In the wake of David Calhoun's departure from Boeing, a critical conversation has resurfaced about the enduring influence of Jack Welch's leadership principles and the subsequent ramifications for major corporations led by veterans of his GE.
His departure is not merely a leadership change but a poignant reminder of the cautionary tales delineated by David Gelles in "The Man Who Broke Capitalism," which scrutinizes the far-reaching impacts of Welch's tenure at GE. Calhoun's exit from Boeing underscores a moment of reckoning for an approach that once redefined American business practices but now prompts a critical examination of its legacy, particularly in the context of engineering and value creation.
A Spectacular Fall: The Welch Legacy in Question
The legacy of Jack Welch, once celebrated for transforming GE into a financial colossus, has come under intense scrutiny in recent years. The strategies he championed, emphasizing short-term financial metrics over long-term investments in innovation and engineering excellence, have proven to be a double-edged sword.
Critics argue that this approach, while initially boosting stock prices and operational efficiency, ultimately led to a decline in intrinsic value creation and innovation. David Calhoun, having risen through the ranks within this culture at GE, is seen by some as a continuation of this problematic legacy at Boeing, especially in the wake of the 737 MAX disasters.
Boeing's Turbulence: Beyond Leadership
The tragic incidents involving the 737 MAX aircraft cast a long shadow over Boeing, raising profound questions about the company's commitment to safety, engineering integrity, and ethical responsibility. These events cannot be attributed solely to leadership failures but point to deeper systemic issues within the organization.
Critics argue that a culture fixated on financial performance, possibly inherited from GE's influence, may have contributed to a detrimental oversight of engineering excellence and safety considerations. Calhoun's departure is thus a symbol of a broader crisis, one that calls into question the sustainability of a corporate ethos that prioritizes short-term gains over all else.
Learning from the Past: A Path Forward
The central message of "The Man Who Broke Capitalism" serves as a stark reminder of the potential consequences of neglecting real value creation in favor of financial engineering. As Boeing faces this critical juncture, it presents an opportunity for the corporation to realign its priorities towards innovation, safety, and long-term strategic vision. This recalibration requires a departure from the Welch-inspired paradigm, advocating instead for a culture that focuses on value creation over financial market game-playing.
Engineering Excellence as the North Star
For Boeing, and indeed for any organization facing similar crossroads, the path forward involves a recommitment to the core principles of engineering excellence and genuine innovation. This was a central feature of Satya Nadella turnaround at Microsoft. This shift necessitates a reassessment of corporate values, leadership strategies, and operational priorities. By placing engineering and innovation at the heart of corporate culture, companies can ensure that they not only meet the immediate demands of their stakeholders but also contribute to the advancement of their industries and the betterment of society at large.
How to lead an organisation into the ground
At Boeing, the aftermath of the 737 MAX incidents revealed a culture where the tenets of psychological safety were markedly absent. As Amy Edmondson defines it, psychological safety allows for open dialogue, error reporting without fear of punishment, and the candid exchange of ideas to foster innovation and safety.
Unfortunately, reports and investigations into Boeing's operations suggested a culture where such openness was discouraged, reflecting a "shut up" rather than a "speak up" environment. This culture, arguably a remnant of the cutthroat performance ethos celebrated by Welch's GE, prioritizes financial and operational metrics over the well-being and voice of employees. In such a setting, cutting corners becomes a byproduct of the relentless pursuit of short-term goals, and the disdain for perceived weakness stifles critical dialogue essential for safety and innovation.
Psychological Safety: The Foundation of Long-term Value Creation
The juxtaposition of Boeing's crisis with the principles laid out in my book "Safe to Great – the New Psychology of Leadership" underscores the argument that psychological safety is not merely a component of a healthy workplace but a foundational element of sustainable success. The absence of psychological safety at Boeing — where employees might have felt compelled to remain silent about potential safety issues for fear of retribution — exemplifies the profound risks associated with a culture that devalues openness.
The point I make in my book is that sometimes a lack of psychological safety is intentional. We want people to keep quiet about problems, ethical or mechanical. Based on the evidence discovered so far, it’s hard not to draw this conclusion at Boeing. The “cut short, shut up and cover up” culture was arguably intentional.
Rebuilding with Psychological Safety at the Core
For Boeing, and indeed any organization looking to pivot from a culture of silence to one of safety and innovation, the path forward involves a fundamental reevaluation of values and leadership practices. Embedding psychological safety into the fabric of the company culture is essential. This means fostering an environment where employees feel safe to speak up about concerns, where mistakes are viewed as opportunities for learning rather than occasions for punishment, and where the long-term health of the organization is prioritized over short-term financial gains.
Leaders play a critical role in this transformation. They must model the behaviors they wish to see, demonstrating a commitment to listening, learning, and ethical decision-making. This shift requires more than just policy changes; it necessitates a deep, authentic commitment to valuing human factors as much as financial ones.
The biggest cultural turnaround since Alcoa
The challenge of leading a profound cultural transformation within an organization, particularly one mired in a deeply ingrained "shut up" culture, cannot be overstated. For leaders at Boeing and similar organizations, the task of making such an "about face" in leadership practices is daunting, requiring not only strategic vision but also a profound personal transformation. The complexity of this change is further compounded by the entrenched nature of the existing culture and the necessity of navigating a path toward a culture of openness, safety, and innovation.
The Need for a Cathartic Amnesty and Reconciliation
Initiating change in an environment that has long valued silence over safety requires bold, symbolic acts of reconciliation and amnesty. A "cathartic amnesty" on safety issue reporting can serve as a pivotal moment, signaling a clear break from past practices. It offers a form of psychological release, encouraging employees to come forward with issues, errors, and concerns without fear of reprisal.
Similarly, establishing a reconciliation commission can facilitate a structured dialogue between leadership and employees, acknowledging past mistakes, understanding the impacts of these mistakes, and collectively committing to a new path forward. This process not only aids in healing but also in rebuilding trust—a crucial component missing in cultures plagued by fear and silence.
Leadership's Role in Personal and Organizational Transformation
The transformation of an organization's culture from one that suppresses voice to one that encourages it is intrinsically linked to the personal transformation of its leaders. Leaders who have been emblematic of the old culture face the monumental task of introspection, acknowledging their roles in perpetuating a harmful environment, and demonstrating a genuine commitment to change. This personal transformation is both the most challenging and the most critical step in the cultural shift. The difficulty lies not just in changing behaviors but in altering fundamental beliefs and values that have driven decision-making and leadership styles.
For many organizations, the depth and duration of the dysfunctional culture can pose significant challenges in identifying internal leaders capable of embodying and championing the new cultural ideals. However, these individuals are key to seeding change throughout the organization. Their authenticity, courage, and commitment to the new values can inspire others and demonstrate that transformation is indeed possible.
Managing Apologies and Seeking Help
A major component of initiating cultural change involves leadership's willingness to take full responsibility for past behaviors and their consequences. A "Japanese style apology," characterized by its sincerity, humility, and public nature, can be a powerful tool in this process. Such an apology, however, must be more than performative; it must be backed by tangible actions and a clear plan for change.
Engaging employees in the transformation process is equally critical. Asking for their help not only empowers them but also leverages their insights, experiences, and ideas in reshaping the culture. This approach fosters a sense of ownership and investment in the cultural transformation.
The Role of External Support
Given the challenges of navigating such a profound cultural shift, external support becomes indispensable. A strong team of consultants can provide the expertise, perspective, and accountability mechanisms necessary to guide the organization through this transformation.
Additionally, a sounding board composed of individuals external to the organization can offer unbiased feedback, challenge assumptions, and help keep the leadership team on track.
The perils of the blame game
The transition from a culture characterized by disengagement, punishment, and control to one grounded in commitment, engagement, and accountability is a profound shift that requires a thoughtful, nuanced approach. This transition, while challenging, is critical for organizations looking to foster environments where innovation, safety, and integrity are paramount. At the heart of this transformation is a pivot from a blame-oriented culture to one that embraces genuine accountability. Here's a deeper exploration of this critical transition.
From Blame to Accountability
The journey begins with a fundamental shift in mindset: moving from assigning blame for past mistakes to fostering an environment where accountability is seen as a collective responsibility and an opportunity for growth. This shift is essential for breaking the cycle of fear and silence that characterizes cultures of punishment and control. Accountability, in this context, is about learning from errors, openly discussing failures, and implementing systemic changes to prevent future issues.
However, transitioning to a culture of accountability requires more than just changing policies or practices; it demands a change in how individuals within the organization perceive their roles and the roles of their colleagues in the collective success and failures of the organization. It means recognizing that errors are often the result of systemic issues rather than individual failings.
Navigating Emotional Landscapes
The process of moving away from a blame culture, especially in contexts where the stakes are high and the consequences of mistakes can be severe, is emotionally charged. Leaders must navigate this emotional landscape with care, ensuring that feelings of guilt, shame, and sadness do not derail the process. These emotions, while natural, can overwhelm individuals and the group, leading to disengagement or resistance to the transformation process.
Creating spaces for open dialogue, where individuals can express these emotions without fear of judgment or retribution, is crucial. Such spaces can facilitate healing and foster a sense of psychological safety, enabling team members to engage in the difficult work of cultural transformation.
The Role of Sincerity and Care
In cultures with significant past errors, especially those with serious consequences, the atmosphere is particularly charged. The transition to a commitment culture in such environments requires an approach grounded in sincerity and care. This means acknowledging the gravity of past mistakes, demonstrating empathy, and committing to change not just in words but in actions.
Leaders play a pivotal role in setting this tone. They must model the behaviors they wish to see, showing vulnerability, acknowledging their own mistakes, and demonstrating a genuine commitment to the well-being of their teams and the ethical integrity of their operations.
This leadership approach can help mitigate the potential for guilt and shame to overwhelm the process, instead fostering a culture where individuals feel valued, respected, and motivated to contribute to positive change.
Building a Commitment Culture
The ultimate goal of this transformation is the creation of a commitment culture—a culture where engagement, mutual respect, and a shared sense of purpose drive performance and innovation. Achieving this requires continuous effort, ongoing dialogue, and a commitment to revisiting and refining processes and behaviors as the organization evolves.
Key to building a commitment culture is the understanding that real accountability is not punitive but developmental. It's about creating an environment where people are encouraged to learn, grow, and take risks, knowing that their contributions are valued and that their mistakes will be seen as opportunities for learning and improvement.
Conclusion
Transitioning from a culture of disengagement, punishment, and control to one that prioritizes commitment, accountability, and engagement represents a profound and arduous journey. This transformation necessitates a strategic blend of sensitivity, dedication, and visionary leadership.
By moving away from a blame-centric approach to one that embraces real accountability, and by carefully navigating the emotional challenges inherent in such a transformative process with sincerity and care, organizations can begin to foster an environment of mutual respect and continuous learning. This shift is essential for overcoming past mistakes and setting a course towards future success and innovation.
Moreover, transforming a deeply entrenched "shut up" culture into one that values safety, openness, and innovation requires not just a change in practices, but a fundamental personal transformation among leaders and a collective recommitment to new, healthier values. This journey is fraught with challenges, including the potential for emotional overwhelm in the face of acknowledging past mistakes and the necessity of navigating a culture that has long resisted change.
Yet, the potential rewards are immeasurable. A culture that not only avoids disasters but actively fosters innovation and sustainable success is within reach.
Achieving such a culture demands more than internal commitment; it requires external support, including insights from experts, to guide and maintain the transformation process. Organizations must wade through the "muddy bog" of cultural inertia with determination and a clear vision for a future that aligns more closely with their core values.
By integrating strategic actions with a dedication to personal and organizational growth, companies can emerge from the process stronger, more resilient, and with a renewed sense of purpose. The end goal is a culture where safety, openness, and innovation are not just valued but are intrinsic to the organization's identity, paving the way for a future where success is measured not just in financial terms but in the welfare of individuals and the global community.
PostScript
The concept of "too big to fail" presents a unique set of challenges and risks, particularly for conglomerates like Boeing, where the vastness of operations and the complexity of management can indeed overshadow the capacity for agile, effective decision-making and cultural transformation.
The suggestion to break up Boeing into smaller, operationally independent units is not just a strategic move to mitigate leadership risk; it's a profound structural realignment that could redefine the landscape of corporate governance, innovation, and safety within the aerospace industry.
Diversifying Leadership Risk
Splitting Boeing into more manageable entities could allow for a more focused and nuanced approach to leadership and organizational culture. Each unit, with its distinct operational scope, could cultivate a unique culture that prioritizes safety, innovation, and accountability—tailored to the specific challenges and opportunities it faces.
This diversification of leadership risk means that the failure or misstep in one unit does not necessarily precipitate a systemic crisis across the entire organization, thereby isolating and potentially minimizing the impact of such events.
Enhancing Agility and Innovation
Smaller, more autonomous units within Boeing could lead to enhanced agility, enabling faster responses to market changes, regulatory demands, and technological advancements. This structure can foster a more competitive environment internally, driving innovation as each unit strives to excel within its domain.
Moreover, this independence can facilitate a more experimental approach to new projects and ideas, reducing the time from conception to implementation—a crucial advantage in the fast-evolving aerospace sector.
Fostering a Commitment Culture
Cultural transformation, as discussed, hinges significantly on leadership's ability to embody and promote values of safety, openness, and engagement. By decentralizing Boeing's vast organizational structure into smaller units, the leadership's influence on culture and practices becomes more direct and impactful.
Each unit's leadership team has the opportunity to closely engage with their teams, building trust and fostering a culture where psychological safety and mutual respect are paramount. This close-knit approach can significantly enhance the effectiveness of cultural transformation efforts.
Challenges and Considerations
While the breakup of Boeing into smaller operational units presents many potential benefits, it is not without its challenges. Key considerations include the potential loss of economies of scale, the complexity of restructuring such a large organization, regulatory hurdles, and the risk of diluting Boeing's brand and market power.
Moreover, the success of such a strategic realignment would depend heavily on the execution—how these units are defined, structured, and governed to ensure they do not operate in silos but rather contribute to the overarching goals and values of Boeing as a whole.
I will follow this story with great curiosity.