{"id":13247,"date":"2018-02-20T13:38:57","date_gmt":"2018-02-20T13:38:57","guid":{"rendered":"https:\/\/arielle.com.au\/?p=13247"},"modified":"2025-07-03T01:13:28","modified_gmt":"2025-07-03T01:13:28","slug":"vw-emissions-scandal","status":"publish","type":"post","link":"https:\/\/arielle.com.au\/vw-emissions-scandal\/","title":{"rendered":"Dirty Leadership Truths About The VW Emissions Scandal"},"content":{"rendered":"Reading Time: <\/span> 5<\/span> minutes<\/span><\/span>

The VW scandal, like every good scandal before it, has left business leaders wondering where exactly it all went wrong, who at VW is\u00a0behind it, how leaders ought to lead through a crisis<\/a> – and whether the brand can recover.<\/p>\n

It even spawned a hashtag, #dieselgate<\/a><\/strong>, which has become the world\u2019s unofficial forum for discussing causes of the crisis and its possible fixes – all while aiming a healthy amount of frustration and resentment at the company\u2019s top executives.<\/p>\n

We spoke to Harvard Business School professors Bill George<\/a> and Amy Edmondson<\/a> to get their take on what business leaders can learn\u00a0from the scandal.<\/p>\n

These are, as Bill puts it, devastating times for VW.<\/p>\n

For the traditionally well-respected brand, the emissions scandal is a major breach of trust\u00a0– and it\u2019s the pre-meditated, calculated aspect of the\u00a0violation that makes it so hard to swallow.<\/p>\n

There\u2019s no doubt that, in Amy\u2019s words, \u201cit\u2019s actively deceptive, an act of fraud\u201d, but the real question we’ve all been asking is this: how far up the corporate chain does it go?<\/p>\n

If we were to believe the CEO of VW USA Michael Horn, not very far at all.<\/p>\n

Horn, facing a grilling\u00a0before US Congress, was to be seen accepting little of the blame: \u201cThis was not a corporate decision. No board meeting [\u2026] has authorised this. This was a couple of rogue software engineers who put this [deception device] in for whatever reason\u201d.<\/p>\n

This is, at best, a flimsy excuse.<\/p>\n

As Bill wryly observes of the hearing, \u201cMr. Horn did not distinguish himself in the eyes of the public\u201d.<\/span><\/p>\n

(Related: Ultimate Guide To Capex For SMBs<\/a>).<\/strong><\/p>\n

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Lesson #1: Take Full Responsibility.<\/strong><\/h2>\n

It\u2019s in the VW response we find clues to our first strategic leadership lesson<\/a>: to err is to be human, but to cover up is to sin.<\/p>\n

\u201cThe cover-up can be worse than the crime\u201d, Amy points out.<\/p>\n

When the issue is that of broken trust, deflecting questions, acting\u00a0slippery and distancing themselves from\u00a0“the real\u00a0villains”\u00a0is one of the worst things VW executives can be seen doing.<\/p>\n

It\u2019s unlikely that anyone other than those involved know the truth of the matter, but it\u2019s exactly this kernel of truth that needs to come out.<\/p>\n

\u201cThe new CEO will need to be very hard-nosed in getting out publicly exactly who is responsible\u201d, argues\u00a0Bill – \u201cthe longer they withhold that information for, the harder it\u2019s going to be\u201d.<\/p>\n

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VW\u2019s management of the crisis up to this point, then, has been less than ideal.<\/h3>\n<\/blockquote>\n

Although their senior leaders seem to be contrite – \u201cWe\u2019ve totally screwed up\u201d, admits\u00a0Horn \u2013 this contrition runs barely skin deep.<\/p>\n

Scapegoating and proclamations of C-Level innocence aren\u2019t likely techniques to win any CEO\u00a0of The Year awards, regardless of whether such proclamations are true.<\/p>\n

Horn and his colleagues\u00a0are equating innocence with ignorance, but ignorance is no excuse, says Amy:<\/p>\n

\u201cIf the top officer of the corporation doesn\u2019t know what\u2019s happening that\u2019s problematic – a serious leadership failure. Whether you know or not, you\u2019re still responsible. You\u2019re responsible for creating the culture that tells people what to do in the absence of prescriptive rules. This is a situation exactly like that\u201d.<\/p>\n

The real issue here is that of company culture. It’s what Bill calls the \u201cexecutive responsibility<\/em>\u201d – whether your people feel that they can get away with breaching practices.<\/p>\n

Which brings us to our second major leadership lesson.<\/span><\/p>\n

<\/div>\n

Lesson #2: Culture Is The\u00a0CEO’s Job.<\/strong><\/h2>\n

Top executives might not know everything that\u2019s going on in their company, but setting standards at the macro-level means guiding decisions at the micro-level.<\/p>\n

To put it bluntly, if the leadership team had done its job and built the company culture on the right foundations, we wouldn\u2019t be having this discussion.<\/p>\n

(Related Article: How World-Class Executives Improve Employee Engagement<\/a>).<\/strong><\/p>\n

Without doubt, the ever-increasing globalisation of business plays a role here – but it also\u00a0can’t be used as an excuse.<\/p>\n

As former Chairman and CEO of Medtronic, a medical device company that operates in 140 companies, Bill certainly understands firsthand the difficulties of operating across continents:<\/p>\n

\u201cThese events should bring home to every company in the world that when you\u2019re operating in another country you have obligations in terms of their law and compliance.<\/p>\n

You have to go along with whichever laws they have in place, whether or not you agree with them, and that\u2019s the Chief Executive\u2019s job \u2013 to go out and speak to different people on the front-line in every country and ensure people are compliant.\u201d<\/p>\n

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There\u2019s no point crying over spilt milk, though. The real question is, what next?<\/h3>\n<\/blockquote>\n

For Amy, \u201cwhat must come out of this is a top to bottom soul-searching. An evaluation of the culture, of the technical processes, of everything\u201d.<\/p>\n

The VW leadership team has a remarkable challenge ahead of it.\u00a0Broadly, they have a choice to view the crisis as either:<\/p>\n