By Alan Hilburg*

When the VW scandal broke in late September last year, media everywhere was speaking of the company’s actions in the context of it being a “scandal.”
Respectfully, a scandal is only a scandal when you know who knew what when.
In September it wasn’t a scandal. Now with the acknowledgment of senior leadership in Germany and the U.S. that everyone, all the way to the top, knew but didn’t tell…it’s a scandal.
VW failed to understand the most essential lesson in crisis management. You ultimately will not be judged by your initial response (which in VW’s case was nimble) but by your actions and decisions in responding to the crisis.
Why? Unquestionably, what caused the crisis is reflection of how effectively people made decisions (or not), and an organization’s response reflects their character and their values.
So now, VW is paying the high cost of low trust.
VW violated the core of any trusted brand relationship, they failed to keep their brand ‘promise.’ When the crisis ‘broke’ the financial and customer world wanted VW to validate the trust it put in their exceptional German engineering and take immediate action. At first, they were doing everything right including the CEO stepping down with a fundamentally sound ‘I didn’t know, but I should have known’ position. Then, instead of taking control of the narrative by saying ‘we’ve identified the executives that made this anti-values decision and we’ve removed them and here is what we’re doing to reearn your trust”…they hunkered down and became a defensive monolith.
Without exception, a bad situation that drifts out of control always gets worse…and it has for VW. With a one-time opportunity to seize the high ground, through indecision, they let it go.
The American humorist Mark Twain once said, “trust the teller and you trust the tale.” VW is no longer being trusted, nor listened to. And all of their mea culpas are not resonating with the market. In fact, several critics have suggested that VW’s structure – a few, very large and secretive shareholders, along with management and supervisory boards made up almost entirely of insiders – has contributed to governance problems in general, and the emissions scandal in particular. All great organizations have four common traits. Great brand trust. They keep their brand promise and have strong brand resonance with their stakeholders. They have great behavioral driven values. The value of great values is that those values guide every decision everyone makes every day. Values driven decision making shatters organizational silos, biases, and the builds up transparency and sharing of knowledge. Great employee engagement which creates a culture where everyone understands they are part of something bigger than themselves and how they fit. And lastly, great leadership with a clear view of their higher purpose and achieving the responsibility of destiny.
So where from here? What does VW’s the long road back involve?
Over the next 12 months or so VW should take a few essential steps to rebuild trust in the company and their legendary brand.
Read also: US rejects VW recall proposal – falls short on proposed repairs.
Obviously on one hand their greatest financial challenge is retrenching in order to accumulate the cash and assets necessary to respond to the penalty of their decisions. This creates a new type of risk to which they need to protect themselves against… don’t divert important resources from the recovery of trust.
For VW, as with all companies facing the recovery from a crisis, start at the core. What one achieves inwardly will change outer reality, or as Aristotle said, “knowing yourself is the beginning of all wisdom.” Volkswagen’s reverse engineering should quickly identify that their insular culture, created by a troubling organization viscosity, was at root of where flawed decision making began. And what ‘affected’ those decisions were their values.
Based on 30 years experience, the road home begins with VW reexamining their values. VW has a unique opportunity to do some historic soul searching.
- Step one… launch a company initiative to explain that what really went wrong was their failure to uphold their values.
- Step two… ask every employee, if they could architect five new values that should define and reflect contemporary behaviours or desired behaviors what they would be.
- Step three… aggregate those inputs and adopt those bottom-up created values.
- Step four… ensure that everyone in the organization becomes fluent in ‘their ‘ values and ensure that compensation, incentives and other measurement tools reward or reduce compensation based on ‘living the values.’ Values are the only way to ensure the high value of high trust.
Externally, VW needs to restage their profile. Stop focusing on trying to build trust on a ‘what we make’ product-driven strategy and reconnect with key stakeholders based on a ‘who we are’ platform.
Read also: Volkswagen shares hit hard on US Justice Dept bankruptcy-inducing approach
At the core, who is VW? Not what do they make, but rather who are they? Just think of the irony of launching senior executives in every market to become champions of addressing the world’s most serious epidemic, the cancer of distrust. Who better to talk about ‘high cost of low trust?’ And who would be more ‘listened’ to? Senior executives can begin reversing the international crisis of distrust simply by starting their conversation with, “who knows more about the high cost of losing trust than VW?” It is a once-in-a-lifetime opportunity to put their experience into a larger context and demonstrate what one leading company is doing about it.
Trust is not a matter of chance, but a matter of choice. In recent weeks the VW headquarters has released a statement warning against any expectations of a ‘quick investigation.’ It’s been six months. Chairman Potsch said, “answers would take some time.” Hopefully this isn’t another example of believing that their form of “no comment” works. As kids we covered our eyes because we felt it was safe and it would drive whoever was under our beds away.
And in the end, TRUST is the substrate that will determine success or failure on any organization in the 21st century.
Trust changes everything.
Why?
Because it’s the only thing that means everything.
Trust is not only the business currency of 2016, it’s society’s currency.
- Alan Hilburg, President and CEO of Hilburg Associates, is a widely recognised problem-solver, helping leadership teams build trust by navigating organisational transitions. Good transitions (M&A, brand opportunities) and bad transitions (crisis, litigation). He’s been a confidant and advisor to a range of senior luminaries around the world including country presidents, university chancellors, CEOs, leading entrepreneurs, sports and entertainment celebrities and religious leaders. Alan has also authored two NY Times national best-selling books on leadership; received an Academy Award nomination for the world’s first environmental film; three Emmy nominations; and a number of awards in marketing and television production. Hilburg Associates is based in Johannesburg.