Reporter's Theory: The VW Scandal was Due to Their Corporate Culture
Let me tell you how a car salesman once quickly sold me on a Volkswagen. He was a large, obese man, which is relevant. On a test drive, he sat in the passenger seat and my father sat in the rear seat behind me; the two of us together provided just about enough ballast to even the car out. As we pulled out of the dealership lot, the salesman directed me towards a very steep hill, and asked me to drive up the hill in second gear as he turned the air conditioner on full blast. With all three of us in the car I thought for sure it would choke, but the car accelerated up the hill as smoothly as if we'd been traveling on flat ground.
The proof was in the pudding, and the car served me well for five years. (I sold it and joined ZipCar when Manhattan parking became too expensive.) It lived up to the hype, and if I had to buy another car, I'd get another Volkswagen in a heartbeat.
So I was shocked when the scandal broke. I'm a fan of not only the VW brand but German engineering in general, and could not understand how such a technically competent company could be motivated to cheat.
Also disturbing was the nefariousness of the cheating. This was no simple fudging of figures on a chart, no rounding down when they should have been rounding up; instead software had been installed across the board on diesel models, and this software detected when an emissions test was being conducted and then secretly switched the engine over to a lean mode.
I've been eagerly awaiting the results of the investigation to see how this could have happened. But in the meantime, Reuters Breakingviews reporter Edward Hadas has published an Op-Ed piece containing his theories. VW fans among you will certainly want to read the article in full, but here are some of his salient points:
So how was it allowed it happen? Look to the corporate culture. The feuding cousins at the top of Volkswagen and Porsche promoted people with the same basic management style. In that kind of environment, three things tend to occur. Talented and arrogant executives do well. Bosses fail to delegate important decisions. Subordinates are expected to succeed, not to moan about problems which they cannot solve.
The hard style naturally travelled from top to bottom. So it is easy to imagine the pressure on the engineers who had been ordered to find a low-price way to keep diesel emissions down on a new engine model. The company's reputation for technical excellence was on the line. So was the strategy in the crucial North American market, where VW was struggling. Failure was not an option.
… A few enterprises have managed to maintain cultures which combine aggression and ambition with unflinching rectitude and constant self-examination, at least for a while. General Electric is a definite contender for the global all-round prize. Fans of VW's more luxurious German rival BMW might put it forward, but corporate life is generally easier for producers of luxury products with high profit margins than for mass-market players. Toyota was once the exception to this principle, but rapid expansion eventually compromised the Japanese company's commitment to excellence.
Speaking of Toyota, I find it interesting that people seem more outraged at Volkswagen's deceit than Toyota's accelerator scandal and GM's ignition switch scandal--even though Volkswagen's lies didn't kill a single person, while the Toyota and GM problems directly led to people's deaths. Why do you suppose that is? (That's not a rhetorical question, I'm genuinely asking you.)
Read Hadas' full piece here.