The Ford Pinto Case The Pinto is a car launched by Ford in the, in the year 1970. And there's probably never been a car that has been so controversial as the Pinto. The car had a serious problem. The gas tank is at the rear end of the car. And whenever another car crashes on the Pinto from behind, there's a high risk of gas tank rupture. So, the Pinto risks to explode in a ball of fire. And everyone in the car would burn and die. The Pinto story has become a symbol of the cold-hearted profit maximization attitude of companies who make, try to make money at any price even if human life is at stake. Ford engineers knew about the gas tank problem. They did more than 40 crash tests and in all these crash tests the problem occurred. Ford even made a cost benefit analysis with regards to the reduction of that risk. They calculated as follows: What will it cost to invest in a reduced explosion risk? There are roughly 12,500,000 vehicles, you have to invest $11 per vehicle to make the back part stronger. And this would cost roughly $137 million USD. What would be the benefit of this investment? Well, statistically you can predict that there will be rough, roughly 180 persons dying in the car. Which according to the statistics of the insurance companies costs $200 thousand per person. There would be roughly 180 persons heavily burned but still alive which costs a bit less $67 thousand per person. And there will be 2,100 burned cars. If you calculate $700 per car, you arrive at roughly $50 million and you see, this is much cheaper. It is not worth investing in a reduction in the explosion risk from the perspective of a cost-benefit analysis. It is estimated that between 500 and 900 people burnt in Pintos. And Ford did not stop the production of the Pinto even when the dying started, even when these cars came in with these accidents. Instead, they paid millions of dollars to settle damages out of the court, and they continued to produce the Pinto. In August 1978, three teenagers burned when a truck crashed into their Pinto from behind, and Ford was for the first time charged of reckless homicide. In the end, the jury finally voted in favor of them, but the reputation damage was huge. And finally, they decided to stop the production of the Pinto. Looking at this case, we have the impression that this is a bunch of greedy, unethical people. But, let us look at the case from the perspective of ethical blindness. Ford, as all the car makers, had a call back team. The call back tearn basically had the role of deciding when to call back a car to fix a problem. This team sees the first Pintos coming in and they decide not to call back the Pinto. One of the engineers in this team is Dennis Gioia, who later became a famous management professor who later writes down a story of his experience of the time of the 1970s when he was an engineer at Ford in the call back team. We at times refer about ethical blindness. It is the temporary loss of the ability to see the ethical dimension of a decision at stake. And now here, what Dennis Gioia is saying about his own perspective of his own position in this call back team in the 1970s, later when he became a management professor. After I left Ford I now argue and teach that Ford had an ethical obligation to recall. But while I was there, I perceived no strong obligations to recall and I remember no strong ethical overtones to the case whatsoever. Or, why didn't I see the gravity of the problem and its ethical overtones? What happened to the value system carried with me into Ford?" So you see, this is a typical case of ethical blindness. You make the decision. You do not see the ethical dimension. Before and afterwards, you are able to see it, but not in the very moment of making the decision. In 1973 Dennis Gioia became the call back coordinator at Ford. And he's in charge of tracking the information that might lead to call back decisions. He has the responsibility for overseeing about 100 active recall campaigns. And he is responsible for observing numerous other potential call back cases. So, he is drowning in complexity. Comparably few Pintos come in with this horrible accident. Is this a candidate for a call back? Not really. Call back team has a clear standard operating procedure with two criteria they should search for when making this decision. First of all, is there a high frequency of cases? So, do many cars have this problem? Second, is there a clear traceability? So, can we clearly trace the problem to a certain part of the car? Both elements were not given in the Pinto. The Pinto, as such, was a problem. And Gioia had little time to reflect upon cases that did not meet these two criteria. Giola was acting under high complexity, immense time pressure. He had to rely, basically, on the standard operating procedure to prototype information to frame them and to make decisions. And as we have seen, frames help us to focus. Frames help, help us to make quick decisions in situations that come repeatedly. So applying these standard operating procedures, Gioia is looking for particular cues. He can't find them in the, in the Pinto case. How can you go to your boss and tell him you have to make a very expensive call back decision, when you can't even give legitimate arguments according to the standards of your corporation. Gioia felt that he would look ridiculous proposing a call back for the Pinto. So, this is the immediate situation of the call back team. Clear frame, time pressure, overwhelming complexity. They're caught in this routine. And there's group pressure, of course, because there are several engineers and none of ther' sees a problem. You look left, you look right. Everyone is, is feeling comfortable with the decision you make, why should you feel differently? There are other elements of the story that made this frame of the engineers even more narrow. Look at the organizational layer of the context. The Pinto is the baby of the CEO of this company, Lee lacocca. He was in urgent need of a small car at that time. Why? Well, there's the oil crisis. Your competitors, Volkswagen Japanese car makers, they aggressively win market shares in your market because they have small cars and, and customers suddenly want small cars that consume less. There's a pressure to produce such a small car as fast as possible. Ford engineers are given 25 weeks to plan the car. Normally, they had 43. So, there's an extremely short production planning schedule. Time pressure is not just on the engineers in the call back team, time pressure is already on the engineers planning and developing the car. Safety was not a popular issue at Ford at that time. Nobody would dare to harass the CEO with safety issues. He was famous for always saying safety doesn't sell. And he was having rigid objectives. It was called the limit of the 2,000s. There were two limits of 2,000. First of all, he told his team the Pinto should not weigh more than 2,000 pounds and second the Pinto should not cost more than $2,000. Do you want to be the guy goes to him and tells him it will cost more than $2,000? This might be a career terminating move for you. And the word problem, by the way, was forbidden in this organization. And the legal department had declared that it should be avoided as a word. And here you have a classic case of self-censorship. If you cannot say it, how can you see it as a problem? CEO's like Lee lacocca were pretty much told what they wanted to hear, like in the fairy tale of The Emperor's New Clothes. Crash tests start in 1968. The Pinto is put on the market in 1970. So, there's not much data available. And, crash tests are only obligatory in 1977. So, in the year the Pinto is brought to the market, you can completely fail a crash test and still market the car. It's legal. Engineers are still struggling to interpret the data of the crash test they have started to do. How would these crash tests apply, the data apply to real crashes, real accidents? There was no consensus about that. Of course, the Pinto performed worse than all the other small cars at that time in crash tests, but only a bit worse than the others. So it seemed to be acceptable. Engineers at Ford, were driving Pinto's themselves. So, the impression overall was, the Pinto is more or less as safe as all the other cars on the market. And maybe, the explosion was perceived as an acceptable risk. It had a low probability. And driving cars as such, at that time, was perceived as a risk that customers accept. Finally, if we have these two layers of the immediate pressure of the context of the engineers and the call back team, the organization, we have this third layer of the societal institutional context. How does that context look like? As said before, early in the 1970s there's the oil crisis. There's the crisis of the automotive industry, not because of the oil crisis alone, but also because of the aggressive competition with the car makers who arrive with their small cars. People want smaller and less consuming cars. The only trurnp Ford had was the Pinto. There was no other small car available. Do you want to risk your only trump in the market in a situation of crisis if there's nothing else you have to offer? There's a growing regulatory pressure that started at the time. Ralph Nader, the activist, has written a book, Unsafe at Any Speed, in which he explains in detail how the car makers disregarded safety issues and were responsible for many dead people in accidents. This external pressure created an atmosphere of us against them inside Ford. So, there were all these external threats. All these enemies. Governments who wanted to regulate aggressive competition. Customers changing their habits and expectations. If you have a very strong perception of us against them, the us, the inside people, they're close like in a medieval castle, and they feel beseeched by the outside world. If you develop strong inside outside group feelings, this is often the beginning of rule breaking. Outside, the idiots. Inside, the guys who know everything. This is the atmosphere at that moment. Finally drivers as I said, are well aware of the risk of driving cars. The overall perception is that accidents happen for two reasons, because of drivers and because of streets. Because drivers are not well-trained and streets are not well- built. So, if you're in this call back team, you see these Pintos coming in with these devastating accidents. And if you believe that accidents are true, are caused by drivers and streets, you might not be surprised that the engineers did not involve more self-reflection in, in this situation. Ford even held patents for safer gas tanks. But safer gas tanks were larger, they would reduce the space in the trunk. And if you asked customers in the early 70s, would you prefer more safety, or larger trunk? Most of them would prefer the larger trunk. Lacocca gave the order, as said earlier, that the car should not cost more that $2,000. Why did he give this order? Because he was a well experienced automotive manager. He knew that there was a very high price sensitivity in the market. We increase the price, customers switch to another model. In the crisis situation, that's the least thing you want. So, is it a case of greed and in, intended evil? Is it a case of bad apples? As you might agree with us, Ford's behavior is less a case of deviant behavior. It is more a case of confirming the dominating rules of the game. The dominating practices and beliefs that are there in this industry at this very moment. Safety is systematically de-emphasized by everyone in that industry in this moment. So, if you put together this constellation of these three contexts: the situation, the organization, the societal level, what you get is a very strong context that seems to remove the ethical dimension from the decision making of the managers. And this does explain why someone like Dennis Gioia can say, well why didn't I see it when I was making this decision? Of course, we do not want to excuse the behavior of these managers. We just want to understand them better so that we can, in the future, prevent this kind of strong context around people who make decisions. So let us conclude with few observations. The first one, the idea that bad things are done by bad people, so called bad apples, does not help to explain sufficiently unethical decisions in organizations. Second, different layers of contexts, situation, organization, society, can build powerful constellations that switch off reason in decision makers. And third, in such contexts, decision makers might get blinded for the ethical dimension of their decisions. They behave unethically, but they can not see it. Lastly, the obligation of engineers to protect the health and safety of the public requires more than refraining from telling lies or simply refusing to withhold information. It sometimes requires that engineers aggressively do what they can to ensure that the consumers of technology are not forced to make uninformed decisions regarding the use of that technology. This is especially true when the use of technology involves unusual and unperceived risks. This obligation may require engineers to do what is necessary to either eliminate the unusual risks or, at the very lcast, inform those who use the technology of its dangers. Otherwise, their moral agency is seriously eroded. Please answer the following questions: 1. What was the business context to come up with the "pinto" model? 2. Was safety a priority in designing the Pinto, what is your opinion? 3. Do you think when the accidents were happening Ford could see the reason of the accidents clearly? 4. What is your opinion regarding the cost-benefit analysis, do you support this approach? 5. If you are allowed to change any of the described decisions and actions by Ford in retrospect, what would that be and why? Good Luck The Ford Pinto Case The Pinto is a car launched by Ford in the, in the year 1970. And there's probably never been a car that has been so controversial as the Pinto. The car had a serious problem. The gas tank is at the rear end of the car. And whenever another car crashes on the Pinto from behind, there's a high risk of gas tank rupture. So, the Pinto risks to explode in a ball of fire. And everyone in the car would burn and die. The Pinto story has become a symbol of the cold-hearted profit maximization attitude of companies who make, try to make money at any price even if human life is at stake. Ford engineers knew about the gas tank problem. They did more than 40 crash tests and in all these crash tests the problem occurred. Ford even made a cost benefit analysis with regards to the reduction of that risk. They calculated as follows: What will it cost to invest in a reduced explosion risk? There are roughly 12,500,000 vehicles, you have to invest $11 per vehicle to make the back part stronger. And this would cost roughly $137 million USD. What would be the benefit of this investment? Well, statistically you can predict that there will be rough, roughly 180 persons dying in the car. Which according to the statistics of the insurance companies costs $200 thousand per person. There would be roughly 180 persons heavily burned but still alive which costs a bit less $67 thousand per person. And there will be 2,100 burned cars. If you calculate $700 per car, you arrive at roughly $50 million and you see, this is much cheaper. It is not worth investing in a reduction in the explosion risk from the perspective of a cost-benefit analysis. It is estimated that between 500 and 900 people burnt in Pintos. And Ford did not stop the production of the Pinto even when the dying started, even when these cars came in with these accidents. Instead, they paid millions of dollars to settle damages out of the court, and they continued to produce the Pinto. In August 1978, three teenagers burned when a truck crashed into their Pinto from behind, and Ford was for the first time charged of reckless homicide. In the end, the jury finally voted in favor of them, but the reputation damage was huge. And finally, they decided to stop the production of the Pinto. Looking at this case, we have the impression that this is a bunch of greedy, unethical people. But, let us look at the case from the perspective of ethical blindness. Ford, as all the car makers, had a call back team. The call back tearn basically had the role of deciding when to call back a car to fix a problem. This team sees the first Pintos coming in and they decide not to call back the Pinto. One of the engineers in this team is Dennis Gioia, who later became a famous management professor who later writes down a story of his experience of the time of the 1970s when he was an engineer at Ford in the call back team. We at times refer about ethical blindness. It is the temporary loss of the ability to see the ethical dimension of a decision at stake. And now here, what Dennis Gioia is saying about his own perspective of his own position in this call back team in the 1970s, later when he became a management professor. After I left Ford I now argue and teach that Ford had an ethical obligation to recall. But while I was there, I perceived no strong obligations to recall and I remember no strong ethical overtones to the case whatsoever. Or, why didn't I see the gravity of the problem and its ethical overtones? What happened to the value system carried with me into Ford?" So you see, this is a typical case of ethical blindness. You make the decision. You do not see the ethical dimension. Before and afterwards, you are able to see it, but not in the very moment of making the decision. In 1973 Dennis Gioia became the call back coordinator at Ford. And he's in charge of tracking the information that might lead to call back decisions. He has the responsibility for overseeing about 100 active recall campaigns. And he is responsible for observing numerous other potential call back cases. So, he is drowning in complexity. Comparably few Pintos come in with this horrible accident. Is this a candidate for a call back? Not really. Call back team has a clear standard operating procedure with two criteria they should search for when making this decision. First of all, is there a high frequency of cases? So, do many cars have this problem? Second, is there a clear traceability? So, can we clearly trace the problem to a certain part of the car? Both elements were not given in the Pinto. The Pinto, as such, was a problem. And Gioia had little time to reflect upon cases that did not meet these two criteria. Giola was acting under high complexity, immense time pressure. He had to rely, basically, on the standard operating procedure to prototype information to frame them and to make decisions. And as we have seen, frames help us to focus. Frames help, help us to make quick decisions in situations that come repeatedly. So applying these standard operating procedures, Gioia is looking for particular cues. He can't find them in the, in the Pinto case. How can you go to your boss and tell him you have to make a very expensive call back decision, when you can't even give legitimate arguments according to the standards of your corporation. Gioia felt that he would look ridiculous proposing a call back for the Pinto. So, this is the immediate situation of the call back team. Clear frame, time pressure, overwhelming complexity. They're caught in this routine. And there's group pressure, of course, because there are several engineers and none of ther' sees a problem. You look left, you look right. Everyone is, is feeling comfortable with the decision you make, why should you feel differently? There are other elements of the story that made this frame of the engineers even more narrow. Look at the organizational layer of the context. The Pinto is the baby of the CEO of this company, Lee lacocca. He was in urgent need of a small car at that time. Why? Well, there's the oil crisis. Your competitors, Volkswagen Japanese car makers, they aggressively win market shares in your market because they have small cars and, and customers suddenly want small cars that consume less. There's a pressure to produce such a small car as fast as possible. Ford engineers are given 25 weeks to plan the car. Normally, they had 43. So, there's an extremely short production planning schedule. Time pressure is not just on the engineers in the call back team, time pressure is already on the engineers planning and developing the car. Safety was not a popular issue at Ford at that time. Nobody would dare to harass the CEO with safety issues. He was famous for always saying safety doesn't sell. And he was having rigid objectives. It was called the limit of the 2,000s. There were two limits of 2,000. First of all, he told his team the Pinto should not weigh more than 2,000 pounds and second the Pinto should not cost more than $2,000. Do you want to be the guy goes to him and tells him it will cost more than $2,000? This might be a career terminating move for you. And the word problem, by the way, was forbidden in this organization. And the legal department had declared that it should be avoided as a word. And here you have a classic case of self-censorship. If you cannot say it, how can you see it as a problem? CEO's like Lee lacocca were pretty much told what they wanted to hear, like in the fairy tale of The Emperor's New Clothes. Crash tests start in 1968. The Pinto is put on the market in 1970. So, there's not much data available. And, crash tests are only obligatory in 1977. So, in the year the Pinto is brought to the market, you can completely fail a crash test and still market the car. It's legal. Engineers are still struggling to interpret the data of the crash test they have started to do. How would these crash tests apply, the data apply to real crashes, real accidents? There was no consensus about that. Of course, the Pinto performed worse than all the other small cars at that time in crash tests, but only a bit worse than the others. So it seemed to be acceptable. Engineers at Ford, were driving Pinto's themselves. So, the impression overall was, the Pinto is more or less as safe as all the other cars on the market. And maybe, the explosion was perceived as an acceptable risk. It had a low probability. And driving cars as such, at that time, was perceived as a risk that customers accept. Finally, if we have these two layers of the immediate pressure of the context of the engineers and the call back team, the organization, we have this third layer of the societal institutional context. How does that context look like? As said before, early in the 1970s there's the oil crisis. There's the crisis of the automotive industry, not because of the oil crisis alone, but also because of the aggressive competition with the car makers who arrive with their small cars. People want smaller and less consuming cars. The only trurnp Ford had was the Pinto. There was no other small car available. Do you want to risk your only trump in the market in a situation of crisis if there's nothing else you have to offer? There's a growing regulatory pressure that started at the time. Ralph Nader, the activist, has written a book, Unsafe at Any Speed, in which he explains in detail how the car makers disregarded safety issues and were responsible for many dead people in accidents. This external pressure created an atmosphere of us against them inside Ford. So, there were all these external threats. All these enemies. Governments who wanted to regulate aggressive competition. Customers changing their habits and expectations. If you have a very strong perception of us against them, the us, the inside people, they're close like in a medieval castle, and they feel beseeched by the outside world. If you develop strong inside outside group feelings, this is often the beginning of rule breaking. Outside, the idiots. Inside, the guys who know everything. This is the atmosphere at that moment. Finally drivers as I said, are well aware of the risk of driving cars. The overall perception is that accidents happen for two reasons, because of drivers and because of streets. Because drivers are not well-trained and streets are not well- built. So, if you're in this call back team, you see these Pintos coming in with these devastating accidents. And if you believe that accidents are true, are caused by drivers and streets, you might not be surprised that the engineers did not involve more self-reflection in, in this situation. Ford even held patents for safer gas tanks. But safer gas tanks were larger, they would reduce the space in the trunk. And if you asked customers in the early 70s, would you prefer more safety, or larger trunk? Most of them would prefer the larger trunk. Lacocca gave the order, as said earlier, that the car should not cost more that $2,000. Why did he give this order? Because he was a well experienced automotive manager. He knew that there was a very high price sensitivity in the market. We increase the price, customers switch to another model. In the crisis situation, that's the least thing you want. So, is it a case of greed and in, intended evil? Is it a case of bad apples? As you might agree with us, Ford's behavior is less a case of deviant behavior. It is more a case of confirming the dominating rules of the game. The dominating practices and beliefs that are there in this industry at this very moment. Safety is systematically de-emphasized by everyone in that industry in this moment. So, if you put together this constellation of these three contexts: the situation, the organization, the societal level, what you get is a very strong context that seems to remove the ethical dimension from the decision making of the managers. And this does explain why someone like Dennis Gioia can say, well why didn't I see it when I was making this decision? Of course, we do not want to excuse the behavior of these managers. We just want to understand them better so that we can, in the future, prevent this kind of strong context around people who make decisions. So let us conclude with few observations. The first one, the idea that bad things are done by bad people, so called bad apples, does not help to explain sufficiently unethical decisions in organizations. Second, different layers of contexts, situation, organization, society, can build powerful constellations that switch off reason in decision makers. And third, in such contexts, decision makers might get blinded for the ethical dimension of their decisions. They behave unethically, but they can not see it. Lastly, the obligation of engineers to protect the health and safety of the public requires more than refraining from telling lies or simply refusing to withhold information. It sometimes requires that engineers aggressively do what they can to ensure that the consumers of technology are not forced to make uninformed decisions regarding the use of that technology. This is especially true when the use of technology involves unusual and unperceived risks. This obligation may require engineers to do what is necessary to either eliminate the unusual risks or, at the very lcast, inform those who use the technology of its dangers. Otherwise, their moral agency is seriously eroded. Please answer the following questions: 1. What was the business context to come up with the "pinto" model? 2. Was safety a priority in designing the Pinto, what is your opinion? 3. Do you think when the accidents were happening Ford could see the reason of the accidents clearly? 4. What is your opinion regarding the cost-benefit analysis, do you support this approach? 5. If you are allowed to change any of the described decisions and actions by Ford in retrospect, what would that be and why? Good Luck