Broken

Last week, I highlighted Boeing’s 787 Dreamliner project as a dramatic example of using diversity to create breakthroughs. Attracting talents from different industries to imagine a new kind of commercial airliner and to turn ideas into reality. A seven-year innovation project that delivered stellar success in 2011.

Fast-forward to October 2024, and the same company finds itself in very different circumstances. Boeing has announced a US$6.2 billion quarterly loss, arguably one of the few warning signs a traditional American corporation cannot ignore. But, in truth, other signs have been there for a long time if they only cared to consider them:

• Long-running and unresolved industrial disputes (currently 33,000 machinists have withdrawn their labour. And you can’t assemble an aircraft if you don’t have the parts.

• Connected to that, an order backlog currently valued at half a trillion dollars.

• Most publicly, the Boeing 737 Max scandal. An airliner that killed passengers, and an approach to damage limitation that significantly weakened Boeing’s brand reputation.

Shares in Boeing, down by over a third since January, fell 1.8 percent to close at $157.06 in New York on Wednesday. When the strike ends, Boeing will face significant challenges in restarting production of its 737 Max, 767, and 777 models due to the strains on its supply chain. It must convince loyal suppliers who retrenched staff and put off investments to reverse course and support its new production plans.

Kelly Ortberg, who took over as CEO in August, has called for a fundamental culture change at Boeing. He said there have been serious lapses in its performance and acknowledged that trust in the company has eroded.

“We need to know what’s going on, not only with our products but with our people. Most importantly, to prevent the festering of issues, we have to find ways to work better.  We need to identify, understand, and fix the root causes.”

Anyone with experience in culture transformation understands this will take much work. For change to be sustainable, Ortberg must find ways to inspire the most elusive employee contribution: discretionary effort.

After the heady days of change during the Dreamliner project, Boeing's traditional culture seems to have taken the upper hand and eroded the gains made.

This reminds me of the wise words of Professor Edgar Schein, who pioneered the definition of organisational culture in the 1980s.

He said, “The only thing of importance that leaders do is to create and manage culture”.