Imagine you get a one-question survey asking you to choose between two options. Option A provides a path to higher quarterly profits but puts the safety of your customers at extreme risk. Option B greatly reduces the safety risks to your customers but decreases quarterly profits.
When you phrase a dilemma in those terms, it’s easier to see Dave Calhoun’s point when the Boeing CEO said, “The idea that any human being makes a trade of quarterly profits over safety is just a flawed notion.”
Boeing, he noted on Fortune’s Leadership Next podcast, gained a reputation for putting short-term profits over safety after two Boeing 737 Max aircrafts crashed, one in 2018 and another in 2019, and 346 passengers died. In a 2021 settlement agreement with the U.S. Department of Justice, Boeing ended up paying $2.5 billion in penalties, most of which went to customers and heirs of the crash victims.
But Calhoun, who became CEO in January 2020 in the aftermath of the disasters, said the problem was never overt avarice by heartless leaders and managers. The problem was a culture that missed the obvious when working on the design systems for the aircraft.
“What I do think I found was an organization and a company and a culture that was having a hard time being honest with one another, with where programs stood, how much time was required, what things still needed to be completed,” Calhoun said. “As a result, leadership became disconnected from the ground troops.”
That comment resonated with me because I’ve been there as a leader. When I became CEO of Prologis, there were no issues of prioritizing profits over safety, but we had a culture similar to what Calhoun describes. For us, that culture led to poor leadership decisions that caused Prologis, once a stalwart in the S&P 500, to slide financially during the Great Recession.
Don’t trust us, we told stakeholders, watch us.
Prologis, in fact, was near bankruptcy, but our management team changed its course by taking an approach similar to what Calhoun is trying to bring to Boeing.
“You have to be transparent with literally everything, no matter how uncomfortable the data is or the conversation is,” Calhoun said. “You have to tell everybody everything, including the media. And you’re going to get whacked along the way, and that’s life. But for us to regain trust, number one with our own people, and then with the flying public, they were going to have to believe us. And that was the culture we were going to carry forward.”
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That type of transparency is the heart of my message in Transfluence, and the chapter on humility in particular shares the story of how Prologis adopted a philosophy of earning trust by proving that we were trustworthy. Don’t trust us, we told stakeholders, watch us. This created a level of accountability among our management team and throughout our organization. But we believed what stakeholders saw from us would earn their trust, and that turned out to be the case.
That’s the challenge for Boeing, but it’s also the challenge for all leaders. There’s no need to wait until your company is near bankruptcy or until some preventable safety issue leads to tragic results. If you and your team embrace a culture of transparency now, trust will follow — inside your organization as well as with outside stakeholders — and people will be far less likely to make decisions that put safety or profits at risk.
Tianna
There is more at stake here in the world than you know!!:
Yes we need to work together!!: