Eyes Shut:
The Consequences of Not Noticing
In
his new book The Power of Noticing: What the Best Leaders See, Max
Bazerman explains how and why many executives fail to notice critical
information in their midst.
Editor's
note: Behavioral
economist Max H.
Bazerman decided to pursue the subject of noticing after
realizing that he wasn't very good at it himself. "The truth is that I was
truly terrible at noticing," says Bazerman, the Jesse Isidor Straus
Professor of Business Administration at Harvard Business School. "Marla,
my spouse, would see all kinds of things going on that I would simply miss.
Why? Perhaps this was due to my tendency to focusing, and in my case, narrowly."
In
his forthcoming book The Power of
Noticing: What the Best Leaders See, scheduled to be published on
August 5, Bazerman documents a decade of research showing how and why many
leaders fail to detect critical information in their midst. "This book
will help you recognize when to seek more useful information and apply it to
your decisions," he writes. "It will provide you with the tools you
need to open your eyes and truly notice for the first time—and for the rest of
your life.
The book analyzes a bevy of real-world examples,
ranging from Bernie Madoff's Ponzi scheme to problematic university admissions
policies. In the following excerpt from Chapter 10, Bazerman discusses how
leaders often fail to notice when their decisions indirectly hurt people—and
how people often fail to hold organizations accountable for indirectly causing
harm.
BOOK EXCERPT
FAILING TO NOTICE INDIRECT
ACTIONS
From The
Power of Noticing: What the Best Leaders See
By Max Bazerman
Consider
two hypothetical fires. A garment factory in a Third World country with minimal
governmental regulatory oversight burns down, killing half of the three hundred
women and children employed there; it subsequently becomes clear that the
factory's owner failed repeatedly to spend money on meeting minimum safety
standards. A second fire kills a suburban dad who filled his lawn mower with
gas too close to a recently tossed cigarette; the fire raced up the flow of gas
and into the can, which exploded. Who is to blame for these deaths?
Let's
shift our focus. If you live in the United States, you probably have shopped at
Walmart at least once or twice, and you likely are aware of their
"Everyday low prices" tagline. Have you ever thought about the
connection between their everyday low prices and the safety of the products
Walmart sells, or the connection between their everyday low prices and the
safety of the employees who make the goods that the retailer sells? No need to
feel awkward if your answer is no. Most people do not think about the harms
created by indirect actions, that is, behaviors that hurt others indirectly,
such as buying a low-price product from a company that skimps on safety. But
perhaps armed with more data, you will.
Blitz
USA was once the largest manufacturer of gas cans in the United States, with
approximately 80 percent of the gas can market. Cy Elmburg, the chairman of
Blitz USA, has testified that in July 2006 he sent a letter to the CEO of
Walmart asking Walmart to get involved in a national consumer awareness
campaign aimed at protecting consumers from gas can explosions. Elmburg felt he
needed Walmart's cooperation because the gas cans produced by Blitz and sold
through Walmart had been connected to dozens of explosions, serious burn
injuries, and deaths. In their contracts with Walmart, suppliers must agree to
accept any financial or criminal liability resulting from the sale of their
products. Elmburg felt that Walmart, given its size and as the point of
purchase, had an ability to influence consumers in a way that Blitz could not.
Perhaps because it was protected from liability, Walmart failed to act on
Elmburg's proposal. The explosions continued.
The
basic problem with the Blitz gas cans is that when gas is poured from them,
there is a risk that gasoline vapors will connect with an ember or other fire
source, and the fire will run up the gas flow into the can and explode. (While
all of the data that I am using about the Walmart stories are from publicly
available sources, it should be noted that I served as an expert witness in the
case of Melvin v. Walmart, Inc.) This had occurred in many dozens of cases, and
a large number of lawsuits against Blitz had followed. A former Blitz employee
has testified that Blitz presented a revised gas can design to Walmart that
would prevent the burn injuries by installing an "arrestor," a device
that would prevent a flame from flowing into the can, at a cost of between 80
cents and $1 per can. According to this testimony, Walmart rejected Blitz's
design on the basis of the price increase, and Blitz halted its redesign
project because it would be difficult to launch a national product that Walmart
refused to purchase.
The
flip side of Walmart's policy of providing everyday low prices to its customers
is its goal of securing everyday low costs for Walmart. The guideline given to
Walmart buyers is to achieve low costs, a motto that its buyers are encouraged
to live and breathe. Court testimony provides extensive evidence that Walmart
places extreme price pressures on its suppliers. This can translate, as it is
claimed to have with Blitz, to a supplier realizing that adding commonsense
safety features to a product can prevent it from acquiring Walmart's business.
My wife, Marla Felcher, is a product safety expert, and we have a shared
interest in what keeps safer products from reaching the market and what keeps
less safe products on store shelves. In 2002 she wrote:
As the world's
largest retailer and the nation's largest toy seller, Wal-Mart could take the
lead in ensuring the products we buy for our kids are safe. But the company
does not require manufacturers of toys, carriers, high chairs or other
children's products to demonstrate the products are safe before they wind up on
a Wal-Mart shelf. The retailer does, however, flex its market power to insist
that manufacturers cut costs. . . . Wal-Mart has enormous clout with
manufacturers. The retailer should use this clout not only to insist its
suppliers cut costs, but also to insist that manufacturers safety-test their
products. A solid first step would be for Wal-Mart to require manufacturers of
children's products to certify that their goods have been safety tested by a
truly independent third party, and that the products comply with meaningful
safety standards. For the world's largest retailer to take a bold position on
safety would set a strong precedent for other retailers to follow. It is time
for Wal-Mart to be part of the solution, rather than part of the problem.
More
than ten years later, not only has Walmart failed to lead on product safety but
the Blitz cases indicate that little has changed.
Based
partially on legal fees and settlements with plaintiffs from exploding gas can
lawsuits, Blitz went bankrupt. Consequently many of the plaintiffs turned their
attention to Walmart and sued the retailer as a causal agent in the deaths and
injuries. Given that more than one party was involved in Walmart's sale of unsafe
gas cans, who is to blame?
A
logical strategy for analyzing the role of different possible causal agents in
gas can injuries would be to assess what the likely outcome would have been if
one of the agents didn't exist. Consider the counterfactual in which Blitz did
not exist as a company during the years in question. Without Blitz, would
Walmart likely have sold a gas can without an arrestor? Without Blitz, would
Walmart have engaged in an effective communication campaign on the safe use of
gas cans? My assessment is that Blitz would have been replaced by an
alternative manufacturer, that Walmart would not have engaged in a safety
campaign, and that little would have been different in terms of the safety of
gas cans sold at Walmart.
Consider
the alternative counterfactual, namely, that Walmart did not exist during this
time. Would Blitz have created a safer gas can to sell to other buyers? Based
on Blitz's behavior, there is evidence that Blitz was concerned about improving
the safety of its gas cans. Thus it is quite likely that Blitz would have
brought a safer gas can to the marketplace.
This
comparative analysis of these two counterfactuals suggests that Walmart was the
driving force in unsafe gas cans being sold to consumers. While I believe this
is the correct analysis, Walmart has yet to be found guilty in any such product
liability suit.
A
similar indirect effect of Walmart on safety—this time, the safety of those who
make products sold by Walmart—can be found in the case of the 2012 garment
factory fire in Bangladesh. On November 24, 2012, a fire broke out in the
Tazreen Fashions factory in Dhaka, the capital of Bangladesh. At least 117
people died and at least another two hundred were injured, making this the
deadliest factory fire in Bangladesh's history. Subsequent analyses document
that the factory failed to meet any reasonable set of safety standards.
Who
is to blame? The owners of the factory, or the retailers that demand price
levels that cannot be met if reasonable safety standards for factory workers
are in place?
Let's
step back and consider this account of an interaction
between garment manufacturers and more than a dozen Western retailers,
including Gap Inc., Target, and JCPenney, that took place just a year and a
half before the fire:
At the meeting
in Dhaka, the Bangladesh capital, in April 2011, retailers discussed a
contractually enforceable memorandum that would require them to pay Bangladesh
factories prices high enough to cover costs of safety improvements. Sridevi
Kalavakolanu, a Wal-Mart director of ethical sourcing, told attendees the
company wouldn't share the cost, according to Ineke Zeldenrust, international
coordinator for the Clean Clothes Campaign, who attended the gathering.
Kalavakolanu and her counterpart at Gap reiterated their position in a report
folded into the meeting minutes, obtained by Bloomberg News.
My
argument is not intended to acquit factory owners of running unsafe facilities
in order to generate greater profits. But like the gas can story, the root of
the problem is that price pressure from Walmart and other retailers can lead to
unsafe decisions by gas can manufacturers and factory owners. This pattern is
being repeated across product categories in many nations.
When
a company refuses to accept price increases to create a safer product, to
educate consumers about product safety, and to pay extra to participate in
making factories safe, it is a causal actor in creating harm. But as we will
see throughout this chapter, people fail to hold organizations accountable when
they are the indirect cause of harm. By definition, indirect harm often goes
unnoticed and is particularly hard for people—manufacturers, retailers, and
consumers—to see.
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