Tuesday, March 26, 2024

The answer is: 10 years to change a culture

 Many of us who work in the consulting and strategy space often talk about the difficulties in understanding and more importantly, changing a corporate culture.  Typically, we are talking about moving a culture from its current set of values that has sustained the business, to a culture that helps the company compete in a new reality that may be different or more competitive or operate in a slightly adjacent market.  That is, we want the culture to adapt to market needs and changes that everyone can see but inertia keeps the company from making.  Often, this cultural change is one that the company NEEDS to make in order to stay successful and grow.

We are now witness to a different kind of cultural change, but one that can provide us with an important lesson.  That is, how long does it take to change a powerful and embedded culture, one that values and emphasizes factors like efficiency and safety?  The recent struggles that Boeing is undergoing are telling, but most importantly they provide insight into what it takes and importantly, how long it takes, to change a culture.  From what we can see from Boeing, it would appear that it can take as little as 5 to 6 years to change a powerful culture.  In Boeing's case, this shift was from a safety-first culture to a profitability first culture, led by two CEOs.

The original culture:  safety

Think about it - airlines and airplanes are only viable if the flying public thinks they are safe.  Otherwise, who is going to climb into a metal tube and get flung miles into the air?  Air safety and plane reliability have been the ultimate backbone of the US transportation system.  Companies like Boeing have always focused on the highest levels of quality, efficiency and safety.  That's what has led to such a stellar flying record in the US.

Boeing didn't pay lip service to quality and safety: their structures, business processes and training reinforced the concept that safety was paramount.  This idea was a throughline in their onboarding, training, evaluation and compensation.  The people who started Boeing and many of the people who worked there understood the importance of quality and safety, and this belief was reinforced and became part of the culture.

What we are seeing now

The issues we are seeing with Boeing in 2024 are the result of changes in focus at Boeing, not from a year ago or two years ago, but over 15-20 years ago.  Quality and safety regimens at a company like Boeing don't simply fall apart in a day or even a year.  A focus on safety and quality atrophies and declines over a period of years or even decades as the culture shifts.  My sense is that the first die was cast in the early 2000s, as the market began to favor high tech firms over manufacturing firms, and Boeing was at risk of being thought of as out of fashion.  Additionally, it was experimenting with new design techniques for the 737.  In 2005 James McNerney, a Jack Welch disciple with little aerospace experience became the CEO.  Welch's philosophies focused on profitability in all sectors, and in the case of Boeing may have led to less focus on quality and safety.  McNerney left Boeing in 2015, just as some of the problems with the revised 737 began to emerge. See what Forbes wrote about McNerney's turn as CEO of Boeing.

Boeing announced Dennis Muilenberg would take over as CEO.  Boeing was troubled by many problems with both the 737 Max and for AirForce 1, the president's plane.  Even though Muilenberg was a Boeing lifer, his focus seems to have been primarily financial, trying to recover from poor financial decisions and Boeing mishaps.  By 2019, Muilenburg, announced a restructuring to focus more on safety after an independent review indicated that safety had become less important to Boeing.  So for four years, during multiple safety issues, the CEO had not acted to refocus the company on safety.  Note that through both the McNerney administration and Muilenberg's, the focus was more weighted toward financials rather than safety and quality.  

 I need to state here that this analysis is based on reading about Boeing and its leadership.  I do not have inside information, nor have I conducted a lengthy investigation into the culture, but from reading about the company and observing its challenges, I believe we can say that Boeing lost its primary focus on safety and quality over this period.  It's hard to emphasize how dramatic a change occurred at Boeing to lose focus on safety and quality, and the shift in culture that must have happened.

The startling amount of cultural change

What's startling about this is how much the quality and safety culture was impacted at Boeing from 2005 to 2015-17.  The culture shifted from one that highly valued quality and safety, to one that seems to have been more focused on profits at the costs of safety and reliability.  Even after multiple problems with quality, Muilenburg focused on financial issues until 3 years into his tenure, probably because he felt that the quality and safety culture within Boeing would rebound and restore itself to previous dominance.  It may seem strange, but Muilenberg was quoted by Forbes in 2019 in congressional testimony as saying "we don't sell safety".

So we can say with some assurance that a very focused and powerful corporate culture, one that emphasized and reinforced safety, began to shift to one focused on profitability and with less focus on safety and quality, over the period from 2005 to 2015, or roughly a ten-year time horizon.  Of course, I am using McNerney's tenure as a measuring guide and do not have inside information, but the beginnings of the issues with quality and safety seem to map closely with his tenure and continue into Muilenberg's.

The forces at work

If you've worked on changing attitudes and beliefs in a business, you know how difficult it can be to change a corporate culture.  Understanding that changing a nebulous and poorly defined but powerful factor like corporate culture in any business is difficult, consider how difficult changing a culture like the safety and quality culture in an aerospace company must be.  It took at least 10 years of focus on other priorities to lose the historical focus on safety, to turn over staff who were more focused on safety, to change priorities and compensation models.  Problems with the production are not new.  US government testimony indicates that quality issues were rampant in 2016.  This report is evidence that the culture had already changed, not that it is starting to change.

Which means that the culture had changed previously, and the pressure that Boeing engineers were facing was evidence of a change that had already occurred.  My estimate is that it took at least 7-10 years for the culture to change this dramatically.

What does this say about corporate culture change generally

There are a number of lessons to take away from Boeing's cultural shift and it's likely subsequent refocus on safety.

  • First, if the safety and quality culture at an aerospace company can change this dramatically, any corporate culture can change. In Boeing's case, it was the absence of emphasis on safety and a new emphasis on profitability that shifted the culture.  This shift was led by executive leadership.
  • Second, note that no one at Boeing suggested a program of cultural change to shift away from safety and quality.  Simply, more emphasis was placed on financial returns. In other words, there was no "cultural change" agenda with balloons and programs to help people change this culture.  The change happened insidiously over time, aligned to the priorities and emphasis placed on financial returns.  
  • Third, a culture can change negatively as well as positively.  In most instances, we want culture to change to adapt to new competitive realities.  In the case of Boeing, an important and critical aspect of their culture and eventually their brand was allowed to atrophy.
  • Fourth, and this is speculation on my part, many of the people who upheld and reinforced the safety culture have likely been pushed aside or reassigned or retired, so an entirely new cadre of people who are willing to work to improve the safety culture will need to emerge.  The good news for Boeing is that some of the people are still there, some of the safety paradigms still exist, they are just lying low, because safety and quality will always have a role at an aerospace company.  They can renew this focus.  Other companies will not find those assets quite so readily available.  Shifting a culture may require bringing new people into the organization.

Finally, a safety and quality culture may need to trump or at least be on par with a profitability culture in companies that have such a high exposure to life and death.  Pharmaceuticals, healthcare, aerospace and other industries must place a high value on quality and safety, sometimes at the cost of some profit.

What did it take to change the safety culture at Boeing?  It took new leadership, a revamped focus on profitability and stock price and about 7-10 years of consistent focus on profitability over safety.  All cultures can change, it just takes time and leadership focus.

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posted by Jeffrey Phillips at 6:31 AM


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