The Autopilot Crisis: What Tesla Mustn't Do

July 18, 2016

Don’t fight it. Don’t try to brazen it out. Remember Intel’s PR disaster around the Pentium in the mid-90s? And what about the Exxon-Valdez oil disaster in 1989? And BP’s catastrophic oil spill in 2010? Closer to Tesla’s home industry, remember the Bridgestone tire scandal of 2000? And what about the ongoing dramas that are dragging down Toyota (airbags) and Volkswagen (diesel car pollution), jeopardizing their very viability?

Tesla’s insistence until now, despite a call by Consumer Reports yesterday for Tesla to disable hands-free operation until its system can be made safer, and to stop using misleading language such as “autopilot” for a driver-assist feature, is disturbing. To me it’s a sign of hubris that I would have hoped not to have seen from Elon Musk and his management team despite signs we’ve seen in the past of his notable ego, and his obsessive ambition – admirable in so many ways – to revolutionize the auto industry in every way imaginable. Musk is rumored to be particularly preoccupied to keep Tesla in front of Google on the self-driving cars front. This is where pride and hubris are getting in the company’s way.

Tesla has achieved so much with its extraordinarily successful Model S, despite a record of reliability that has at times been sub-par, that it would be a remarkable setback if Musk were to ignore the signposts that are telling him to eat a bit of humble pie, recall the driver-assist feature (which they can probably do via a software update), and apologize to his loyal and at-times fanatic following. Common sense mandates that Musk and Tesla have too much to lose by not following Consumer Reports’ four-point recommendation:

  • Stop referring to the system as “Autopilot” as it is misleading and potentially dangerous.

  • Issue clearer guidance to owners on how the system should be used and its limitations.

  • Test all safety-critical systems fully before public deployment; no more beta releases. (Me talking now: I have to say, I am shocked that Tesla would release a beta-test feature to all of its Model S owners, but then maybe Tesla hasn’t yet learned how to operate as a top-grade software-enabled business in every respect that it needs to, despite all the dazzling software-enabled feature of the car and the ownership experience.)

  • Disable Autosteer until it can be reprogrammed to require drivers to keep their hands on the steering wheel.

A bit more on the issue of Tesla releasing a beta version of Autopilot for general use: This is the mistake that many tech companies make, racing to launch a jazzy new feature and jam it into the marketplace at whatever cost without sufficient time to work out the kinks. Not a good idea, and in this case one that looks like coming back to haunt the company.

It will much better for Tesla to emulate the more successful cases of positive management responses to the PR nightmares that afflicted them, showing authentic acknowledgement of the problem, demonstrating real resolve to solve it, and thus with good fortune turning a dangerously negative crisis into an opportunity. These examples, which tend to be fewer than the negative ones, include the gold standard in crisis management – J&J’s recall in 1982 of 31 million cyanide-laced Tylenol capsules. The cyanide had been added to the pills by an unidentified person, which meant that the company was innocent of any malfeasance or negligence. But Johnson & Johnson quickly accepted responsibility (not guilt, but responsibility) and set up a 24-hour hotline to keep consumers updated on their attempts to solve the mystery. The CEO at the time, James Burke became a prominent media figure, making it very clear that consumer safety was the company’s top priority. The company also developed a tamper-proof seal to protect its bottles, an innovation in packaging that has undoubtedly saved many lives since then. This stellar response taught other companies to put the public’s welfare before the company’s profits, even though it cost J & J more than $100 million – considered an astronomical number at the time. Furthermore, “get the company’s CEO in front of the media if he is forthright and affable. And if there is a legitimate sympathy card available, play it”, as a Huffington Post piece on corporate PR nightmares put it.

Even Intel, which in 1994 initially tried to rationalize the Pentium bug as something that was insignificant to most computer users, managed to eventually turn the situation around, going on to produce one of the most successful brand promotions of all time in tech, the Intel Inside campaign, which solidified its dominant position in microprocessors for the following three decades. The customer backlash finally resulted in CEO Andy Grove, who realized the acute danger that the company was in, agreeing to replace all Pentium chips. The company set aside a $420 million reserve to cover the costs.

At the end of the day, in situations like these, the market and customers are always right in sensing when something is awry, and and corporate hubris will always be penalized. On the other hand, if the company’s management acts appropriately, they can turn the situation to their advantage by employing empathy and direct action and communication. Elon Musk, this is your chance.