Idiom of the Day – “Penny Wise, Pound Foolish”
To be “penny wise but pound foolish” means to be careful about spending small amounts of money, but careless when spending much larger amounts. It means to focus on minutiae (small things) but to lose sight of the big picture. General Motors has been described as being “penny wise but pound foolish.” It produced a flawed ignition switch that has been blamed for at least 13 deaths. The ignition switches cost $10. Yet GM waited more than ten years before recalling 2.6 million Chevrolet Cobalts and other small cars. GM’s failure to alert customers sooner could end up costing the automaker hundreds of millions of dollars in fines and much more in damage to GM’s reputation.With so much at stake, why didn’t GM act sooner?
Clearly, the company was “penny wise and pound foolish.” The answer, according to many people familiar with the automaker, is a corporate culture reluctant to pass along bad news. When GM was struggling to cut costs and improve its image, a recall of its popular small cars would have been a terrible setback. By the time GM engineers began to face up to the potential gravity of the defect, the Great Recession had hit and the company was begging Congress for a taxpayer bailout that would become its financial lifeline.