Restoring Trust – Communications Lessons from the Boeing Crisis and the Company’s Promising First Step Toward Recovery

By Chris Patz, Managing Director & Ryan Dugdale, Intern

On August 8, Kelly Ortberg took over as Boeing’s CEO, tasked with restoring the reputation of a firm once revered for its engineering prowess.  After two preventable crashes and another incident – all involving Boeing 737 MAX aircraft – passengers now say, “if it’s Boeing, I ain’t going.”  What’s more, Boeing has entered into a criminal plea agreement under which the company admits it lied to federal regulators about the system involved in both crashes and then failed to implement promised changes to its quality, safety, and compliance practices.

The challenge facing Mr. Ortberg flows from two fundamental strategic communications failures.  First, Boeing was not truthful about the 737 MAX mishaps.  Then, even after Boeing admitted fault in connection with the mishaps, it failed to demonstrate and act on a stated commitment to reform its safety culture.  Regulators and the market punished Boeing severely for these failures.

Credibility is everything.

Credibility is essential to navigating any enforcement action, and Boeing’s plea agreement with the government can be traced directly to its failure to maintain credibility.  The plea agreement is based on a 2021 deferred prosecution agreement in which Boeing admitted making false statements to the government about the 737 MAX (Boeing made the statements in 2017, before the mishaps).  In exchange for Boeing’s admission, substantial payments, and other undertakings related to the 737 MAX crashes – including a commitment to improve Boeing’s compliance culture – the government agreed not to prosecute Boeing for its false statements. 

Unfortunately for Boeing, the third 737 MAX mishap took place earlier this year and subjected the company to further scrutiny, revealing that “Boeing [had] breached its obligations under the Deferred Prosecution Agreement . . . by failing to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws throughout its operations.”  Thus, while Boeing’s false statements got the company in trouble, it was Boeing’s failure to live up to its promises after admitting those false statements that got the company prosecuted, further damaging the company’s already tarnished reputation and costing the company, as well as its customers and investors, billions.

Deeds, not words.

Even after Boeing publicly accepted that its culture was broken – former CEO Dave Calhoun admitted as much to Congress – the company seemed adrift.  Perhaps it was because the company was waiting to find a long-term CEO capable of managing the necessary changes that Boeing did not communicate specifically what it would do to fix its culture and restore its reputation.  This led The Economist to write in July: “What to do about all this?  For a start, get cracking.”

Those two sentences contain a key lesson for restoring a reputation damaged by government inquiry or any other crisis: it’s important to acknowledge a failure (which Boeing eventually did), but it’s what you do in response that matters most.  Boeing’s failure to act in response to the deferred prosecution agreement destroyed its credibility and led to its criminal plea.  Now, Boeing must pledge specific action to restore its reputation and it must do what it says under the eyes of a skeptical government, as well as nervous passengers, employees, customers, and investors, all of whom have lost trust in the company.

Looking ahead.

Mr. Ortberg’s initial message to Boeing addressed this point directly in a note to employees on his first day as CEO:

Restoring trust starts with meeting our commitments -- whether that’s building high quality, safe commercial aircraft, delivering on defense and space products that allow our customers to meet their mission, or servicing our products to keep our customers running 24/7. It also means meeting our commitments to each other and working collaboratively across Boeing to meet our goals. People’s lives depend on what we do every day, and we must keep that top of mind with every decision we make.  (Emphasis added).

This was the right note to hit, but the world will be watching to see whether Boeing makes good on its promises this time around.