The unforgiving nature of crises and the volatility of business operating environments in the modern era leaves corporations and executives fallible to reputational damaging effect of event of crisis proportion.Â
Within a space of nearly 5 years, Boeing has suffered yet another blow to its reputation following another of its 737 MAX model failures.
On Friday, 5 January, a Boeing 737 MAX 9 Flight 1282, operated by Alaska Airlines was reported to have had a cabin panel blown off the plane’s fuselage, leaving a gaping hole in the plane, and depressurising the plane's cabin. Luckily enough, there was no loss of life in this incident - all 174 passengers and 6 crew members landed safely. The incident was shared on social media several times, emphasising the power and Influence of Social Media in Crisis Management.
Already grappling with financial repairs from the incidents involving a Lion Air Flight 610 in October 2018, and another involving an Ethiopian Airline Flight 302 in March 2019, alongside the grounding of the plane model for long periods – the woes brought about on Boeing by 737 MAX could be the very beginning of the crumble of the corporation's competitiveness for decades. We covered Boeing’s crisis response and approcah to crises, and how it could salvage its reputation outside the quality control, safety concerns, and technical difficulties of the plane model in our previous article Boeing 737 MAX: Navigating Its Future following the fatal incidents in 2018 and 2019.
Crises facilitate for big market share loss for brands and products. Boeing will continue to lose its market to competitors as investigations continue to occur, every now and then. Already, the US Federal Aviation Administration (FAA) has ruled that the 737 MAX operated by any USA airliner or flying into the USA by a foreign operator should be, and must remain grounded. This would look like a ‘sequel’ to an 18 month grounding of the MAX plane model following the catastrophic incidents in 2018 and 2019 - once again offering competitor's confidence to engage market negotiations whilst there is a vacuum forming.
For a model that suffered massive market setbacks soon after its introduction on the market, the Boeing 737 MAX still remains a product of concern following revelations that an inspection of the model by another operator, United Airline, found that the opratator's fleet of the MAX had loose bolts. It is yet to be seen how much confidence airline operators will still have in the MAX model.
Crises not only affects reputation, financial bottom line, and market share - they also disrupt corporations operating environment, business model, and can cost corporations hefty lawsuits, and careers for its executives. For example, following the 737 MAX incident in 2019, Boeing separated the roles of Chairman and CEO, introducing David L Calhoun as non executive chairman while Dennis Muilenburg continued as CEO, and President. Muilenburg was later fired based on his perceived management of the 2018 and 2019 accidents. In addition, Boeing set up funds to pay victims' families and also made payments in related lawsuits.
Organisational reconfigurations are implemented to improve organisational performance and propel it’s competitiveness in an industry. With the recent incident demonstrates that despite management changes, there has not been significant progress at Boeing, as far as the 737 MAX model and quality control is concerned. We are yet to see if there will be any heads rolling off the chopping board. The ramification and how current CEO David L Calhoun handles the prevailing crisis may be the life saver for both Boeing as well as his own career. It is also a litmus test if he is indeed up to the task as a leader conversant in Leadership and Crises Management.