Boeing 737 MAX Aircraft Crisis Analysis

Introduction

Boeing’s response to the Boeing 737 MAX crisis was one of the most prominent examples of poor crisis management due to the lack of immediate actions and communication attempts from the leadership. Such irresponsibility from the company not only lead to major financial losses but also undermined reputation and legitimacy within the industry. In both accident cases, Boeing showed a certain form of reluctance in admitting that there was some manufacturing issue with the aircraft. It was manifested in the form of delayed response and blame deflections, which further worsened the overall state of their reputation. Therefore, Boeing’s response was poorly conducted due to late response, leadership, engineers, and despite taking strategic steps, the overall impact on reputation and legitimacy was negative.

Delayed Response

One can effortlessly observe from the Boeing 737 MAX case that the company was highly reluctant to respond to the crisis in an effective manner. The faulty aircraft design led to “two tragic plane crashes, in which a total of 346 people died: the crash of Lion Air flight 610 on October 29, 2018, in Indonesia, and the crash of Ethiopian Airlines flight 302 on March 9, 2019, in Ethiopia” (George and Migdal, 2020, p. 1). In the era of digital technology and instant communication, Boeing did not address the crashes immediately. For example, Boeing CEO Denis Muilenburg released his apology video only 26 days after the second crash (Baker, 2019). However, he also sought out some form of recommendation or advice from other parties, which indicates the severity of the issue (Tangel, Sider and Pasztor, 2019). In other words, despite needing some time for assessment, the company still demonstrated a response. It is important to understand that speed and timing is essential in crisis management. Any organization in crisis needs to be able to provide updates and built communication channels quickly.

In addition, the company was reluctant to ground its Boeing 737 MAX aircraft. The main reason is that Boeing proceeded to do so only five days after the Ethiopian crash (RockDove Solutions, 2020). The provided events can be observed in chronological order in Figure 1. Therefore, the company not only delayed its communication attempts but also did not implement immediate measures to ground its dysfunctional planes. In other words, the company did handle the crisis properly, and many of its actions were reactionary to public pressure. The overall safety of individual passengers did not appear to be a primary concern for Boeing.

In modern conditions, the most important driving force behind social change is a powerful management resource embedded in information, information technology, and the organization of communication flows. However, when disruptions occur in the production, transmission, and dissemination of information, crises can ensue. A crisis is an event, through the fault of which a company falls into the center of not always benevolent attention of the media and other external target audiences. The latter includes shareholders, politicians, trade union organizations, and environmental movements who, for one reason or another, are legitimately interested in the organization’s actions. Crisis situations can be avoided, but subject to constant systematic work related to the development and implementation of strategies and technologies for anti-crisis management.

The effectiveness of anti-crisis measures at Boeing directly depends on the understanding of communication as a management activity. Crisis communications is an activity aimed at establishing effective interactions between an organization and its public before, during, and after negative impacts in order to maintain a stable reputation of the organization and minimize reputation risks. To do this, Boeing had to use a complex of social communication technologies aimed at forecasting, diagnosing, managing the crisis, adapting to new conditions, and neutralizing negative consequences. The main institution, whose purpose is to maintain communication processes, is public relations. Public relations as a mechanism for managing social relations and public opinion provide relationships between actors and their target groups through the transfer of information and the establishment of effective communication. With regard to the Boeing crisis, this is of fundamental importance, since in this case the factors associated not only with the disaster itself, but also with the public’s reaction to its occurrence, and maintaining the organization’s stable reputation are taken into account.

The methodology for studying the problems of managing crisis communications is based on several theoretical approaches. First, a systematic approach focused on disclosing the integrity of an object and the mechanisms that support it in identifying internal connections and the influence of environmental factors. In accordance with the key provisions of systems theory, an organization that functions as an open system must maintain constant interaction both between its internal structures and external objects. By adapting to changes in the internal and external environment, the organization thereby increases its viability in the long term. Considering crisis communications in open Boeing systems as a communication activity, it is necessary to emphasize the two-sided movement of information and meanings in the communicative space. This means not only the transmission of key information messages to the external environment but also feedback with elements of monitoring, control, and management of the state of the system.

Assessment of the reactions of various target audiences of the public is necessary since it allows people to timely identify ineffective key messages, correct them, adapting them to the current situation. In other words, crisis communications mean interactions between communicants who regard each other as equal owners of certain meanings, between which subject-subject relations are formed. Evidently, this engagement at Boeing is not simply a process of accepting or not accepting the terms offered by the other party. It is about mutual influence, mutual consideration of the interests and needs of the opposing sides. Taken together, all of the above means make up the organization’s adaptive potential, which makes it possible to predict, identify, assess natural, economic, political, and other risks, and build an adequate communication policy in order to ensure sustainable development. Therefore, increasing the adaptive potential can be considered as the main criterion for the quality and effectiveness of the crisis communications strategy.

Leadership

The majority of decision-making processes are determined by the leadership from both Boeing and relevant agencies. It is evident that the company shows some form of resistance to ground its jets despite international concerns. For example, both American Airlines and Southwest Airlines were flying Boeing 737 MAX planes until President Trump ordered to have them grounded (Sucher, 2019). Poor mismanagement was observed from the leaders of the Federal Aviation Administration (FAA) who defended Boeing’s position and claimed that “review shows no systematic performance issues and provides no basis to order grounding the aircraft” (Sucher, 2019, para. 2). In other words, the leadership of both company and FAA showed little to no awareness of the scope of the problem (Newburger and Josephs, 2019). Such a response to the crisis puts the national reputation at risk due to the incapability to communicate the details.

The leaders could have prevented the escalation of the issue by being direct and open regarding the planes. It is stated that the leadership should have framed the subject in order to show that there is a mishandling from multiple sides, which might include engineers, certifiers, agencies, and pilots (Sucher, 2019). Therefore, the upper management did not act accordingly, and thus, it is among the key elements of Boeing’s poor crisis management. In modern times, organizations, regardless of what area of ​​economic, administrative, or social activity they specialize in, are in a difficult situation. This requires constant reorganization, modification, and innovation. First of all, this is caused by such factors of the external environment as fierce competition, business globalization, amendments to legislation, an innovative approach to technologies, and a reduction in the life cycle of goods.

Competent use of new realities and adequate response to challenges from the external and internal environment have a beneficial effect on development. However, the same factors, misinterpreted by the leadership of organizations and not leading to a quick response, can be the cause of the disaster (Hall and Goelz, 2019). To survive, companies must focus all their efforts on producing the highest quality goods and services, high levels of market mobility, and lower prices. Using only one or two of these key ingredients usually does not achieve the desired result, as is the case with Boeing. It is also advisable to take into account changes in the system of values ​​and interests of modern workers, who require more participation in the affairs of the organization, flexibility, and greater autonomy. They want to apply not only their skills but also their voice at work. In these conditions, the actions of the leader are in the foreground, and his or her task is to influence others so that people do the assigned work.

The modern leader should be in the center of attention of the organization, inspire employees to achieve a common goal. The leader needs to learn to understand when to listen and when to act or stop, which will allow him or her to work effectively with each person and even with other professionals and group leaders. In the modern world, effective leadership is built on a new type of leader-follower relationship. In this case, power is transferred to the leader by followers who recognize his or her value and importance for the cohesive activity of the group. Thus, the followers take a conscious part in the life of the group. However, the leaders of the company failed to show coordination and initiative in managing the crisis. In addition, the leader must have such qualities as the ability to foresee. He or she must be flexible, be able to communicate effectively, and gain the trust of the group. This allows one to quickly achieve the goals and ensures the participation of followers in the management of this process.

Engineers

Engineers of Boeing 737 MAX aircraft are partly blameworthy of faulty technological components of the control system. The company’s response to the crisis in terms of its engineering specialists was one of the few correct decisions during the entire process, and the chronological order of all steps can be seen in Figure 2. Boeing announced that from now on, engineers of the aircraft would directly report to the chief engineers, and middle individual plane managers will no longer act as insulators for smaller teams (Bogaisky, 2019). In other words, engineers at the company possess a more flattened structure instead of previously high hierarchal ones. In the past, a concerned engineer needed to report to the aircraft managers, who, in turn, were required to transfer the message to the chief engineer. Such a structure is prone to some form of failure in terms of safety because the incentives of a manager can be aligned with project completion.

Moreover, the Boeing 737 MAX case illustrates the importance of engineering ethics within the industry. The flawed control software system of Boeing was partly due to the lack of transparency regarding the quality of the installed programs (Herkert, Borenstein, and Miller, 2020). In addition, there was no voice given to engineers, which is critical in large organizational settings (Herkert, Borenstein, and Miller, 2020). These ethical concerns are related to engineering practices that took place at Boeing. It might be more important to increase the transparency of the software program designs in order to properly assess their safety and functionality.

Strategic Steps

Despite the severe backlash, Boeing undertook a specific set of actions in order to correct the faulty aircraft and restore some portion of the lost reputation. According to estimates, the entire crisis cost the company approximately $18.7 billion, which includes legal fees, compensation to the families, and rebuilding the planes (Isidore, 2020). Therefore, the total financial loss struck Boeing’s market strength heavily. However, it is important to note that the general corporate recovery of Boeing is made difficult by the COVID-19 pandemic, which further reduces the demand for the industry products (Welch, 2020). Therefore, the company’s first step was strengthening the voice of its engineering employees. The main mistake of the newest owners and managers of airlines, such as Boeing, is ignoring the specifics of work and personnel in the civil aviation industry. In addition, there is a general disregard for workers as something inanimate.

Boeing has established reasonable labor standards for engineers, compliance with labor laws, including, in terms of social partnership, the norms of the industry tariff agreement. In addition, the restructuring in the company will remove unfair competition, including the connection of administrative resources to eliminate competitors. Excessive exploitation of an already highly qualified specialist for a small increase in wages over several years allows an individual enterprise to reduce its costs due to the difference between the payments and real returns.

This is determined by the cost of training, for which both the state and the employee himself and other enterprises in the industry paid. Practice shows that after no more than five years of such work, a specialist who is not yet of retirement age becomes no longer fit for further professional activity due to the so-called burnout syndrome and additional disability (Rosenbloom, Malka, and Israel, 2016). This information allows people to draw conclusions about the dire plight of the industry in terms of management quality, both at the company and industry levels. Meanwhile, right now, in the conditions of the global economic crisis, Boeing is taking the necessary steps to improve the current situation.

Conclusion

In conclusion, one should be aware that the case of Boeing 737 MAX is an illustration of poor crisis management due to delayed response, improper leadership, and insulated engineers. Although the issue severely hindered the company’s reputation and legitimacy, it still undertook a certain set of strategic steps to induce the corporate recovery process. However, such an attempt will be made more difficult due to the coronavirus pandemic.

Reference List

Baker, S. (2019) ‘Boeing’s response to the 737 Max crisis confused and frightened people, making it hard to believe its apologies, experts say’, Business Insider, (May). Web.

Bogaisky, J. (2019) ‘Boeing to strengthen engineers’ powers in response to 737 MAX crisis’, Forbes, Web.

Diverting the blame to pilots (2019) Web.

Ethiopian Airlines flight ET302 crashes (2019) Web.

George, W. W. and Migdal, A. (2020) ‘What went wrong with Boeing’s 737 Max?’, Harvard Business School, Web.

Hall, J. and Goelz, P. (2019) ‘The Boeing 737 Max crisis is a leadership failure’, The New York Times, Web.

Herkert, J., Borenstein, J. and Miller, K. (2020) ‘The Boeing 737 MAX: lessons for engineering ethics’, Science and Engineering Ethics, 1, pp. 1-18.

Isidore, C. (2020) ‘The cost of the Boeing 737 Max crisis: $18.7 billion and counting’, National Geographic, Web.

Newburger, E. and Josephs, L. (2019) ‘What you need to know about Boeing’s 737 Max crisis’, CNBC, Web.

RockDove Solutions. (2020) ‘Boeing’s reminder of the #1 rule in crisis management’, In Case of Crisis, Web.

Rosenbloom, T., Malka, Y. and Israel, S. (2016) ‘Job burnout of security guards of aviation company’, Personnel Review, 45(3), pp. 557-568.

Sucher, S. J. (2019) ‘How Boeing should have responded to the 737 Max safety crisis’, Harvard Business Review, Web.

Tangel, A., Sider, A. and Pasztor, A. (2019) ‘‘We’ve been humbled’: Boeing’s CEO struggles to contain 737 MAX Crisis’, The Wall Street Journal, Web.

Welch, J. (2020) ‘Will Boeing soar again? Navigating a corporate recovery process’, Journal of Business Strategy, pp. 1-9.