Boeing Gets Its 737’s & Reputation Grounded: 3 Tips For Managing Your Brand Crisis
Brand leadership is easy when things are good and everybody’s happy. When times grow tough, however, a brand’s true authenticity is quickly revealed.
For Boeing, times couldn’t be tougher. Since the heartbreaking second crash of its 737 Max plane this week, the U.S. has joined several dozen other countries in grounding the aircraft, adding to Boeing’s woes as more than $25 billion has been wiped off the company’s market value.
And things aren’t looking up anytime soon.
Boeing investors ended this week by rushing into derivatives markets to protect themselves from further steep falls in the company’s share price. The sale of puts soared to 237,000 contracts on Tuesday – 20x the average daily volume – and has remained elevated since. At the same time, the cost of hedging against a further 10% fall in Boeing shares has close to doubled.
The market is simply reflecting what most of us are already thinking: Boeing’s handling of this latest tragedy hasn’t been very good.
Of course, given the scope of this crisis, Boeing would certainly face difficult questions and investor fallout.
But adding unnecessarily to its woes has been Boeing’s lack of effective leadership in its response.
Brand reputation is a fragile quality. Leadership, especially in times of crisis, is necessary to preserve it.
Here are three tips that you can distill from Boeing’s missteps this week that will help maintain your brand’s reputation when challenged:
1) Core brand values come first. For Boeing, its core brand value is safety. In fact, on Boeing’s website you can read its brand value statement: “We value human life and well-being above all else and take action accordingly.”
Following the second crash, Boeing could have been proactive and grounded the 737 Max jets themselves while addressing safety concerns. Instead, they took the path of least resistance, foregoing their core brand value by announcing, “we have full confidence in the safety of the 737 Max 8.”
The company missed a critical opportunity to lead with its core brand value: safety.
According to reports, there are roughly 380 737 Max 8s in service. In North America, Southwest operates the largest fleet with 34, while American and Air Canada each have 24.
The question these numbers raise is what kind of company which values life ‘above all else’ – and has such a small number of these planes in service – would display absolute confidence in an aircraft after two deadly crashes inside of five months? And to do so before the NTSB completes its investigation.
The answer is a company that is now perceived to be more concerned with its own corporate reputation and bottom line than the lives of passengers. Boeing had the chance to lead by grounding the planes because they truly ‘value human life’.
Takeaway: Don’t abandon your core brand value when things get tough. If you do, the price you pay in the Court of Brand Reputation is steep.
2) Own your Sh*t! Boeing is largely responsible for its current reputational position. By reaffirming the safety of the 737s and not taking any action, the company put itself on the defensive. With more than 40 countries insisting on grounding these planes, Boeing put itself into the unenviable position of defending the continued use of the 737 Max, even as airlines and regulators argued for safety.
Takeaway: Own up to the challenges that come your way. Show your stakeholders that your core brand value is authentic enough to withstand scrutiny.
3) Understand Your Situation. In one of its more puzzling moves this week, Boeing announced that it had a software update to the 737 Max that makes “an already safe aircraft even safer.”
Excuse me, what? Haven’t you been insisting that the aircraft is already completely safe?
Absent the circumstances of the crashes, such an announcement makes sense. But in light of the ongoing investigations, what could have been a meaningful software announcement for its business only frustrated Boeing stakeholders further. It’s difficult to message an important software safety upgrade for an aircraft you’ve been professing absolute confidence in for several days.
Boeing’s executives misread the situation in a way that dangerously delayed a successful response.
This troublesome misread is reminiscent of the United Airlines case in 2017. If you recall, instead of apologizing for humiliating a passenger, the airline’s CEO (Munoz) apologized for the inconvenience caused to other passengers. As a result, the company and Munoz both came under intense criticism. Munoz had to apologize again and United suffered a major reputational setback that translated into heavy revenue losses. All of this happened because United Airlines misread the gravity of the situation. It is, therefore, necessary to understand a crisis thoroughly to ensure a timely and correct response.
Takeaway: With the right approach and messaging, your brand can survive almost any challenge. Remember that when you face a crisis, your customer also faces a crisis. Put them first and then be their source of information and communication. If not, they will find it elsewhere and your brand’s reliability will suffer.
Moving forward, Boeing might do well to adopt an approach to their corporate culture in which bad news can not only flow, but also be recognized and acted upon.
A resilient brand responds and adapts to adverse circumstances. So that in those tough times, your brand can emerge from a crisis strengthened, both internally and in the eyes of key stakeholders.