Negative target setting: Ford Pinto

Targets - as we will see - are typically numbers or percentages or ranges over time. In many instances what organizations and politicians do, for that matter, is to really set something that is aspirational. It's not necessarily related to past results of the organization, so sometimes targets are set just as a means to encourage people to look at something positive even though they're not necessarily based on facts or previous performance. In other cases instead they're used very well. There is plenty of evidence that shows that targets can actually function in many different ways to really inspire people and motivate people to achieve better performance.

Let's look now at an example which is very negative. This comes from the world of motors. As you can see from the exterior design of this car this is from the 1970s. The Ford Pinto was a scandal that essentially came out of many mistakes and many leadership and management falls at Ford. But essentially the slogan at the time was that the Ford Pinto would not weigh an ounce over 2,000 pounds and no cost a cent over $2,000. That was the slogan of Ford. As you may know or if you read about this, this was a diktat from the senior management team that the engineers of Ford soon understood it was not doable unless they started to compromise on a number of things. E.g., to make a car lighter, you need to compromise on materials, or the car design. To make it cheaper, you've got lots of pressure on the type of materials that you use and so on. Effectively, the Ford Pinto was commercialized but it was soon a disaster because it was not a safe car. You can see the tank of the car is quite at the back and was not very well-protected. When people started to have accidents, as it may happen with cars, essentially, if somebody bumped into the back of this car, this car would catch fire and explode. There were lots of fatal accidents in which the Ford Pintos were involved. It was also an ethical scandal whereby Ford was found to have calculated the risks related to being sued by people injured or the family of those injured or dead, and then estimated that vis-a-vis the cost of a recall. Ford decided not to do the recall, eventually, it was a disaster also financially because they were sued and they had to pay lots of compensation to many people. Way more than it would have cost them to recall the car. In this case targets worked really badly. The targets of 2,000 pounds and $2,000 were completely arbitrary. They were incredibly challenging and certainly not achievable. The people involved in the process of creating the car were not involved in the process of setting the target and there were certainly demotivated about it.