Monday, February 22, 2016

Beware of the Hidden

Takata air bag inflator recalls in the United States may soon reach 100 million units, according to engineers and managers who talked to Reuters. The problem seems to be that Takata’s records show that defective materials were used in at least 10 million inflators, putting them at risk of exploding without warning — but other records that would have told specifically which units were at risk were destroyed, so it may be necessary to replace a much larger number. Paul Lienert and David Shepardson write for Reuters: Exclusive: Up to 90 million more Takata airbag inflators may face U.S. recalls.

My own car was subject to three airbag recalls. The repairs were completed only last week after I waited for all the parts to be available. It is hard to imagine nearly half of the cars in the United States, excluding those already recalled for this issue, having to have the same parts replaced. Based just on the number of trained workers available, that’s a job that won’t be finished this year or next. It is also, just as obviously, a financial debacle for the manufacturer involved. When a product is recalled for replacement, it is dead money as far as the manufacturer is concerned. The company would be better off if it had not manufactured the defective units in the first place.

So how did a manufacturer carry on delivering a dangerous product, being at least dimly aware of a defect rate above 20 percent, and take more than a decade to correct its problems? Obviously, this question is being studied as a case in management.

In my opinion, the first point to consider is the way airbags are hidden in use. Most cars live a quiet life, retiring after 10 to 20 years (or now, often longer) having never been struck hard enough for the airbags to ever have done anything. In these cases, you never see the airbag at all until the car gets to the junkyard. There, of course, the airbag has to be removed before the car can be melted down for scrap, but if the airbag is missing when the mechanics go to get it, at that stage, no one really cares. Someday we will find out that a factory one day installed trash bags in place of air bags in some cars. If the car is never in a serious accident, how would you ever find out if the car is made with a real air bag or a fake air bag made out of a trash bag? When a product is hidden, that makes it a little too easy easy to pretend that it was made correctly, even when you know it wasn’t.

Most management, from what I have seen, is management by failure. Managers wait until they see something go wrong, then they try to correct the problem. Management by failure is a poor approach in any case, but it works extraordinarily badly when problems are hidden, as is the case when the problems are located in products that are hidden in ordinary use.

Takata had tests that showed its manufacturing controls weren’t working, but instead of trusting its own tests, it waited until it heard government complaints. It can take thousands of serious injuries and deaths before a product defect forms a statistical pattern so clear that safety investigators who have no clue where the problem is coming from can sort it out. That’s how Takata’s problem got to be so expensive. Managers were able to bury their heads in the sand for a long time.

Beware of the hidden. Make sure the success of your business does not depend on things you cannot see. It is a lesson that should be obvious enough to anyone following the Takata case. Unfortunately, management being what it is, it will take hundreds of cases like Takata before this point finally sinks in.