One year ago Boeing’s 737 Max was one of the most successful launches in company history.
A re-imagining of the venerable 737 design, it used updated aerodynamics, materials and engines to achieve 14% greater fuel efficiency vs the base 737, to compete with the Airbus A320neo (and it competed quite well). It was granted FAA approval in March 2017 and the first copy was delivered shortly thereafter. The product strategy expanded to include 4 variants.
Now, after 2 mass-fatality crashes, production is on hold, the global fleet is on an expanding grounding with no firm restart date, and the entire line’s future is in doubt, taking with it the fortunes of a host of related entities including GE, the FAA, and the town of Renton, WA, where the planes were built, among many others.
Is this the end of what we know as the 737 MAX?
Surviving a crisis seems to be some combination of:
- severity of an ‘event’
- how likely are negative consequences to occur in the future
- A third key factor is management’s action to swiftly and effectively mitigate future risk
Some very well-known brands have survived severe crises. All are very healthy today.
- Tylenol – while the fatalities were low, the Tylenol poisonings of the early 1980s were a huge public threat
- Perrier – – in 1990, a crisis emerged when a toxic substance, benzene, was found in some bottles of Perrier
- Firestone – – in the late 1990s and early 2000s, hundreds of people died related to accidents attributed to tread separation of Firestone tires, particularly on Ford products
- There are others: Volkswagen (Dieselgate), BP (Deepwater Horizon), SeaWorld (orcas)
In all of these cases, Management worked to swiftly remove any affected (or associated) product from circulation, provided consumer hotlines, publicized the recalls, and provided clear ongoing updates to the public.
In all of these cases, there was a clear explanation given for what caused the issues, and the solution was directly linked to the cause.
Other brands did not fare as well:
- AYDS was a very popular diet-suppressant candy in the 1970s and 1980s, but could not survive the mid-80s emergence of the disease AIDS. Because this association was not likely to end, the candy fairly rapidly was withdrawn from the market.
- ValuJet – a budget airline, its Flight 592 crashed in 1996, killing all 110 aboard. The severity of the crash brought the airline’s poor safety record to light, thus raising doubt about future safety. A rebrand was attempted but the airline eventually was discontinued.
- Vioxx – -an anti-inflammatory marketed by Merck, this brand had over 80 million users. It was withdrawn in 2004 following reports that it could accelerate heart attack and stroke, exacerbated by the fact that evidence was known for about 5 years prior to action being taken.
In two of these cases, the severity of consequences was high, and there was low confidence that a long-term solution was possible. In the third, the brand was associated with a disease with severe consequences – – just bad luck.
So will Boeing’s 737 Max survive?
- High consequences from failure
- No definitive cause or solution identified
- Indecisive management reaction pushes resolution into the hazy future
The longer the lack of clarity lasts, the more doubt will grow around the 737 Max. (As they said of the moon shot: “a million things have to go right. Only one thing has to go wrong”.)
After a quick check of the headlines, put me down for a no.
The Armchair MBA 