Volkswagen Needs a Cultural Reboot
“I’m not aware of any wrongdoing on my part.”
Those nine words pretty much sum up what’s wrong with the Volkswagen brand these days. Spoken by former CEO Martin Winterkorn on his way out the door, it speaks volumes about why VW’s “clean-diesel” mess requires more than the typical crisis-management response. This is pure scandal on a macro level because, as Mr. Winterkorn also said, the marketer has “broken the trust of our customers and the public.”
The facts are still being unraveled, but this much we do know: Since 2009, VW has been installing emissions software on its TDI “clean-diesel” engines to circumvent pollution regulations in the U.S. — “manipulations that violate American environmental standards,” as the company put it.
When it was pointed out to VW engineers in 2013 that new road tests showed wildly unacceptable results — as much as 40 times the pollutants allowed — the car manufacturer reportedly pushed back, blaming the testers instead of its cars, until finally issuing a mea culpa last month.
So what is VW to do now? Textbook protocols for corporate crises simply don’t apply. The Tylenol scare in the 1970s is usually the model for this situation, except in that infamous case it was an unknown perpetrator who poisoned the pill bottles. In this case, the perps are known to have been VW employees — we just don’t know their names yet. Even the various scandals in the investment-banking industry, where rogue employees lost billions of dollars of somebody else’s money, don’t seem to fit. This was no lone-wolf act — it took an entire village to carry out the malfeasance.
VW meanwhile advertised its promises with its clever, $77 million “Old Wives Tales” ad campaign, which aimed to debunk popular myths about diesel engines (like that they were dirty). In one TV commercial, an “old wife” places her snow-white scarf next to the exhaust pipe while her VW clean-diesel car is running. Incredibly, there’s no sign of any pollutants belching from the engine.
Regaining the public’s trust will not be easy for VW. Forget burnishing the brand. Changes will have to be made that must be big, bold and sincere. The entire corporate culture that approved lying to customers will have to be reengineered, and the process will need to be fully transparent.
What do I mean by bold? It almost goes without saying that those responsible for this fraud will have to be held accountable. But VW doesn’t have a choice in that. What must be done to save the brand goes beyond merely settling lawsuits. Here’s a four-point plan it should consider:
1. Offer to buy back from consumers the cars in question, since there’s no doubt that their value is now significantly diminished.
2. Establish an environmental fund to combat the estimated 1 million tons of nitrogen pumped into the atmosphere since the fraud began.
3. Provide protection for independent VW dealers (the company’s frontline brand ambassadors), who along with consumers will be financial victims of this scandal.
4. Set up an ombudsman at VW with no prior ties to the company — a consumer-advocate, Ralph Nader-type attorney — to oversee revised policies at the company and to keep the public regularly informed with updates.
The great irony here is that the company achieved one of its aggressive goals: Earlier this year, VW overtook Toyota as the No. 1 car manufacturer in the world. Yet, those ambitions blinded them to the consequences they now have to face.
