VW’s big mess and what can be learnt from it

A couple of years ago, when VW last hit the news for doing stupid stuff I wrote the following piece about their inaction and lack of willingness to accept responsibility until forced to by regulators.

Clearly time has passed but not much changed. There are however (more than) a couple of differences between this recent transgression and their last dance with controversy. You can read in depth about the latest scandal here.

This time the issue is not directly related to the core promise of the organisation. Sure diddling emissions smells bad. But when you are synonymous with safety and it’s the reason people buy your cars, leaving your customers fearful that their cars might spontaneously brake, potentially hit much closer to home.

However secondly, while recalls are an expensive exercise, this time VW has attracted the attention of government and regulators and the ire of the stock market. All of whom can and have exacted swift and expensive retribution. VW has set aside $US 7.6 billion for fines as a start, but that figure is likely to rise. Their share price has plummeted by a third. And let’s not forget likely criminal investigations sure to follow. Quite the tally for a few lines of code.

But while the ins and outs of this story are fascinating, I’m more interested in what others can learn from the mess. So here are three lessons for SMEs courtesy of VW and their now unemployed (and perhaps unemployable) executives.

1. Whether you’re looking at relationships, transactions, cars, widgets or services, without trust it’s virtually impossible to trade. So treat it like gold. And once you’re in a deficit situation it takes time and a lot of work to get out of the red and back in the black – if you ever can.Just two years on from the last major trust withdrawal it’s a definite question as to whether VW has enough reserves to survive.

2. How you do things must be guided by your values or they are nothing more than words on a page. Honour them. Always. VW say that their values are responsibility and sustainability. Call me picky, but when a company says it holds sustainability including “environmental protection” as a value. And then gets caught defrauding their stakeholders by cheating on emissions that directly impact the environment, the values aren’t just words on a page. The page belongs in the recycle bin!

3. Growth at any cost is not worth the risk. While every organisation needs to maintain some level of growth to survive, looking for that growth in all the wrong places – that is ignoring your values and purpose and breaking laws in the process, will likely lead to heartache and ruin.

One of the big drivers of VW taking their huge risk appears to be an insatiable desire to be the biggest carmaker in the world. But to grow you need the kind of car that the big market (US) you’re going after wants to buy. No matter that the car isn’t quite up to their environmental standards. There’s a software workaround for that. And the likelihood your machinations to fudge the system will be noticed are pretty small. Until they are.

Of course, the Volkswagen Group own far more than the VW. Porche, Audi, Ducati and just a few of the storied brands that share the stable. So the ripple effects might well yet extend well beyond VW.

Only time will tell if VW can survive. I hope so. It would be a shame to see the actions of a few people lead to the demise of an organization and brand beloved by millions.

See you next week.

Get your brand questions answered by posting them on twitter @michelhogan or emailing me at michel@brandology.com.au

Michel is an Independent Brand Analyst dedicated to helping organisations make promises they can keep and keep the promises they make. She also publishes a blog at michelhogan.com. You can follow Michel on Twitter @michelhogan.