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ANALYSIS OF MANAGEMENT ISSUES AT BOEING
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POOR PLANNING AND THE BOEING CRISIS
REPORT COMPILED BY KRYSTAL FISCHER
17 MAY 2020
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- ANALYSIS OF MANAGEMENT ISSUE
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Long-Range Plans
Long-range plans take three or more years into the future (Schermerhorn et al, 2017). Often, the top management is involved in setting up these plans as well as offering guidance on the direction of the organization as a whole. All management levels should, however, understand the long-range plans of the organization even as they play different roles towards the achievement of those plans (Schermerhorn et al, 2017). In the absence of objectives and long-range plans, the pressures of daily events may create confusion and divert attention from essential tasks. Under such situations, the management will be working hard without achieving any clear long term objectives. Such was the case of Boeing when faced with the pressure to compete against Airbus’s 320Neo aircraft, a low-fuel consuming and efficient invention (Pontefract, 2019). As Boeing grappled with the competition pressure emanating from its main rivals, the executive managers sprang to action to protect their dominance and keep their customers. Instead of setting clear and sustainable long-term plans for the evolving 737 Max, Boeing took only nine months following Airbus’s announcement to build and launch the aircraft. The fatal results of this fast-tracked project was a clear indication that the project should have been a long-range rather than a short-range plan to allow for the aircraft’s inefficiencies to be solved. The two subsequent crashes that followed the poor planning and implementation revealed that the leaders had not done their share in defining the expected outcomes for the aircraft and had maintained their silence for as long as the aircraft was built and sold to unsuspecting customers (Caskey, 1972). Additionally, the crashes revealed the state of unethical leadership within the organization which was both competitive and compliant. The leadership’s unethical competitiveness was displayed in their profit-centred directive which saw them proceed with the making of an ineffective aircraft. The unethical behaviour on the engineer’s part was compliant since it was a response to the orders from top management (O’Keefe, 2019).
Strategic and Tactical Plans
Strategic plans encompass long term organizational needs. They establish comprehensive directions for an organization and its respective departments (Schermerhorn et al, 2017). For this scope, management planning involves determining the company’s objectives and deciding on the appropriate actions to achieve the established objectives. The invention of the 736 Max was in itself a strategic plan to counter Airbus’s competitive threat. While product line expansion strategies always prove successful, this particular one was destined to fail because of the poor planning and the unethical leadership that structured its foundation.
Planning Tools Techniques and Processes
Contingency Planning
Planning, just like leadership, is an essential part of successful organizational management. It works best when it is comprehensive, systematic and based on well-established foundations. However, the more uncertain the planning environment the more likely the original predictions may prove incorrect. Contingency planning is the process of identifying alternative strategies that can be implemented if the original plan becomes inadequate due to changing circumstances (Schermerhorn et al, 2017). Contingency based plans are all done with the purpose of perfectionnement. The latter refers to the ability of an organization to attain improvement over time. An organization that does not move forward soon falls behind its competitors (Hatchuel & Segrestin, 2019). Following Fayol’s innovative theory of management, progress in every sphere must be pursued unrelentingly. Within the aerospace industry, the best way to come up with a contingency plan is by using the devil’s advocate approach. The use of this approach allows planners to imagine the worst-case scenarios and come up with solutions for such cases. The key to an effective contingency plan is by identifying the trigger factors that indicate the possibility of a plan to fail. Even though one of the top managers at Boeing identified trigger factors in the 737 Max aircrafts, his recommendations were dismissed and nothing was done about his concerns (Aratani, 2019). The manager’s recommendations would have been used as a foundation for the development of a contingency plan. To a large extent, the company’s failure to plan was a plan in itself to fail.
Scenario planning
Scenario planning is the process of developing possible plausible scenarios and uncertainties about the future. It enables managers to understand how such environmental uncertainties can affect the company’s strategies thereby allowing for an effective plan for such eventualities (Schermerhorn et al, 2017). Scenario planning, unlike contingency planning, is more concerned with short term plans. At the heart of every planning process should be the need to identify and plan for a myriad of possible future situations or scenarios. Identifying future scenarios creates room for flexibility and the ease to respond to rapidly changing environments. Additionally, scenarios help organizations to think deeply and remain better prepared for the future uncertainties as compared to their competitors. In the Boeing situation, the managers and planners failed to develop possible scenarios about the plan to build the 737 max aircraft within 9 months. The lack of scenario planning rendered them incompetent enough to handle concerns by some of the managers or to recruit professionals with experience in building an aircraft that required advanced technical expertise.
Benchmarking
The success or failure of a plan depends on an organization’s ability to use relevant references at the onset. Often, planners have limited awareness about what is going on outside the internal business environment (Schermerhorn et al, 2017). Successful planning should challenge and question the usual way of doing things. Benchmarking is a technique which allows planners to make use of external comparison and carry out an evaluation of an organization’s current performance (Schermerhorn et al, 2017). Benchmarking enables planners to find out how other organizations are handling certain issues and come up with easy ways to incorporate similar approaches into an organization. While benchmarking has become increasingly popular in today’s global business environment, Boeing failed to take important lessons from its main competitor, Airbus. Instead, it launched a model that would compete with its Airbus’s 320Neo. By so doing, Boeing did not allow its planners and managers to thoroughly analyse and compare the different processes and systems and identify efficiency as well as the opportunity for innovation (Schermerhorn et al, 2017). Establishing a benchmarking partnership with Airbus would have equipped Boeing’s managers with the skills, knowledge, and expertise to build an aircraft to standard quality.
Participation and Involvement
Participation is a fundamental component of the planning process. Participatory planning involves including people who will be affected by the planning in the planning process (Schermerhorn et al, 2017). Participation can increase innovation, communication and enlarge the scope of information available for the planning process. It can also increase employee commitment, understanding, and acceptance of their roles. The planning process should include the contributions of different people representing a range of responsibilities. Unlike in the past, today’s organizations are embracing inclusivity during the planning and decision making processes in management. The more involved all levels of management are, the more committed they will be to the organizations objectives. In the Boeing case, it is apparent that the top management failed to include other management levels in the planning process. The dismissal of the concerns of one of the senior managers by the executive management was a display of contempt for lower levels of management. Moreover, it showed that some members of the organization had been left out of the planning process. While including everyone during planning can take more time, it will improve the results of the project (Schermerhorn et al, 2017).
Conclusion
As interesting as it is to examine the reasons behind planning in organizations, it is equally intriguing and to some extent embarrassing to examine why some organizations fail to plan. The complexities and uncertainties of today’s business environments are putting pressure on the horizons of planning. Effective and timely planning has a significant effect on the success of an organization. Different planning styles, tools, techniques, and processes can be applied to different situations to achieve the set objectives. One major problem at Boeing was the lack of an effective long-range plan towards the building of the 737 Max. Unethical competitive behaviour formed resulted in a vague plan that would eventually lead to major losses and a ruined reputation for the plane manufacturing company. The pressure to keep their customers pushed the top executives to overlook some of the most important elements in planning for a mega-project. The lack of participation and involvement of other managers resulted in poor communication between managers and top executives, a hitch that would eventually result in a problem that would have otherwise been identified and solved before the 737 Max made its way to the purchase front. Instead of benchmarking Airbus, Boeing saw an opportunity to compete, all the while overlooking the possibility that its competitors may have spent years planning to build their aircraft. Boeing’s top executives failed to plan accordingly and instead prioritized profit and industry dominance over safety and ethics.
References
Aratani, L. (2019, Dec 11). Boeing Manager Repeatedly Warned About “Dysfunctional Production” of 737 Max Before Crashes that Killed Over 300 People. Independent. Retrieved from https://www.independent.co.uk/travel/news-and-advice/boeing-737-max-production-managewarning-lion-air-ethiopian-airlines-a9241706.html
Caskey, C. C. (1972). The Functions of Management. Journal‐American Water Works Association, 64(6), 361-366.
Hatchuel, A., & Segrestin, B. (2019). A century-old and still visionary: Fayol’s innovative theory of management. European Management Review, 16(2), 399-412.
Johnsson, J. (2020, Feb 11). Boeing Monthly Orders Fall to Zero for Second Time in Max Crisis. Industry Week. Retrieved from https://www.industryweek.com/leadership/article/21122765/boeing-monthly-orders-fall-to-zero-for-second-time-in-max-crisis
Lawrence, P. K., & Braddon, D. (2017). Aerospace Strategic Trade: How the US subsidizes the large commercial aircraft industry. Routledge.
O’Keefe, D. F., Peach, J. M., & Messervey, D. L. (2019). The combined effect of ethical leadership, moral identity, and organizational identification on workplace behavior. Journal of Leadership Studies, 13(1), 20-35.
Pontefract, D. (2019, Mar 18). Boeing’s 737 MAX Crisis Is a Leadership Issue. Forbes. Retrieved from https://www.forbes.com/sites/danpontefract/2019/03/18/boeings-737-max-crisis-is-a-leadership-issue/#615c4d026a0a
Schermerhorn, J. R., Davidson, P., Factor, A., Poole, D., Woods, P., Simon, A., McBa,E. (2017). Management (Interactive). [VitalSource Bookshelf]. Retrieved from https://bookshelf.vitalsource.com/#/books/9780730363118/