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But... why? I will never understand the thinking that goes into doing stuff like this, especially within a mega-corp. It's the same as with diesel-emissions che

But... why? I will never understand the thinking that goes into doing stuff like this, especially within a mega-corp. It's the same as with diesel-emissions cheating: if you're successful with that product, you're basically guaranteed to get caught eventually. And if you start from the assumption that it's not going to be a successful product... why even bother?

BankaiTiger 9y ago
Going ahead with the bad product has higher payoff than not or later on. I imagine that's how they made the decision if the knowledge was widespread.
ivanbakel 9y ago
I'd imagine part of it is the timeframe of "eventually". Why care that the company will be in ruins later, if it makes you rich now and you think you'll be out the door before the apocalypse comes? Of course, there's a simpler answer: because they think it will be profitable. The aggressive settlements described in the article might even have been a part of the original calculations in just how much money could be made.
darkerside 9y ago
> you're basically guaranteed to get caught eventually That seems like an unwarranted assumption rooted in confirmation bias. It seems like everyone gets caught... because everyone we know about gets caught. There could be legions of cases like this that we never find out about.
- virgilp 9y ago
  > unwarranted assumption rooted in confirmation bias I'd say it's rooted in statistics: 1. Take this tire. If you know that there's a high chance it will blow up, then ... the more you sell, the more tires blow up in the wild; the more tires that blow up, the more injured & dead. The more injured & dead - the more likely you are to get caught. The end-to-end equation is "the more tires you sell, the worse your chances to get away with it". 2. Dieselgate: it's different, in that nothing "blows up". But still, the more cars you put on the road, the higher the chance one owner/mechanic will notice it. Maybe your "chance of detection" doesn't increase dramatically with the success of the product (though it definitely does increase), but the impact of it being detected increases linearly with the number of cars sold! This is still a very bad equation, since VW had zero deniability - once the cheat was detected in one car, it could be easily reproduced in all. It just doesn't seem to work out, from a risk-benefit perspective. Maybe only if you're looking very short term?
  - fbdjskajxb 9y ago
    The difference with dieselgate is that the cheating was known by European regulators, who did not bother enforcing the law. https://www.theguardian.com/environment/2016/jun/20/european-commission-warned-car-maker-suspected-cheating-five-years-vw-scandal https://www.theguardian.com/environment/2016/jun/20/european... VW was surprised by the American response, since they simply did not expect the law to be enforced (they were apparently unaware of a similar diesel scandal that occurred with US truck manufacturers in the 90’s). Source: Faster, Higher, Farther: The Inside Story of the Volkswagen Scandal Book by Jack Ewing
  - darkerside 9y ago
    > the more you sell, the more tires blow up in the wild; the more tires that blow up, the more injured & dead. The more injured & dead - the more likely you are to get caught In this case the outcome was pretty straightforward. Tires were literally coming apart at the seams. I'd wager that oftentimes product failures are less obvious. Maybe a certain tire exhibits unexpected sliding on certain types of pothole filler. We probably identify 0% of product failures that don't follow a human recognizable pattern. Some of these accounts probably unfold according to a "Breaking Bad" progression. Skylar never would have gotten involved in criminal activity except that her husband was already knee deep in it when she found out. A great deal of her rationale was keeping someone else from getting in trouble.
pstuart 9y ago
Obligatory Fight Club reference: https://www.youtube.com/watch?v=SiB8GVMNJkE https://www.youtube.com/watch?v=SiB8GVMNJkE
elipsey 9y ago
Do these products have a planned lifespan? Perhaps the objects is to recoup fixed development costs before the scheduled end of the product's life. Also, it seems like once the manufacturer knows there is a problem based on real failures, the cost of litigating to obfuscate information is small compared to defending many more cases after allowing an unfavorable legal precedent to be set and letting more injured consumers and PI attorneys find out about the problem. For example if 1,000,000 tires with a %1 failure rate were sold and each claim costs 1mm, the break-even on litigating to seal evidence would be 1bn. So the product is already out there, it will be discontinued eventually anyway, and aggressive litigation in a small number of cases is cheaper then painting a bullseye on your back with a recall. Makes sense to me.
snarf21 9y ago
Not shipping product and not showing growth is how you get fired and don't get bonuses. Hopefully you will be at a different company when the shit hits the fan. (Being overly cynical but it it probably more true than not)
- tomkarlo 9y ago
  In the bond market (especially cat bonds, which insure against long tail risks like earthquakes), they have a phrase for this: "YBGIBG". It means, "you'll be gone, I'll be gone."
jeffdavis 9y ago
Unwillingness to deliver bad news. It starts out as a design flaw, and someone doesn't want to give the bad news, so it goes to production. Now it's even worse news, so the higher up doesn't want to say anything either. It keeps getting further and further and worse and worse until there's a lawsuit.
nikanj 9y ago
Nobody ever got promoted for delivering bad news, delaying projects or recalling products.
Tuna-Fish 9y ago
As you have formulated it, this is a textbook example of the principal-agent problem. Given your assumptions: For the company, these kinds of systemic failures are unquestionably bad. For the specific employees making each decision, this might have been the utility-maximizing choice. All they need to do is to keep the wheels rolling (sorry) and profit coming in until they are out. No amount of punishing the company can fix this. In order to fix the problem, prosecutors need to go after the individuals who made the calls.
- sologoub 9y ago
  Completely agree, but as with the VW case, I’d argue that many in management who knew and allowed it will not be punished.
  - vinay427 9y ago
    Certainly, but justice is rarely carried out perfectly accurately. Hopefully getting close enough will send a warning of the consequences of such a decision to others in the industry. As an aside: A good number of people in Europe will apparently prematurely die as a result of their actions, so if nothing else, it will be incredibly difficult for many of these guilty employees to justify their actions even to themselves.

BankaiTiger 9y ago

Going ahead with the bad product has higher payoff than not or later on. I imagine that's how they made the decision if the knowledge was widespread.

ivanbakel 9y ago

I'd imagine part of it is the timeframe of "eventually". Why care that the company will be in ruins later, if it makes you rich now and you think you'll be out the door before the apocalypse comes? Of course, there's a simpler answer: because they think it will be profitable. The aggressive settlements described in the article might even have been a part of the original calculations in just how much money could be made.

darkerside 9y ago

> you're basically guaranteed to get caught eventually That seems like an unwarranted assumption rooted in confirmation bias. It seems like everyone gets caught... because everyone we know about gets caught. There could be legions of cases like this that we never find out about.

virgilp 9y ago
> unwarranted assumption rooted in confirmation bias I'd say it's rooted in statistics: 1. Take this tire. If you know that there's a high chance it will blow up, then ... the more you sell, the more tires blow up in the wild; the more tires that blow up, the more injured & dead. The more injured & dead - the more likely you are to get caught. The end-to-end equation is "the more tires you sell, the worse your chances to get away with it". 2. Dieselgate: it's different, in that nothing "blows up". But still, the more cars you put on the road, the higher the chance one owner/mechanic will notice it. Maybe your "chance of detection" doesn't increase dramatically with the success of the product (though it definitely does increase), but the impact of it being detected increases linearly with the number of cars sold! This is still a very bad equation, since VW had zero deniability - once the cheat was detected in one car, it could be easily reproduced in all. It just doesn't seem to work out, from a risk-benefit perspective. Maybe only if you're looking very short term?
- fbdjskajxb 9y ago
  The difference with dieselgate is that the cheating was known by European regulators, who did not bother enforcing the law. https://www.theguardian.com/environment/2016/jun/20/european-commission-warned-car-maker-suspected-cheating-five-years-vw-scandal https://www.theguardian.com/environment/2016/jun/20/european... VW was surprised by the American response, since they simply did not expect the law to be enforced (they were apparently unaware of a similar diesel scandal that occurred with US truck manufacturers in the 90’s). Source: Faster, Higher, Farther: The Inside Story of the Volkswagen Scandal Book by Jack Ewing
- darkerside 9y ago
  > the more you sell, the more tires blow up in the wild; the more tires that blow up, the more injured & dead. The more injured & dead - the more likely you are to get caught In this case the outcome was pretty straightforward. Tires were literally coming apart at the seams. I'd wager that oftentimes product failures are less obvious. Maybe a certain tire exhibits unexpected sliding on certain types of pothole filler. We probably identify 0% of product failures that don't follow a human recognizable pattern. Some of these accounts probably unfold according to a "Breaking Bad" progression. Skylar never would have gotten involved in criminal activity except that her husband was already knee deep in it when she found out. A great deal of her rationale was keeping someone else from getting in trouble.

pstuart 9y ago

Obligatory Fight Club reference: https://www.youtube.com/watch?v=SiB8GVMNJkE https://www.youtube.com/watch?v=SiB8GVMNJkE

elipsey 9y ago

Do these products have a planned lifespan? Perhaps the objects is to recoup fixed development costs before the scheduled end of the product's life. Also, it seems like once the manufacturer knows there is a problem based on real failures, the cost of litigating to obfuscate information is small compared to defending many more cases after allowing an unfavorable legal precedent to be set and letting more injured consumers and PI attorneys find out about the problem. For example if 1,000,000 tires with a %1 failure rate were sold and each claim costs 1mm, the break-even on litigating to seal evidence would be 1bn. So the product is already out there, it will be discontinued eventually anyway, and aggressive litigation in a small number of cases is cheaper then painting a bullseye on your back with a recall. Makes sense to me.

snarf21 9y ago

Not shipping product and not showing growth is how you get fired and don't get bonuses. Hopefully you will be at a different company when the shit hits the fan. (Being overly cynical but it it probably more true than not)

tomkarlo 9y ago
In the bond market (especially cat bonds, which insure against long tail risks like earthquakes), they have a phrase for this: "YBGIBG". It means, "you'll be gone, I'll be gone."

jeffdavis 9y ago

Unwillingness to deliver bad news. It starts out as a design flaw, and someone doesn't want to give the bad news, so it goes to production. Now it's even worse news, so the higher up doesn't want to say anything either. It keeps getting further and further and worse and worse until there's a lawsuit.

nikanj 9y ago

Nobody ever got promoted for delivering bad news, delaying projects or recalling products.

Tuna-Fish 9y ago

As you have formulated it, this is a textbook example of the principal-agent problem. Given your assumptions: For the company, these kinds of systemic failures are unquestionably bad. For the specific employees making each decision, this might have been the utility-maximizing choice. All they need to do is to keep the wheels rolling (sorry) and profit coming in until they are out. No amount of punishing the company can fix this. In order to fix the problem, prosecutors need to go after the individuals who made the calls.

sologoub 9y ago
Completely agree, but as with the VW case, I’d argue that many in management who knew and allowed it will not be punished.
- vinay427 9y ago
  Certainly, but justice is rarely carried out perfectly accurately. Hopefully getting close enough will send a warning of the consequences of such a decision to others in the industry. As an aside: A good number of people in Europe will apparently prematurely die as a result of their actions, so if nothing else, it will be incredibly difficult for many of these guilty employees to justify their actions even to themselves.