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Boeing 737 MAX: Company Culture and Product Failure


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by: Michael A. Roberto

Publication Date: November 3, 2020
Length: 16 pages
Product ID#: 3-058-283

Core Disciplines: Ethics, Leadership/Organizational Behavior, Strategy & Management

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Teaching Note

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Description

In October 2018, Lion Air Flight 610 crashed into the sea soon after takeoff from Jakarta, Indonesia. Investigators identified a problem with the new Boeing 737 MAX jet’s stall-prevention system (known as the Maneuvering Characteristics Augmentation System, or MCAS). However, the Federal Aviation Administration (FAA) allowed airlines to continue flying the jet, while Boeing worked on some changes to the MCAS software. Less than five months later, Ethiopian Airlines Flight 302 crashed six minutes after takeoff. Once again, a faulty sensor triggered a misfire of the MCAS software. The system pushed the nose of the plane down repeatedly. The pilots could not determine how to stop the sharp descent, and the plane plunged into the ground at more than 500 miles per hour. Four days later, facing immense pressure from government officials around the world, Boeing grounded its entire fleet of 737 MAX jets.

The Boeing board of directors faced a multi-part dilemma. Was the current CEO still the right person to lead the company, or to what degree, if any, was he responsible for the position Boeing found itself in? Had something gone awry with the company’s culture after decades of engineering excellence? How did it come to happen that pilots suddenly experienced fatal difficulties flying the latest model of one of the world’s most-used passenger jets? And, how could Boeing ensure such a situation would not happen again?

Teaching Objectives

After reading and discussing the material, students should:

  • Identify the aspects of an organizational culture that can contribute to a major product quality/safety crisis and analyze the factors that may cause a culture to shift over time.
  • Examine the conditions and behaviors that undermine psychological safety, making it difficult for technical experts and lower-level employees to raise concerns and share bad news.
  • Apply complex systems theory to understand the unintended consequences of implementing safeguards designed to help prevent failures.
  • Evaluate how surfacing and discussing near-miss situations can be instrumental to organizational learning, quality improvement, and accident prevention.
  • Distinguish between individualistic and systemic approaches to assessing an organizational failure and recognize the advantages of adopting a systemic approach.