News of Volkswagen’s cheating on the emissions testing of its diesel cars is only two weeks old but the scandal is already a case study in courses on leadership. VW’s systemic deception, similar to earlier scandals at General Motors and Toyota, has become an object lesson in the perils of corporate arrogance.
A year before the scandal even broke, VW chief executive Martin Winterkorn told a Spiegel journalist that “arrogance and complacency are the worst things that could happen to us.” Whether Mr. Winterkorn knew of the software trickery remains unknown. But now after his ouster, VW’s new chief, Matthias Mueller, faces the need to instill a behavior of humility in the company, which might help prevent such deliberate fraud in the future.
“Volkswagen needs a fundamental cultural change,” says Bernd Osterloh, VW’s top labor executive and a member of its supervisory board. Or, as a VW manager told Reuters, “Humility will be the name of the game.”
A certain hubris drove VW to cheat. Its engineer-driven culture held regulators in disdain. The company put the prestige of becoming the world’s largest automaker ahead of honesty with customers about the quality of its cars. Its executives used their power to make workers conform rather than listening to their concerns. In its public pronouncements, VW called itself a “thought leader” and “change agent” even as it snookered governments on the pollution levels coming out of its exhaust pipes.
General Motors is now in the second year of reforming its long-held corporate behavior of arrogance. In 2014, GM was called out for a decade-long coverup of faulty ignition switches that could turn off the engine and cause air bags not to deploy. A new CEO, Mary Barra, has surprised people by her admissions of mistakes and problems. She encourages candor and trust. She says that feedback from customers and parts suppliers is “a gift.” She encourages employees to challenge their bosses, and their bosses’ bosses. She has set up an internal program called “Speak Up for Safety.”
An expert on leadership, Jim Collins, author of the book “How the Mighty Fall,” says corporate leaders can avoid the self-destruction that comes from arrogance by channeling their resolve and drive into “being of service to something that [is] bigger than them.” Humility allows for transparency in the corporate process and a receptivity to criticism and learning from others. It counters pride in past successes, which opens thinking to ideas for future success.
VW still makes great cars, even if many of them pollute more than promised. Now it can use this scandal to become a model of corporate leadership. Not out of hubris, of course, but with humility.