Anthony Painter

Guest post by Stephen Adshead

During the 1970s, the Ford Pinto was one of the biggest selling subcompact cars in the United States. Named after the Horse Pinto, it started life as a two-door coupe and was introduced under the tagline ‘The Little Carefree Car’. With a certain prescience, Ford’s advertising agency later dropped the following from a radio commercial – ‘Pinto leaves you with that warm feeling’; prescient because the Pinto’s later fall from grace was as a result of a fuel tank prone to explode following rear-end collisions.

Ford had estimated that if no changes to the fuel tank were made there would be 180 deaths and 180 burn injuries. In a cost benefit analysis later revealed to a US jury, Ford calculated the overall ‘cost’ of the safety improvement as $ 49.5 million. This was based on an estimate of $ 200,000 per human life and $ 67,000 per injury. By contrast, the cost of fixing the fuel tank for 12.5 million Pinto vehicles was calculated by Ford as $ 137.5 million, i.e. $ 88 million more. QED. The cheaper option was chosen. When a US jury assessed punitive damages following one such injury, unsurprisingly, they went berserk.

Ford had, according to Professor Michael Sandel, adopted a purely utilitarian approach, as reflected in a (Benthamite) cost benefit analysis. Certainly, they had a highly rationalistic calculation of the risks. There was no visible evidence of empathy towards the individuals and families that might be affected, seemingly treating them as a cost of doing business. Ford’s analysis was numerate, logical and utterly mechanical, in essence it was left-brained. It was the type of thinking suited to the – you can have whatever colour you like, as long as it is black – Fordist age. If the people at Ford had been more right-brained – empathetic, creative, seeing the bigger picture – they might have approached the problem very differently.

The left-brain dominant types amongst you are right now searching for the memo – a version is here – and are chomping at the bit ready to perform your own calculations. You will probably review whether $200,000 was too low (the figure was based on the average value of a lost adult life according to the National Highway Traffic Safety Administration); then consider whether numerical account was taken of legal cost (indirect costs such as hospital, legal and funeral costs were considered). You may reasonably point out that 500 people lost their life, not 180 as Ford estimated. You will note that assessment was not made of reputational risk and treat that as an error in the analysis. Much like the chocolate biscuit machine in Bagpuss, you believe that fed the right butterbeans and breadcrumbs, the chocolate biscuit will pop out. Your response to a consistent stream of failures, scandals and disasters may well have been that all risks can and should be made governable and auditable; that the failure of Ford was not being left-brained, but being not left-brained enough. If so, you would not be alone.

There has been a risk management explosion, as highlighted by Michael Power in his Demos Paper ‘The Risk Management of Everything’. Risk management has entered our lexicon and extended its tentacles such that, according to Power, even concepts of national security and ideas of preventative military action are being thought of within the conceptual architecture of risk management.

Risk managers talk of risk mapping, risk-based decision making, risk frameworks, risk intelligent solutions, or propose impressive calculations (e.g. risk = uncertain future results + consequences x probability). In the absence of an agreed English definition, search is made elsewhere: Latin (risicare meaning ‘to dare’) or Chinese (apparently the characters for risk contain elements of both danger and opportunity). The latter has even been characterised as mitigating (a) potential adverse consequences and (b) the sub-optimization of gain.

Problems arise where Bagpuss’ butterbeans and breadcrumbs do not take into account human behaviour (in particular how human beings handle risk) and fail to give sufficient weight to the right hemisphere of the brain. Malcolm Gladwell in Blowup, an article from the New Yorker, drew attention to an experiment involving German taxis equipped with antilock brake systems (ABS). You would expect that better brakes made for safe driving. But that is exactly the opposite of what happened. A fleet of taxis – some with ABS, the rest left alone – were put under secret observation for three years. The result? Giving the taxi drivers ABS made them drive faster, make sharper turns and turned them into markedly inferior drivers.

This is not an isolated example.

• More pedestrians are killed crossing the street at marked crossings than unmarked crossing.
• The introduction of childproof lids on medicine problems led, according to one study, to a substantial increase in fatal child poisoning.

In essence, we become less careful with ABS, marked crossings, childproof lids and the like and, over time, we become complacent. (Interestingly, it works in the opposite direction – when Sweden changed from driving on the left to the right, traffic fatalities dropped 17%, before returning slowly to previous levels.) Devices and systems brought in to reduce risks run the danger of leading human behaviour in the wrong direction. ABS systems did not reduce accidents; instead the drivers used the additional element of safety to enable to them to drive more recklessly. As economists might say, they ‘consumed’ the risk reduction, they didn’t save it.

Power points out that significant risk events – litigation, uncontrolled employees, reputational damage – are high impact and low probability; by their very nature the events lack rich historical data sets and exist at the limits of manageability. Power argues that a great deal of risk management activity focuses on routine system errors and malfunctions – “it is as if organisational agents, faced with the task of inventing a management practice, have chosen a pragmatic path of collecting data which is collectable, rather than that which is necessarily relevant, and in this way it is a kind of displacement; the burden of managing unknowable risks, a Nick Leeson, is replaced by an easier task which can be successfully reported to seniors’ Systems and controls and other left-brain activities are important, but to be truly ‘risk intelligent’ you must also see the bigger picture. And seeing the big picture is a speciality of the right hemisphere of the brain.

This hasn’t always happened. Max Weber argued many years ago that the logic of bureaucracy is the tendency to privilege procedural rationality (the rationality of rules) over substantive rationality (the rationality of ends). There is a temptation – in the face of uncertainty and risk everywhere – to increase the rules and the systems; to shape human behaviour by sheer bloody effort of will. The danger is the flight from judgement, with the negative concomitant effects highlighted. The ‘end’ should be to encourage healthy human behaviours in your people, recognising that you can’t control all of the people all of the time. Ideally, you want a mixture of left-brain and right-brain thinking, with a wide circle of consultation to maximise the chances of both. Ultimately, as the Royal Society of Arts neatly puts it, twenty first century enlightenment involves championing a more self-aware, socially embedded model of autonomy. If your systems or controls don’t help to encourage the right behaviours, or worse still they hinder them, these systems and devices need to be re-thought.

Fortunately, some of the lessons of the Ford Pinto have been learned. Akio Toyoda, the grandson of the founder of Toyota, said before the House oversight committee and explaining Toyota’s recall of several million cars – ‘All Toyota vehicles bear my name. When the cars are damaged, it is though I am as well. I more than anyone wish for Toyota’s cars to be safe, and for our customers to feel safe when they use our vehicles’. On a very personal level, he appeared to empathise. He may have recognised that whilst left-brain analysis will help to enhance your brand, an absence of right-brain thinking may damage it in an instant.