Well, VW is in a real mess! With rapidly dwindling share prices, the CEO resigning and global lawsuits at its door, it sounds very much like the doomsday scenario of a Hollywood script. Indeed, VW seems to have undone years of good in one go; so, is the end nigh for VW? From a strategic perspective, the real question is: what will really determine the death or survival of VW from this point on?
Everybody loves VW
VW is a passionately loved brand; no wonder reactions to the scandal have been highly emotive. But why did people fall so much in love with VW? Once, a friend of mine, during a rather heated debate about which was better, BMW or VW, abruptly ended the argument by asserting “I'll ride a VW till I die. The thing hardly ever breaks down; it’s a sure ride to anywhere!” And I have a feeling that he might not be the only one who feels this way. VW has a legion of fans worldwide that will have endless ways of telling you how much they love their cars. VW has given us cars like the ‘bug’, which was an emblem of flower power and has been one of the pioneers of GTI driving. Until recently, it was a symbol of ‘courage’, and it has been a sustainability idol among car manufacturers, defining ethical norms and industry standards worldwide.
So anybody with any love for VW feels heartbroken; their trust is shattered. The immediate reaction is to reprimand such unethical behaviour, to punish VW and avoid it happening again. This was perhaps the observation last week, which argued that negative behavioural and emotional feelings could account for a large part of the drastic fall in share value. However, such actions could also prove futile if we do not understand the real reason(s) that might trigger such behaviour. No one yet knows what may have led to such practices as the alleged rigging of emissions tests, which could run deep into the bowels of a company and implicate numbers of people. That’s why, to me, looking at VW’s culture and leadership practices in a generic way does not quite explain such behaviour, because it was these very elements of the company that accounted for the success that it was. In fact, we need to dig a bit deeper, as we know very little about how the company strategy is aligned with the cognitive, affective and social processes embedded at different culture levels that influence (un) ethical behaviours in the workplace, and direct how they behave ethically over time.
Aligning strategic and ethical resilience
The problem is strategy and ethics rarely walk hand in hand, but may be they should. A possible way forward for VW could be to reassess and align both strategic and ethical resilience when considering its future strategic options. ‘Strategic resilience’ is a clearly defined concept in the field of strategic management. It attests to a company’s ability to continuously withstand adversity or to bounce back from setbacks. Strategic resilience requires an overview of alternatives as well as an awareness of actions and behaviours that will carry them through from the outset. If VW has a well-established and strong strategic approach, then this is a true test of its resilience, as this is the time to turn to and unravel compelling strategic alternatives, rather than think of dying strategies. ‘Ethical resilience’, in turn, is a much less defined concept, but it has gained much significance in the light of recent work in the fields of psychiatry and neuroscience, where researchhas identified the role of cognitive, affective and motivational factors in the performance of a range of adaptive and maladaptive individual actions and behaviours.
So, can VW survive? Obviously there is no straight answer to this, but such scandals signal pressing demands on companies and brands alike to continuously align strategic and ethical resilience when contemplating their future. Strategists argue that as much as such an event can feel damaging, it is also a unique opportunity for the company or brand to reinvent itself in ways it never could before. For VW, this may be a good chance to revisit or revamp its deeply-held morals and virtues in order to redefine its ethical resilience in a new form, for not everything it has done so far has been so wrong. In order to reinforce resilience in people with problematic ethical behaviours, psychotherapists prescribe attention to four generic dimensions for individual improvement: 1) the desire to facilitate positivity 2) enabling powerful opportunities for change, 3) reconnection to core personal values and 4) education. Taken together, these dimensions are seen to effectively reduce ethical vulnerabilities, enhance personal resilience and improve quality of work and personal well-being. This sounds very much like advice that VW could do with at the moment; and who knows, they might just pull through.
Dr Roshan Boojihawon, SL Strategy, University of Birmingham.