On October 20th, 1978, Firestone recalled 10 million steel belted radial tires. The infamous Firestone 500’s broke up at high speeds leaving vehicles careening down the highways. One can imagine the result. However, admitting nothing, the company chairman of Firestone at the time agreed to recall the tires not because the tires were defective but because of bad publicity.
Firestone’s problems really started back in the early 70’s. Michelin had launched their radial tire in North America and Firestone responded with the 500. According to a 1983 HBR case study, to get to market quickly Firestone modified its bias belted tire production equipment. Memos of problems with production and quality were documented starting in 1972. In 1975 internal reports showed that Firestone knew it had problems with steel belted radial tires separating but continued selling them. In 1977, Firestone recalled 400,000 defective tires as the company wrangled with Federal regulators. Firestone continued to argue that its tires were safe even while civil and class action legal suits poured in. They finally recalled the tires in October of 1978.
Learning from mistakes is a lesson that was lost on Firestone as history would repeat itself twenty two years later. Firestone had another recall of 6.5 million tires mostly fitted on Ford Explorers. These tires separated at high speeds leading to equally fatal results as the Firestone 500’s. Once again refusing to admit there was a real problem, Firestone initially limited the recall to the warmer US states as it was thought that the warm weather contributed to the tread separation. (From this one can conclude that the rest of the USA wasn’t supposed to drive on hot days – there are some advantages to living in Canada!)
The overwhelming conclusion of people who study big mistakes (airline accidents) is that rarely is a crash the result of one big mistake but most often it’s a ‘series of mistakes’. By documenting these mistakes one can see patterns. By better understanding the mistake patterns accident investigators can assist pilots to recognize these patterns before they become fatal. Using the same deductions, could Firestone have recognized similar patterns and a tragedy have been prevented?
Fortunately not all mistakes have life and death consequences but they can be just as fatal in a business sense. We all remember the big ones, Polaroid responding too slowly to the digital threat, McDonalds not responding to changes in diets and Enron cooking the books. On a smaller scale, many of us have stories of R&D projects that took double the anticipated time and resources to complete. And we all know of great products that failed because the customers didn’t appreciate nor understand the value the new product or service brought them. How often are these mistakes repeated time and again? Someone once wrote that we don’t study history to know history but so that we don’t repeat the mistakes of the past.
Robert Mittelstaedt in his book ‘Will Your Next Mistake Be Fatal?’ writes that “If we do not ‘break the chain’ of mistakes early, the damage that is done, and its cost, will go up exponentially … until the situation is irreparable”. He goes on and states that typically mistakes fall into three categories – failure of strategy, failure of execution and failure of culture. Let’s look briefly at each of these:
Strategy: Is your business strategy and all the sub strategies of marketing, R&D, finance and manufacturing well thought out and reviewed on a regular basis?
Execution: Are there mechanisms in place to catch mistakes early for both R&D projects and products currently in the market?
Culture: ‘Fail often but fail fast’ is the mantra in some organizations as they know that mistakes are a necessary ingredient of discovery and ultimately market success. Does your culture view project mistakes as people failures or stepping stones to success?
Good business strategists recognize that patterns of the past have created our present and that those same patterns can be used to look further down the road and map the future. Don’t be afraid of mistakes and project failures, plan for them! For success is born from failure… but remember; those who do not learn from the mistakes of the past are sentenced to repeat them.
Further reading – Robert E. Mittelstaedt, Jr. Avoiding the Chain of Mistakes that Can Destroy Your Organization Wharton School Publishing