Ford And Firestone Separation: Not Just About Tires

Dec. 21, 2004
Trust emerges as the critical issue.

The still-unfolding story of Bridgestone/Firestone Inc.'s business separation from Ford Motor Co. could, in its own way, become as much of an instructive management tale as was Johnson & Johnson's handling of the Tylenol tampering crisis in the 1980s. Improbable as it may seem, since it contradicts a classic management mantra, one possible lesson from the continuing imbroglio between Ford and Firestone over tire and vehicle safety is that the customer is not king. "There is a consistent misunderstanding about the customer always being right. The truth is that the customers who do things within the norms of business and society are the ones who are always right," contends Brendan Tobin, president of the Tobin Group, a management consulting firm based in Tinton Falls, N.J. "There is nothing wrong with cutting off a customer who ends up being a drag on your business, and clearly Firestone felt Ford was just that," he asserts. The most powerful lesson likely to emerge from the unprecedented event, however, is a renewed recognition of the critical need for trust to exist between manufacturing supply-chain partners. Indeed, John T. Lampe, chairman, CEO, and president of Bridgestone/Firestone, a unit of Japan's Bridgestone Corp., made just that point in his May 21 letter to Jacques Nasser, Ford's president and CEO, in which Firestone fired Ford as a customer in the Americas. "Business relationships, like personal ones, are built upon trust and mutual respect," said Lampe. "We have come to the conclusion that we can no longer supply tires to Ford since the basic foundation of our relationship has been seriously eroded." Fred Beier, a professor at the University of Minnesota's Carlson School of Management in Minneapolis, says he first sensed a trust problem between Ford and Firestone many months ago when the first recall of Firestone ATX and Wilderness AT tires was announced. Each company pointed a finger at the other and said in so many words, "It's your fault." For Ford, Firestone tires were the safety issue; for Firestone, some Ford Explorer SUVs were the problem. Such finger-pointing is an "unusual reaction for two supply-chain partners," emphasizes Beier. "Supply-chain relationships are built on trust, and when you have a problem, you don't run to the lawyers, you run to your partner." Marc Drizin sounds a similar theme. There are two issues Ford and Firestone have to deal with, the product "problem" and the ethical issue of "how do we work with our partner's problem," says Drizin, a vice president at Indianapolis-based Walker Information Inc., a company whose research portfolio includes work on corporate reputations and ethics. "The answer [to the problems] shouldn't be that the first thing you do is to place blame," stresses Drizin. "The first thing you should do is make sure that the end-customer is safe," he stresses. Not surprisingly, Drizin applauds Johnson & Johnson for pulling its Tylenol brand from store shelves after tampering was discovered. "They put the consumer first," he emphasizes. Beyond first steps, the extent of Ford's success in expanding to new tire suppliers the integrated systems that provide order, inventory, and forecast data could provide another helpful manufacturing management lesson. So, too, could the degree of success Ford has in persuading tire suppliers to quickly ramp-up their production levels to fill the Firestone void. And once all the details come to light, Firestone's actions and words could produce a lesson in the crisis management of quality issues. In the meantime, both Ford and Firestone clearly face major challenges in rebuilding their public images. "They certainly circled the wagons and shot at each other enough," quips Marvin Goldberg, professor of marketing at Pennsylvania State University's Smeal College of Business in University Park, Pa. Ford will have the easier job, believes Goldberg. "Tactically they've seemed to have been reasonably effective at pointing the finger at Firestone. But also I think it's easier for them to differentiate their product line so that in the public's mind Ford has many products and the Explorer is only one," Goldberg says. "What is glaringly absent [are] Firestone's efforts to say, 'We have identified the problem, clarified it, removed it, and [are] going on,'" Goldberg claims. Without getting into the blame game, David Gebler, president and founder of the Working Values Group Ltd., a Boston-based consulting firm, suggests Firestone has a significant opportunity to reassert values-based ethics as part of its recovery process. "I have not seen Firestone's code of conduct -- or their values. But . . . there's a strong chance that honesty is somewhere in there as a value within the organization," Gebler surmises. "My hope is that what [Firestone CEO Lampe] is trying to do is to establish that there is a level of disclosure and honesty that is going to be the hallmark of their rebuilding process."

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