The Real Reason Volkswagen is Crashing and Burning

Volkswagen screwed up.

Badly.

But how could this have happened?

Recent revelations that Volkswagen intentionally duped environmental regulators has caused a PR and legal firestorm for the company.

stock priceThe stock plunged 35%, the CEO has stepped down, and one can only imagine the regulatory fines they may be liable for.

Almost anyone looking in from the outside has to think, “WTF!? How could they have been that stupid?”

Fair question. After all, these people are paid very well to guide the company.

The answer is a stark warning to others in leadership positions.

The answer lies in two words. Hubris and Culture.

Hubris

As many leaders climb up the ladder of power, going from success to success, they begin to see themselves as infallible and surround themselves with sycophants who do not question any of their decisions. They no longer have the child beside the road who can point out that the emperor has no clothes.

Because they see themselves as infallible, they begin to push their conduct into riskier and riskier territory.

Volkswagen CEO Martin Winterkorn is just the latest of a string of leaders making the walk of shame. Here are some more:

This has become known as “Hubris Syndrome”.

As a leader, the best way to avoid this is to practice humility, look at yourself realistically, and actively cultivate relationships with people that will call you on your BS. Many leaders find that a strong, grounded and honest coach can keep them from falling into the hubris trap.

The board of directors also has a responsibility to monitor the leadership and look for signs of hubris. They may be the only ones with the power to re-align the leader’s conduct before it gets to the point where they have to fire him/her.

Culture

Corporate culture affects how everything is done in an organization, from the smallest decision to the largest initiative.

Usually, a corporate culture evolves by default, with no real thought given to it. There may be a “Corporate Culture Statement”, but often it bears no resemblance to “the way things are really done around here”.

This would not be such a big problem if corporate cultures were malleable. But most are rigid and inward-looking. Unable to properly take advantage of new ideas, they continue on their cultural trajectory, oblivious to their weak spots.

When I began my career, I spent several years in change management consulting for major corporations. What quickly struck me was how a process that was commonplace at one company was considered revolutionary at another company (“that would never fly around here”). And vice-versa. And these were not companies in wildly different industries (Think Shell and Exxon).

The fact that this inward-looking cultural blindness is obvious to anyone on the outside makes it even more astonishing for anyone who’s not inside that culture.

Cultural Blind Spots in Action

To see this in action, you need look no farther than the recent furor around policing on North America.

US police departments have been plagued recently by accusations of excessive force and violence. They’ve been forced to admit that they’ve gone too far in many cases.

Given this, one would think that they should take a careful look at the types of people they’re hiring and how their organizational culture is giving them the idea that this sort of violence is acceptable. So… here’s a recruitment video for the Portsmouth Police Department.

You see the problem right? It looks more like a recruitment ad for a paramilitary mercenary force. If it’s so obvious to us, why can’t the police department see it? The fact that this police department thinks this is OK shows that they simply cannot look beyond their organizational culture.

Even Canada’s venerable RCMP (The Mounties) is not immune to this. Plagued by misconduct, sexual harassment charges and human rights investigations in recent years, the force seems incapable of altering the course of its culture.

Their recent recruitment video, though not as extreme as the Portsmouth ad, is still packed with adrenaline-pumping activities set in a dystopian, black and white world.

Do really you want the people who are excited by this stuff to be the ones joining your police force??

Contrast this with a video ad for the for the New South Wales police department.

It shows them helping people, interacting with the public and being all-around good folks. I know I’d rather have the people that are attracted to this image as my police force.

The Way Out

Cultural change isn’t easy. Especially for organizations that have been around a long time.

It has to come from the top. And, because the CEO is normally a product of the culture, they may not have the vision to do it on their own. The board of directors may have to mandate it and force the CEO down this road. Or, if necessary, replace the CEO with someone capable of seeing and evangelizing the required cultural change.

The risk of “business as usual” is just that great.

A seasoned expert from outside the company can make this transition much easier and provide you with advice, roadmaps and processes to guide you along the way.

Conclusion

As obvious as leadership hubris and corporate cultural blindness are to outside observers, it is equally obscure to people inside that system. Most organizations will continue down this path, unaware of the dangers ahead.

Some, however, have the foresight to see their trajectory and will change course.

It requires guts, commitment, openness and humility to change the course of these supertankers of cultural blindness. But with steady pressure on the rudder the results will accumulate and you will eventually find yourself on a new course.


Trent Schumann PhotoExperienca

is an outstanding cadre of leadership and team development specialists ready to bring your organization to the next level of teamwork, results and happiness. We’ll get you there with programs ranging from team fun and bonding events to in-depth transformative retreats and longer term coaching and consulting. Our clients love us and so will you!

Contact us today so we can make a difference in your life and your team.

+1 (403) 270-0000  infonow@experienca.com

My name is Trent Schumann and I’m the founder and lead facilitator of Experienca. I hope I have the pleasure of working with you soon.

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