Boeing is behind the power curve in dealing with the growing 737 Max crisis

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Chart: WalletInvestor.com The orange line charts Boeing share price following Ethiopian airlines crash on 10 March

Eventually Boeing took the decision to ground all its 737 MAX 8 aircraft. The aircraft has now been involved in two crashes, the first in Indonesia last October and now a second in Kenya. As a result of the delay in making the decision the perception was that it was made extremely reluctantly and only as country after country banned the aircraft from their airspace.   

Following the second fatal crash the UK Civil Aviation Authority said on 12 March it had “issued instructions to stop any commercial passenger flights [using the plane] from any operator arriving, departing or overflying UK airspace”. The United States followed with their own ban and then Boeing announced their decision shortly after.

Clearly this is bad news for Boeing as the 737 MAX is Boeing's most important plane and is competing for orders against other manufacturers such as Airbus and Commercial Aircraft Corporation of China. Bans will hit Boeing hard both financially and reputationally.

Like many major corporations facing major crises assessing the financial cost of the situation is actually easier than trying to measure the estimated reputational damage and to put a figure on that impact. Reputational damage may appear a nebulous concept and be hard to quantify but it is important to try and assess reputational impact against a range of operational responses. It is vital to avoid the allegation of “Profit before people” that these situations can create.

The situation is complex. Lawyers will advise on the basis of innocent until guilt is proven, so do nothing and say nothing that would appear to be accepting of guilt or blame. Insurers, who will make good any loss, for similar reasons will want to limit their exposure and a suggestion of accepting responsibility by an organization at the centre of a crisis might increase the value of what an insurer may have to pay. Also add in that any investigating or regulatory body will not want an organization to be commenting publicly in any way that might prejudice or compromise an investigation. There are some strict rules around this.The fact that there are clear limitations on what can be said should not be an excuse to say nothing.

The Boeing response appears to have parallels with the recent Pret a Manger allergen labelling case and travel company Thomas Cook over the deaths of two children from carbon monoxide poisoning at a holiday resort a number of years ago. Both organisations followed the advice of their legal counsel not to offer apologies until guilt was confirmed and both suffered very high levels of reputational damage in the court of public opinion.

It is recognized that Boeing cannot discuss possible causes nor investigations once these begin. However, what was initially offered was pretty bland comment about being “deeply saddened” about the incidents and that was all the company said for around three days.  At the time of a major incident such as this there are always people working around the clock to deal with the situation.  Those actions can be reflected in communications to provide the wider public with a sense of urgency and that the organization cares.

Eventually after a gap of some three days Boeing began to highlight the many actions they were taking to respond.  I believe that was too little too late. Boeing had already lost the opportunity to demonstrate to a wider audience that they cared and that they were dealing with all the situation entailed as a matter of urgency.   

Meaningful action following an incident, strong and visible leadership, fast and transparent communication and putting people first are essential elements of crisis response.


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