Boeing again, and the power of systems thinking

It seems like Boeing just can’t stay out of the news these days. 

• 
  On Saturday, June 22, Korean Air 189—a Boeing plane—developed a leak half an hour after takeoff. Within ten minutes the cabin depressurized, triggering the emergency oxygen masks. The flight was bound from Incheon Airport in Seoul, South Korea, for Taichung International Airport in Taiwan. But when the cabin lost pressure the pilots started an emergency descent to bring the plane down to a safe altitude, dropping nearly 26,900 feet in fifteen minutes. While nobody was seriously injured, nineteen passengers were hospitalized for ear pain and nosebleeds.
• 
  A couple weeks before that, on June 5, two NASA test pilots blasted off for the International Space Station aboard Boeing’s Starliner capsule. They were supposed to spend a week. But the capsule had last-minute thruster trouble after it was already launched, which almost prevented it from docking with the ISS. (It also developed several small, unrelated helium leaks.) At this writing, the two pilots have been at the ISS for three weeks (not one) … and counting. Their return has been scheduled for three different dates—and canceled each time, as NASA and Boeing continue to trouble-shoot the equipment. But a Boeing spokesman offered reassurance that that “the astronauts are not stranded.”
• Last month, Justice Department prosecutors recommended that Boeing face criminal charges for violating a 2021 settlement related to crashes of the 737 MAX in 2018 and 2019. 
• And just last week, the National Transportation Safety Board sanctioned Boeing for making inappropriate comments to the media regarding the ongoing investigation of Alaska Airlines 1282. 

What’s an airline to do?

Asking the wrong question

I wrote, “What’s an airline to do?” but it’s not clear if that’s even the right question. Let’s think about it for a minute.

Of course, it’s difficult to turn around a whole organization, especially one as large as Boeing. Growing or healing a Quality culture is a big task, and it requires coordinating a lot of elements—even something as trivial as a box of doughnuts can help make a difference. If this were the first time that Boeing had had problems, we might expect the turnaround to take a while.

But it’s not the first time. Boeing’s Quality and safety cultures have gotten worldwide attention at any rate since the crashes of Lion Air 610 in October, 2018, and of Ethiopian Airlines 302 in March, 2019. And internal discussions had already begun years before those crashes. Boeing whistleblower John Barnett testified that he began raising Quality complaints internally back in 2011.

So if the deficiencies in Boeing’s Quality and safety cultures have been well-known for over a decade, why has the company seemingly made so little progress?

A couple of months ago in this blog, we looked at how the Mayo Clinic built their Quality culture, one that continues to be healthy and effective. One of the critical elements that made the Quality initiative succeed was solid, long-term management support. Barnett and others (including other whistleblowers) have said—to put it gently—that Boeing’s management did not offer the same kind of support when Quality concerns were raised. Their focus was profitability, pure and simple.  

The funny part is, you would think that a focus on profitability ought to be enough, if only the management took a wider perspective. When customers suffer from a bad product, they sue; their damages come out of the company’s profits. When courts convict companies of criminal activities, they assess fines; those fines are paid out of the company’s profits. Besides, as we discussed with respect to the Mayo Clinic, a reputation for high Quality can itself be a key to increased profitability. Surely if only Boeing’s management were sufficiently enlightened, they would do the right things out of self-interest. Wouldn’t they? Isn’t that how this is supposed to work?

Empirically, it doesn’t seem to.     

So maybe the real question is, What’s a judge to do? Boeing has already been assessed $2.5 billion in criminal penalties; they have been subject to litigation more or less continually since the Lion Air crash; and there is no clear evidence that anything meaningful has changed. If the DOJ prosecutors have their way and Boeing is assessed another $24 billion, do we really think that will finally make the difference, when other fines and damages have failed? Or will Boeing just write it off as a cost of doing business? 

One of the recurring lessons in the Quality profession is the need to study the objective consequences of the measures we take—in other words, to assess the effectiveness of our corrective actions. If we keep doing the same thing to fix a problem and it keeps not working, the odds are pretty good that doubling down one more time isn’t going to help. Assessing fines on corporate malefactors—not just Boeing, but others as well—doesn’t seem to make much difference. Maybe it’s time to try something else.

The systems perspective

We’re often encouraged to take a “systems perspective” to solve Quality problems, though it’s not always obvious what that means in practice. But I recently ran across an example in an unexpected place. In my spare time, I’ve been reading The Dictator’s Handbook: Why Bad Behavior Is Almost Always Good Politics, by Bruce Bueno de Mesquita and Alastair Smith.* One topic they discuss is government corruption (e.g., bribes); and they point out that enacting strict laws against corruption is, by itself, not nearly enough to curtail it.** (To be very clear, I am NOT accusing Boeing executives or the FAA of corruption! But this example is meant to show how a systems perspective can illuminate questions about enforcement in general.)

Why are those laws not enough? Well, they have to be enforced by someone in the government administration. So in case the administration is also corrupt (and in some countries it is), they will not enforce laws against their friends or allies. In such countries, strict anti-corruption laws are no more than a tool that the administration can use to weed out the disloyal by engaging in very selective prosecution for something that in reality everyone does.

What Bueno de Mesquita and Smith explain is that the best way to root out corruption is to increase the number of voters that the government depends on to keep power. In an autocracy or an oligarchy, where the administration depends on a tiny number of backers, they can afford to reward those people through corruption in exchange for support. But if more people are allowed to vote, then the number of supporters needed to keep a government in power grows much larger. It then becomes pragmatically impossible to pay so many for their votes. And at that point, the anti-corruption laws can finally do their job and the prevalence of corruption starts to recede because the system no longer supports it.

This is a systems argument! And while (once again) I’m certainly not accusing anyone at Boeing of corruption, I think the example highlights how we need to approach the problem of bringing our largest and most powerful corporations to heel. Working inside the existing system by assessing fines doesn’t appear to offer much traction. The alternative is to apply some other kind of pressure to any of the very few points where there is a chance for some leverage.  

An alternative to fines

The proposal that follows is only an example, but it relies on the same kinds of systems thinking that Bueno de Mesquita and Smith use. I owe this example to the blogger and public intellectual John Michael Greer, and I will quote his description extensively in what follows.***

Greer starts by pointing out that in certain parts of Europe during the early Middle Ages, most legal punishments took the form of fines (weregild)—the same way that our courts assess fines on corporations today. Someone who injured or murdered someone else could make restitution to the victim’s family by paying the appropriate amount of money, with no additional penalty. Unsurprisingly, this arrangement meant that the very rich could commit murder uninhibited, as long as they could afford the fine. Over time, the laws changed and weregild was replaced by imprisonment or execution. Greer’s proposal is that—since a corporation is presumed to be a “legal person”—we could make similar changes in corporate law today. He describes it like this:

Imagine that a corporation—we’ll call it the Shyster Company—has just been caught deliberately selling worthless securities to widows and orphans. The district attorney files charges of felony fraud and theft in state court. The trial date arrives, the lawyers bicker, the jury finds the defendant guilty as charged, and the judge sentences the corporation to ten years in the slammer. In practice, what happens is that the judge appoints a trustee, who takes control of Shyster and all its assets. For the next ten years, Shyster is a wholly owned subsidiary of the state government. Its stock pays no dividends and has no voting rights, its directors have to find something else to do with their time, and if the trustee decides that the CEO and other overpaid office fauna get to find new jobs, they get to find new jobs—assuming that they’re not doing time themselves, as they very well could be. All profits earned by Shyster during its period of imprisonment go to the state government, subject to set-asides that pay restitution to the victims of the crime.

Meanwhile another conglomerate—we’ll call this one Dirty Rotten Scoundrel Inc.—has been caught knowingly selling food products tainted with deadly bacteria, and a dozen people have died. This time the district attorney files charges of aggravated first degree murder. The trial date arrives, the media has a field day, the lawyers bicker, the jury returns a verdict of guilty as charged, the judge sentences DRSI to death and the appeals court upholds the sentence. In practice, what happens is that on the scheduled date of execution, DRSI ceases to exist. Its stock becomes worthless, its assets are sold off in an auction in which no former shareholder is allowed to bid, its name and trademarks can never again be used by anybody under penalty of law, and its creditors get whatever scraps are left once the victims’ families receive their settlements.

OK, I guess it’s an entertaining story, but where is the systems thinking?

Fair question: Greer explains that next. 

It’s crucial that the stockholders in both cases, and the creditors in the latter case, suffer for the behavior of the corporation…. Thus under this system, if word gets out that a corporation is pushing the limits of legality, the stockholders have a very strong incentive to sell, driving down the value of the stock. Equally, if lenders become aware that a corporation is engaging in really egregious behavior, they have a very strong incentive to charge higher interest rates or even to stop loaning money to the corporation. Neither has any such incentive under the current system, which is one reason why corporations act as though their quarterly profit statements are the only things that matter. To their stockholders and creditors, this is essentially the case; this proposal would change that.

In other words, this proposal changes the incentives that a corporation faces by applying leverage to the corporation’s stock price and its access to liquidity. This kind of leverage might make a difference.****

Would this help?

Of course I can’t know for sure whether laws like this would encourage Boeing to handle its Quality culture more conscientiously. In the short run, the chain of causality is probably too long to have an immediate effect. 

On the other hand, if one of these penalties ever were to be invoked, it would likely mean a wholesale change of the company’s top management. And if the management understood that risk today, they might be more willing to take the Quality culture seriously. As Samuel Johnson once remarked, “When a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully.”

Meanwhile if you have other proposals that take adequate account of the systems incentives which drive Boeing’s management, I’d love to hear them. Please leave a comment.        

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* (New York: PublicAffairs, Hachette Book Group, 2011, 2022). 

** See especially Chapter 6.

*** Quotations are all from John Michael Greer, The Wealth of Nature: Economics as if Survival Mattered, 2nd ed. (Founders House Publishing LLC, 2021), pp. 213-215. An earlier draft of the same proposal can be found in an archived blogpost here, dating from January, 2010.

**** Greer says more about the legal and political aspects of his proposal in the sources cited above.

 

Do things right, or Do the right thing?

Two weeks ago, when I started writing about the Mayo Clinic, most of the feedback I got was favorable. It seemed that people were glad to read good news for a change. But Ian Hendra, of Clearline Services in New Zealand, offered a comment on LinkedIn that was very critical, not only of the Mayo Clinic but of the whole health-care industry. The gist of his argument was that medical care as practiced these days focuses (outside of surgery) on the use of pharmaceuticals, even for conditions that can be more thoroughly and reliably treated with diet and nutrition. While his comment rapidly plunged into detailed arguments about diet and insulin resistance, he touched on a wider issue. If I were to rewrite his argument to make it at once more general and more focused on the underlying Quality topics, it would sound something like this:

Any hospital whose Quality Policy says they prioritize patient outcomes should do everything they can to help patients get well. But this means they should use methods that have (1) a high rate of success, while involving (2) minimal intervention in the body's natural operation, in order to cause (3) the fewest unwanted side effects. Many of the treatment methods common in modern medicine, by contrast, involve significant intervention in the body's natural operation, and sometimes trigger serious side effects. Therefore a hospital who takes the Quality Policy seriously should step back from many of the most common treatment methods in modern medicine, and replace them with others.  

Now, I'm certainly not a doctor, and I have no expertise to discuss this critique at the medical or scientific level. What is more—to be very clear—I don't know the research that Mr. Hendra is relying on, so I have no idea whether he's got his medical or scientific facts straight. But what interests me is the Quality issue. If some patients do better when they are treated according to nonstandard methods, does Mayo's Quality commitment require its doctors to adopt those nonstandard methods? Is that what a commitment to the Quality of patient outcomes really means?

In one sense, of course it would be nice. From a patient's point of view, getting well is typically the only measure of the Quality of a course of treatment. At the same time, there are a number of pragmatic considerations that every hospital or medical center has to keep in mind.

They have to have specialists who understand any method of treatment that they offer. The more types of treatment they offer, the more specialists they need in different fields. This point should be uncontroversial, but we can't forget it.

The treatment methods they offer have to be known to work. This point is trickier than it sounds. Human health is phenomenally complex, and even the most routine courses of treatment regularly fail on somebody. It's also true—and documented—that some very unusual courses of treatment have nonetheless worked very well on some patients.* It can be hard to know where to draw the line, but you have to draw it somewhere; otherwise, with no regular approaches, a doctor really doesn't know where to begin.

Finally, the treatment methods often require not only consent but active participation (or at least compliance) on the part of the patient. This is where diet and nutrition encounter their most frequent difficulties. Most patients are famously very bad at following nutritional advice. Lots of people "know they should eat better than they do," but that doesn't change their food choices in real life. If a doctor says, "Take this medication once a day for two weeks," patient compliance is usually pretty high. If the same doctor tells the same patient, "Cut out high-cholesterol foods and refined carbohydrates every day for the next thirty years," compliance drops off fast. You don't have to look for conspiracies by the pharmaceutical industry to guess that there are practical reasons doctors overwhelmingly choose the former approach over the latter.

In light of these considerations, what is a hospital to do? At a pragmatic level, as I suggested a minute ago, they have to draw the line somewhere. Implicitly or explicitly (and of course it is better to do  it explicitly) they have to say, "These are the kinds of services we provide. We will provide them as well as we can. But if you want some other kind of service, you have to go elsewhere." This statement defines the Scope of their Quality System. Inside that Scope, it is possible to optimize their performance. But there is no meaningful way to optimize performance of tasks that are outside of Scope, because a hospital (or any organization) shouldn't take on those tasks to begin with. And if you try to widen your Scope until it covers everything, you can never optimize because you can never get your arms around the task. So you can never get started. 

From  Matt Groening's School is Hell.

To capture this in a snappy formula, an organization's Quality Commitment is focused on ensuring that the organization does things right, and not that it does the right thing. There must, of course, always be room somewhere to discuss whether the organization really is doing the right thing, or whether the Scope should be amended to include new and different kinds of activities. But these discussions take place necessarily outside the Quality System (though they might incidentally involve some Quality personnel). In a hospital, these discussions would include whether to offer or adopt fundamentally new or alternative forms of treatment; in a business, they would involve whether to pivot to a new line of business or a new form of operation. These discussions are important but they are fundamentally strategic, while most routine Quality work is tactical: Given a certain set of objectives, how can we best achieve them?

No Quality System will ever make everything perfect, any more than it can prevent all accidents ever. And it is not really the job of the Quality System to break the paradigms in which the organization operates. But inside those paradigms, of course, it is a powerful tool for making things as good as possible.

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* In addition to the normal kinds of care made available by conventional medicine, there have been documented cases where some patients have responded well to such treatments as: 

• diet and nutrition (Mr. Hendra's preferred approach)
• placebos
• acupuncture
• homeopathy
• Christian Science practice
• laying on of hands
• prayer  

Obviously it would be tough to ask a hospital to provide all of these.

  

Quality and cost

Last week I wrote about the Mayo Clinic, and how their most recent Quality Initiative pushed them to the very first rank among the world's hospitals. When I looked for what principles undergirded or enabled this achievement, one of the ones I identified was this:

Mayo chose to focus on Quality first, not cost; and their metrics for Quality were tied directly to patient outcomes. This is the correct way to define metrics: start by defining what results you want to achieve, and then build metrics to support those results. In modern management, metrics drive so much other activity that it is critical to get this part right up front.

Now that's great, but it's fair to ask, How can Mayo afford to focus on Quality before cost? Don't they have bills to pay? For most companies—maybe all—neglecting cost is a quick way to go broke. What's special about Mayo's situation that apparently allowed them to defy this basic law of corporate gravity?  

Of course the answer is that Mayo didn't literally neglect cost. In fact, the article that I summarized last week (ASQ's "Journey To Perfect: Mayo Clinic And The Path To Quality") makes clear that an earlier quality initiative in the 1990's was in fact canceled for reasons of cost. What happened since that time (apparently) was that Mayo reëvaluated their approach, and began to address costs intentionally, and consistently with their mission. This intentionality shows up in several ways.

For example, Mayo has pushed to standardize practices across its multiple facilities. As my post last week pointed out, the criterion for selecting which practice to choose (among various alternative ways to do the same thing) was generally based on data about patient outcomes. But the mere fact of standardizing at all lowered costs. And cost is one factor tracked (among many others) in the massive data collection that Mayo hosts about all its surgical activities.

Mayo's approach to paying physicians is equally intentional. Physicians are compensated with salary only—no bonuses or special treats. The goal is "to remove financial incentives to do more than is necessary or less than desired for the patient." Of course the salaries are structured so that physicians with more experience earn commensurately more, and the various specialties are compensated competitively with peer institutions. And an additional benefit of this structured, salary-only compensation plan is that it makes it easier for Mayo to find and correct inequities, in order to avoid pay discrepancies based on non-relevant factors like race or sex. But the core motivation is to reduce the risk of corrupting the patient experience.

The key, though, seems to have been when Mayo realized "that patient-centered care is a win for financial outcomes. Quality was not simply continuous improvement; it was the vision and mission of the organization." In other words, while an awareness of costs matters internally (in order to keep the books balanced), cost is not a market-differentiator externally, at least not for the Mayo Clinic. Patients don't come to Mayo to get their x-rays done cheaper. They come to Mayo to get their care done better. Patients seek out the Mayo Clinic because they want its Quality.

Can other businesses do the same thing? Yes and no. To some extent, Mayo benefits from the economics of health care. The proliferation of so many different insurance models for health care means that almost nobody pays the "list price" for any given medical procedure, and so those prices mostly are not posted or even visible. Often enough, a patient won't even know the price for any but the most routine care until after the care has been provided. And health care is simply a different kind of good from candy bars or movie tickets. If movie tickets cost too much, people may try to stream the movies at home for less or simply forgo seeing them at all. But someone who needs an important medical procedure is much less likely to forgo it because of the cost. For all these reasons, cost is a weak market differentiator in the health care industry.

All the same, companies with a reputation for Quality can thrive in any industry even if their products cost more. I used to work for Bosch, which is a manufacturing company. And manufacturing is an industry where even minor differences in cost can make a huge difference. Bosch's products are never the cheapest ones available; but people buy them eagerly because they know the products are going to work. Every time.

A few months ago, we discussed that—Philip Crosby notwithstanding—Quality isn't really free. Building any kind of Quality System takes time, effort, and money. But in the long run, such a system pays for itself by reducing defects. And if you are good enough, it draws customers from around the world who want to work with you because you are the best.

          

Building a healthy Quality culture

For much of this spring, I've written about system and culture failures. I've written the most about Boeing, but I've addressed other companies too (even ones like Toyota and Patagonia, who are mostly pretty good). After a while it can get grim. One reader wrote me to say, "I am too depressed about the Boeing issue."

What if we look at a success story, for once? A company that built on a history of doing good work, and lifted themselves to world-class performance? It could be a refreshing change, if nothing else.

A couple weeks ago Dale Weeks, another reader, called my attention to an ASQ Case Study about the Mayo Clinic. The study, titled "Journey To Perfect: Mayo Clinic And The Path To Quality," was written in July 2012. That means it is more than a decade old, but it is hardly out of date. The Mayo Clinic is still among the best hospitals in the world. This Newsweek website rates them, in fact, #1 in the world. Mayo's own website states, more modestly, that "Mayo Clinic Hospital — Rochester is top-ranked in more specialties than any other hospital and has been recognized as an Honor Roll member by U.S. News & World Report's 2023–2024 'Best Hospitals' rankings." Whatever they are doing, they are doing it right and it seems to be working.

What are they doing? The article describes a history of Quality initiatives at Mayo, so the first thing is that Quality has been a sustained focus over many years. But the heart of the article is about the Quality initiative in the early 2000's, and this had several elements. We have discussed some of them before. 

• Mayo implemented a "Fair and Just Culture," in which "every member of the medical team is encouraged to report anything that does not seem quite right, without fear of reprisal." Even better, the article gives examples which suggest that Mayo really means it. (By contrast, for example, Boeing's culture sounded good on paper, but did not encourage transparent communication in practice.)
• Mayo asked all departments to display their performance data, so that any room for improvement would be visible to everyone. (Back in the first year of this blog we discussed the value of making your performance data visible to everyone.)
• Mayo used this performance data to look for best practices, and then spread those best practices across all their multiple hospitals. Sometimes the data related to patient outcomes: when one hospital had a much-lower patient failure rate than all the others in administering warfarin, Mayo studied that hospital's procedure and made it standard. Other times, the data was frankly economic: when they found that one orthopedic surgeon could do hip replacements more profitably than any of the others (while all of them had the same rates of patient outcomes), his method became the one to use.
• While of course Mayo had to track their financial metrics the same way any business does, those were never the center of attention. Mayo's key metrics focus on "patient and quality outcomes, patient safety, and the patient experience." We've talked before about why it is more valuable to measure problem-resolution than operational activity, and also about why it is essential to see how the problem looks to your customer. These are lessons Mayo has clearly taken to heart.
• Mayo made training available to all employees on Quality methods, including topics like Six Sigma, lean, and reengineering; and encouraged everyone to take them. They even issued pins of different colors that employees could wear, to show how far they had progressed through the curriculum.
• Finally, Mayo implemented an extensive knowledge management infrastructure.

All of these measures are excellent, of course, and it is no surprise that the outcomes have been so good. But I found myself wondering, Why doesn't everybody do this? If the Mayo Clinic can focus on Quality this relentlessly and achieve such glowing results, then it is clearly possible. And if it's possible, why doesn't everyone else do the same thing? Why—not to put too fine a point on it—isn't Boeing following this very same game plan right now?

The article isn't structured around cause-and-effect. It's a case study, and not a root-cause analysis. But as I combed through it, I think I found three fundamental points that made all the others possible.

• First, Mayo had a history of selecting executives from among its practicing physicians. I have sometimes argued that management roles should not be handed out as rewards for the very best physicians or surgeons, because it's better that those experts continue to save lives in the examining room and the surgical theater. At the same time, it clearly makes a difference when the executives understand the work at a deep level. Once upon a time, Boeing's executives were engineers, too.
• Second, Mayo chose to focus on Quality first, not cost; and their metrics for Quality were tied directly to patient outcomes. This is the correct way to define metrics: start by defining what results you want to achieve, and then build metrics to support those results. In modern management, metrics drive so much other activity that it is critical to get this part right up front.
• Third, it is clear that the whole Quality initiative had unflinching management support over the long haul. Without a clear vision of what to do, and an unwavering commitment to doing it, none of this could have been accomplished.

These three points aren't universal. Not every company selects its executives from its working experts; not every company prioritizes Quality over cost; and not every management team is committed to implementing Quality in every aspect of their business. But they could do. If Mayo can keep finding ways to improve, so can we all.