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Miracle in San Francisco Shows How Corporate Conduct Can Work

Matt Kelly | July 8, 2013

I spent part of July 4th weekend in the White Mountains of New Hampshire, and was hiking up Mount Washington on Saturday afternoon when someone told me the news: an airliner had just crashed at San Francisco International Airport.

What? I thought to myself. An airline crash, here in the United States? When was the last time that happened?

By the time we reached the summit two hours later, more details had emerged. Yes, the television at the Mount Washington Visitors Center told us, an airliner had crashed while attempting to land in San Francisco. But even in those early moments, all evidence suggested that the vast majority of more than 300 people on Asiana Flight 214 had escaped—despite the jet breaking in two and bursting into flames.

OK, I thought to myself again, relieved. That seems more normal. That's what I was expecting to hear.

By Monday morning, only two people died in the crash; a tragedy without question, but still a testament to how far aviation has come. For the record, the last crash in the United State of a major passenger airline happened nearly 11 years ago, in November 2001, when an American Airlines flight crashed just after takeoff in New York and all 260 passengers and crew perished, along with five people on the ground in Queens. That was the last major disaster for commercial aviation in the United States.

How did the aviation industry achieve something so remarkable? How did so many different groups—airlines, airplane makers, engine makers, industry regulators, employee unions, local governments, and more—come together to set a goal of passenger safety, and then work together to achieve it? That success is something every business executive should study, because so many other industries have tried something similar, and failed.

For example, regulation played a strong role in aviation safety. Starting in the mid-2000s the Federal Aviation Industry required all commercial aircraft in the United States to use seats capable of staying bolted in place even at 16 times the force of gravity. (That is far more than most planes would ever experience in a crash, and more than humans can survive anyway.) The FAA has also long specified that commercial aircraft must be able to evacuate all passengers in less than 90 seconds, even with half the exits not available.

A strong regulatory tone, however, goes only so far. Industry must want to achieve the same end, and in this case that regulatory goal—greater passenger safety—fit well with what commercial aviation wanted anyway. Remember, air travel had been extremely safe long before the mid-2000s; the Boeings, Airbuses, Embraers and airlines of the world, however, wanted to make air travel even safer thanks to the unique public fascination with (read: fear of) plane crashes. Better air safety leads to more consumer confidence in the airlines, which leads to more money for the aviation business.

In other words, air safety is one instance where regulatory goals and industry self-interest align perfectly, so everyone wants to work together.

That doesn't happen as often as one would like. For example, when a major plane crash does happen, a full and open investigation dissects every possible cause of failure. In the IT realm, however, corporations are subject to hacking and security breaches all the time—and just try to find examples of companies publicly disclosing how their systems were breached, or even just disclosing that a breach happened at all.

We are starting to see some glimmers of industry cooperation on supply-chain risks and anti-corruption efforts. Within the last week we've seen European retail and fashion businesses agree to form an industry consortium that plans to inspect every garment factory in Bangladesh, after the Savar factory collapse in that country that killed more than 1,100 in April. We've written in these pages before about Latin American businesses' experiments with accione colectiva, where participating companies meet to review and confirm their anti-bribery compliance programs.

Alas, even these efforts are fraught with anti-trust risk. (Just imagine, for example, how regulators might respond if one of these industry consortiums did find a corrupt supplier, and collectively decided not to do business with that party any longer.) The anti-corruption regulators are saying one thing, the anti-trust regulators another, and corporations are left with conflicting messages. That ends the quest for improvement right there.

Let's also be honest: the commercial imperative for ethical business practices is still far less than the imperative for safe products. Nobody at the receiving end of a cheap pair of jeans can easily understand the costs of corruption in Bangladesh—but investors can see the benefits of cheap labor, and the instinct is to embrace the profits while ignoring the social costs. Corporate social responsibility is moving that needle of social awareness in the right direction, but the needle is moving slowly, and has far to go.

Nobody should give up hope at improved corporate conduct. We do have a long way to go on many fronts, certainly. But as the survivors of Asiana Flight 214 can attest, we know how to make great strides, too.