Harvard Case - What Went Wrong with Boeing's 737 Max?
"What Went Wrong with Boeing's 737 Max?" Harvard business case study is written by William W. George, Amram Migdal. It deals with the challenges in the field of Business Ethics. The case study is 23 page(s) long and it was first published on : Jun 28, 2020
At Fern Fort University, we recommend that Boeing implement a comprehensive overhaul of its corporate culture, prioritizing ethical leadership, transparency, and stakeholder engagement. This involves a multi-pronged approach encompassing robust ethical frameworks, enhanced regulatory compliance, and a commitment to corporate social responsibility.
2. Background
The Boeing 737 Max crisis unfolded after two fatal crashes within a short period, highlighting serious flaws in the aircraft's design and the company's subsequent response. The case study focuses on the development and certification of the MCAS (Maneuvering Characteristics Augmentation System), a flight control system that played a central role in the crashes. The main protagonists are Boeing executives, including CEO Dennis Muilenburg, and the Federal Aviation Administration (FAA), responsible for aircraft certification.
3. Analysis of the Case Study
This case study exemplifies a failure of ethical leadership, corporate governance, and regulatory oversight. The analysis can be structured using the following frameworks:
a) Stakeholder Theory: Boeing failed to adequately consider the interests of all stakeholders, prioritizing shareholder value over the safety of passengers, pilots, and the general public.
b) Ethical Decision-Making: The decision to prioritize cost-effectiveness over safety in the development of the MCAS system demonstrates a clear deviation from ethical decision-making principles.
c) Corporate Responsibility: Boeing's lack of transparency and accountability in the wake of the crashes, coupled with attempts to downplay the severity of the issues, exposed a significant deficit in its understanding of corporate responsibility.
d) Conflicts of Interest: The close relationship between Boeing and the FAA, including the delegation of certification responsibilities to Boeing employees, created a conflict of interest that compromised the integrity of the certification process.
e) Whistleblowing: The case highlights the importance of whistleblowing as a mechanism for exposing wrongdoing. However, the lack of a robust whistleblowing culture at Boeing prevented employees from raising concerns about the MCAS system effectively.
4. Recommendations
a) Establish a Robust Ethical Framework:
- Code of Conduct: Implement a comprehensive code of conduct emphasizing ethical decision-making, transparency, and accountability.
- Ethical Leadership Training: Provide mandatory training for all employees on ethical leadership principles, conflict of interest management, and whistleblowing procedures.
- Independent Ethics Committee: Establish an independent ethics committee to oversee ethical compliance and provide guidance on complex ethical issues.
b) Enhance Regulatory Compliance:
- Independent Certification Process: Ensure a completely independent certification process, eliminating any potential conflicts of interest.
- Transparency and Accountability: Publish detailed information about the development and certification of new aircraft systems, ensuring complete transparency.
- Strengthened Oversight: Increase the FAA's oversight of aircraft manufacturers, including regular audits and independent inspections.
c) Embrace Corporate Social Responsibility:
- Stakeholder Engagement: Establish a formal process for engaging with all stakeholders, including passengers, pilots, employees, and communities impacted by Boeing's operations.
- Sustainability and Safety: Prioritize sustainability and safety in all aspects of the business, demonstrating a commitment to responsible operations.
- Transparency and Communication: Maintain open and honest communication with stakeholders, providing timely and accurate information about any potential risks or issues.
5. Basis of Recommendations
These recommendations are grounded in the following principles:
- Core Competencies and Consistency with Mission: The recommendations align with Boeing's core competencies in aircraft manufacturing and its mission to provide safe and reliable transportation.
- External Customers and Internal Clients: The recommendations prioritize the safety and well-being of external customers (passengers) and internal clients (employees).
- Competitors: By demonstrating a commitment to ethical practices and corporate responsibility, Boeing can differentiate itself from competitors and regain public trust.
- Attractiveness: The recommendations are expected to enhance Boeing's long-term attractiveness to investors and customers by rebuilding trust and ensuring sustainable growth.
6. Conclusion
The Boeing 737 Max crisis underscores the critical importance of ethical leadership, transparency, and corporate responsibility in the business world. By implementing these recommendations, Boeing can rebuild trust with stakeholders, restore its reputation, and ensure a safer future for its passengers and employees.
7. Discussion
Alternatives:
- Ignoring the crisis: This option would have resulted in further damage to Boeing's reputation and potentially led to more accidents.
- Minimal changes: Implementing only superficial changes would not address the underlying issues and could be perceived as insincere by stakeholders.
Risks:
- Resistance to change: Some employees and executives may resist the implementation of these recommendations.
- Increased costs: Implementing these changes could increase costs in the short term.
- Regulatory scrutiny: The FAA and other regulatory bodies may continue to scrutinize Boeing's operations.
Key Assumptions:
- Commitment to change: Boeing's leadership must be committed to implementing these recommendations.
- Stakeholder support: Stakeholders must be willing to engage with Boeing and provide feedback.
- Regulatory cooperation: The FAA and other regulatory bodies must be willing to collaborate with Boeing on implementing these changes.
8. Next Steps
- Develop a detailed implementation plan: This plan should include timelines, milestones, and responsible parties.
- Communicate the changes to stakeholders: Boeing should proactively communicate the changes to all stakeholders, including employees, customers, investors, and the public.
- Monitor progress and make adjustments: Boeing should regularly monitor the progress of the implementation and make adjustments as needed.
By taking these steps, Boeing can begin to rebuild trust and ensure a safer future for its passengers and employees.
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Case Description
This case describes the development of the Boeing 737 Max airplane model and the events leading up 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. The evolution of Boeing's organization and management is described, focusing on the span from Boeing's 1997 merger with rival McDonnell Douglas through the development of the 737 Max and the crashes. The case examines the antecedents and possible causes of the crashes, both through the lens of industry and competitive dynamics and through the lens of corporate culture and development processes at Boeing. The development of the 737 Max is described in detail, including the factors and decisions that led to the development of the Maneuvering Characteristics Augmentation System (MCAS), the system that ultimately led to the crashes. Information about Boeing's response and actions during the period between the two crashes is also included in the case.
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