Today, Boeing announced that its CEO, Dennis Muilenburg, is being replaced by current board chairman David Calhoun. The board had previously removed Muilenburg as chairman in October, in a move that was said to give him the ability to focus solely on the current crisis. Now, it appears he has lost the confidence of the board as a result of a series of missteps since a pair of fatal crashes of the 737 Max in October 2018 and March 2019.
Boeing is a huge company that has an outsize impact on the overall economy. The 737 Max was its bestselling aircraft and was used heavily by two of the three largest airlines in this country. When it was taken out of service, it caused delays and problems for passengers at Southwest, American Airlines, and United Airlines.
And, just last week, Boeing announced it was temporarily shutting down the factory that assembles the 737 Max, meaning there's no end in sight to the current crisis.
In reality, there are three things that Muilenburg has done that have made the crisis worse, and made it impossible for him to continue to lead.
Failing to Live Up to Promises
Muilenburg made the mistake of consistently promising more than he could deliver. The problem is, we're not talking about vacuum cleaners here. These are enormously complicated airplanes with literally thousands of moving parts. They also happen to carry human beings through the air at 400 miles per hour. They have to work. You can't simply say everything is fine.
But, in Boeing's case, its CEO had repeatedly tried to assure people that everything was fine. According to The New York Times, on a call just last week, Muilenburg told President Trump "any pause to production would be temporary, and that there would be no layoffs as a result of the move."
In reality, no one knows how long the problems will last since there hasn't been any agreement yet on how to best fix the flawed software that is responsible for the crashes. Boeing is yet to provide the FAA with documentation or updated fixes for it to review, meaning that there is no timeline for getting the aircraft back in the air.
Lack of Empathy
In several attempts at public apologies, Muilenburg fell remarkably flat. He has irritated lawmakers and left the families of victims believing that Boeing isn't concerned about their loss. Both groups called previously for Muilenburg to be removed.
There's no question that handling a situation that involved the death of almost 350 people is extremely delicate, but as a leader, that's your responsibility. And taking responsibility means more than simply telling people you are "sorry for their loss." Taking responsibility means acknowledging their loss, validating their grief, and demonstrating that you are both willing and able to make the changes need to be sure that loss isn't in vain. Mostly, it means treating people like people, not as simply another aspect of your business.
In a crisis, a leader's first job is to assure the people who are depending on him or her that there is a plan. Without a sense that there's a good plan, people quickly lose confidence in the leader. When that happens, failure becomes a self-fulfilling prophecy. No one wants to follow the leader headed in the wrong direction.
In this case, investors have been especially concerned with the impact the crisis is having on the company, with Boeing's stock price dropping 22 percent since the crisis began. While that's bad for Boeing, the impact of the way Muilenburg has handled the 737 Max issues extends well beyond the aircraft maker to airlines and suppliers, each of which has suffered real financial damage and damage to its reputation.
At some point, a leader has to be accountable for their performance. In this case, Boeing is in desperate need of a change in direction. Unfortunately for Muilenburg, that means a change in leadership.
Correction: An earlier version of this article misspelled former Boeing CEO Dennis Muilenburg's surname and misstated the timing of the 737 Max crashes.