Wall Street often enough, hasn't been portrayed in the best of lights when it comes to media, movies, and documentaries. Just like the Netflix (NASDAQ: NFLX) hit, 'The Social Dilemma', that cracked shots at social media giants and their misuse of data, Boeing's (NYSE: BA) reputation could likely take a beating following the latest documentary release 'Downfall: The Case Against Boeing'.
First off, spoiler warning in case you've added this one to your watchlist. But here's the overview. Amid a mirage of ongoing struggles, Boeing prioritized shareholder value at no expense. It let company culture slide, it sidestepped key regulatory hurdles, it docked employee wages where there were major disagreements with management concerning issues highlighted by employees.
The company was chasing a product-market fit so it could compete with Airbus, whose steady rise saw the company lose monumental market share. What was Boeing's response? Repurposing an existing jet, market it as more energy and fuel-efficient, and promising customers that this new, modified model would mean companies could save on the costly pursuit of training pilots. They actively engaged in a culture of hiding information and making sure that as little as possible was documented to minimize its culpability.
The lack of remorse shown for the family members of the victims was just an extra kick in the teeth that painted the company poorly. Unfortunately, these jets never should have flown without the necessary training in place, and as a result, two airplane crashes led to the death of hundreds of crew members and passengers.
Boeing managed to go from one of the most renowned and respected airline manufacturers in the world to one that customers were afraid to fly with overnight. This was a company that built itself the tagline "If it ain't Boeing, I ain't going". Following these serious mishaps, there's a sure chance that motto will be long forgotten.
At the route of it all, there are many fantastic businesses that add so much value to their customers and society -- take the recent ActivisionBlizzard issues for example -- it took a Microsoft acquisition to see the company rebound. Without that stroke of luck, who knows how things would have played out. In many cases, a brilliant business model is all well and good, but if there are ongoing cultural problems, negative consequences are a sure thing.
Poor culture brings an onslaught of issues that carry over to employee motivation, brand reputation, and willingness for consumers to buy from that company. History shows us it's crucial not to understate the role company culture plays when analyzing your investment decisions. Irrational markets bring enough volatility of their own, investors don't need to be greeted with additional risk stemming from poor management.
This serves a purpose and a lesson for all of us. Shareholder value is important, but it can't be sacrificed in order to chase profits.
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