Three crucial lessons that brands can learn from the Volkswagen debacle

I would even go further and say that VW probably prided itself on how it acted with integrity. Clearly something went wrong.

So what are some of the lessons for us from the VW debacle?

(1) It’s not about where you planned to go, it matters where you end up

“When the map differs from the terrain, go with the terrain,” Kevin Plank, CEO Under Armour, famously said while quoting one of his board members on CNBC.

For most of us, business lesson number one was MBOs. We are trained in “management by objectives”. We turn our objectives into milestones. We live or die by our milestones and we reward our people based on their ability to hit their milestones. Yet as important as our milestones are, they are not the “be all and end all” of our work. They are, well, milestones.

What matters is where we end up.

Too often do we get distracted by the fact that the market did not respond as we wanted it to. We try and look for short-cuts and fixes to achieve our milestones. How much are we willing to compromise? What are we willing to overlook to achieve our goals?

When I read “The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron”, what struck me was not that they necessarily set out to break the law, but that it was where they ended up. A small lie. A minor “fudge”. A little misdirection. What starts as a minor problem grows into a legal nightmare. Then you worry about people covering up what they find rather than being honest about what they found. As Martha Stewart would tell you, the cover-up is always worse than the crime.

(2) It’s about the culture, stupid

Lou Gerstner, former CEO IBM once said that culture isn’t just one aspect of the game, it is the game.

So what happened at ENRON? Why didn’t anyone stop what everyone knew was bad behaviour? The answer is culture. It is always about the culture.

Entrepreneur Magazine recently covered ten examples of companies with fantastic cultures. When you read the stories of Zappos, Google and the rest, there are some common themes. Among them is openness and clarity of purpose. While many of these 21st century organisations may want to convince you that there is no politics, all organisations have politics. The question is, does the culture encourage the employees to do the right thing and speak out? Does your company’s culture reward people who speak out and say the tough things, or does it reward people who say nothing and go along to get along?

Read articles on Volkswagen:

• Volkswagen could face one of the biggest legal claims in UK history
• The biggest CEO resignations of 2015 so far
• The Volkswagen recall scandal could be more keenly felt in Europe

(3) Integrity matters

I remember an incident at work where one employee knew another employee was breaking the rules. When it was discovered, both employees were let go. As a management team we discussed why the employee who knew and said nothing was also punished. The discussion ended up being about integrity. One of the team questioned this and said that the two players had demonstrated different failings of integrity, implying that there was a scale to integrity or lack of it. There is not. Integrity is binary – you either have it or you don’t.

So as much as we might want to blame our company and its culture, in the end it comes to your personal integrity. Someone at VW knew what they were doing and chose not to say anything. Yes, doing so would risk their job and their livelihood. You can decide to say nothing but if you do, then it always comes back to bite. At some point, you have to lay your head on your pillow and sleep. It is always easier to sleep knowing you did what was right and acted with integrity.

Bottom line

My guess is that what happened at VW did not start as a plan to deceive the market, but that is where it ended up. The best way to avoid this at your company is always to act with integrity, regardless of what others around you are doing.

Nigel Dessau is CMO at Stratus Technologies.

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