retail news in context, analysis with attitude

by Kevin Coupe

Go figure. The ethical lapses that led Volkswagen to cheat on emissions tests given to its cars go back a decade and were both systematic and systemic.

Hans-Dieter Pötsch, the chairman of Volkswagen’s supervisory board, said yesterday that the initial results of an internal inquiry has revealed that "the cheating took place in a climate of lax ethical standards," saying that "there was a tolerance for breaking the rules." The inquiry "proves not to have been a one-time error, but rather a chain of errors that were allowed to happen."

According to the New York Times this morning, "Although the company is not ready to identify culprits, the preliminary findings confirmed widespread suspicion that the scandal occurred because the company’s ambitions in the United States collided with air quality rules that were, and still are, more stringent than Europe’s." And in this case, as so often happens, ambition trumped ethics.

The chemistry is, to be honest, a little beyond my pay grade ... and if you are interested, you can read more about it here.

To me, the most interesting part of this issue has to do with how companies like Volkswagen create a culture in which short-term advantages are seen as far more important than the long-term brand equity and trust that allow companies to thrive. It is business malpractice ... and yet there are companies that tolerate it, because it helps this quarter's numbers and bolsters this year's performance bonuses.

Now, as the Times writes, Volkswagen continues to look as if it is taking public relations advice from veterans of the Nixon White House: "Volkswagen on Thursday continued to maintain the company’s account that the cheating was the work of a relatively small number of people. It said that nine people had been suspended as a result of the scandal, one more than had previously been disclosed. But the company said it could not disclose any names until the evidence was 'watertight'."

I'm not buying that position ... just as I'm not buying any product made by Volkswagen or its corporate brethren, Audi and Porsche. (Though, I must admit that if I had the money to buy a Porsche 911 Carrera Cabriolet, my moral superiority and ethical condescension might fade away...)

Matthias Müller, the chief executive of Volkswagen, said yesterday something that lots of executives should say: "We don’t need yes men, but managers and engineers who make good arguments."

That's true. Of course, senior management actually have to listen to them and act on their good arguments. Because that's the definition of leadership, and it would be an Eye-Opener.
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