, Ford engineers have forgotten the importance of decisions made on the human level: the Ford Pinto was killing people. This vehicle was leaving the Ford factory with a structural probability of death for his driver.

But in the economic context of the times when competition was strong and Ford had to to produce and innovate, the company focused more on the economic elements, on the competition, only on the values of the company and the need to create vehicles Safe enough for their customers.


This situation has many similarities with Boeing: difficult economic context, complexity of the decision in the face of contextual pressures, technical difficulties in approach the problem in a new way to fully understand the issues…


With this case study, well known to the great management schools, one could imagine that Boeing, at the very least, has managed to respond quickly to the crisis and become aware the scale of the problem and to respond in a transparent way.


What lessons can be learned from the operation of human enterprises and organizations?

Of course here again it is necessary to be cautious on the evolution of this situation. And this is not about pointing fingers at Boeing but learning from what seems to be clearly a dysfunction in the decision chain.


So what lessons can be taken out of this experience to benefit other organizations?

First, it is important for each organization to define its values ​​clearly. We see it here, even though Boeing has for a long time concretely brought in its work high corporate values, it did not seem enough to allow it to stick to the course of these values in a difficult context.

How to proceed? It can be interesting for any organization to set up an internal ethics committee composed of different members from different levels of hierarchy and professions of the organization. At the very least, it will be fundamental to ensure that the decision-making process is not unilaterally carried out at the risk of seeing certain fundamental ethical or technical considerations fall short of visibility or through a lack of understanding of the needs of the different business units of the company.


Indeed, because of evolutions along the way in the internal organization, the decision-making process can end up being centralized on a single philosophy or sectoral approach. Thus certain elements necessary to ensure good and efficient decision-making in accordance with the values ​​and practices of the company may lack a strong transversality which is necessary to guaranty a decision that encompasses the reality of the situation and not just a one-sided approach.


As in the case of the Ford Pinto, it seems that Boeing has focused its 737 Max development decisions on the commercial need more than on the technical imperatives. It can be deduced that it is mainly the sales departments or the central management, without the engineers' opinion, who made the decision to market the aircraft as similar to previous versions to facilitate sales.


Once these decisions were made, it was then necessary for Boeing to adapt its strategy to this imperative linked to an apprehension of the economic context from a commercial point of view.


Through a multidisciplinary group to analyze important decisions about the future of the company, it will have a much broader view of its context and, in particular, without relying solely on the financial elements. These, while important, can sometimes lead to short-term decisions that ultimately cost the company.


Keeping track of its values, and applying them through multidisciplinary, means ensuring inclusive, long-term decisions, but also, more simply but necessarily, ensuring that an important discussion process happened before deciding.


Indeed, the more we put different trades to decide on a situation, the more we will have points of view, the more we will have debates.

Some will consider that this process will be excessively time-consuming and will not produce the desired effects because of the lack of capacity to reach consensus. It is true that decisions taken in a collaborative way are always longer than unilateral and authoritarian decisions (it is enough to compare the decision-making process applied during the 2015 Paris agreement on climate to measure the extent) . But the drama of the 737 Max and the major economic losses that followed for Boeing suggest that the time taken to value the discussion and the diversity of points of view will lead to a much more profitable decision economically.


Of course, no decision will be 100% perfect. It is in managing the crisis that the ability of the company to question itself and adapt to the new, unselected and instantaneous context will be appreciated.


2. In the face of the human drama: the incoherence and absence of empathy revealing a lack of real ethics


Unfortunately, Boeing's reaction was at least very far from ethical standards and morals expected from a company with such a reputation.

Recent information has shown that many pilots have reassembled their concerns and problems encountered during the flights of the 737 Max but without receiving an attentive listening to Boeing who rejected their criticism.


Regarding the technical answer. While it is now established that Boeing has clearly modified its Boeing 737 Max structurally, and that it has been shown that the company was aware of the impact of these changes on the flight specifications of the aircraft, the immediate response of the company, after the second crash, was to try to limit the panic by focusing on the upcoming arrival of a software update.


This answer, clearly insufficient, poses several problems:

  • Only after the second crash, and evidence of the link between the crash and the type of plane that Boeing started to clearly react. Which means that the first crash did not was sufficient for the company to clearly take charge of a problem already known. Does this mean that, like Ford in its day, Boeing did a risk calculation simple without taking into account the human and moral element of the equation?

  • Despite the human tragedy of two crashes due to a structural problem not taken in charge although known there in advance, Boeing did not clearly recognize his responsibility in the crisis, trying to blame the pilots "in some cases, the procedures were not properly followed. " 

  • Given the information in possession, the company should not have avoided trying to disempower pilots and clearly demonstrate its "integrity" (in the very words of the CEO of the company)? Although, of course, if it was appropriate to wait for on-going investigations to proceed, given the information the company already had, why did the CEO of the company wait for until April 29 to speak? Even more, this speech was prepared for a meeting with shareholders and not as part of a broader communication plan. If the company recognizes integrity among its values, it is clear that the management of the crisis by the company has clearly not demonstrated the value of this value. Indeed, in its strategy, the company recognizes its responsibility only to the extent of update of the software, not clearly crash in themselves.

Of course, any plane crash is the result of a complex chain of events generators and no flight is 100% safe. But, as for the Ford Pinto, it seems here that some probabilities could have been drastically reduced if Boeing had held his principle of integrity in the modernization of his device. If, in his speech to shareholders, the CEO will pay tribute to the victims of two crashes, it will show no real desire to be realistic, transparency but above all empathy by giving the families of the victims clear on the reasons for the death of their loved ones.

No business is perfect, many make mistakes. Unfortunately for Boeing, the slightest mistake made by the company is quite immediately linked to the death of individuals.


But this is not new and in its crisis management policy as in its communication, the company should be used to this aspect of its business and, with its reputation, should be priest to take more responsibility than necessary if only to demonstrate its genuine concern for human life and integrity.


Yet Boeing is far from being a company that can be described as “unprofessional". Its reputation is one of the best in the world and the models developed so far have always been praised both in terms of innovation (the 747 is in all memories) than of security.

So what happened? Is this a once-in-a-while case? We must hope! Everything will depend on how the company will act and adapt over the crisis. One of the first exit issues will be very clearly to acknowledge its responsibility before to clearly diagnose the causes of the crisis. Accepting reality is the first step to rebuild his strategy and learn from his experience.

But it will also be appropriate for the company to work on the context, both internally and externally, in which the company evolves.


3. When institutions do not play their role: or when the ease and lack of vision plays on the lack of values.


We have already talked above about the economic context in which Boeing and all plane manufacturers were and still are as of today. We will only come back to quote a New York inquiry Times which established in April 2019 that internally to the company, the pressure was important to speed up production rates rather than focusing, as has always been the case at Boeing, on safety and quality.


For a long time it was the capacity of innovation that facilitated the production without impacting the production (the famous "Moonshot factory"). But more and more, the financial logic has taken the above on the engineering logic that privileges security.


So much so that some orders from major airlines such as Qatar Airways have been canceled because of too repeated findings of design flaws on the delivered aircraft.


Therefore, it seems that already internally, the safeguards that constitute the values of the company, the production standards, the professional ethics, have been too relaxed and have led to significant and repetitive defects that were not taken into account.


It is in this kind of situation, which can happen to any company, that one will wait for external safeguards, such as regulators, to take effect.


Unfortunately, in the United States, especially because of reduced federal budgets (accelerated with the coming to power of the Trump administration), the air transport authority (the FAA) no longer had the necessary means to ensure effective and the entire production chain.


So much so that it has been reduced to contracting with the builders such as Boeing, to delegate certification and control processes. Boeing became both judge and party in the control operations of his own planes.


In a context where already internally the standards of safety and quality had been lowered, this situation of delegation of control and lack of resources of the FAA have been an accelerator of Boeing's deviance and mistrust of his ethics and values.


Thus, the MCAS software system, which had to compensate for imbalances of the 737 MAX and its new reactors, has been certified by engineers who have designed.

You do not have to be a philosopher to realize that:

  • at least: few people will be able to have such an objectivity that they will able to judge the quality of their own work and even with the greatest ethics it will always be difficult to judge one's own work;

  • at the maximum: this situation was the best way to facilitate the putting under pressure of creators and controllers and force them to certify a system they knew insufficient.

The responsibility in these crashes is therefore clearly not just due to Boeing but also to an overall context of relative excess of tolerance and bad priorities.


In this context, it is important for any organization not to seek simplicity or ease by taking advantage of such a context of laxity to develop its business.


Companies must remember that they are a full member of the social contract and the socio-political environment in which they operate. Their actions, their attitudes and their decisions act as catalysts of mentalities in society.


Therefore, a clear desire to override the rules or to take advantage of the laxity of the institutions (influenced by the state of mind of the ruling rulers or simply financial restrictions of their organization) will give a signal to the population that these behaviors are normal and acceptable.


In the long run, there will be acceptance and acceptance of the notion that rules are useless constraints rather than indispensable safeguards. As in sports, each field needs its referee. Not to limit but to ensure that everyone evolves in accordance with their role and abilities.

A company, like Boeing, that goes into the game of carelessness is a company that breaks with its societal role and participates in the development of long-term harmful social chaos.

Because companies are major social actors, they must be the "canaries" in the mine and be pro-active vis-à-vis institutions to demand clear arbitrations and safeguards.


In the end, this is only a clear and obvious way of demonstrating their professionalism and therefore easy to detach from the competition.


On the other hand, yielding to the sirens of laxity and regulatory subjectivity, they only offer their competitors an easy option of "ready for anything". And when human lives are at stake, there is a need to know how to say stop when the gaps are too great.


In a more global dynamic of rejecting public institutions and focusing on short-term individualized interests, Boeing fell into its own trap and quickly suffered the reverse of this attitude by losing the objectivity necessary to validate its ideas and its products.


This is very clearly encouraged or facilitated by an attitude of seeking significant profits for the sole benefit of its shareholders.


We come back to the concept of obliquity theorized by John Kay: when in a company focuses on the need for profitability and benefits, it's up to decisions that will ultimately cost far more than the savings realized at first!


The cost for Boeing today: several billion dollars of losses in market value, for the airlines using the famous 737 Max, from 10 to 18% of losses of figure business, for the future of Boeing a loss of confidence that will most certainly generator of refusal of purchases from its loyal customers as has already been the case...


To want too much "to make the figure" companies are found to put aside their values, their ethics, so many elements that in everyday life, in a tense economic context appear to be superfluous or even expensive.


But in the long term, stay fixed on its values, value and apply ethics every day, in all services and remind everyone (including shareholders) what the mission is first of the company ... all these elements seem today to be the guarantors of a business that lasts!


To date, Boeing's website has established the company's vision as one of "Connect, protect, explore and inspire the world through aerospace innovation, company aspiring to be "the best in aerospace and an industrial champion globalized and sustainable ".


This is a mission and an aspiration more than commendable that should have been remembered managers Boeing at each stage of the stormy and tragic life of the last 737 Max. Because research profit led them in a much sadder direction...


Ressources:

  • How the Boeing 737 Max Disaster Looks to a Software Developer”, Gregory Travis, in http://spectrum.ieee.org

  • Flawed analysis, failed oversight: How Boeing, FAA certified the suspect 737 MAX flight control system”, Dominic Gates, Seattle Times, 17/03/2019,

  • Boeing’s 737 Max: 1960s Design, 1990s Computing Power and Paper Manuals”, Jack Nicas & Julie Creswell, New York Times, 08/04/2019,

  • Boeing Was ‘Go, Go, Go’ to Beat Airbus With the 737 Max”, David Gelles, Natalie Kitroeff, Jack Nicas & Rebecca R. Ruiz, New York Times, 23/03/2019,

  • Audio reveals pilots angrily confronting Boeing about 737 Max feature before second deadly crash”, Jason Hanna, CNN.com, 15/05/2019,

  • Boeing did not disclose 737 MAX alert issue to FAA for 13 months”, Tracy Rucinsky, reuters.com, 05/05/2019,

  • Boeing Believed a 737 Max Warning Light Was Standard. It Wasn’t.”, David Gelles & Natalie Kitroeff, New York Times, 05/05/2019,

  • Boeing Statement on 737 MAX Disagree Alert”, boeing.comSpeech from Boeing CEO Dennis Muilenburg: 2019 Address to Shareholders”, boeing.com, 29/04/2019,

  • Boeing CEO Says Nothing Went Wrong With Design Of 737 MAX Flight Controls”, Forbes Editors, forbes.com, 29/04/2019,

  • Boeing boss rejects accusations about 737 Max jets that crashed”, Rupert Neate, The Guardian, 29/04/2019,

  • Boeing CEO Faces Tough Questions On 737 Max Plane's Design”, Laurel Wamsley, NPR, 29/04/2019,

  • Immobilisation du Boeing 737 MAX : les compagnies américaines accusent le coût”, Le Monde, lemonde.fr, 27/04/2019

  • Claims of Shoddy Production Draw Scrutiny to a Second Boeing Jet”, Natalie Kitroeff & David Gelles, New York Times, 20/04/2019,

  • Lean Manufacturing Mindset Means Continuous Innovation at Boeing”, Sally Mounts, industryweek.com, 04/09/2012,

  • Boeing Rethinks How It Builds Planes With Help From Its 'Moonshine Shop' [Archive]”, Archive, http://diecastaircraftforum.com/, 05/09/2001,

  • Between Two Boeing Crashes, Days of Silence and Mistrust”, Hannah Beech and Muktita Suhartono, New York Times, 02/04/2019,

  • In Test of Boeing Jet, Pilots Had 40 Seconds to Fix Error”, Jack Nicas, James Glanz, David Gelles, New York Times, 25/03/2019,

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