‘Culture eats strategy for breakfast’, or so the saying (from Peter Drucker) goes. Boeing’s long list of recent problems have been well documented. And there’s been a number of good analyses of the real causes behind them, amongst which this Harvard piece is probably the best.
What has struck me as I’ve read more about this unfolding case study documenting the challenges being experienced by this once great company is what the Harvard piece calls ‘a leadership failure that has allowed a cultural shift away from Boeing’s once-vaunted engineering quality’. Bill George, who wrote the Harvard article, notes that the problems likely began over 25 years ago when Boeing acquired McDonnell Douglas, a company that in contrast to Boeing’s culture of engineering excellence, was known for focusing on cost-cutting and upgrading older plane models in preference to designing entirely new ones.
This, he says, set the scene for a litany of poor decisions including moving the company’s headquarters to Chicago for a relatively insubstantial tax gain (which put a geographic as well as psychological separation between top management and the engineers and production crews). The recruitment of senior executives from outside the industry helped to shift the focus onto profit above all else, resulting in the prioritisation of share buybacks and the decision not to build an all new model to replace the ageing 727, 737 and 757. The impact of this significant misstep was exacerbated by the huge problems created by the programme to upgrade to the 737 MAX and to maximise short term earnings. Flaws in the software led to critical errors, made worse by single points of failure being designed into the system.
George notes that the origins of Boeing’s problems lie not only in individual leadership failures but also in a flawed culture. These two things no doubt acted in combination. Each reinforcing the other. So it’s enlightening to think about this case through the lens of Edgar Schein’s famous model for organisational culture.
Schein describes organisational culture (PDF) as:
‘a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.’
The model defines three key ways in which culture manifests within organisations:
- Observable artefacts: these are the visible, surface elements in the organisation which demonstrate what it believes to be important, and can range from physical environments and technologies, to language and jargon.
- Espoused values: these are the rules of behaviour and qualities which are advocated by the companies leadership
- Underlying assumptions: these are the far less visible attitudes, thought processes, ingrained assumptions or values that remain unquestioned but which can invisibly guide priorities, approaches, and decisions.
The reason that ‘culture eats strategy for breakfast’ is that culture can be fundamental in driving strategic decisions. In Boeing’s case decisions like the one to separate top management from engineers and production, and the choices to focus on aircraft model upgrades rather than an entirely new design. These are examples of the more visible ways in which Boeing’s shift in culture revealed itself – observable artefacts and espoused values. But it was surely the shift in the underlying assumptions, and notably the degree of emphasis on short-term profit over engineering excellence, that provided the foundation for cultural evolution and the invisible force behind so many decisions that were made during that time.
If a strategy runs counter to the underlying assumptions that sit at the heart of a company’s culture, it will be impossible to implement that strategy with any degree of effectiveness. So what Boeing need to do now is to regain the culture of engineering excellence that helped to build the company and make them so successful.
But that will take a significant amount of time (according to Gallup it takes a minimum of 3-5 years to change a company’s culture). In my first book I described a ‘pace layering‘ view of transformation, which acknowledged the different cadences with which critical elements of transformation evolve. Culture was right there with the longest cycle of change (followed by vision, strategy, resources, and processes which have progressively shorter cadences). The same ‘pace layering’ approach to culture itself is also true. Observable artefacts and visible espoused values are easier and faster to change than the underlying assumptions that underpin so much. The sooner Boeing start questioning and challenging these fundamental assumptions the sooner they can start digging themselves out of the hole they’ve dug their way into.
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