I nearly chocked on my breakfast last week. My partner was telling me about the VW story. I’d heard a bit of the news earlier in the week, but it wasn’t until he explained that the cars had been specifically designed to react differently to test conditions, to cheat tests, than they do under normal conditions, that I understood the extent of the story which had hit the global headlines.
11 million vehicles have been built with the devices, these are now confirmed as 5m VW cars, 2.1m Audi, 1.2m Skoda, 700,000 Seat, and 1.8m commercial vehicles. The devices were built into diesel cars between 2009 and 2015. That’s 6 years of manufacturing across some of the best known car brands of the Volkswagen family.
Switzerland has banned the sale of VWs. Sweden, Australia, South Africa, 27 US states, and the EU are currently investigating. Japan’s transport ministry has ordered Toyota, Nissan, Mazda and Mitsubishi – along with importers of European brands to report by the end of the week on whether their diesel cars can cheat emissions tests.
Intentional Deception
As the world heads towards an uncertain future for our planet, these car-markers have taken our environmental decisions into their own hands. Actually, they have taken our decisions away. The well-meaning green policies of the German government, of many other governments around the world, will fall short, because of number of people at VW wished to sell more cars. They knowingly, intentionally, deceived their consumers.
What do you do, if you own an affected VW, but one of the reasons you chose it, was its ‘low’ emissions impact? What do our governments do now, re-test all the cars on the open road before each new policy? The car-maker claims the practice is widespread. Who can be trusted?
Trust is the foundation of every relationship. Even relationships that are not with people but with brands. Rebuilding trust is mainly a complex and unrewarding process, because once trust leaves, it’s almost impossible to regain. I am not sure if it can never be regained. Companies and industries should take note of what unfolds with VW next.
Last week experts predicted it could be the end of the diesel car.
Scandalous Stories
In previous years we have had the press scandals, phone hacking, AP scandal, Lady Diana, the presidential, diplomatic, and royal scandals, scandals in the police, the Ferguson scandal, scandals in our top sports, and our best sportsmen; Lance Armstrong, Oscar Pistorius, FIFA and the event that halted our world for a while, the 2008 financial crisis. The latter was brought on by a string of events, each wrong in its own right, the culmination of which brought our world to its knees. The story started with the irresponsible lending to US homeowners, was worsened by the overvaluation of these bundled subprime mortgages by 3rd parties, and was further exacerbated by the questionable compensation structures in our global investment banks, which prioritise deal flow over long-term value creation. Finally, a severe lack of adequate capital holdings by banks and insurers, some whose very existence was to ensure their capacity to back their financial commitments, fell short and our governments had to step in. At any point, any of these levels could have questioned, but nobody did.
What have we learned?
As with all the above, things do change, but not until after things have gone seriously wrong first. People knowingly go along with it. What do we need to do, to have happen to us, to believe that change starts with us, and now?
My father, who was a teacher and a lecturer, an academic, not a businessman, correctly predicted the financial crisis and the credit bubble when I was about 16 years old. We were in the kitchen, when I remember him telling me that one day the bubble would burst, credit would simply run out, because credit wasn’t real. He explained to me that many banks didn’t always create any value, they just shifted it around. One day all the Banks would need it back at the same time, and nobody would have any credit left to give. Pop.
When the over-leveraged investment banks collapsed, the entire global financial system collapsed, leading to the sovereign debt crisis, and now the issues in the Eurozone. A string of events. The interconnectedness of which, shows how one repackaged deal can turn into another, until you end up with one great big mess which even our children’s children will be paying for. And it is not simple enough to over-regulate everything. If you do that, then you don’t end up with any businesses at all.
Mythical value
You have choices in business, in life. You can chose what kind of firm you represent. You can chose to break cycles or be a part of them. Your business can either build others, or build mythical value, and slowly take them down from the inside. Value creation, real value, is something that can go in hand with your ethics, it doesn’t need to be in the opposite direction. You can build something successfully, while also being successful. Success attracts success.
Why the truth is your best strategy
Many people make the mistake of thinking others don’t know what they’re thinking. They have a poker face. But they don’t. You never really get away with it. If you think someone hasn’t sensed it, you’re wrong. If they are not acting on it, it’s because they don’t want to, or they would like to give you the benefit of the doubt. Don’t push it.
Many companies, or even industries, make the mistake of thinking they can get away with it for a time. But they can’t. When the house of cards comes down, there is no going back. Time will not be on your side.
Operating from a place of honesty is powerful, because what you can achieve when people know you’re always telling the truth, is greater than what you can win with the occasional lie that you might be able to get away with. Don’t underestimate others.
A few years back I attended a client meeting with a colleague. The relationship wasn’t going that well; the client we were working with, wasn’t working with us. The contact had changed and things were back to square one again. The team was growing frustrated and I was wondering if it was even worthwhile. As I was on the verge of walking away, I booked a meeting with the client to tell them that I was thinking of discontinuing the relationship. Just after we left the room, my then colleague looked at me wide-eyed, in disbelief. At coffee afterwards, they told me that they liked my strategy. I said, ‘what do you mean my strategy?’
I didn’t have one.
