Theoretical model “Management molecule”
In my personal view, the most comprehensive theoretical model that can be used to account for problems that occurred in the Boeing company is the so-called McKinsey 7S framework. The acronym 7S in the name of the framework comes from 7 crucial factors that the author, McKinsey, locates in every organization. The names of the factors all begin with the letter S. In McKinsey’s view, the factors are interdependent, and a change in one of the factors can cause a change in others; therefore, any organization can be represented schematically as a “Managerial Molecule”.
The factors can be classified into two groups. The first group consists of three factors, which are easily changeable by intervention and these are the structure, strategy, and systems. Structure denotes the organization of activities within the company. The strategy is related to plans that the company has for achieving its goals. Systems are the established procedures subordinated to the organization as a whole.
The second group consists of the so-called “soft factors” and there are four of them. Shared values are the factor that is at the core of the Managerial Molecule, and it represents the most important ideas that all members of an organization share. Staff encompasses all the employees of the company with particular emphasis on highly competent members like engineers. Style is mirrored in the way in which managers carry out their leadership. Skills are competencies of workers and the company as a whole.
Within this framework, a view is held that in case of deep problems a company has to find ways to change those soft factors if it is to improve its performance. In other words, if an organization faces fundamental issues, it is never enough to introduce changes in structure, strategies, or systems, and reforms have to cut deeper than that.
Cultural diversification
Applying this theoretical analysis to the case of Boeing, one can locate problems in several factors. Firstly, the symptoms of Boeing’s malady could be seen in terms of organizational problems when the increase in production caused confusion in the production and subcontracting of parts. Moreover, the overly bureaucratic way of organizing work only further increased the company’s inefficiency. Secondly, the technological systems which had not been updated since World War II slowed down the production and Boeing lost its competitiveness.
Once a company enters such a state, it becomes clear that introducing reforms is vital for its survival. At Boeing, reforms coincided with an increase in demand, which was a positive circumstance. However, incompetence in carrying out those reforms caused the company’s revenue to drop dramatically.
One additional factor that deepened the crisis at Boeing was cultural diversification. During the period in which the organization was trying to amend its way of doing business, it acquired several companies with different views on business and management. At that point, the crisis struck at the very core of McKinsey’s Managerial Molecule – the shared values. Cultural diversification had its consequence in the confusion that the workers felt about the guiding ideas of their company. This fact combined with a serious drop in revenue devastated the morale of the workers.
The new CEO, who was able to resurrect Boeing, seems to have had this idea in mind when he confidently sketched out the outlines of the organization’s future trajectory. He was determined about the production of smaller aircraft, which he saw as the future of the aeronautic industry. Determination, simplicity, and clarity of his approach, seem to have introduced a change in the shared values of the staff. Once the workers had a defined vision in their minds their morale rose and it was easier to implement changes in other domains of the Managerial Molecule.