The view of a CEO on the VW scandal

by Didier Marlier on Friday November 20th, 2015

Looking back at last week’s post, it becomes clear that when fear and power distance replace trust and collaboration, a whole culture will dangerously shift from creative and performant to risk averse and compliance driven, from honest, challenging and transparent to deception and lies loaded.

A lot has already been published on the VW scandal but a recent column written by Bob Lutz (a Swiss born retired executive at BMW, Chrysler and GM) drew my attention. It is in line with what was published on our blog last week.

When the VW scandal broke during the Summer, the spotlights rapidly and understandably focused on its CEO, Martin Winterkorn, who, after an arrogant initial stand, had no other choice than stepping down,in front of the magnitude of the disaster. Many questions broke, to which the German police inquiry will try to respond: Did Mr Winterkorn order this explicitly? Did he not want to see? Was he simply condemned to trust his gigantic organization? Or can he be criticized for having failed to make the organization he ran “Trustworthy”?

Bob Lutz is pretty clear on the causes of the scandal. When he talks about the VW culture and the man he holds responsible for it, Chairman Ferdinand Piëch, he writes: “a reign of terror and a culture where performance was driven by fear and intimidation”. Placed in front of a “Perform or die ultimatum” (to become the World’s No1 and defeat Toyota had become obsessional), people would have little choice, if they wanted to keep their jobs at Volkswagen. As Lutz puts it: “Under this situation, your choice was immediate dismissal or find a way to pass the test and pay the consequences later. Human nature being what it is—if it’s lose your job today for sure or lose your job maybe a year from now, we always pick maybe a year from now.”

I am wondering: As leaders, how many employees do we constrain to think like VW engineers probably did? We may not all be as harsh as Mr. Piëch of course but an eyebrow, a criticism, forgetting to mention someone in a speech, or a movement of impatience are all details that concur to install a distance between us and the people we lead.

Sometimes, the purpose of the leader, his ideology, is precisely to behave as Mr. Piëch is reported to: The belief is that fear is a powerful motivator. So I do mean to scare them, I dointend to create a distance because I believe that, should I be too close, I will revert to my status of human, I will be “one of them” again and won’t be able to “motivate them by fear”. But the experienced Bob Lutz firmly rejects that ideology: “That management style gets short-term results, but it’s a culture that’s extremely dangerous. Look at dictators. Dictators invariably wind up destroying the very countries they thought their omniscience and omnipotence would make great. It’s fast and it’s efficient, but at huge risk.”

Luckily, most of the time, our intention is to create a management style that is engaging, induces creativity, measured risk taking, innovation and loyalty. We intend to create a wonderful culture as our legacy for the place which hired us to lead it. But life, with its moments of doubts, stress, anxiety, disappointment or on the contrary, happiness and joy of private life, its episodes of tension, conflict, annoyance or satisfaction and development on our professional side makes us very vulnerable to changes of temper. I was exhausted two weeks ago and some of my trusted colleagues have been shot at, more because of that than because of what they said…

However, no matter our ideology or intention, even if we mean well, any derailment will give birth to a story which will add to the legend people are constructing about us… and those stories will concur to create the culture we want (when positive) or its exact opposite (when negative).

So what can we do? My advice to such well-intentioned leaders who happen to have derailed (as I just did that week) is simply to admit it, apologize and reconnect with not only the person involved but also with those who witnessed the scene. This will reassure them, will clearly demonstrate our intention and capacity to take criticism and be self-critical. It will show them that we accept feedback and expect them to provide it to us when we fail to be the exemplary leader we intend to be. It will also profoundly reassure them that… we are simply human and aware of it!

 

 

 

 

 

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4 Responses to “The view of a CEO on the VW scandal”

  1. Dear Didier
    As always ,very meaningfull and reach analisys of episodes . My contribution is try to enlarge the cause to broader dimension of VW and Automotive Industry and beyond to Stock Market and how citizen evaluate those companies . President and CEo is a leader for sure but is a human not God who even may have good intent is subject to major forces of corporations . My doubt is how society is realy making value to emission control vs stock value , see even until this year after more than 21 years from Kyoto US and China still not signed penalties againts who not comply with CO2 emission quote , how is CEO selecting and dismissing framework ? the results providers or evaluating how the results is delivered ? If you select whos drivers is only deliver KPI no matter the way ,from who is the guilty the selected guy or who assigned it ? Who is responsible ? Who support and ellect dictators or only dictators ? Because the personnal behavior normally don`t use to change , Adolf Hitler was sociopat since his younger age , the question is who supported him , his miracle fromula to overcome difficulties ? It is time to society think and refletc what we want for us and our family and society .

    Reply
    • Obrigado Herberto,
      I think that your closing line is really the question: What do we want out of business? Short term results or profound changes on the mid term? Thank you for enlarging the debate, as always. Your wisdom is a gift!
      Abraço

      Reply
  2. Didier

    We all, in a moment or another of our careers face challenging situations. Our answers or decisions in such moments are driven by many inners aspects (education, ethics, personal beliefs), but also by some practical aspects of corporate life. I am happy I was never put against the wall to decide “be good and die or be evil and keep with us”. I did decide for changing from comfortable positions and leaving a company for a new challenge in a lower status in a different company, in these moments I admit I was not loosing a lot, it was clear and easy to decide for the right things.
    I wonder what is a decision as this VW CEO (if it evercame to his hands to decide), a decision that might slowly but without doubts, drive the company to bankrupcy. It isquite a heavier decision, not only a personal move.
    Thanks for keeping our brain close to our heart.
    The higher we go, harder to deal with such situations. I admire leaders capable of assuming correct decisions in hard moments (what is a correct decision other than an opinion?), being attacked in their personal life, but acting with conscience. And yet I think we all should be responsible for our actions, I understand the pressure the VW CEO affected his decision (again, if ever was inhis hands to decide).
    Thanks once again for your words. They help me keep my brain close to my heart.

    Reply
    • Thank you Luiz,
      Indeed, “Moments of Truth”… And what I like in Lutz text is that it really places us, leaders, in front of our responsibilities: Do we manage by fear and create the next VW disaster or do we balance challenge and support in order to “create conditions for people to do and be their best”?

      Reply

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