It’s another auto “scandal.” But unlike the GM ignition switch issue earlier this year, Volkswagen’s emission problem wasn’t the result of lower level neglect. It was proactive deception.
It’s inappropriate to call this a scandal. A CEO affair is a scandal. This was an orchestrated project to circumvent the law. U.S. regulators say Volkswagen deliberately programmed some 500,000 diesel-powered vehicles to emit lower levels of harmful gases in official tests than on the roads. Henceforth, I shall refer to this as what it was, Project Deception.
An emissions problem may not seem fatal, at least not immediately. But in ways that matter, Project Deception is far worse than GM’s failures. Leaders went to great lengths to create software that would give false emissions reading. We don’t know how many people were involved, but projects like this can’t be accomplished by just one person.
CEO, Martin Winterkorn, an engineer and former head of Audi, resigned shortly after the Project Deception story broke, saying, he was stunned by the scale of the misconduct, and was accepting responsibility to clear the way for a “fresh start” for the company.
It has yet to be determined whether Winterkorn knew about Project Deception. But he was CEO for eight years. Volkswagen, which also owns the Audi and Porsche brands, had just achieved Winterkorn’s long-standing goal of overtaking Toyota™ to become the world’s biggest automaker three years ahead of target.
Winterkorn may not have told his people to create software that would circumvent emissions testing. But he created a culture where people believed that overtaking Toyota was more important than complying with the law. Are we surprised that Winterkorn’s team decided the best use of their engineering talent was to find a way to lie about problems, rather than solve them?
Volkswagen may not have falsified reports on seat belt strength, or air bag effectiveness. But now that we know about Project Deception in the emissions department, would anyone be surprised if there were parallel projects designed to circumvent safety regulations?
At the time of the GM debacle, I wrote, “We shouldn’t continue to be surprised by these situations. A culture focused entirely on earnings will never be anything other than an every man for himself rat race.”
In Volkswagen’s case, the leader’s long-stated goal had nothing to do with adding value for customers; it was about besting the competition.
We live in an age of transparency. The values of the leader set the tone for the team. The leader decides whether the true purpose of the business is to make money, or improve the lives of customers. Those are the only two choices.
Winterkorn made it clear, Volkswagen’s purpose is to make money and beat Toyota. We should not be surprised that his team applied their talents accordingly. As a result, Volkswagen is facing billions of dollars in fines, and possible criminal charges. Their brand may never recover.
The ultimate test of a leader is how well their team makes decisions when they’re not around. A large-scale leadership failure Volkswagen doesn’t mean business is evil. It simply means we need to do a better job of training leaders.
Making money, and providing honest value are not incompatible. They are inextricably linked.