The corporate apology - The Editor's Chair

Business Horizons, March-April, 1990 by Art Wolfe

The Corporate Apology

Imagine that your two teenage daughters and your niece were burned to death in a Ford Pinto when it was hit from behind by an auto as they slowed to pull off the highway. The impact shoved the gas tank onto the rear axle where it split open, gushing fuel into the passenger compartment. At the trial against Ford, the prosecution introduces a Ford study revealing that a committee of managers and designers estimated that the placement of the fuel tank would cause 180 burn deaths, 180 serious burn injuries, and 2,100 burned vehicles that would cost Ford a total of $49.5 million in court judgments for a negligent or defective design. To rectify the design for 11 million cars and 1.5 million light trucks with the Pinto-like gas tank design would cost $11 each, for a total expenditure of $137 million. Management's decision was rather straightforward: pay the less costly probable judgments for the burn deaths, and keep the design the same.

The results of this event, and ones like it, are the awful deaths that could have been prevented, the heart-shuddering grief of family and friends, and an onerous lawsuit against an organization that is today one of America's most profitable companies - as well as a plea by concerned observers of such events that we somehow address this problem through courses in ethics.

National news magazines, newspapers, and academic journals have all featured discussions of business ethics in the past few years. The common view of events like the Ford design decision is to suggest courses in business ethics for our undergraduates and professional students and thus address the problem. But just what is the problem? I have been teaching business ethics for ten years to MBA students and, in the process, I have read much of the literature in the field of business and professional ethics. In my reading, I have not seen a discussion of some of the fundamental structural problems in our business society that I believe cause the clamor for such courses.

In the current offering of business ethics courses, the textbooks provide a mild critique of what I call the surface problems: the misplaced emphasis on the values of corporate efficiency and profit. But the heart of the problem is deeper. It lies in understanding the structure of the environment in which the committee at Ford saw death and destruction to be preferable to a design change. In short, if we assume that the managers at Ford are reasonable, intelligent, and humane like you and me, what arrangements of people, institutions, and ideas could cause them to make the decision they made? Once we believe we have the answer, the next question is, what can be done to change matters so that these decisions are not repeated?

Stating exactly what caused the Ford managers to decide the way they did is by no means simple, but I believe there are two fundamental facets of our business environment that must be acknowledged and changed before this type of event ceases. The first is obvious and needs little elaboration. It is that our business environment is dominated by very large corporations where thousands of employees and managers interact and make decisions that affect us all. Many, if not most, of the business ethics cases take place within the large American corporation, or involve it in some crucial capacity. The high-level decision makers in these institutions are far removed from the impact of their decisions. As with our pilots who dropped bombs "in the mountains" in Vietnam, the victims of their corporate actions are out of sight and mind.

This first facet, then, is one of physical distance, or proximity. The Ford managers could read "180 burn deaths" on the paper in front of them, but the people that would die would be "out there" somewhere beyond the misty periphery of their consciousness. These deaths just did not mean much to them. However, the cost of the change was more immediate; it would probably affect the reputation of their department; perhaps it would even affect them directly. So, they would rather plant bombs on some remote highway than disturb an operational design for which they had direct responsibility.

The second facet of the problem is not so obvious and needs some elaboration. It involves the metaphor managers use (mostly unconsciously) to give meaning to their business activities. This metaphor is a residue of the manner in which most managers are taught business-related skills. The point here is that people in business see and do pretty much what they are taught to see and do. The emphasis here is on both "see" and "do."

We are graduating about a half million college students with business degrees every year, and this includes 65,000 MBAs who usually go right into management positions. Over the past ten years, millions of students who now manage our large business corporations have been taught the same subjects in the same way. The subjects such as marketing, finance, accounting and management are harmless in themselves; what I find harmful is the mind-set or basic view of business these students have after this training experience. Implicit in almost all instruction in colleges of business today is that business is game-like. The rhetoric of business leaders, business professors and public opinion makers is that of a game. In business, managers think and speak about winners, losers, offensive strategies, defensive postures, corporations gaining ground or losing ground, striking out or scoring or hitting it out of the park, and on and on.