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Mark Graban

Bad News Not Flowing Up at Boeing?

July 3, 2009

Communications Woes Show at Boeing - WSJ.com:

Non-aviation folks (and healthcare readers)… stick with me, this isn’t strictly a post about making airplanes.

Isn’t it a fairly common dysfunction of organizations that bad news doesn’t flow up? This happens in manufacturing… an old boss at unnamed company (not GM) once typified this by saying (bragging really) that “my job is make my boss look good.” That “goal” certainly wasn’t accomplished by sharing any bad news. I was sickened. I wanted to focus on making things better, not just creating the fake impression of better. Bad news never flowed up.

In other organizations (and this was a GM dynamic) bad news didn’t flow upward. Why? Mainly fear. Fear of being yelled at. Fear of being embarrassed in front of others and ridiculed. That fear led to team leaders faking the hourly production numbers (the shift total was correct, but the hourly numbers were smoothed out to eliminate the peaks and valleys… the valleys got you yelled at).

Last week, Boeing announced at the huge annual Paris Air Show that the test flight of the troubled 787 was on track.

“…Boeing had said at the Paris Air Show just days ago that the plane was ready to fly.”

I’m not an aviation expert, but I know the annual air show (in France or the U.K.) is THE wheeling and dealing show of the year. Many planes are sold here, right?

Then, Boeing announced after the show that the test flight will be delayed.

So what gives?

I often have a bit of a philosophical debate with my wife when a company screws up — are they dishonest or are they incompetent? Sometimes you can’t tell. We have a little debate about which is worse — competent but dishonest (at least they’re competent) or honest and incompetent?

You might think the Boeing executives were lying in Paris. But they’d have to be smarter than that, to think that the lie would eventually catch up to them.

I don’t think Boeing’s executives (or GM’s) are stupid.

Did they HONESTLY think the test flight was on time?

“‘During the last two years…some investors described optimistic statements by management as misleading,’ wrote Doug Harned, aerospace analyst at Bernstein Research, in a note to investors Tuesday. ‘On the contrary, we saw the answers as honest, which is the heart of the problem. Management appears to have been operating without adequate visibility into the details of program performance in the 787 organization and at suppliers.’”

Honest, but a clueless sort of honest. Why did the information not get to the Boeing execs? They must be pretty embarrassed (they didn’t comment for yesterday’s WSJ story).

The above quote blames the suppliers, in a way. Blame — there’s another dysfunction of broken organizations. Is it really the suppliers’ fault? Do you “blame” those who chose the suppliers? Those who manage the suppliers? Does it matter?

This article assigns blame internally in Boeing:

The structural flaw that has grounded Boeing’s 787 Dreamliner originates with Boeing’s engineering and will likely add months of delay to the new jet program, an executive with key partner Mitsubishi Heavy Industries said Wednesday.

Trying to piece this together… it’s probably not too much of a stretch to assume that people in Boeing KNEW that there were problems or likely delays.

Oh, the WSJ reports that people in Boeing DID know… in May, when the Air Show was in June. D’oh!

This week, however, Boeing said its engineers and senior executives alike had known since May of the structural problem that will keep the jet grounded, possibly for months.

Why did this news not get to Boeing execs? At what point in the communication chain did things break down? Who was afraid to share the bad news?

The same type of dysfunction exists in hospitals… bad news not filtering up to VPs or the CEO. Do you have examples to share (anonymously) about bad news not flowing up? What caused that? Was it fear, as Dr. Deming would have said??

There’s a story in my book, Lean Hospitals, about how the CEO in a leading lean hospital was helping create an environment where people could be honest without fear of retribution. A nurse told him bad news — that she wasn’t entering information about medication errors into the computer system because it took too long. He thanked her for telling him this and worked to get the problem fixed as a “servant leader.”

I guess Boeing doesn’t have that type of culture? Or am I wrong?

Posted by Mark Graban on July 3, 2009 | Comments (3)

July 5, 2009

In response to: Bad News Not Flowing Up at Boeing?
devlinson commented:

Boeing knew their plane could not fly before the end of June but assured investors it would fly. I purchased stock based on those assurances. Boeing and its executives should be brought up on criminal charges for fraud. Saying nothing isn't the same as giving false information you know is wrong. No excuses.

July 3, 2009

In response to: Bad News Not Flowing Up at Boeing?
Ray H commented:

Business plans are like a plan for a battle. Once you start things change rapidly. Boeing seems to have forgotten; "No surprises, and make a profit". Best laid plans of best planers still need follow up, evaluation and correction. What happened to these old saws?

July 3, 2009

In response to: Bad News Not Flowing Up at Boeing?
don miller commented:

At the old Boeing (I retired in 1995 -Aerospace Eng)there were a very few noted Eng in most maor projects that always had the ear of management (VP level). This was often the method used to prevent bad news from "flowing upward".

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