Ethics

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Ethics

• February 21st

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Ford/Firestone
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background

• Long History
• 1999 14 deaths in Saudi Arabia (not reported in
  US)
• 2000 first deaths reported in the US
• Tires recalled

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• In December 2000, Firestone blamed Ford
• Firestone tires worked fine on Rangers problems
  were limited to Explorers
• SUVs role over easily independent of the tires
• In August 2001, Ford blamed Firestone
• Goodyear tires work fine
• May 21st 2001, Ford and Firestone officially part
  ways

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Wherein lies the blame?

• Ford
• Ford was alone SUV makers in equipping the
  Explorer with Class C tires versus class B tires
• To be a class C tire you have to withstand two
  hours at 50 mph when properly inflated and
  loaded, plus another 90 minutes at speeds up 85
  mph. (The standards were set in 1968)
• Class B tires are more heat resistant
• most Explorer death took place in hot Southern
  States and hot-climate countries
• The Good year tires that were used on the
  Explorer were class B
• Ford should have been aware of dangers (perhaps
  not immediately but certainly after a few years)

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• Firestone
• Early investigations linked deadly vehicle
  accidents to tire failure, shoddy manufacturing
  in the Decatur, Illinois plant
• Still GM picked Firestone as its supplier of the
  year for the sixth consecutive time in 2001
• Government
• Too slow to investigate deaths or to upgrade
  standards
• Driver
• Neglected tire pressure, too heavy loading,
  driving too fast for extended periods of time.

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Consequences

• In may of 2001 Ford announced it would triple the
  size of the Firestone recalla 2.8 billion
  prospect, a cost Ford wanted to shift to
  Firestone
• At that time Firestone refused to supply the
  company with more tires.
• Ford lost market share to foreign rivals, in July
  of 2001 it reported its first loss from
  operations since 1992

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• Ford also faced 200 product liabilities lawsuits
  involving Explorer rollovers
• Bridgestone/Firestone faced a more dangerous
  situation in 2000 earnings dropped 80
• Legal expenses were at 750 million and were
  expected to reach billions of dollars
• Some analysts doubted Firestone as a brand could
  survive

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Firestone Options

• Option 1
• Deemphasize firestone and push business to the
  Bridgestone label
• Option 2
• Stop using the firestone brand altogether
• Option 3
• Try to salvage the brand name The American
  Public is quick to forget.

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Postmortem

• Buyers of Ford Explorers with firestone tires
  faced higher risks of deaths and injuries for
  years. The New York times reported that the tire
  defects were known in 1996. Not till three years
  later did Ford replace tires in Saudi Arabia and
  not till after television reports on problems did
  federal regulators and the two manufacturers take
  it seriously

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• Ford refused to admit that anything was wrong
  with its SUV
• Firestone was slow to clean up defective
  manufacturing practices in Decatur, Illinois and
  other plants
• Minor ethical abuses became major when lives were
  lost. Still the companies delayed until lawyers
  were brought in. Then each company tried to
  blame the other.
• Throughout this time, saving lives did not
  apparently have a very high priority.

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Group Think

• The unethical behavior of groups
• The Abilene paradox

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Eight Main Symptoms of Group Think

• Illusion of Invulnerability Members ignore
  obvious danger, take extreme risk, and are overly
  optimistic.
• Collective Rationalization Members discredit and
  explain away warning contrary to group thinking.
• Illusion of Morality Members believe their
  decisions are morally correct, ignoring the
  ethical consequences of their decisions.
• Excessive Stereotyping The group constructs
  negative stereotypes of rivals outside the group.

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• Pressure for Conformity Members pressure any in
  the group who express arguments against the
  group's stereotypes, illusions, or commitments,
  viewing such opposition as disloyalty.
• Self-Censorship Members withhold their
  dissenting views and counter-arguments.
• Illusion of Unanimity Members perceive falsely
  that everyone agrees with the group's decision
  silence is seen as consent.
• Mindguards Some members appoint themselves to
  the role of protecting the group from adverse
  information that might threaten group
  complacency.

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Examples

• The most famous example of Groupthink is the
  presidential advisory group who almost led
  Kennedy into invading Cuba and potential nuclear
  war in the Bay of Pigs affair.
• The Challenger disaster was another effect where
  NASA officials disregarded engineers concerns
  and decided to launch the shuttle.

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Abilene Paradox

• The Abilene paradox is a paradox in which the
  limits of a particular situation force a group of
  people to act in a way that is directly the
  opposite of their actual preferences. It is a
  phenomenon that occurs when groups continue with
  misguided activities which no group member
  desires because no member is willing to raise
  objections. It was observed by management expert
  Jerry B. Harvey in his 1988 book The Abilene
  Paradox and other Meditations on Management. The
  name of the phenomenon comes from an anecdote in
  the book which Harvey uses to elucidate the
  paradox

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• On a hot afternoon visiting in Coleman, Texas,
  the family is comfortably playing dominoes on a
  porch, until the father-in-law suggests that they
  take a trip to Abilene (53 miles away) for
  dinner. The wife says, "Sounds like a great
  idea." The husband, despite having reservations
  because the drive is long and hot, thinks that
  his preferences must be out-of-step with the
  group and says, "Sounds good to me. I just hope
  your mother wants to go." The mother-in-law then
  says, "Of course I want to go. I haven't been to
  Abilene in a long time."
• The drive is hot, dusty, and long. When they
  arrive at the cafeteria, the food is as bad. They
  arrive back home four hours later, exhausted.
• One of them dishonestly says, "It was a great
  trip, wasn't it." The mother-in-law says that,
  actually, she would rather have stayed home, but
  went along since the other three were so
  enthusiastic. The husband says, "I wasn't
  delighted to be doing what we were doing. I only
  went to satisfy the rest of you." The wife says,
  "I just went along to keep you happy. I would
  have had to be crazy to want to go out in the
  heat like that." The father-in-law then says that
  he only suggested it because he thought the
  others might be bored.
• The group sits back, perplexed that they together
  decided to take a trip which none of them wanted.
  They each would have preferred to sit
  comfortably, but did not admit to it when they
  still had time to enjoy the afternoon.

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Avoiding Group Think

• The group should be made aware of the causes and
  consequences of group think.
• The leader should be neutral when assigning a
  decision-making task to a group, initially
  withholding all preferences and expectations.
  This practice will be especially effective if the
  leaders consistently encourages an atmosphere of
  open inquiry.
• The leader should give high priority to airing
  objections and doubts, and be accepting of
  criticism.
• Groups should always consider unpopular
  alternatives, assigning the role of devil's
  advocate to several strong members of the group.
• Sometimes it is useful to divide the group into
  two separate deliberative bodies as feasibilities
  are evaluated.

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• Spend a sizable amount of time surveying all
  warning signals from rival group and
  organizations.
• After reaching a preliminary consensus on a
  decision, all residual doubts should be expressed
  and the matter reconsidered.
• Outside experts should be included in vital
  decision making.
• Tentative decisions should be discussed with
  trusted colleagues not in the decision-making
  group.
• The organization should routinely follow the
  administrative practice of establishing several
  independent decision-making groups to work on the
  same critical issue or policy.

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Questions

• Can a firm guarantee complete product safety?
• Based on the information presented which company
  do you think is more to blame for the deaths and
  injuries?
• If an Explorer driver never checks the tire
  pressure and drives well above the speed limit,
  he has no one to blame but himself in an
  accidentnot the vehicle and not the tires.

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• Do you think the government should be blamed in
  the Explorer deaths and injuries?
• Have you had any experience with a Ford?
• Have you had any experience with Firestone tires?

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What can be learned

• A firm today must zealously guard against product
  liability suits
• Thorough product testing
• Suspicions and complaints about product safety
  must be thoroughly investigated
• Health and safety of customers is entirely
  compatible with the firms well-being
• Lose/lose scenario if customer safety is ignored
• If you dont do it for ethical or moral reasons
  do it because it make good business sense

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• Salvage strategy
• Attempt to tough it out, try to combat bad press,
  deny culpability, blame someone else, resort to
  the strongest legal defense. (this is what Ford
  did because it blamed Firestone for everything)
• Shredded tires were obvious and hard to blame on
  somebody else
• Conciliatory strategy
• Full admission of problem and removal of risk
• Both strategies can be costly Salvage puts
  potential costs in the future, Conciliatory puts
  costs now
• Where blame is most likely shared, the solution
  of the problem lies not in confrontation but in
  cooperation

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• Ford and Firestone today