The painful power of culture over strategy

Boeing continues to suffer the painful power of its flawed culture over its impressive strategy.

To compete with the gigantic Airbus A380, Boeing made a huge strategic bet that people’s desire to fly direct would outweigh the savings of ‘going large’ and flying indirect through major hubs. And they were right.

The launch of their 787 Dreamliner in 2011 shut down production of the A380 long before it had made its money back.

But this week, the same fatal cultural issues that caused two 737Max’s to crash look like they’ve contaminated 787 production too. The FAA has announced it’s investigating whether test records have been falsified.

Boeing found and voluntarily reported the issue itself – a good sign that it's making progress on prioritising safety over sales. But it also suggests they’ve got some way to go. Yet more severe reputational damage to one of the world’s most iconic brands could compromise earnings for years to come – on top of the 737Max’s estimated $20 billion losses so far.

The trouble with developing culture is that you can quantify its costs, but not its benefits. Well, not until something goes really wrong anyway. But you don’t need numbers to understand that leaders need to know and live the right values and behaviours in order to sustain the benefits to everyone affected – from customers to investors.

Boeing’s exec team didn’t tell anyone it was OK to cut corners, but the culture they cultivated did. Not the 'integrity, trust and respect’ culture highlighted in the Chairman’s last annual statement before the 737’s crashed, but the actual culture – the one that the Chairman’s annual statement two years later acknowledged ‘fell short of [their] values and expectations’.

Developing your culture takes your leaders away from their day jobs – where results are tangible and progress is visible – to deliver something intangible that usually takes ages. In your drive for results though, remember Boeing. The one result they de-prioritised was the very culture they claimed to nurture, and it was this that brought all their other results crashing down around their ears.

If you really believe that people are your most strategic asset, put your money where your Chairman’s annual statement is, because having a great strategy and the drive to deliver it isn’t enough. Your values affect your value, and unfortunately Boeing can now calculate exactly how much theirs are worth.

You have a choice. Take the time to work on your culture now, when it can help you build competitive advantage. Or wait until you’re forced to work on it later, when the poor behaviours you experience today will only be further entrenched, and your strategy less likely to succeed as a result.

Rich Alderton is a Leadership Development specialist, so call us on 07873 823 800, email us or complete our enquiry form to arrange an initial consultation.

You can download Rich's free e-book 'Mastering Adaptability' here.