The Pinto Case is cited widely in the academic literature of business management, organisational behaviour, management ethics and related disciplines. My question is why? The facts of the case are well documented in law journals – yet the Pinto myth maintains traction in business schools around the world. One article wrote that if it was untrue then it is the very case that an ethics course would invent. In that light, it is time for the Myth of the Pinto to be pushed aside by the actual facts of the case.

The Ford Pinto Myth as Espoused by Business School Professors

The case of the Ford Pinto, in the early 1970s, is usually put forward to students as a matter of fact. The young Turk Iacocca, rising on the success of the Ford Mustang, pushed for a sub-compact car to cost no more than $2000 and weigh no more than 2000 pounds. The production schedule of the Pinto was only 25 months, whereas industry standard was 43 months. In crashes over 25 miles per hour the fuel tank always ruptured spilling fuel onto the road, the low fuel tank was situated behind the differential and would get rammed into it on collision causing a spark and then ignition. At the same time, a rear end collision would cause the doors to jam shut and the result was a deadly fireball which incinerated its occupants.

The story gets more sinister when it turns out that the Capri’s tank was higher and therefore did not suffer the same problem. The Pinto’s fuel tank problem went unfixed for several reasons: Iacocca wanted the Pinto in showrooms by 1971; Iacocca would not suffer negative reports so nobody told him this flaw had been identified during testing (safety was not a Ford priority); and, a cost-benefit analysis of loss of lives compensation versus the cost of fixing the Ford Pinto’s fuel tank meant it was cheaper for Ford to ignore the problem and pay off the victims.

The cure would have been a simple $11 per vehicle fire prevention device… and an alternative bladder could have achieved the safety requirement for a mere $5.08 per vehicle. At around this time the academic has their student morally enraged.

The story is BULLSHIT and it is time that academics from the business schools stop spreading it around as the truth.

The Pinto Myth Debunked in Rutger’s Law Review, 1991

Enter another professional body who have well and truly debunked this myth a good 20 years ago – Myth of the Ford Pinto Case is from Rutger’s Law Review, 1991 volume 43:1013. You can download the Myth of the Ford Pinto Case from PointofLaw (link on the right side of their page). You can also read Grimshaw v Ford Motor Company (1981) online.

Over a wide range of reading about the Pinto case several things came to light. Lee Iacocca was not the great villain of all time, he went to revive the Chrysler Corporation in the 1980s and became a legendary working man’s hero. There was never any evidence Iacocca knew of anything regarding those fuel tank allegations. The Pinto’s fuel tank was not an unusual configuration for a sub-compact at that time in the US market, it was no safer or more dangerous than other cars of it’s type. Sub-compacts are an inherently more dangerous vehicle than a larger car, it remains a fact of life today. We compromise safety and luxury for economy and convenience. One key reason for the controversial low fuel tank placement was that the Pinto was a hatchback, the fuel tank needed to be lower by necessity (common practice in its market of the early 1970s). At the same time, European cars had the higher tank which caused splashing of fuel onto back seat passengers in accidents – so the espoused cure was another compromise of safety.

Dowie’s facts in the Mother Jones article were blatantly wrong and clearly sensationalised to meet Dowie’s agenda. The offending cost-benefit analysis Dowie mentioned was never undertaken in the context of evaluating the Ford Pinto’s fuel tank in isolation. All Ford product lines were represented in the analysis and the cost of a human life was determined not by Ford but by a relevant government administrative body much earlier. This so-called damning cost-benefit analysis had been created for the insurance body, on request. It was not performed for the assessment of Pinto deaths by fire in rear-end collisions, as espoused by Dowie.

There was never any evidence to support the claim that the Pinto production schedule was 25 or 38 weeks… it may have been grossly mistaken by Dowie.

The US government openly asks designers to compromise between economics and safety. After all, the safest car in the world would never be built so trade-offs are essential to achieve product viability and industry competitiveness.

Why Do Business Academics get this so Wrong?

I won’t get into the nuts and bolts of this case beyond asking you, the reader, to pass this information around to every academic you encounter who insists on passing the Pinto Myth along the academic food chain. The practice is sheer laziness with the facts and should be contested wherever the Pinto Myth raises its ugly misinformed head.

My question to academia is why? If Rutger’s Law Review debunked this myth in 1991, why is there a business school obsession with professors quoting the Pinto case as fact in academic literature over multiple disciplines? In each and every case I encountered, a fast backtrack through the referenced articles traced genealogically back to the Dowie article in Mother Jones. Even today, in a Strategic Management lecture, several students passionately raved about the Pinto Case as fact because another MBA professor had used it as a case study.

The Pinto Myth is BULLSHIT and does not belong in serious academic literature. Further, it does not even belong in our living room. Academic articles should never trace back to a popular published magazine article, because the source is generally unsafe… otherwise dig much deeper independently.

Curiously, there is also a complete divergence between management and business literature and the law literature. How can this be so? Business academics need to take this as a call to caution in their research, they must read more widely. The Pinto Case, as espoused, is wrong and easily unfolded. I can see no excuse.

Question: How do you expect customers feel about being stuck with add-on fees? Answer: Crap. You only have to get a parking fine in the Central Business District and you know exactly what add-on fees do to your relationship with the fee sticking organisation.

It might pay to think about two ways of framing an add-on fee based on a new sofa. The first framing adds a fee directly onto the unit price (the unsophisticated way most stores seem to use).

1. Shop for sofa in several stores around your area
2. Identify the price and product you wish to buy (eg. $500)
3. Get stuck with a $50 delivery fee at the point of sale

In my opinion this is a shallow approach to managing the customer perception of that transaction. In the customer’s mind the psychological contract is made for the fee of $500 and the customer ends up paying $550 (10 per cent extra), which makes the customer feel unsatisfied.

Try the second way of framing that same transaction.

1. Shop for sofa in several stores around your area
2. Identify the price and product you wish to buy (eg. $550)
3. At point of sale you are offered a $50 price reduction for self-delivery OR the store will deliver your new sofa for free

This is a superior way of framing the transaction in the customer’s mind because the true price of the sofa is honestly represented at $550. The customer no longer gets pushed over the final hurdle to spring an extra $50 at the checkout (where they feel most vulnerable).

Ask how much better you would feel at the point of sale if you are offered a $50 saving for self-delivery? Contrast the two ways of framing the customer conversation and tell me which one would make you, as a customer, feel better about your transaction with the store?

Nobody is saying stores do not have the right, or the business need, to charge for extra services. But how a business tells somebody about that surcharge is a large contributor to how the customer thinks about their post-purchase value. Which relates to repeat sales… which relates back to the bottom line.

The management of peers and employees is a much simpler concept to grasp because we usually think of management as (almost) synonymous with the leadership role. The POLC acronym – planning, organising, leading and controlling. But it would be naive to believe that your main management role is to manage downward. When you think about it a little, most of your role should be focused on using the resources of your peers and employees to support your upward management hierarchy – put simply, if they are made to look good then you also look good (and vice versa).

As a middle manager your downward objective is to create leaders (not followers) and to ensure the company’s available resources are efficiently and effectively put to work. As a middle manager your upward objective is to supply all the relevant inputs – reports, advice and assistance – to support your boss. Its a matter of perspective, seeing yourself as a part of an organic structure rather than as an individual working solely on your own inputs and outputs throughout the day.

Which leads me to the question of the day – what synergistic capacity does your business have in the middle? By that I mean to ask how effective and efficient the conduits in the middle of your business structure are able to add synergistic benefit between the top and the bottom. For example, is your design team leader an ego boiling for self-satisfying portfolio opportunity… or an effective supporting structure for both employees on the team as well as the manager above?

That’s an important question and one that just may be costing your business bottom-line more than you might expect.

At the moment I am a full time student in the second year of a Master of Business Administration (Journalism and Media Studies) degree. I have a Bachelor of Computing university degree. Nine years ago I had never turned a computer on in my life.

I read blog posts in my RSS reader every single day and those blog posts link off to other organisation’s websites where relevant cross-pollinated ideas have permeated across the World Wide Web. My digital reading regime usually incorporates at least 90 minutes over a given day – blog posts, recommended magazine / news articles / design critique / technical wherewithal; my analogue reading covers another hour on working weekdays and sometimes all day on weekends (or days when I’m not directly visiting the University for classes).

Supplemental to this list of reading are the video and audio podcasts that abound on the web. If you want to be smarter and more in tune with the world just start with WNYC’s RadioLab, the DO Lectures (some great 2008 speakers), the TED (ideas worth spreading) Conference, NPR Science Friday, Tank Riot, Math for Primates, Tack Sharp and the Moth Podcast. If you’re a web developer you probably have a few others under your belt but I won’t string out the non-techies in this post. So if you’re cruising to work… play a previously downloaded podcast and enjoy the ride.

My point is that rather than pumping iron or driving the car to the sounds of some zone-out band… I love to pump iron or drive the car listening to interesting information. Lots of broadly interesting information about whales, the universe, how the brain works, contemporary science experiments, technology, philosophy and as many novel and new ideas that I can rattle around in my brain. From memory I think it was Robert Sapolsky who wrote in his book Monkeyluv: and other essays on our lives as animals that it was a book where each essay was the result of an obsession to understand something… he would drive his wife crazy with each obsession then one day just move onto another question to be answered.

So research is less about being the type of person who has to be told to look for an answer… more about being a question in one’s self in search of an answer.

As for my Curriculum Vitae [PDF 775KB], it occurs to me that the broadness of my knowledge should be a paramount factor in why you should be interested in my services. What is worth more to your company – an MBA graduate who reads widely and is engaged in contemporary thought… or a contemporarily disengaged MBA mite solely-read from the factory of financial rhetorical textbookery… none the wiser about the world outside the institution… or about the way people tick.

The importance of reading broadly is that you may actually be able to articulate something of value… well, one would quietly suggest. So which MBA graduate do you want on your team? I’d choose the information addict anytime. If anything else, I can at least entertain you with facts about all those wonderful things you never thought about on your way to work.

The setting was the global steel industry in the years preceding the Global Financial Crisis. The companies involved were Mittal Steel and the Luxembourg based Arcelor. The combatants were Lakshmi and Aditya Mittal’s vision of a globalised steel industry, a vision of rationalisation and economies of scale; Guy Dolle’s vision of a global steel industry was a European Arcelor focused on the high end of the market. Mittal Steel served mainly the low end of the steel industry in volume; Arcelor served the higher end of the steel industry with quality… and never the twain shall meet.

In the Tim Bouquet and Byron Ousey non-fiction novel Cold Steel: Laksmi Mittal and the multi-billion dollar battle for a global empire the reader is taken behind the scenes on perhaps the largest hostile corporate takeover of all time. It was also the most complex due to the immensity of the two organisation’s respective footholds in various parts of the world, coming under various authoritative bodies and numerous governments. There were the race cards, the backroom handshakes and the inevitable retinue of corporate bankers, spin doctors and strategists. This is the inside story of a hostile corporate takeover through the eyes and perspectives of the significant players.

This book came across my desk as a textbook in the MBA unit BMA799 Strategic Management so I cannot say if this review would ever had occurred without that exposure to a required reading list. However, having read Cold Steel it really read like the thriller it promised in a chess game format – move for move strategies employed by either side. I would highly recommend anybody interested in business to give it a read.

I guess the most disturbing point from my perspective as somebody who is worried that we’re too focused on economy, exploitation and greed is that the world is in fact run this way. More is more is the general philosophy that you have to buy into to agree with either side of this takeover battle… its a globalisation adventure story for potential CEOs and Board members of the future.

My suggestion is read Cold Steel simply to understand how globalisation leaders tick and how governments work, sometimes counter to the ideals of free trade that they espouse externally. Understanding how our resources are being exploited and in what volume because that provides some insight into why we need to keep corporations under control.

Fact: people obsessed with figuring out the meaning of life ARE doing it intellectually.

Have you got air, water, food, friendship and security? If you have all of those then you’re better off than 80-90% of the planet. Don’t waste your life telling me what a hard time you have living with a part-time job in a first world city – in Hobart, Tasmania. Don’t insist that Personality-Cult-Leader X, Y or Z has all of the answers to the meaning of my life – MY LIFE is being experienced by me here and now.

People in cults, sects and other “LEADER-ORIENTED” pyramid structures tend to have a get out of conversation free card… it goes like… “but man I just want to feel life, not intellectually; I want to experience life.”

MY ANSWER: “Then EXPERIENCE it… Stop wasting it complaining about the intellectualisation of life in other people! If you’re thinking about life SO FRIGGEN HARD then you are wasting it; you ARE intellectualising it.”

Take it from ME, the BIG GUY who wasted so much of my life. I KNOW about WASTED TIME.

The trouble is that people are so pampered now and living in such decadent privilege that some of us just can’t get over our own self-importance. Does everything revolve around us? No. Get this idea: what if this is the life you’ve got, its a better life than 100 years ago and its better than the life most of the planet experience. Oh shit yeh, the washing up is boring… but get over it. Read history. Become world-aware.

Take it from me, the missing ingredient in experiencing your life is EFFORT times PERSPECTIVE. This now is all you’ve got… on a rock hurtling through space. Don’t you think that’s incredible enough? Seriously?

[I say this because the 7 Questions of Byron Katie remind me awfully much of standard run of the mill Organisational Behaviour questionnaires - keep it in perspective! Good enough in itself, but its NOT a religion, its a self-help focus. Nothing new. Move on... Not the Buddha... Goodbye.]

One of the stark differences between attaining an undergraduate business degree and a postgraduate coursework business degree such as the MBA (Master of Business Administration) is that the undergraduate degree is more focused on students being able to rote back the seven lists of X and Y. It was explained to me there is the assumption that an undergraduate cannot think for themselves… the assumption of the undergraduate is that they are to be told everything they need to know and that they cannot have unique ideas of themselves even if they have a plethora of real world experience.

That sounded cruel when I was an undergraduate… but its more than clear to me as a postgraduate in the MBA program. That’s actually why the MBA programs exist – greater intensity, more focus on understanding and practical ability, higher stress purposefully placed on the students.

The postgraduate MBA student does many of the same general courses as an undergraduate business student, only with a different course code; unless of course it is one of the few postgraduate-only units on the curriculum (most units are both undergraduate and postgraduate delivery). The textbook is generally the same. What is different as a postgraduate is the coursework and the expectation.

An MBA student has to actually be able to do the walk… very rarely are we asked to rote back a list of anything; quite often there are no formal exams. The MBA student is groomed in a different way than the undergraduate, has to think on their feet and are challenged to articulate and defend their point of view with logical structured argument. The MBA student has to bring in their own ideas and is expected to learn well beyond the taught curriculum because the MBA is the only formal qualification for entry level into corporate middle management.

The course delivery is different from undergraduate business degrees, the assignment work is more demanding and the expectation about understanding concepts and being able to utilise them in the real world is imperative. Its not enough to walk into class knowing the theory as a postgraduate – that part is just expected before you walk in the door!

I guess the reason this post exists on this website is because its not always apparent to people why the MBA exists. There may be a misconception that its a backdoor way to make up for not having an undergraduate business degree. They would be wrong to believe that misconception. Let me put it this way… an undergraduate degree gives you the ability to learn (as my Bachelor of Computing probably attests)… whereas a postgraduate degree teaches you to actually do things. They’re not interchangeable or even mildly comparable. So its worth taking into consideration why MBAs are sought out by large organisations in vast numbers around the world.

After all, this is a Masters degree not an undergraduate degree. The next step would be a PhD or a Doctorate…

As you can see I’m no great fan of the contemporary corporate intranet as they stand today in many organisations. In Gerry McGovern’s article People are not always the problem he talks about this issue – organisations are installing technology as an end rather than as a means to an end. Technology is being touted as the cure in itself… when the real cure is to provide technology to individuals in your workforce in such a way that it enables and enhances their ability to meet objectives, foster innovation and manage the day-to-day business that makes your organisation successful.

Most corporate intranets are difficult, cumbersome – like moving through a virtual shoebox of ad-hoc anomalies in the hierarchy defined by a many in different contexts on alternate days throughout a leap year or two. In short, they don’t make much sense.

Most corporate intranets stifle, obfuscate and demand bureaucratic obeisance to the Info-Obstructionist Overlord. Most suck. Most lose your organisation money. Often the intranet being circumvented is a sign that its just not working out for either of you.

The answer is simple. Rethink your intranet solution. Maybe it needs to be more organic, more context-relevant to individuals in the workplace. I mean you should employ people to follow your workers around for a while, to learn what it is that makes them a radiographer, a receptionist or a calligrapher. I don’t know what job they do so how can I design an intranet for them to achieve their outcomes? And that’s the current case in most instances… you need to employ smart people (not programmers) to dissect and dismember the people and processes that make you money, that contribute to innovation and to productive processes… and you need to invest in the solution they envision. You need to hire skilled interface designers and experience engineers to ensure that the vision is sufficiently articulated when users hit the virtual pavement of the new intranet solution.

One simple thing that I can think of right off the top of my head: make your entire Intranet context specific to the individual. How can a 5000 strong workforce be effective with a blanket corporate intranet solution? If you attempt to meet the needs of everyone you’ll probably meet the needs of no-one, so they say.

When I log onto your corporate intranet I need only the things that are relevant to me… not obfuscated in bureaucratic double talk… not seven links deep in a circular hierarchical nightmare. Here is my intranet, my project, my team. And if I need to share with other teams or make decisions based on relevant inputs then that should be as contextually relevant to my experience as anything else.

Yes its hard to design and build a corporate intranet without ending up with electronic spaghetti. But there’s an opportunity for an evangelist out there, too. That’s the up side. That given the balls and the dedication you just might change a few corporations for the better. Because intranets can be the solution… if you make it about the people and their processes and not just about installing new technology.

And intranets not only can, but SHOULD, be about improving processes and communication in ways that increase productivity and efficiency – they make you more money! Unfortunately most intranets are simply about being there as an end in themselves. What a wasted business opportunity.

My life has taken several directions to date (some worse than others, including life-prisoner, fisherman, farmer, lawn-mower and fruit picker). In the last decade I’ve up-skilled to obtain numerous qualifications in Information Technology (including a Bachelor of Computing and IT certificates in web design and web administration). These qualifications have seen me work as a web designer, web developer and consultant in various public and private sector organisations around Australia and overseas. Over the last year I have completed 9 units of the Master of Business Administration and will graduate with the MBA (Journalism and Media Studies) at the end of 2010. But what then?

The main take-away from the Gourmet Farmer is that high quality niche locally produced products will always have a future. I am a great believer in the Slow Food Movement and in Jamie Oliver’s message about the lack of food and nutritional education provided to our children. And I’m very much against the MBA mantra that the purpose of business is to maximise shareholders wealth.

How’s this: The purpose of being in business is to meet society’s unmet needs which aren’t already being met by the government.

An offshoot of meeting that need, if it is achieved effectively, is economic profit.

So this year with at least a day or two up my sleeve for part time work I am very interested in getting involved with the right small-to-medium-sized organisation. I’d love to learn the whiskey business or the cheese business or gourmet beer or wine or organic farming, for that matter. I’m looking for a small-to-medium-sized business where a fresh MBA’s skills can be put to wholesome use – rather than pure globalised greed. I’m looking for lifestyle, not super wages. Just a living.

If you’re just such a business that could use a studying MBA (Graduate in December, 2010) then I’d love to hear from you. Maybe Mathew Evans would like to hook up for a few malt whiskeys and a bit of a country yarn about this sometime to give me some pointers… who knows? I just know its time for a sea-change into something worthwhile. After all, you only live once.