The Vulgar Math of Exploding Automobiles

In late 1968, Ford’s swashbuckling Executive Vice President, Lee Iacocca, was shaking in his boots. Convinced that VW’s beetle and a swell of Japanese imports would subsume the American car market unless Ford countered with a subcompact of its own, Lee greenlit a production schedule that would make the 737 MAX look thorough. From clean sheet to 1971 Ford dealership floors, the Pinto was baked in just 25 months.

We look back now on the Pinto calamity, with its 900 lives claimed and billions of dollars of enterprise value forfeit, and see a rushed program that overlooked crucial safety measures and tried to bury the evidence. The truth, however, is much more insidious. Sophisticated actuarial calculations underlay Ford’s safety decisions, not blunderous bluster. And the Pinto’s fireprone gas tank would have been delivered exactly the same to market in 1972 as 1971. None of the fatal errors were made due to haste; rather, the Pinto was a casualty of corporate culture. Today we’ll dig into why that’s the case, and how you can stop your own Pinto from being born before you have to pay the price Lee Iacocca did.

Wild Mustangs, Quiet Mules

Lee Iacocca rose from marketing to leadership prominence at Ford with the thunderous success of his brainchild, 1964’s Mustang. By the late 1960s, the entire company was looking to him for direction in combatting the overseas invasion of subcompact automobiles eating up American muscle’s market share. While he famously relished the attention, Lee likely did not understand the microscope under which his missives would be evaluated by subordinates in an effort to please him. Put simply, he didn’t “get” the implications of modeling a company-wide culture.

Lee did a great job of setting a clear vision for the Pinto. It was to be “not an ounce over 2,000 pounds nor a cent over $2,000.” In today’s office environment, that vision would have been taken as a lodestar and worked towards diligently. At 1970 Ford it was received as an unquestionable baseline, pushback against which would have meant instant career suicide.

Lee was also on record as not being a huge fan of safety. His true stance was that safety didn’t sell cars at Ford (the Volvo model). That is, it shouldn’t be the focus of design or marketing. It was interpreted down the pecking order, however, that Lee simply didn’t want to hear about safety at all – including imminent safety issues related to the Pinto.

So, nobody told Lee about the 40 internal crash tests of the Pinto, wherein every crash over 25mph resulted in a ruptured gas tank. Nobody told him about the 1 dollar, 1 pound piece of plastic (really – that’s not hyperbole) that could have obviated the issue.

Instead of moving these issues up the ladder, middle management decided to do math. They figured out the tort value of a human life, the negative press from fires, the frequency of crashes, and the likelihood of those crashes turning into fiery tragedies. When all that math came out the other side of the actuarial meat grinder, Ford determined that it would be cheaper to pay victims’ settlements than to add that 1 pound 1 dollar plastic baffle between the rear differential and gas tank.

What decision would Lee have made if he had known about the issue and solutions? You hope he would have installed the fix. In court discovery documents years later, he claims he would have. In fact he sounds shocked by the vulgar decisionmaking of his direct reports, who sincerely felt they were carrying out his vision.

The vulgarity carried forward through the 70s recall period when the Pinto’s engineering shortcomings were now well known by the public – and Iacocca. Applying the same math, Ford determined that a recall would be $121 million, whereas paying off the growing tally of victims would only cost $50 million. Guess which choice they made. When the legal dust settled, Ford’s “Pinto tab” far exceeded the $131M jury damages. Billions of dollars of consumer trust were erased for decades. $3M of plastic would have saved Ford this fate, and spared 900 innocent lives.

What Lee was missing, was tone. Regardless of the prevailing cultural challenges of corporate life in the late 1960s, the best executives were then and are now able to temper vision with tone. The implicit understandings we all hope our people will share with us, aren’t always communicated with strict language. Broadly announcing you have an open door policy is different than proactively seeking feedback from subordinates and publicly acting on it. Claiming to care about workplace gender equality on a website “values” statement is different than having a senior female executive visibly take extended maternity leave without negative career consequence. The words are not enough – the culture must be set through tone. That takes time, nuance, and caring. Three things that were in short supply at Ford in the sixties, and might be in shorter supply than we’d prefer to admit in our own organizations.

3 Culture missteps that lead to Pintos

Common “strong leadership” characteristics can lead to tonal misjudgment on teams:

  1. Show don’t Tell. Lack of demonstrative follow-through on values is corrosive. It doesn’t just decrease the impact of the value in question: it degrades the organizational importance of all stated values. If you are willing to publicly flout one of your stated positions, who’s to say they’re not all up for negotiation? Pick your values carefully; champion them as though your company’s future depends on it.
  2. Mimicry Intensifies. When the head of the ship is a larger-than-life figure, it signals to middle management that they should aim for similar tone with their subordinates. This game of telephone intensifies as it moves down the food chain, until it reaches engineers who can logically conclude that their boss would rather not hear about exploding fuel tanks because “safety doesn’t sell.”
  3. Boxes vs Practicality. It’s very fashionable in 2020 to “time-box” or “cost-box” or “resource-box” initiatives to keep them under control but enable flexibility within a set of parameters. This sort of absolutism is often useful but unhealthy. Most things in life expand to fit the containers in which we place them. Ask yourself how far away this technique is from the set of circumstances that led to the Pinto. It can be healthier organizationally, though more taxing for management, to take an active role in correlating milestones to costs and entertaining the cost-benefit questions which naturally arise as projects mature.

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