Ford-Firestone Lesson: Heed the Moment of Truth
                    Comment Column on September 11, 2000

                    By Marianne M. Jennings, a professor of legal and ethical studies at
                    Arizona State University.

                    My students know one fundamental principle of business ethics that
                    Ford and Firestone forgot. That principle was not culled from years of
                    research or modeled through an Excel spreadsheet. Rather, it is the
                    most basic of precepts: The truth always gets out.

                    Firestone CEO

                    Such wisdom would have served both companies
                    well in averting the current public-relations crisis
                    that will soon ripen into class-action lawsuits
                    managed by lawyers who have been lying idle since
                    hogtying the tobacco companies.

                    There was a moment of truth for every company
                    that passed through the public spanking lines of the
                    media, Congress and courts that Ford and
                    Firestone now face. That moment of truth comes
                    when those within the company realize something is
                    awry with their product, practices, earnings statements or culture. The
                    moment usually comes when things are peachy in sales and earnings
                    and its truth is ignored in the name of saving face and, perhaps,

                    Knowing the inevitable outcome -- for truth does percolate -- why do
                    bright and experienced people ignore it? For even if the truth is known
                    only within the confines of the company, it will out. Circumstances
                    beyond even the best manager's control take over once the chance has
                    passed to act on the moment of truth.

                    Johns Manville learned of the "crunching" lungs of asbestos workers in
                    the 1930s, as reflected in the minutes of its board meetings. Instead of
                    working on product development, warnings or even safety equipment,
                    the company forged onward with a strategy of trying to keep the
                    scientific community from disclosing its findings and of limiting the
                    increasing numbers of plaintiffs by settlements for silence.

                    Dow Corning didn't deserve its bankruptcy or the multibillion-dollar
                    settlements for its silicone implants because the science didn't support
                    the alleged damages. However, there was a moment of truth when
                    those implants, placed on a blotter, left a stain. The company could
                    have disclosed the possible leakage, researched the risk, and warned
                    doctors and patients. Given the congressional testimony on the
                    implants, many women would have chosen them despite the risk.
                    Instead, they sued because they were not warned.

                    Beech-Nut's crisis was a chemical concoction instead of apple juice in its
                    baby food products. Executives there ignored an in-house chemist who
                    tried to tell them they were selling adulterated products.
                    Kidder-Peabody fell despite warnings from employees about a glitch in
                    its accounting system that was reporting bond swaps as sales and

                    These cases all have several things in common. First, their moments of
                    truth came and went while the companies took no action. Second,
                    employees who raised the issue were ignored, or, in some cases, fired.
                    Third, there were lawyers along for the ride, as they have been with
                    Ford and Firestone.

                    Never rely on a lawyer in these moments of truth. Lawyers give
                    controlling legal authority but are not particularly good at controlling
                    damage. Lawyers shouldn't make business decisions; moments of truth
                    require managers. More importantly, moments of truth require
                    managers with strong ethics who will do more than the law requires and
                    less than the law allows.

                    As a now infamous memo reveals, Ford and Firestone did not feel
                    obligated to reveal to the U.S. Transportation Department that certain
                    tires were being recalled in overseas markets. The companies should
                    have realized that it was not a question of whether the recall would be
                    reported, but by whom.

                    Do businesses ever face the moment of truth wisely? One great
                    example is James Burke, CEO of Johnson & Johnson at the time of the
                    1982 Tylenol capsule scare. The minute Tylenol was linked to the
                    cyanide poisonings, Johnson & Johnson recalled and destroyed 31
                    million bottles of the product, at a cost of $100 million, and Mr. Burke
                    bent over backward to deal openly and forthrightly with the media and
                    public. The result was one of the best crisis-management performances
                    in history; the company won back nearly all its customers.

                    Perhaps the best example of an industry willing to use the truth to set
                    itself free was the electric utility sector. During the 1980s, the media
                    went hysterical over electromagnetic fields. These EMF, located in areas
                    near electrical power lines, spawned litigation for cancer among those
                    living nearby and produced claims of reduced property values.

                    In response to these unfounded fears, utilities went to their customers
                    with monthly bill inserts discussing EMF. They funded studies, disclosed
                    studies and encouraged all to study the issue. They took steps of
                    "prudent avoidance," placing power lines sufficient distances away from

                    The result? The EMF scare, which might have been the utility industry's
                    asbestos, disappeared. Even sympathetic cases involving child plaintiffs
                    did not sway juries; the causal connection was simply not there. EMF
                    was managed with ethics and an attitude: If EMF is a problem, we
                    manage it early and make it right. If it's a false alarm, we have the
                    credibility and trust earned with voluntary action and disclosure at the
                    moment of truth.

                    Unfortunately, Ford CEO Jacques Nasser and Bridgestone/Firestone
                    CEO Masatoshi Ono did not heed their own moment of truth early
                    enough. They are now paying the price.