Organizational Liability Assessment and Avoidance

Organizational Liability Assessment and Avoidance
Tom Taormina, CMC, CMQ/OE

Thursday, February 4, 2010

The Case for Proactive Vulnerability Assessment

Honda Recalls 646,000 Vehicles Worldwide Over Faulty Switch
News Source: by EIN, 2010/02/02
Legal news for product liability attorneys. Honda recalls the Fit after discovering a switch poses a fire hazard. Product liability attorneys alert- Honda recalled the Fit over the power window switch, which poses a fire hazard to consumers.

Toyota's other pedal problem: Lawsuits
NEW YORK, Feb 1 (Reuters) - Toyota Motor Corp is facing a growing number lawsuits from consumers who complain their vehicles suddenly accelerate or may do so, and want the world's largest automaker to pay for it. Last week, Toyota stopped selling eight models in the United States and Canada, including its popular Camry and Corolla, because of possible unintended acceleration. Some 8 million vehicles are up for repair worldwide over problems including alleged faulty accelerator pedals made by the supplier CTS Corp, and the possibility that floor mats could jam the accelerator pedal.

CPSC Recalls 15,000 Horse Figurines Over Lead Paint
January 30, 2010 ( - Injury News)
New Source:
Minneapolis, MN—The U.S. Consumer Product Safety Commission (CPSC) and Blip Toys have voluntarily recalled Nature Wonders HD pinto horse toy figures, after it was revealed that the toys violate the federal lead paint standard. The recall was announced by the CPSC on Tuesday, January 26, 2010.

Tree Stands and Brackets Recalled Due to Fall Hazard
New Source:
CPSC announces recall of tree stands and brackets due to fall risk. Product liability lawyer alerts- Tree stands recalled due to fall risk, CPSC reports. Decatur, ALSummit Treestands LLC has participated in the voluntary recall of Talon Hunting Hang-on Tree Stands and Brackets due to the fall hazard they pose to consumers. The U.S. Consumer Product Safety Commission (CPSC) announced the recall on Thursday, January 28, 2010. The CPSC reported, The tree stand can unexpectedly detach from the tree when the brackets fail, posing a fall hazard to consumers. Approximately 6,800 tree stands, brackets and straps are involved in the recall.

What is more disturbing than the content of these four news stories is that they were from the FIRST TWO DAYS of February, 2010. The numbers are staggering. The cost is mind-boggling. The impact is global. The long-term consequences cannot be measured because the manufacturers will only have the opportunity to fix a small number of the products. Lack of notification and consumer apathy will ensure that many of these faulty products will be in the hands of customers for decades. The release of these products to the public by the manufacturers is not only keeping the Consumer Products Safety Commission busy, it continues to overload the civil court dockets with products liability lawsuits. This epidemic borders on criminal behavior because the vast majority of these defects were avoidable!

When Lexus was introduced by Toyota as their high-end line of ultra-reliable vehicles, we in the quality assurance field studied their processes and training to learn proactive techniques for process excellence. The Toyota quality model had long-been a benchmark of success in minimizing defects, so we were eager to learn of the ongoing advances. During that period, there was a popular case study that made many of the quality assurance journals as an example of proactive quality management.

A customer complained that the gas pedal on her Lexus caused her shoe to become jammed between the pedal and the floor mat, resulting in the heel breaking from a very expensive pair of Ferragamo shoes. As the legend was told, the dealer immediately replaced the shoes and within a week Toyota had flown an engineer from Japan to New York to study the problem. Within a month, a fix was designed and all Lexus were voluntarily retrofitted with an improved gas pedal.

While the exact details of the case study may have been embellished in the retelling, this example of customer service and proactive defect avoidance has been used as a benchmark for teaching continual process improvement and customer satisfaction. Fast forward to the above story of millions of Toyota vehicles being recalled (and production halted) to fix a gas pedal problem. Is this the definition of irony? What has happened to Toyota over the last twenty years?

Since I have not been commissioned to perform an exhaustive quality audit of Toyota, I can only present a scientific hypothesis based on 40+ years as a quality control engineer, 20 years as a management consultant and ten years as an expert witness in products liability and organizational negligence litigation. It is a phenomena we have termed Enterprise Entropy©.

(En•tro•py - noun: The inevitable and steady deterioration of a system)

Enterprise Entropy typically manifests itself as follows: A company is launched to fill some perceived gap in a market. The principals are determined to make the product or service “better and of higher value” (or some such superlatives) than those currently in the market. They execute per their vision and values and rise to prominence in their industry. Their name becomes synonymous with quality and value. Then the business “changes hands,” either by sale of the company or generational transition from the older to the younger, the “Boomers to the Gen X to the Gen Y.” The new leadership rides the crest of their public reputation while on a mission to drive down costs, increase profits and penetrate new markets.

Many companies that rose to stardom during the second half of the twentieth century have become mostly entropic skeletons of their former majesty. Production of their products and services are now outsourced, off-shored, throw-away hermaphrodites of what was designed and produced by the founders. The vision and values of the founders have been methodically diluted as time and business pressures and loss of focus caused systematic decay. Oftentimes, customer service issues begin to surface signaling an increase in the probability of impending product failures. This priceless message from consumers is, tragically, too-often dismissed as customer stupidity or buyer’s remorse.

We are utilizing the lessons learned from our expert-witness assignments, harmonized with our quality management tools, as the basis for making executives aware of the potential liability issues within their organizations. Just as we have used our assessment and diagnosis tools to help improve processes, we are applying ourselves to uncover the warning signs of pending catastrophes that may have become embedded in products and services.

As best-selling author Malcolm Gladwell points out in his books Tipping Point and Outliers, we are often unaware of when symptoms turn into epidemics until it is too late. Gladwell’s research goes on to make the case that well-meaning leaders are prone to misdiagnosing the problems and then trying to fix the wrong root causes. He also points out that those attempting to communicate the message of impending disaster are often ignored.

The disease of Enterprise Entropy has also permeated the quality assurance disciplines set the stage for inherently unsafe products to reach a critical mass and explode into an epidemic of a country producing the equivalent of “Japanese Junk” as seen in the 1950’s. Currently however, rather than defective products simply being thrown away, we have cadres of attorneys ready to sue your company into non-existence.

Tom Taormina was a Quality Control Engineer at NASA’s Mission Control Center for 14 years. He was part of the Apollo 13 recovery team and heard the words “Houston, we have a problem” first hand. His career has been dedicated to hands-on proactive business excellence and he has written ten books on quality and business process improvement.