What VW’s Next CEO Must Do To Save The Organization

What do these have in common? 1.   “Communication. Respect. Integrity. Excellence.” 2.   “Social responsibility. Sustainability. A spirit of partnership. ‘Pro Ehrenamt’ volunteering initiative.” They are each a nice set of corporate values that were set in stone and ignored by the organization’s leaders. The first set belonged to Enron, which got brought down by a complete lack of integrity. The second set is directly from the website of Volkswagen, whose CEO just resigned because the company was lying about emission tests. Specifically, as described by Elaine Shannon, of the nonprofit Environmental Working Group,

The company had deliberately installed a “defeat device” in diesel vehicles sold worldwide from 2009 to this year. The device was really a bit of software coding expressly engineered to spoof standard emissions testing instruments and evade the federal Clean Air Act and related state rules.

Whether Volkswagen CEO Martin Winterkorn knew about this or not, he was the leader of an organization in which people blatantly contradicted one of its four core values. As Shannon explained to me in a brief interview,

At the end of the day a company or non-profit group, all it has to sell is its values and reputation.” VW was about being “humble, iconic (and then added) greenness.” But, “they lied.” And now, “VW is all about dishonest cars.”

  Values Are The Bedrock Of Culture The more I get into this, the more I’m convinced that culture is the only sustainable competitive advantage. (Pun unintended.) BRAVE cultures are made up of choices around behaviors, relationships, attitudes, values and the environment. Further, the way organizations answer questions around how to win, how to connect and the impact they choose to make flow directly from what they think matters and why. Someone told me a long time ago that you define your values by what you choose to walk by – or turn a blind eye to. In a leadership meeting, one of my colleagues said he was going to do something that was in direct contradiction to one of our organization’s values. I called him on it in the meeting. He stood his ground. I called him privately the next morning and he told me he was going to go ahead. I explained that if he was going to do that he was going to do that somewhere else. That was the last time I talked to him. By the end of the day he was out of the organization and I had called all the other leaders personally to explain why.   Rebuilding Trust This is going to be a daunting and long-running task for the new CEO. Replacing shattered bedrock is not for the faint of heart. Just ask the people at Enron. Oops. Sorry. Can’t ask them. They couldn’t do it. What it’s going to take is summed up by “Be. Do. Say.” No one is going to believe what the new CEO says. He or she is going to say exactly what the firm’s lawyers and communication experts tell him or her to say. Almost any of us can anticipate the communication points:

• It was a horrible aberration
• It’s not who we are
• I vow to fix the problem and get us back on track.

Some will believe what the new CEO does. The new CEO and VW will have to regain trust over time by doing what they say they are going to do. But, if the new CEO and the organization don’t fundamentally believe in what they are doing, if it’s not who they are, they will stumble again and will get caught. So, job no. 1 for VW’s board is to decide what really matters and why and then find a new CEO who believes in that. Then, and only then, can they start to rebuild and, perhaps, avoid being the next Enron and save the company.