I appreciate that the title is somewhat sensational, but without wanting to kick a CEO when he is down, I would contend that Volkswagens worries are a result of poor leadership.
The usual defence for most CEOs in difficult situations is to say that they cannot be responsible for the minutiae in their business. In todays hyper-connected, hyper-transparent world I dont think that defence is acceptable.
Although we are swimming in huge volumes of data, every senior leadership team has the opportunity to use that information to examine and identify potential risks to their operations. In the case of Volkswagen, criticism of its emissions testing policy has been simmering for some time.
The other traditional defence is that because large multi-nationals are so big, it is very easy for information to remain silo’d in different divisions, which makes it difficult to share actionable intelligence.
Similarly, this is not a defendable position, because companies are operating in such inter-connected environments where their customers and partners have grown used to greater information transparency and availability.
If CEOs want customers to do business with them, then those customers (and other stakeholders) will expect them to have an equally transparent and detailed oversight of all the information floating around their organisations.
So for me the key question is when should a CEO decide that public criticism has become a strategic risk for his or her business And how can they use data to create a holistic and in-depth picture of the potential risks (and opportunities) that such situations present
Hyper-transparency and risk
In todays hyper-connected world, what might have previously appeared to be an isolated issue in one market (or division of an organisation) now has the potential to be accessible from anywhere in the world. Hyper-transparency redefines what is a strategic risk and therefore must redefine how companies manage risk.
For CEOs, the challenge is staying alert and identifying trends before they damage reputations or threaten share prices. However in such a complex, interconnected world where every element of your business model and supply chain is under constant scrutiny by shareholders, watchdogs and regulators that is no easy task.
Find out how to mitigate risk more effectively in your business on page two…