05 Nov Boeing And The Purpose Paradox
I want to talk to you this week about what I call the Purpose Paradox, which happens when a short term focus on profits serves a company well in the interim, but the long run strategy needs to be focused on the well being of customers and society. It is simply good business to keep purpose at the helm when navigating strategy. Boeing lost sight of that and is paying a huge price.
As many of you know, Boeing is one of the largest and most successful companies in the world. They also happen to be in a load of trouble right now. While you may not think of the 737 MAX grounding as a lesson about corporate purpose, I think we can understand the mess they are in happened because they lost sight of their purpose.
How Boeing Got in Trouble
Without boring you with a long history of the Boeing 737, let me make it as simple as I can. The 737 was designed in 1964. It is the highest selling plane in commercial history. The plane has been redesigned many times over, in fact, too many times. Pilots will tell you that every new version of the 737 is harder to fly than the one before it for one simple reason. It costs a lot of money to design a new plane and a total redesign also triggers the requirement for expensive pilot re-training. But under competitive pressure from Airbus, Boeing decided to re-design the 737 one more time.
In order to make the plane more efficient, Boeing needed a bigger engine, but this posed a problem. The bigger engine couldn’t sit on the existing wing without redesigning the aircraft. That would take time and it would cost money, so they built a plane that isn’t as aerodynamic and is more likely to stall – meaning you lose lift, so down you go.
When Boeing realized this, they needed a fix, so they put in software that would push the nose down without assistance from the pilots to correct the stall. So basically, they designed a plane that isn’t right and built software to try to overcome it. It was all about money, all about profits. Then they made critical safety alarms “optional” and didn’t even tell pilots about the new system which had NEVER been on a commercial aircraft ever before! Why? You guessed it…profits!
Here is What Happens When
You Focus on Profits Not
The 737 MAX has now been grounded for most of this year. It probably won’t fly again until sometime in 2020 and surveys show passengers are afraid to fly it. U.S. flight attendants are even threatening to “refuse to work on it” and Boeing’s reputation is diminished perhaps for years to come. Orders are down, the stock has gone down, and the company has been demonized.
Not only does losing sight of purpose impact customer opinion but it also impacts the employees’ sense of purpose. An executive at Boeing told me that when the MAX issue came to light, when over 300 people lost their lives in two plane crashes, employees were in tears at the factory that assembles the MAX. We now know that some insiders expressed lots of concern about the design but their concerns weren’t heeded. Given that employees are the most believable spokespeople when it comes to purpose for a company, Boeing is in trouble.
Imagine for a moment if Boeing had put its purpose in the driver’s seat? Imagine if the number one priority had been to do the right thing? They would have taken a little more time, spent a little more money, built a safe product, and in the long run grown their reputation with clients, customers and employees. Let me say I don’t think anyone at Boeing is evil or intended for people to die. But purpose was not in the driver’s seat.
Qantas Airlines Knows The
As if Boeing didn’t have enough troubles, the previous versions of the 737 have now been found to have cracks in a critical part that helps hold the wings to the plane (hmm seems important to me!). The FAA ordered all 737 NGs of a certain age to be inspected within seven days, newer ones to be inspected over the next six months.
Qantas was a client of mine for four years and I know the safety culture there very well. More importantly, I know they put “safety” above all else. When Qantas found cracks this past week in a plane newer than an age where the FAA expected cracks to appear, Qantas immediately decided to inspect all their planes in seven days. Andrew David, their domestic CEO whom I know personally, came out publicly to make that commitment, saying “We will never fly an unsafe plane.” They are going above and beyond what the regulators are requiring.
Contrast that with two major US Carriers: United and American. They are simply saying that they are following the FAA. They have not been transparent about how many planes they have inspected or when they will inspect them, even though they have scores of planes of the same age as the ones Qantas has already grounded. Once again here is the purpose paradox. Qantas knows that focusing on purpose now buys safety and long term loyalty, while United and American are choosing inaction, which I think is a HUGE mistake.
The Foolish Bottom Line
So, here is the foolish bottom line: Where is the purpose paradox alive right now in your company or team? Where are you focusing on short term profits when you should be focusing on the long term best interest of your clients and society? Boeing has just found out the hard way that when you focus on profits, you lose sight of purpose and when you focus on purpose, you produce profits. It isn’t too late for Boeing but if they don’t see this as a major wake-up call, their troubles will surely continue.