Boeing, Who Is Your Customer?

TQM Matters so we must ask, “Boeing 737 Max, what is it?”.

Interesting discussion in the Globe and Mail provides context about the interaction between corporate culture and quality production.

 (link: https://www.theglobeandmail.com/business/commentary/article-can-corporate-culture-be-blamed-for-errors-at-boeing/?utm_medium=Newsletter&utm_source=Top%20Business%20Headlines&utm_type=text&utm_content=TopBusiness&utm_campaign=2019-7-19_17&cu_id=duF4Be0wsCfC2EFDKe%2BaydZcn7xjnYRB )

So the first thought I had was about Total Quality Management, management of quality through quality of management.  TQM is a movement that really took hold in the 1970's.  The startling outcomes include the sharp market ascendency of Japanese automakers Honda, Toyota in the North American market.  This was a market wherein the Japanese automakers were previously given no chance of meaningful penetration.  Now, some 45 years later, we know them to be a given part of the North American automotive landscape as market leaders and forces to be reckoned with. 

How did this come about?  Mostly because of TQM.  They became well-known for solid, dependable, and therefore low total cost of ownership automobiles that drove well and comfortably with refined styling.  What do you know, consumers cared about such stuff!

There were and are many TQM theorists complete with their own implementation programs.  My favourite was Philip Crosby of  “Zero Defects” fame.  I came to understand his theory in two different ways.  First, define quality of product and understand that quality is dependent upon quality of management of productive processes.  So, quality of product must be part and parcel with quality of management.  Second, I think Zero Defects drives the qualitative definition of the outcome of production processes.  If a unit of output is defined, specified, and the output in any way does not comply with that definition, specification, can it be said to be one of the units successfully produced?  I think it cannot.  It is a defect.  Therefore never stop looking for all and any ways of eliminating defects however these might be defined.

Now we have the example of the Boeing 737 Max, grounded because it cannot be trusted to fly and land safely.  Is the Boeing 737 Max an aircraft?  Not by my definition.  I don’t know what it is besides an assemblage of various materials, but it clearly is not an aircraft. You see, my specification for an aircraft includes the ability to take-off, fly and land safely, thereby providing a service to users, the passengers.

This is an important distinction.  The closest these crafts can come to being considered Boeing inventory, for example, is as inventory of work in progress.  Some might consider even that to be a generous definition if it becomes obvious that the design and engineering flaws indicate they could never be trusted to take off, fly and land safely.  They would then be simply costly junk.

It seems to me the entire process from determining need for a new design through to delivery and use needs review for effectiveness.  That means the production processes of design, factory engineering, plane engineering, plane production and delivery must be reviewed in detail. 

I suspect Mr. Sorscher, cited in the article linked above, is correct as he at least represents people working at Boeing.  He is in a position to know the details of the work there and is also in a position to understand the impact of those details on product quality.  Boeing indeed operated with a total quality culture and apparently no longer does.  That suggests a change in the C-suite’s culture from one of product quality to one of balance sheet quality.  Product quality can lead to balance sheet quality, balance sheet quality has no direct causal relationship to lead to product quality. 

Corporate culture includes every person in the society of the workplace.  TQM unites these people in common cause, teamwork.  If C-suite decisions have abandoned product quality as Job 1, then corporate culture is built on something else, perhaps cost-cutting.  This suggests that every productive employee might then be focussed on costs, something over which they have little control, instead of producing quality components, something over which they have much control.  In fact, costs can be totally eliminating by not attempting to produce anything.

I see the balance sheet as the aggregate of all the details that went into generating operating income over a given time period, implementing capital budget strategies and realizing investment policies.  All these details are important as they are the transactions, the basic units of business activity, that form the balance sheet.  For Boeing, producing and selling aircraft that take-off, fly and land safely is a significant part of that and has a significant impact on its balance sheet.

Trouble is, now Boeing is adjusting its projected sales, adjusting its current sales as sales are cancelled and I suggest might be adjusting its balance sheet to reflect the reduced value of finished goods inventory.  Its balance sheet is crumbling.

This might be Boeing’s Edsel moment.  Ford was so disturbed by its Edsel moment that it launched a research project that eventually generated a whole new class of automobile.  Ford wanted to know what purposes people wanted to serve through automobile ownership and use.  Interestingly, Ford then abandoned that research with the result that it was Chrysler who developed and sold the mini-van, creating the means to serve that newly identified market demand.

So, Boeing 737 Max, what is it?  Good question.  After two crashes resulting in heart wrenching loss of life and wreckage of families and workplaces as employees died, maybe it’s not an aircraft.  Lets hope the 737 Max is the spark that creates a new Boeing.