A good plan, but dire effect

 FireStone

Firestone had been growing for seven decades by the time the 1970s rolled around. Along with Goodyear, its crosstown rival in Akron, Ohio, it sat atop the thriving U.S. tire industry. Managers at Firestone had a comprehensive understanding of their company’s posture and strategy. They saw the Big Three Detroit automakers as vital clients, Goodyear and the other big U.S. tire manufacturers as competitors. Simply keeping up with the steady increase in tire demand was the company’s primary problem. The organization had become a symbol of its prosperity. Harvey Firestone, Sr., the company’s founder, insisted on treating customers and staff as members of the “Firestone family” in the company’s culture and operations. The company’s management and capital allocation systems were created to take advantage of the increasing tire demand by quickly ramping up new manufacturing capacity. Frontline personnel, for example, discovered market possibilities and turned them into suggestions for investing in more capacity during the capital budgeting process. 

Then, seemingly out of nowhere, everything changed. Michelin, a French corporation, was the first to offer the radial tire to the American market. Radials were safer, longer-lasting, and more cost-effective than standard bias tires, thanks to a breakthrough in design. They had already established dominance in European markets, and when Ford announced in 1972 that all new cars would be equipped with radials, it was evident that they would do so in the United States. The debut of radials did not catch Firestone off guard. The company had experienced firsthand the European markets’ fast embrace of radial tires during the 1960s thanks to its significant activities in Europe. It also created estimates that both automakers and customers would quickly accept radials in the United States. Although Firestone’s answer was swift, it was ineffective. It adhered to its old ways of operating even as it invested in the new product. It just tweaked them rather than redesigning its production processes, even though radial tire manufacturing demanded significantly higher quality standards.

References

Why good companies go bad. (1999, July 1). Harvard Business Review. https://hbr.org/1999/07/why-good-companies-go-bad