In a recent article in The Washington Post, Terrence McCoy detailed Henry Ford’s disastrous rubber plantation foray into Brazil in 1927.
It’s a great case study of how substance over (local) knowledge creates risk.
The highlights
Integrating rubber production operations makes sense if you make cars. Brazil seemed logical at the time (close to crops and cheap). But 1920s American execs weren’t ready for deep Amazonian jungle life, so:
🌴 Build fire-hydrant-lined streets 🌴 Give them names like Hillside and Main Street 🌴 Build an American village replete with golf courses, cinemas, and large homes 🌴 Stuff the buildings with bucolic Midwestern vistas and furniture 🌴 Remove cows (Henry Ford had an aversion to the doe-eyed ruminants)
This parallels a bit with large organisations exporting their “values” and culture without much consideration for congruence. Anyone who has spent time in primary rainforests will attest that nature wins. You can try and prettify and tame as much as you like, but long term, you must adapt to survive.
In risk terms, this is rolling out Western-centric socio-political aims without localisation = more divisive than unifying (see a recent piece in The Economist).
The lowlights
When the Ford team eventually got down to the business of rubber production, it was an unfettered disaster. They:
🛞 Planted crops in the wrong season… 🛞…on the wrong terrain… 🛞…with the wrong seeds 🛞 When pests took over, they introduced ants (to kill pests) 🛞 The ants became another pest
The calamitous venture was likened by Ford executive, William Cowling, to “dropping money into a sewer.” By 1945 they’d admitted defeat - $20 million poorer (about $340m today) - and withdrew. The cattle returned in the form of a ranch.
Failing to integrate local knowledge into risk management (usually) guarantees failure.
It’s a jungle out there
In integrity risk terms, most markets should be viewed as the Amazon. We need to understand the laws of that jungle and the ecosystems. For instance, saying, “We have zero tolerance for facilitation payments”, may look great on your glossy prospectus and Code, but it’s like saying, “We don’t tolerate mosquitoes” in the jungle.
Officials coached in extracting small bribes using the cover of opaque regulation (with capricious interpretation) often function like an organised criminal group - the folks on the corners channel a portion of earnings up the chain. In other words, there are structural conditions (like stagnant water and breeding grounds for 🦟 ), and treatment requires a blended strategic and tactical approach.
🦟 Removing breeding spots from your environment 🦟 Provide employees with the knowledge to avoid high-incidence areas 🦟 Create protection when we’re unavoidably vulnerable 🦟 Gather local support (encourage wildlife that’s not supportive) 🦟 Collaborate with likeminded folks (e.g., data and science-led)
Time for more cultural relativism?
I’m picking on one tiny example - facilitation payments - but the logic extends to most risk malaises. We must understand the seasons, terrain, growing conditions, pests, and predators to manage issues.
Now, if only we knew people who lived and thrived in those environments for millennia… oh, wait. We do. But they (often) don’t like us, as we talk too much, listen too little, and ram our version of morality down their throats.
Risk management is a team sport; we fail if we’re not integrating frontline knowledge and risk ownership. As one year back in “the West” passes, my main wish and observation would be less exporting of values that aren’t adapted for travel. We (in the West) are building so much self-obsessed ephemera that we’re turning the very people we need help from against us. We’re losing the integrity risk fight.
Endnote - are we all in this together?
On the topic of cultural imposition, this NYT article (extract courtesy of The Knowledge below) - skewed heavily to the existential Trumpian vs Liberal internal US friction - could be extended to many liberal Western elites. We export our values and ask others with fewer opportunities and options to follow them. I’m not advocating tolerance of human rights abuses, corruption, and the rest. We won’t win until we step out of our bubble into the jungle - we need jungle solutions for jungle problems, not Fordian inflexibility.
“Since the 1960s, the idea that “we’re all in this together” has been replaced by the reality that “the educated class lives in a world up here” and everybody else is “down there”. This is our modern meritocracy: highly educated parents go to top schools, marry each other, and pass their class privileges to their children. This means important industries are “elite-college-dominated”. More than half of the staff writers at America’s two biggest newspapers, for example, attended one of the country’s 29 most elite universities. Armed with all this “economic, cultural and political power”, we opinion-formers support policies that help ourselves.”
What might a disastrous 1927 foray by Henry Ford into Amazonian rubber production teach us about managing risk in 2023?
Quite a lot, as we seem not to have learned many integrity risk laws of the jungle in the past 96 years.