The Volkswagen Brand Crisis

This article originally appeared in The CEO Magazine.

Since the story broke that VW deliberately buried emissions results in its software, plenty has been written about this case of corporate malfeasance, perhaps more than any since Enron.  

The Volkswagen brand crisis seems fairly straightforward to me. With no mission or values, I contend there is no hope for achieving VW’s goals ethically and in a way to sustain the company.  

Some confuse mission statements with other corporate communications that are really marketing taglines and slogans.  Mission statements are not typically external documents, used to convince others of the value the company creates.  Rather the most effective mission statements are largely internal documents, guiding people within an organization about its purpose and paired with a values statement so that organizations have clarity about both their purpose and how they are going to achieve it.

Volkswagen doesn’t have a mission statement.  There were values stated in the 2006 annual report, but they disappeared in future years. A vision statement dated June 2011 pronounced: “By working in co-operation with politicians and society, the world of business can play a key part when it comes to combating serious environmental issues and social inequality. Volkswagen's main contribution to the project is related to sustainable mobility.”

An analysis by Strategic Management Insight 2013 could find only this goal in lieu of a mission statement:  “The Group’s goal is to offer attractive, safe, and environmentally sound vehicles which can compete in an increasingly tough market and set world standards in their respective class.”

SMI found Volkswagen Group’s goal lacked any statement of values or philosophy, did not mention customers, employees, or technology.  It achieved a score of 1.6 out of a possible 4.5 in SMI’s evaluation.

By 2014, Volkswagen’s annual report talked about its strategy.  Still no mission, no values:

“Our Strategy 2018 focuses on positioning the Volkswagen Group as a global economic and environmental leader among automobile manufacturers. We have defined four goals that are intended to make Volkswagen the most successful, fascinating and sustainable automaker in the world by 2018.” These goals related to innovation, customer satisfaction, sales, profits and employee retention, but say nothing about core values.

In 2010, Volkswagen joined 21 other German automakers in 2010 in agreeing to a “mission statement for responsible actions in business.” Yet it sill operated without a clear core set of defined beliefs or values to guide VW’s work, or a motivational or reward system aligned with a mission.  While the six principles seem well-intentioned ecologically, without a well-designed system to support this goal, Volkswagen missed achieving it, and in fact, behaved in a way counter to its stated aspiration.

Employees everywhere roll their eyes through discussions of mission, purpose, and values.  For many, uninterested in the larger system they operate within professionally, they seem bored sitting in long meetings listening to  what are for them  buzzwords that get in the way of the real work to be done in any company.

Volkswagen was the largest automaker in the world in 2011, offering 13 brands from Audi to Porsche.  That was a few strategies and vision statements ago.  Today Volkswagen’s share price is half what it was a year ago, following a precipitous stock price drop when news of the scandal broke.  It’s recently appointed CEO has been reported to take the same misleading software design approach during his time at Porsche.  No surprise, given that he was working in the same purposeless company, without an articulated set of values to guide his work.

Much more will likely be written about VW and, as it not is its first corporate scandal, perhaps the company’s epitaph is in the works.  Bottom line:  no mission, no hope.