Adaptive Leadership in Transformation – Boeing
Analysis Using ‘The Work of Leadership’ by Heifetz and Laurie (2001)
August 14th, 2024
On his first day as Boeing's new CEO, Robert “Kelly” Ortberg announced that he would relocate his office back to Seattle, closer to the company’s manufacturing facilities. This decision followed years of quality concerns in Boeing’s commercial division. This brief analysis explores how adaptive leadership can transform organisational dynamics, fostering cohesion, performance, and growth.
Boeing, a major player in the aerospace sector, has faced severe challenges, including the 737 MAX tragedies, which resulted in the loss of 346 lives across two major accidents in 2018 and 2019 (United States Senate Permanent Subcommittee on Investigations, 2024). More recent incidents, such as a mid-air door blowout on an Alaskan Airlines flight in January this year and failures in the space programme that left two astronauts stranded on the International Space Station since early June, further underscore the deep-rooted systemic issues within the company (Boeing faces more questions about its aircraft after fresh incident, 2024; Boeing Starliner astronauts stuck at International Space Station, 2024).
Many analysts trace Boeing’s troubles back to its 1997 merger with McDonnell Douglas. Historically, Boeing was known for its engineering excellence, while McDonnell Douglas focused more on a cost-cutting, profit-at-all-costs, shareholder-pleasing mentality. Following the merger, Boeing moved its headquarters from Seattle—its engineering and manufacturing hub—to the East Coast of the United States, closer to lawmakers and regulators (Boeing is not responding to its 737 Max change of course, 2024). This geographical separation between management and engineering is believed to have significantly contributed to the decline in safety and quality over the ensuing decades (Federal Aviation Administration [FAA], n.d.).
In August 2024, Boeing reported a second-quarter operating loss of $1.4 billion, three times greater than the loss recorded in the same period the previous year (What’s the outlook for Boeing’s recovery?, 2024). On the same day, Boeing announced Kelly Ortberg as the new CEO, replacing Dave Calhoun, who had served since 2019. While Ortberg is new to Boeing, he is no stranger to the industry, having previously served as CEO of Rockwell Collins, a Boeing supplier. Ortberg has committed to basing his office in Seattle to be closer to the commercial production facilities, stating, “Because what we do is complex, I firmly believe that we need to get closer to the production lines and development programmes across the company” (Walters, 2024).
Ortberg faces a monumental task. How does a new CEO steer such a transformation? How can they rebuild trust among customers, ensuring that products are safe and reliable? How can they unify employee groups to change manufacturing processes and systems to enhance quality and dependability? And how can they demonstrate value to shareholders in the short, medium, and long term? This paper explores how adaptive leadership can support such a turnaround.
What is Adaptive Leadership?
In their 2001 paper, ‘The Work of Leadership,’ Heifetz and Laurie define adaptive challenges as those requiring organisations to “clarify their values, develop new strategies, and learn new ways of operating” (Heifetz & Laurie, 2001). In contrast, technical challenges involve situations where solutions are clear and can be addressed with existing expertise. Technical challenges can often be resolved by top-down authority, which dictates changes that yield the desired results through the application of established expertise, structures, and routines.
Adaptive challenges, however, are paradoxical and often cause frustration, tension, and distraction. These challenges frequently lead to dysfunctional routines and avoidance, serving as defences against solving the underlying problem. Adaptive challenges are ambiguous and require experimentation and the use of tacit knowledge from within the organisation to be resolved.
Adaptive leadership creates an environment that enables the resolution of adaptive challenges. It fosters a culture of discovery, encouraging the abandonment of outdated solutions, tolerating losses, challenging existing assumptions, and generating the capacity for the organisation to thrive.
How Does Adaptive Leadership Support Transformation?
Heifetz and Laurie identify six principles of adaptive leadership that promote the creation of environments conducive to solving complex and paradoxical problems:
1. Get on the Balcony
Taking a step back, or "getting on the balcony," involves distancing oneself from daily operations to gain a holistic view of the organisation and its challenges. Similar to the analogy of "being in the coach’s box," this perspective allows leaders to observe the entire field, noting individual behaviours, team dynamics, and recurring patterns within the organisation and its interactions with external stakeholders. This approach highlights how individuals and departments respond to both internal and external pressures and provides a macro-level understanding of organisational dynamics.
However, leaders must also possess empathy and an acute understanding of what is happening "on the field of play." Connecting with those on the shop floor and grasping the challenges they face is crucial for building values, behaviours, and attitudes that support them in performing their best work. By comprehending the intricacies of the organisation and its stakeholders, leaders can cultivate environments where people feel safe and valued. The ability to move between the balcony and the field of play, at the right moments and in the right proportions, is key to developing deeper knowledge and insight.
2. Identify the Adaptive Challenge
By shifting between the balcony and the field of play, leaders gain a deeper understanding of what is truly happening within the organisation. Each stakeholder holds a unique perception shaped by their experiences and knowledge. While all these perspectives are valid, it’s only when leaders can see and understand these varying viewpoints that they can begin to develop a comprehensive systems view, drawing on the organisation’s collective tacit knowledge.
While stepping onto the balcony provides valuable insights, effective diagnosis requires a deeper level of understanding and dialogue. Heifetz and Laurie pose critical questions, such as: "Whose values, beliefs, attitudes, or behaviours must change for progress to occur? What shifts in priorities, resources, and power are necessary? What sacrifices must be made, and by whom?" (Heifetz & Laurie, 2001).
Heifetz and Laurie also suggest that a lack of cohesion in the workplace can indicate diverging values, attitudes, and behaviours. Repetitive and unnecessary tasks may mask dysfunction, concealing underlying resistance to change and hindering performance. These behaviours and the associated tension serve as indicators of where to look. However, these issues are often relegated to the ‘too hard’ basket, allowing defensive actions to continue.
Executives must also “turn the mirror on themselves.” As those accountable for setting the organisation’s purpose, mission, and goals, executives must understand how they function as individuals and in teams, as well as how they are perceived across stakeholder groups. Tools such as 360-degree leadership surveys can help highlight how others perceive them in their roles, and psychologically safe workplaces enable them to receive that feedback in real time.
3. Regulate Distress
The level of distress following events like the 737 disasters is beyond what can be fully comprehended in an article like this. The impact on the families of the victims is for others to discuss. However, such events also have a significant and ongoing impact on those within the organisation. Professional roles are often closely tied to personal identity, especially when multiple generations of a family have worked for the same employer. Over time, employees and leaders may recognise that the workplace needs to change, but this can be difficult when so much of a person’s identity is linked to their work and the work of their family members before them. Heifetz and Laurie outline three tasks to regulate distress:
1. Creating a Holding Environment – This involves creating a space where individuals and groups can freely discuss the impact of events and the changes to come. The leader’s role is to listen actively, with curiosity and without preconceptions, allowing the group to work through issues together without immediately providing solutions. This space serves as a place to express emotions and "vent."
2. Directing the Work, Managing Conflict, and Protecting the Team – Leaders must share plans and activities in a way that does not overwhelm but is sequenced and considered. Not everything can be a priority at once.
3. Presence and Poise – This involves maintaining composure and resilience in the face of change, helping others manage stress, and promoting healthy relationships within and between teams.
4. Maintain Disciplined Action
Change requires doing the hard work. Like improving areas in our personal lives, it’s easy to revert to older, more familiar ways of operating. Leaders must address divisive issues while respecting the diverse experiences, knowledge, values, and beliefs of their teams. Change causes disruption, and disruption creates pain and a sense of loss. Ignoring that grief and pressing forward regardless can damage cohesion and trust. However, this must be balanced with the need to drive adaptive change throughout the organisation.
Leaders must also be aware of less overt defences against change, such as distraction, projection, blame, and focusing on immediate operational demands as a way to avoid the longer-term work. Blame and scapegoating are easy ways for individuals and teams to circumvent necessary tasks, bogging down leaders in the here and now. Issues must be unpacked, resolved, and agreed-upon courses of action must be committed to in order to move forward. Emotional intelligence is a crucial skill for a change leader to possess in these situations.
5. Give the Work Back to the People
Tapping into the tacit skills and knowledge of individuals across the organisation is vital for successful change. Uncovering unique viewpoints helps leaders understand the current state and how transformation can be effectively implemented. Leaders should set the vision for change, guide stakeholders through it, and provide them with the autonomy and responsibility to get the work done. Encouraging collaboration and ownership among all members of the organisation fosters intrinsic motivation and ensures that those who will work in the system daily are engaged in the change process. Additionally, it allows leaders to step back onto the balcony during the change process, assess progress, and adjust activities as required.
6. Protect Leadership Voices from Below
Stakeholders across the organisation benefit from listening to diverse perspectives from within. Often, those with operational knowledge are silenced or ignored. Self-protection and anxiety can make these voices less articulate or poorly timed. However, adaptive leaders benefit from listening and being curious about these voices, as they often provide real insight into how the organisation operates, its challenges, and potential solutions. Ignoring future leaders can also impact psychological safety within the organisation and hinder talent retention. “One has to get accustomed to getting on the balcony, delaying the impulse, and asking, ‘What is this person really talking about? Is there something we are missing?’” (Heifetz & Laurie, 2001).
Leveraging Adaptive Leadership Techniques for Transformation at Boeing
Clearly, Ortberg has a daunting task ahead of him. As he begins the challenge of transforming the organisation, adaptive leadership offers a powerful framework to guide his efforts. Rooted in the need to address complex, systemic issues rather than surface-level problems, adaptive leadership can help rebuild trust, engage stakeholders, and foster a culture of accountability and innovation. By managing resistance to change, balancing short-term and long-term goals, and encouraging collaboration across the company, adaptive leadership will support Boeing in overcoming its recent challenges and positioning itself for sustainable success. These four focal areas highlight how adaptive leadership can be instrumental in driving the necessary organisational transformation.
1. Addressing Complex Challenges: Adaptive leadership equips the CEO to dig beneath the surface of Boeing’s issues, identifying and addressing the deep-rooted systemic failures that have plagued the company. The 737 MAX disasters exposed not just technical flaws but also cultural and operational disconnects within the organisation (What’s the outlook for Boeing’s recovery?, 2024). By understanding that these are adaptive challenges requiring new ways of thinking and operating, the CEO can move beyond quick fixes to implement lasting solutions. This approach involves engaging with multiple stakeholders to uncover the underlying factors driving these issues, such as misaligned priorities between engineering and management or communication breakdowns between departments (Boeing faces more questions about its aircraft after fresh incident, 2024).
2. Building Trust and Managing Resistance: Transformational change often triggers fear and resistance within an organisation, especially one as large and historically significant as Boeing. Adaptive leadership encourages the CEO to actively engage with employees, listen to their concerns, and build trust through transparency and empathy. By relocating his office to Seattle, closer to Boeing’s production facilities, Ortberg is taking a visible step towards bridging the gap between management and operations (Boeing Starliner astronauts stuck at International Space Station, 2024). This symbolic move, combined with genuine efforts to involve employees in the change process, can help alleviate anxiety and resistance, fostering a more unified and cooperative environment.
3. Promoting Innovation and Continuous Learning: Adaptive leadership emphasises the importance of fostering a culture where experimentation and learning are valued. For Boeing, this means encouraging teams to innovate, share insights, and learn from both successes and failures. Given the high stakes in aerospace manufacturing, the CEO can use adaptive leadership to create safe spaces for teams to explore new approaches without the fear of failure. This approach also involves tapping into the tacit knowledge of employees at all levels, recognising that those closest to the work often have valuable insights into potential improvements and innovation. By promoting continuous learning, the CEO can help Boeing remain agile and responsive to industry changes and emerging challenges (Heifetz & Laurie, 2001).
4. Strengthening Collaboration and Accountability: Boeing’s past challenges have highlighted the dangers of organisational silos and a lack of accountability. Adaptive leadership provides a framework for breaking down these barriers by fostering collaboration across departments and encouraging shared responsibility for outcomes. The CEO can promote a more integrated approach to problem-solving, where teams work together to address complex challenges, rather than operating in isolation. By giving the work back to the people and ensuring that accountability is distributed throughout the organisation, Ortberg can cultivate a sense of ownership and commitment among employees, leading to more effective and sustainable change. This approach also helps in aligning the organisation’s various functions—such as engineering, manufacturing, and finance—towards common goals, ensuring that everyone is working towards the same vision for Boeing’s future (Heifetz & Laurie, 2001).
References:
1. Boeing faces more questions about its aircraft after fresh incident. (2024, July 11). Financial Times. https://www.ft.com/content/1d6aa5bb-b162-4217-912a-b698c84e5d00
2. Boeing is not responding to its 737 Max change of course. (2024, July 11). Financial Times. https://www.ft.com/content/abd523b0-2e4a-4fd1-aadf-a0af59db296e
3. Boeing Starliner astronauts stuck at International Space Station. (2024, July 11). ABC News. https://www.abc.net.au/news/2024-07-11/boeing-starliner-astronauts-stuck-at-international-space-station/104083926
4. Federal Aviation Administration. (n.d.). Section 103 Organization Designation Authorizations (ODA) for Transport Airplanes Expert Panel Review Report. https://www.faa.gov/regulationspolicies/rulemaking/committees/documents/section-103-organization-designation
5. Heifetz, R. A., & Laurie, D. L. (2001). The work of leadership. Harvard Business Review. https://hbr.org/2001/12/the-work-of-leadership
6. United States Senate Permanent Subcommittee on Investigations. (2024, June 17). Preliminary information from the Subcommittee’s inquiry into Boeing’s safety and quality practices [Staff Memorandum]. https://www.hsgac.senate.gov/wp-content/uploads/2024.06.17-PSI-Majority-Staff-Memorandum.pdf
7. What’s the outlook for Boeing’s recovery? (2024, August 3). Financial Times. https://www.ft.com/content/dcd39dc6-ae3b-4203-9210-c321eac8f5e5
8. Walters, K. (2024, July 11). Boeing Starliner astronauts stuck at International Space Station. ABC News. https://www.abc.net.au/news/2024-07-11/boeing-starliner-astronauts-stuck-at-international-space-station/104083926
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