Does Big Business Want to Change?

Like many people, I followed the VW omissions scandal with disbelief…well, disappointment. Did any of us believe that a company whose primary aim was to become number one would not bend just a few rules?

You have to dig a little deeper (read scratch the surface) to discover the underlying culture of big business. In 2009, an article appeared stating that “Volkswagen hopes to be the “number one” automaker in the world by 2018, an ambition it predicts will require a targeted approach to price, production and design.”… Its plan? To introduce eco-friendly vehicles with ‘innovative technologies’…

Why could VW do what all other car-makers couldn’t? It couldn’t! It lied and deceived the public…AND their own shareholders. Now, here is where part of the problem lies. The shareholders. The group of people who will not accept being number two as it reflects poorly on their return.

In 2015 VW CEO Martin WinterKorn, made no 20 in the Harvard Business Review ‘Best performing CEO’s in the world’ list; Up from position 89 in 2014. He gained this title by delivering a 108% shareholder return. Job well done hey? VW knew about the potential scandal in 2014 but were ooooohh so close to becoming number one.

‘Piëch and his wife subsequently tossed out their pretzels and resigned from the board, …and were quickly replaced by…two of Piëch’s nieces!!!’

Like many European companies, VW has a two-tiered board and is still a private company. WinterKorn (Management Board Chairman) and the VW Supervisory Board chairman, Ferdinand Piëch (grandson of Ferdinand Porsche), had been playing duelling banjos (or Tubas), and Winterkorn won the initial boardroom struggle. Piëch and his wife subsequently tossed out their pretzels and resigned from the board, (yes you read right…but wait for it) and were quickly replaced by…. two of Piëch’s nieces!!!

Now, ethically, could you invest any faith (or money) in a company that is so emphatically focused on family control and inward looking senior executives, that the hierarchy employs a corporate ‘game of thrones’ as its culture? The most progressive (not necessarily ‘successful’ in the shareholder view) companies in the world have strong, competent, and importantly independent chairpersons. Note I said chairperson…  heaven forbid any female become a ‘chairman’ of the German gentleman’s club known as VW.

Transparency International in Berlin said VW scores a grade of 5.5 out of 10 for corporate purity. So, does big business really want change? Or, is it façade to placate the masses whilst silently going about business as usual. In October 2015, the New York Times printed this from incoming chairman, Hans-Dieter Poetsch,;

 “Volkswagen faces great challenges,” Mr. Pötsch said in a statement on Wednesday. “We must overcome the current crisis, but we must also ensure that Volkswagen continues to grow, in an industry that is changing and developing at a previously unseen pace.”

Translated: we’ve had a little hiccup – haven’t learned our lessons and now it’s back to pursuing the number one title. Business as usual – nothing to see here, now please move along.

Don’t think that this a VW bashing rant; we have some serious issues at home too. Dreamworld’s boards handling of the tragic events of October; their decision to go into ‘business as usual’ mode and subsequent backdown was incompetence unbound. That’s another story for another day.

I know I will look a lot deeper when I buy my next car. With the new US leadership, and systemic short termism rampant, a Tesla may be the responsible choice. Elon Musks vision is to make a truly ‘clean’ car that is better for the environment. In doing so (Tesla) may just (eventually) become Number one in the world. Sure, it will cost more but it may be my small part to contribute in endorsing global ethical leadership. The world AND business works by physics – Newtons third Law ; For every action there is an equal and opposite reaction….Business far from usual.