The Boeing 737 Max, once heralded as a triumph in aviation technology and efficiency, has since become synonymous with one of the most catastrophic failures in modern corporate history.
This case study delves deep into the intricacies of the Boeing 737 Max program—a project that was initially designed to sustain Boeing's dominance in the narrow-body aircraft market but instead resulted in two fatal crashes, the loss of 346 lives, and an unprecedented global grounding of an entire fleet.
Boeing's 737 series has long been a cornerstone of the company's commercial aircraft offerings. Since its inception in the late 1960s, the 737 has undergone numerous iterations, each improving upon its predecessor while maintaining the model's reputation for reliability and efficiency.
By the 2000s, the 737 had become the best-selling commercial aircraft in history, with airlines around the world relying on its performance for short and medium-haul flights.
However, by the early 2010s, Boeing faced significant competition from Airbus, particularly with the introduction of the Airbus A320neo. The A320neo offered superior fuel efficiency and lower operating costs, thanks to its state-of-the-art engines and aerodynamic enhancements.
In response, Boeing made the strategic decision to develop the 737 Max, an upgrade of the existing 737 platform that would incorporate similar fuel-efficient engines and other improvements to match the A320neo without necessitating extensive retraining of pilots.
Boeing's leadership was acutely aware that any requirement for significant additional training would increase costs for airlines and potentially drive them to choose Airbus instead.
The company selected the CFM International LEAP-1B engines for the 737 Max, which were larger and more fuel-efficient than those on previous 737 models.
However, this choice introduced significant engineering challenges, particularly related to the aircraft's aerodynamics and balance.
The Maneuvering Characteristics Augmentation System (MCAS) was developed as a solution to these challenges.
The system was designed to automatically adjust the aircraft's angle of attack in certain conditions to prevent stalling, thereby making the 737 Max handle similarly to older 737 models. This was intended to reassure airlines that their pilots could transition to the new model with minimal additional training.
As Dennis Muilenburg, Boeing’s CEO at the time, stated, "Our goal with the 737 Max was to offer a seamless transition for our customers, ensuring they could benefit from improved efficiency without significant operational disruptions".
The MCAS would later become central to the 737 Max's tragic failures.
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Timeline of Events
2011-2013: Project Inception and Initial Development
The 737 Max project was officially launched in 2011, with Boeing announcing that the aircraft would feature new engines, improved aerodynamics, and advanced avionics. The design and development process was marked by intense pressure to meet tight deadlines and to deliver a product that could quickly enter the market. By 2013, Boeing had completed the design phase, and the first test flights were scheduled for early 2016.
2016-2017: Certification and Commercial Launch
The first test flight of the 737 Max took place in January 2016, and the aircraft performed as expected under controlled conditions. The Federal Aviation Administration (FAA) granted the 737 Max its certification in March 2017, allowing it to enter commercial service. The aircraft was initially well-received by airlines, with thousands of orders placed within the first year of its launch.
October 29, 2018: Lion Air Flight JT610 Crash
Lion Air Flight JT610, a Boeing 737 Max traveling in Indonesia from Jakarta to Pangkal Pinang, crashes, killing all 189 passengers and crew on board. Questions quickly emerge over previous control problems related to the aircraft’s MCAS. This marks the first major incident involving the 737 Max, and it raises significant concerns about the safety of the aircraft.
March 1, 2019: Boeing’s Share Price Peaks
Boeing’s share price reaches $446, an all-time record, after the company reports $100 billion in annual revenues for the first time. This reflects investor confidence in Boeing’s financial performance, despite the recent Lion Air crash.
March 10, 2019: Ethiopian Airlines Flight ET302 Crash
Ethiopian Airlines Flight ET302, another Boeing 737 Max, crashes shortly after takeoff from Addis Ababa, Ethiopia, killing all 157 people on board. The circumstances of this crash are eerily similar to the Lion Air disaster, with the MCAS system again suspected to be a contributing factor. The crash leads to global scrutiny of the 737 Max’s safety.
March 14, 2019: Global Grounding of the 737 Max
U.S. President Donald Trump grounds the entire 737 Max fleet, following the lead of regulators in several other countries. This grounding is unprecedented in its scope, affecting airlines worldwide and marking a significant turning point in the crisis surrounding the 737 Max.
October 29, 2019: Muilenburg Testifies Before Congress
Boeing CEO Dennis Muilenburg is accused of supplying “flying coffins” to airlines during angry questioning by U.S. senators. His testimony is widely criticized, and his handling of the crisis further erodes confidence in Boeing’s leadership.
December 23, 2019: Muilenburg Fired
Boeing fires Dennis Muilenburg, appointing Chairman Dave Calhoun as the new Chief Executive Officer. This leadership change is seen as an attempt to restore confidence in Boeing and address the mounting crisis.
March 6, 2020: U.S. Congressional Report
A U.S. congressional report blames Boeing and regulators for the “tragic and avoidable” 737 Max crashes. The report highlights numerous failures in the design, certification, and regulatory oversight processes, and it calls for significant reforms in the aviation industry.
March 11, 2020: Boeing Borrows $14 Billion
Boeing borrows $14 billion from U.S. banks to navigate the financial strain caused by the grounding of the 737 Max and the emerging COVID-19 pandemic. This loan is later supplemented by another $25 billion in debt, underscoring the financial challenges Boeing faces.
March 18, 2020: Boeing Shares Plummet
Boeing shares hit $89, the lowest since early 2013, reflecting investor concerns about the company’s future amid the 737 Max crisis and the impact of the COVID-19 pandemic on global air travel.
April 29, 2020: Job Cuts Announced
Boeing announces the first wave of job cuts, planning to reduce its workforce by 10% in response to the pandemic-induced drop in air travel. This move is part of broader efforts to cut costs and stabilize the company’s finances.
September 2020: Manufacturing Flaws in the 787 Dreamliner
Manufacturing flaws are discovered in Boeing’s 787 Dreamliner, leading to the grounding of some jets. This adds to Boeing’s mounting challenges and further complicates its efforts to recover from the 737 Max crisis.
November 18, 2020: U.S. Regulator Approves 737 Max for Flight
The U.S. Federal Aviation Administration approves some 737 Max planes to fly again after Boeing implements necessary design and software changes. This marks a significant step in Boeing’s efforts to return the 737 Max to service.
January 8, 2021: Boeing Pays $2.5 Billion Settlement
Boeing agrees to pay $2.5 billion to resolve a criminal charge of misleading federal aviation regulators over the 737 Max. This settlement includes compensation for victims’ families, penalties, and payments to airlines affected by the grounding.
November 11, 2021: Boeing Admits Responsibility
Boeing admits full responsibility for the second Max crash in a legal agreement with victims’ families. This admission marks a significant acknowledgment of the company’s failures in the development and certification of the 737 Max.
What Went Wrong?
Flawed Engineering and Design Decisions
One of the most significant factors contributing to the failure of the 737 Max was the flawed design of the MCAS system. Boeing engineers decided to rely on a single AOA sensor to provide input to the MCAS, despite the known risks of sensor failure.
Traditionally, critical systems in aircraft design incorporate redundancy to ensure that a single point of failure does not lead to catastrophic consequences.
Boeing's decision to omit this redundancy was driven by the desire to avoid triggering additional pilot training requirements, which would have undermined the 737 Max's cost advantage.
The placement of the new, larger engines also altered the aircraft's aerodynamic profile, making it more prone to nose-up tendencies during certain flight conditions.
Instead of addressing this issue through structural changes to the aircraft, Boeing chose to implement the MCAS as a software solution. This decision, while expedient, introduced new risks that were not fully appreciated at the time.
"We were under immense pressure to deliver the Max on time and under budget, and this led to some compromises that, in hindsight, were catastrophic," admitted a senior Boeing engineer involved in the project
Inadequate Regulatory Oversight
The FAA's role in the 737 Max disaster has been widely criticized. The agency allowed Boeing to conduct much of the certification process itself, including the evaluation of the MCAS system. This arrangement, known as Organization Designation Authorization (ODA), was intended to streamline the certification process, but it also created a conflict of interest.
Boeing's engineers were under pressure to downplay the significance of the MCAS in order to avoid additional scrutiny from regulators.
"The relationship between the FAA and Boeing became too cozy, and this eroded the regulatory oversight that is supposed to keep the public safe," said Peter DeFazio, Chairman of the House Transportation and Infrastructure Committee
Corporate Culture and Leadership Failures
At the heart of the 737 Max crisis was a corporate culture that prioritized profitability and market share over safety and transparency.
Under the leadership of Dennis Muilenburg, Boeing was focused on delivering shareholder value, often at the expense of other considerations. This led to a culture where concerns about safety were dismissed or ignored, and where employees felt pressured to meet unrealistic deadlines.
Muilenburg's public statements after the crashes, where he repeatedly defended the safety of the 737 Max despite mounting evidence to the contrary, only further eroded trust in Boeing.
"There was a disconnect between the engineers on the ground and the executives in the boardroom, and this disconnect had tragic consequences," said John Hamilton, Boeing's former chief engineer for commercial airplanes
Communication Failures
Boeing's failure to adequately communicate the existence and functionality of the MCAS system to airlines and pilots was a critical factor in the two crashes. Pilots were not informed about the system or its potential impact on flight dynamics, which left them unprepared to handle a malfunction.
After the Lion Air crash, Boeing issued a bulletin to airlines outlining procedures for dealing with erroneous MCAS activation, but this was seen as too little, too late.
"It’s pretty asinine for them to put a system on an airplane and not tell the pilots who are operating it," said Captain Dennis Tajer of the Allied Pilots Association
Supply Chain and Production Pressures
The aggressive production schedule for the 737 Max also contributed to the project's failure. Boeing's management was determined to deliver the aircraft to customers as quickly as possible to fend off competition from Airbus.
This led to a "go, go, go" mentality, where deadlines were prioritized over safety considerations. Engineers were pushed to their limits, with some reporting that they were working at double the normal pace to meet production targets. This rush to market meant that there was less time for thorough testing and validation of the MCAS system and other critical components
Moreover, Boeing's decision to keep the 737 Max's design as similar as possible to previous 737 models was driven by the desire to reduce production costs and speed up certification. This decision, however, meant that the aircraft's design was pushed to its limits, resulting in an aircraft that was more prone to instability than previous models.
"We were trying to do too much with too little, and in the end, it cost lives," said an unnamed Boeing engineer involved in the project
Cost-Cutting Measures
Boeing's relentless focus on cost-cutting also played a significant role in the 737 Max's failure. The company made several decisions that compromised safety in order to keep costs down, such as relying on a single AOA sensor and not including an MCAS indicator light in the cockpit.
These decisions were made in the name of reducing the cost of the aircraft and avoiding additional pilot training, which would have increased costs for airlines. However, these cost-cutting measures ultimately made the aircraft less safe and contributed to the crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302
Organizational Failures
Boeing's organizational structure also contributed to the 737 Max's failure. The company's decision to move its headquarters from Seattle to Chicago in 2001 created a physical and cultural distance between the company's leadership and its engineers.
This move, coupled with the increasing focus on financial performance over engineering excellence, led to a breakdown in communication and decision-making within the company. Engineers felt that their concerns were not being heard by management, and decisions were made without a full understanding of the technical challenges involved.
"There was a sense that the leadership was more focused on the stock price than on building safe airplanes," said a former Boeing engineer
How Boeing Could Have Done Things Differently?
Prioritizing Safety Over Speed
One of the most significant ways Boeing could have avoided the 737 Max disaster was by prioritizing safety over speed. The company was under intense pressure to deliver the aircraft quickly to compete with Airbus, but this focus on speed led to critical safety oversights.
By taking more time to thoroughly test and validate the MCAS system and other components, Boeing could have identified and addressed the issues that ultimately led to the crashes.
"In hindsight, we should have taken more time to get it right, rather than rushing to meet deadlines," said Greg Smith, Boeing's Chief Financial Officer at the time
Incorporating Redundancy in Critical Systems
Another key change Boeing could have made was to incorporate redundancy in critical systems like the MCAS. Aviation safety protocols typically require multiple layers of redundancy to ensure that a single point of failure does not lead to catastrophe.
By relying on a single AOA sensor, Boeing violated this principle and left the aircraft vulnerable to sensor malfunctions. Including a second AOA sensor and ensuring that both sensors had to agree before the MCAS system activated could have prevented the erroneous activation of the system that caused the crashes.
"Redundancy is a fundamental principle of aviation safety, and it's one that we should have adhered to in the design of the 737 Max," said John Hamilton, Boeing's former chief engineer for commercial airplanes
Improving Communication and Transparency
Boeing could have also improved its communication and transparency with both regulators and airlines. The company's decision to downplay the significance of the MCAS system and not include it in the aircraft's flight manuals left pilots unprepared to deal with its activation.
By fully disclosing the system's capabilities and risks to the FAA and airlines, Boeing could have ensured that pilots were adequately trained to handle the system in the event of a malfunction.
"Transparency is key to building trust, and we failed in that regard with the 737 Max," said Dennis Muilenburg, Boeing's CEO at the time
Strengthening Regulatory Oversight
The FAA's delegation of much of the certification process to Boeing created a conflict of interest that contributed to the 737 Max's failure. By strengthening regulatory oversight and ensuring that the FAA maintained its independence in the certification process, the agency could have identified the risks associated with the MCAS system and required Boeing to address them before the aircraft entered service.
This would have provided an additional layer of scrutiny and ensured that safety was prioritized over speed and cost.
"The FAA's role is to be the independent watchdog of aviation safety, and we need to ensure that it has the resources and authority to fulfill that role effectively," said Peter DeFazio, Chairman of the House Transportation and Infrastructure Committee
Fostering a Safety-First Corporate Culture
Finally, Boeing could have fostered a corporate culture that prioritized safety over profitability. The company's increasing focus on financial performance and shareholder value led to a culture where safety concerns were often dismissed or ignored.
By emphasizing the importance of safety in its corporate values and decision-making processes, Boeing could have created an environment where engineers felt empowered to raise concerns and where those concerns were taken seriously by management.
"Safety needs to be the top priority in everything we do, and we lost sight of that with the 737 Max," said David Calhoun, who succeeded Dennis Muilenburg as Boeing's CEO in 2020
Closing Thoughts
The Boeing 737 Max disaster is a stark reminder of the consequences of prioritizing speed and cost over safety in the aviation industry. The two crashes that claimed the lives of 346 people were not the result of a single failure but rather a series of systemic issues, including flawed engineering decisions, inadequate regulatory oversight, and a corporate culture that valued profitability over safety.
These failures have had far-reaching consequences for Boeing, resulting in billions of dollars in losses, a damaged reputation, and a loss of trust among airlines, regulators, and the flying public.
Moving forward, it is crucial that both Boeing and the wider aviation industry learn from these mistakes.
This means prioritizing safety above all else, ensuring that critical systems are designed with redundancy, and maintaining transparency and communication with regulators and customers.
It also means fostering a corporate culture that values safety and empowers employees to speak up when they see potential risks.
If I look at the "accidents" that happened to Boeing employees that have spoken up it seems to be the opposite...
Is your project headed for trouble? Find out! Just answer the 27 questions of my Project Trouble Assessment, which will take you less than 15 minutes, and you will know.
If you are an executive sponsor, steering committee member, or a non-executive board member and want to learn what you need to do so that your project does not land on my list with project failures? Then my (Non)-Executive Crash Course is what you are looking for.
If you want to know where you are standing with that large, multi-year, strategic project? Or you think one of your key projects is in trouble? Then an Independent Project Review is what you are looking for.
If you just want to read more project failure case studies? Then have a look at the overview of all case studies I have written here.
Sources
> Cannon-Patron, S., Gourdet, S., Haneen, F., Medina, C., & Thompson, S. (2021). A Case Study of Management Shortcomings: Lessons from the B737-Max Aviation Accidents.
> Larcker, D. F., & Tayan, B. (2024). Boeing 737 MAX: Organizational Failures and Competitive Pressures. Stanford Graduate School of Business.
> Boeing Co. (2019). Investigation Report: The Design and Certification of the Boeing 737 Max.
> FAA. (2023). Examining Risk Management Failures: The Case of the Boeing 737 MAX Program.
> Enders, T. (2024). Airbus Approach to Safety and Innovation: A Response to the Boeing 737 MAX.
> Muilenburg, D. (2019). Boeing’s Commitment to Safety: A Public Statement.
> Gates, D., & Baker, M. (2019). The Inside Story of MCAS: How Boeing’s 737 MAX System Gained Power and Lost Safeguards. The Seattle Times.
> Tajer, D. (2019). Statement on MCAS and Pilot Awareness. Allied Pilots Association.
Posted on Tuesday, August 20, 2024 by Henrico Dolfing