Case 1-9 @w
Case 1: @w
FAILURE BY DESIGN: BOEING AND THE 737 MAX
TEACHING NOTE
This case illustrates the following themes and concepts discussed in the chapters listed:
Theme/Concept Chapter
Conflict of Interest 5
Organizational Ethics 6
Business Government Relations; Government Regulation 7
Product Safety 14
Case Synopsis
On Monday, October 29, 2018, Lion Air Flight 610 crashed into the Java Sea in Indonesia
shortly after takeoff, killing all 189 people on board. The aircraft was a nearly new Boeing 737
MAX, delivered to Lion Air, a low-cost regional carrier and one of Boeing’s major customers,
just four months earlier. The MAX was Boeing’s newest aircraft and the centerpiece of the
company’s strategy for the short to mid-range commercial market. CEO Dennis Muilenburg
faced an urgent an urgent task: to determine what had gone wrong and why with Boeing’s
newest and so-far successful new model. The case presents the history of Boeing and its external
competitive environment; the evolution of its strategy, governance, and ethics practices; and its
relationship with U.S. regulators during the design and certification of the 737 MAX. What
organizational and environmental factors had contributed to Boeing’s development of an
apparently unsafe aircraft? What could Boeing, government regulators, and its airline customers
,and other stakeholders do to prevent unsafe aircraft from being manufactured and sold in the
future?
TEACHING TIP: WHERE TO USE THE CASE IN THE COURSE
This case is integrative, in that it draws on many themes in the text. Instructors may use it at the
end of the course as a final, integrative assignment, or with the study of Chapters 5 and 6 (Ethical
Reasoning and Organizational Ethics) or Chapter 7 (Business Government Relations).
TEACHING TIP: VIDEO
Instructors may wish to introduce the class discussion with a short video of the Lion Air flight.
The first 4 minutes of this 9-minute segment depicts the fatal flight of Lion Air 610, in which a
journalist rides in a simulator with an experienced 737 pilot who recreates the flight from the
perspective of the cockpit. (The remainder of the clip depicts the Ethiopian Airlines crash and is
not relevant to the case.) Viewers may find the video clip disturbing, even terrifying.
www.youtube.com/watch?v=OxPsxmU_ocI
TEACHING TIP: STARTING A CASE DISCUSSION
One was to start a class discussion of this case is to ask students to huddle in groups of 2 to 4.
Give them 5 minutes to write one or two sentences beginning with: ―One reason that Boeing
produced an unsafe aircraft was…‖ They should then have a representative write their
sentence(s) on the board or share on a common electronic platform. The instructor may then
categorize the answers and use them as a jumping off point for taking up various issues raised by
the discussion questions.
Sample answers: One reason that Boeing produced an unsafe aircraft was…
The culture of Boeing had shifted from a focus on engineering excellence to a focus on
shareholder returns. The company’s capabilities for aircraft design had deteriorated.
The FAA delegated most of the work of certifying the 737 MAX to Boeing itself, so the
regulators were unable to exercise effective oversight.
Boeing was under tremendous pressure because of competition from Airbus, so they decided to
update the 737 rather than design an all-new plane. This created an unsolvable engineering
problem, because the bigger more fuel-efficient engines they wanted to use did not fit under the
wings of 737.
,Boeing’s @wtop @wexecutives @wand @wdirectors @wemphasized @wshareholder @wreturns @wover
@wengineering @wexcellence. @ w Cost @wand @wefficiency @wwere @wmore @wimportant @wto @wthem @wthan
@wthe @wquality @wof @wthe @waircraft.
Boeing @whad @wspent @wso @wmuch @wmoney @won @wstock @wbuybacks @wand @wshareholder @wdividends
@wthat @wthey @wdid @wnot @whave @wenough @wleft @wover @wto @winvest @wproperly @win @wR&D @wand
@waircraft @wengineering.
Boeing @whad @wa @wcode @wof @wethics @wbut @wdid @wnot @wseem @wto @wenforce @wit. @ w It @wignored
@wworrisome @wsurvey @wresults @wand @wdid @wnot @wlisten @wto @wseries @wwarnings @wfrom @wsenior
@wmanagers.
Manufacturing @wof @wthe @wMAX @wwas @wrushed, @wpossibly @wleading @wto @wdefects @win @waircraft
@wdelivered @wto @wcustomers.
The @wFAA @wbasically @wallowed @wBoeing @wto @wcertify @wthe @wsafety @wof @wits @wown @wplane.
Boeing’s @wstrategy @wwas @wto @wacquire @wother @wmanufacturers @w(e.g., @wMcDonnell @wDouglas)
@wand @wkeep @wupdating @wtheir @wold @wmodels, @wrather @wthan @wto @wdesign @wnew @waircraft. @ w Over
@wthe @wyears, @wthey @wlost @wmuch @wof @wtheir @wengineering @wknow-how.
Instructor @wTip: @ w ―C‖ @wstudents @wmay @wanswer @wthis @wquestion @wby @wdescribing @wcharacteristics
@wof @wthe @wunsafe @wplane @wor @wits @wdesign @wflaws. @ w For @wexample, @w―One @wreason @wBoeing
@wproduced @wan @wunsafe @waircraft @wwas @wrelying @won @wjust @wone @wsensor.‖ @ w ―A‖ @wstudents
@wwill @wunderstand @wthe @wdistinction @wbetween @wthe @wproblem @witself @w(an @wunsafe @wdesign) @wand
@wthe @wcause @wof @wthe @wproblem @w(e.g., @worganizational @wculture, @wregulatory @wfailures, @wexternal
@wcompetition). @ w The @winstructor @wmay @wneed @wto @wpoint @wout @wthat @wthe @wquestion @wasks @wfor
@wthe @wreason @wBoeing @wproduced @wan @wunsafe @wplane, @wnot @wthe @wreason @wthe @wplane @wwas
@wunsafe. @w(Question @w1, @wbelow, @waddresses @wthe @wreason(s) @wthe @wplane @wwas @wunsafe.)
Discussion @wQuestions @wand @wAnswers
1. What @wwere @wthe @wimmediate @wtechnical @wcauses @wof @wthe @wcrash @wof @wLion @wAir @wFlight
@w610?
Based @won @winformation @win @wthe @wcase, @wstudents @wwill @wconclude: @wA @wfaulty @wangle @wof
@wattack @wsensor @wfed @werroneous @wdata @winto @wthe @wplane’s @wcomputers, @wtriggering @wthe
@wmaneuvering @wcharacteristics @waugmentation @wsystem, @wor @wMCAS. @ w The @wplane’s
@wcomputer @wrelied @won @wonly @wone @wsensor @wat @wa @wtime @w(a @wsingle @wpoint @wof @wfailure), @wand
@wthe @waircraft @wdid @wnot @whave @wan @wactive @wcockpit @walert @wfor @wdisagreement @wbetween @wthe
@wtwo @wsensors. @ w Once @wMCAS @wwas @wactivated, @wit @wrepeatedly @wforced @wthe @wnose @wof @wthe
@wplane @wdown, @wdestabilizing @wthe @waircraft. @ w The @wLion @wAir @wpilots @whad @wnot @wbeen
@wtrained @won @wa @wsimulator, @wwere @wunaware @wof @wMCAS @wand @wits @wcapabilities, @wand @wtheir
@wflight @wmanual @wdid @wnot @winclude @wrelevant @winformation. @ w Eventually, @wthe @wpilots @wlost
@wcontrol @wof @wthe @waircraft @wand @wit @wcrashed @wnose @wdown @winto @wthe @wsea, @wkilling @wall @won
, board.
@w
2. Describe @wthe @wculture @wof @wthe @wBoeing @worganization. @ w How @wdid @wthe @wcompany’s
@wculture @waffect @wthe @wdevelopment @wand @wproduction @wof @wthe @w737 @wMAX?
Case 1: @w
FAILURE BY DESIGN: BOEING AND THE 737 MAX
TEACHING NOTE
This case illustrates the following themes and concepts discussed in the chapters listed:
Theme/Concept Chapter
Conflict of Interest 5
Organizational Ethics 6
Business Government Relations; Government Regulation 7
Product Safety 14
Case Synopsis
On Monday, October 29, 2018, Lion Air Flight 610 crashed into the Java Sea in Indonesia
shortly after takeoff, killing all 189 people on board. The aircraft was a nearly new Boeing 737
MAX, delivered to Lion Air, a low-cost regional carrier and one of Boeing’s major customers,
just four months earlier. The MAX was Boeing’s newest aircraft and the centerpiece of the
company’s strategy for the short to mid-range commercial market. CEO Dennis Muilenburg
faced an urgent an urgent task: to determine what had gone wrong and why with Boeing’s
newest and so-far successful new model. The case presents the history of Boeing and its external
competitive environment; the evolution of its strategy, governance, and ethics practices; and its
relationship with U.S. regulators during the design and certification of the 737 MAX. What
organizational and environmental factors had contributed to Boeing’s development of an
apparently unsafe aircraft? What could Boeing, government regulators, and its airline customers
,and other stakeholders do to prevent unsafe aircraft from being manufactured and sold in the
future?
TEACHING TIP: WHERE TO USE THE CASE IN THE COURSE
This case is integrative, in that it draws on many themes in the text. Instructors may use it at the
end of the course as a final, integrative assignment, or with the study of Chapters 5 and 6 (Ethical
Reasoning and Organizational Ethics) or Chapter 7 (Business Government Relations).
TEACHING TIP: VIDEO
Instructors may wish to introduce the class discussion with a short video of the Lion Air flight.
The first 4 minutes of this 9-minute segment depicts the fatal flight of Lion Air 610, in which a
journalist rides in a simulator with an experienced 737 pilot who recreates the flight from the
perspective of the cockpit. (The remainder of the clip depicts the Ethiopian Airlines crash and is
not relevant to the case.) Viewers may find the video clip disturbing, even terrifying.
www.youtube.com/watch?v=OxPsxmU_ocI
TEACHING TIP: STARTING A CASE DISCUSSION
One was to start a class discussion of this case is to ask students to huddle in groups of 2 to 4.
Give them 5 minutes to write one or two sentences beginning with: ―One reason that Boeing
produced an unsafe aircraft was…‖ They should then have a representative write their
sentence(s) on the board or share on a common electronic platform. The instructor may then
categorize the answers and use them as a jumping off point for taking up various issues raised by
the discussion questions.
Sample answers: One reason that Boeing produced an unsafe aircraft was…
The culture of Boeing had shifted from a focus on engineering excellence to a focus on
shareholder returns. The company’s capabilities for aircraft design had deteriorated.
The FAA delegated most of the work of certifying the 737 MAX to Boeing itself, so the
regulators were unable to exercise effective oversight.
Boeing was under tremendous pressure because of competition from Airbus, so they decided to
update the 737 rather than design an all-new plane. This created an unsolvable engineering
problem, because the bigger more fuel-efficient engines they wanted to use did not fit under the
wings of 737.
,Boeing’s @wtop @wexecutives @wand @wdirectors @wemphasized @wshareholder @wreturns @wover
@wengineering @wexcellence. @ w Cost @wand @wefficiency @wwere @wmore @wimportant @wto @wthem @wthan
@wthe @wquality @wof @wthe @waircraft.
Boeing @whad @wspent @wso @wmuch @wmoney @won @wstock @wbuybacks @wand @wshareholder @wdividends
@wthat @wthey @wdid @wnot @whave @wenough @wleft @wover @wto @winvest @wproperly @win @wR&D @wand
@waircraft @wengineering.
Boeing @whad @wa @wcode @wof @wethics @wbut @wdid @wnot @wseem @wto @wenforce @wit. @ w It @wignored
@wworrisome @wsurvey @wresults @wand @wdid @wnot @wlisten @wto @wseries @wwarnings @wfrom @wsenior
@wmanagers.
Manufacturing @wof @wthe @wMAX @wwas @wrushed, @wpossibly @wleading @wto @wdefects @win @waircraft
@wdelivered @wto @wcustomers.
The @wFAA @wbasically @wallowed @wBoeing @wto @wcertify @wthe @wsafety @wof @wits @wown @wplane.
Boeing’s @wstrategy @wwas @wto @wacquire @wother @wmanufacturers @w(e.g., @wMcDonnell @wDouglas)
@wand @wkeep @wupdating @wtheir @wold @wmodels, @wrather @wthan @wto @wdesign @wnew @waircraft. @ w Over
@wthe @wyears, @wthey @wlost @wmuch @wof @wtheir @wengineering @wknow-how.
Instructor @wTip: @ w ―C‖ @wstudents @wmay @wanswer @wthis @wquestion @wby @wdescribing @wcharacteristics
@wof @wthe @wunsafe @wplane @wor @wits @wdesign @wflaws. @ w For @wexample, @w―One @wreason @wBoeing
@wproduced @wan @wunsafe @waircraft @wwas @wrelying @won @wjust @wone @wsensor.‖ @ w ―A‖ @wstudents
@wwill @wunderstand @wthe @wdistinction @wbetween @wthe @wproblem @witself @w(an @wunsafe @wdesign) @wand
@wthe @wcause @wof @wthe @wproblem @w(e.g., @worganizational @wculture, @wregulatory @wfailures, @wexternal
@wcompetition). @ w The @winstructor @wmay @wneed @wto @wpoint @wout @wthat @wthe @wquestion @wasks @wfor
@wthe @wreason @wBoeing @wproduced @wan @wunsafe @wplane, @wnot @wthe @wreason @wthe @wplane @wwas
@wunsafe. @w(Question @w1, @wbelow, @waddresses @wthe @wreason(s) @wthe @wplane @wwas @wunsafe.)
Discussion @wQuestions @wand @wAnswers
1. What @wwere @wthe @wimmediate @wtechnical @wcauses @wof @wthe @wcrash @wof @wLion @wAir @wFlight
@w610?
Based @won @winformation @win @wthe @wcase, @wstudents @wwill @wconclude: @wA @wfaulty @wangle @wof
@wattack @wsensor @wfed @werroneous @wdata @winto @wthe @wplane’s @wcomputers, @wtriggering @wthe
@wmaneuvering @wcharacteristics @waugmentation @wsystem, @wor @wMCAS. @ w The @wplane’s
@wcomputer @wrelied @won @wonly @wone @wsensor @wat @wa @wtime @w(a @wsingle @wpoint @wof @wfailure), @wand
@wthe @waircraft @wdid @wnot @whave @wan @wactive @wcockpit @walert @wfor @wdisagreement @wbetween @wthe
@wtwo @wsensors. @ w Once @wMCAS @wwas @wactivated, @wit @wrepeatedly @wforced @wthe @wnose @wof @wthe
@wplane @wdown, @wdestabilizing @wthe @waircraft. @ w The @wLion @wAir @wpilots @whad @wnot @wbeen
@wtrained @won @wa @wsimulator, @wwere @wunaware @wof @wMCAS @wand @wits @wcapabilities, @wand @wtheir
@wflight @wmanual @wdid @wnot @winclude @wrelevant @winformation. @ w Eventually, @wthe @wpilots @wlost
@wcontrol @wof @wthe @waircraft @wand @wit @wcrashed @wnose @wdown @winto @wthe @wsea, @wkilling @wall @won
, board.
@w
2. Describe @wthe @wculture @wof @wthe @wBoeing @worganization. @ w How @wdid @wthe @wcompany’s
@wculture @waffect @wthe @wdevelopment @wand @wproduction @wof @wthe @w737 @wMAX?
