How Volkswagen's Company Culture Could Have Led Employees to Cheat (Lydia Dishman) The Forum applies the 70:20:10 Lens

Fear of failure or making mistakes can inhibit learning. When the culture of an organisation is such that even minor errors are unforgivable, where performance reviews ding employees for small miscalculations or less than perfect outcomes in their work, employees tend to stop innovating and move more linearly in their approach to do what is "right".

Alignment is not inherently bad. However, when alignment reduces independent thinking and connection outside of the hierarchy it has the potential to result in groupthink.  And doing things "by the book" in complex environments, with information changing constantly - the book gets to be out of date pretty quickly, leading to a culture of compliance vs. one of creativity, reducing morale, and jeopardising the entire organisation.

Volkswagen may have had just such a culture, which contributed to its recent fall from grace. It was recently announced that Volkswagen had become the leading car manufacturer in the world, and then the bottom fell out. Earlier in 2015, independent testing revealed that some Volkswagen vehicles were polluting at a higher rate than advertised and arguably worse still, they had installed software that masked the emissions data.

Although the emissions cheating scandal has not indicted the top executives, Volkswagen wasted little time in suspending executives and replacing their CEO. In the Fast Company article “How Volkswagen's Company Culture Could Have Led Employees to Cheat by Lydia Dishman, a small group of engineers has been identified by Volkswagen officials as more or less going rogue and taking unethical measures to cheat the system. The larger question, if the executive’s claims of being unaware is true, is why? Why were they unaware? And why might a group of engineers behave unethically? If the long history of ruthless perfectionism and low toleration of failure the article claims existed, then this culture is ultimately to blame over just a few individuals.

The culture of Volkswagen, like most top down driven ones, was led by executive management that was described as "confident, cutthroat, and insular." To regain prominence in a competitive market, Volkswagen must change from the inside out and move in a direction that is failure tolerant, open and transparent. Volkswagen's effort can be seen in the comment that "new CEO, Müller, is working to change the company culture, eschewing "yes" men in favor of people who "follow their instincts, and are not merely guided by the possible consequences of impending failure".

Can Volkswagen really be able to make this much of a cultural transformation in its global organisation? As the article suggests this culture has been steeping for decades, so it will not be an easy task to make such a quick turn... but it's not impossible if Müller sees this as an organisation-wide learning initiative and not just a changing of the guard in leadership roles. By adopting a 70:20:10 organisational strategy, Volkswagen could exponentially increase the effectiveness of the new direction proposed by Müller, and here's why:

  • Learning is ultimately about performing better, and performing better is not just about job related tangible skills. For Volkswagen, performing better means improved decision-making, ethics, autonomy, and employee morale. When the leadership model is one of command and control and communication becomes insular or siloed - a culture of fear and hierarchical communication results. Learning is then restricted and it becomes something that moves through formal channels only and limiting innovative thinking.
  • Additionally, it nullifies a questioning culture that Volkswagen and similar organisations seek. If in fact it was just a small engineer group that acted unethically by covering up a mistake out of fear, then a 70:20:10 framework would encourage informal learning through more open channels, and shared workflow observations. The new desired default for Volkswagen is transparency and with a 70:20:10 framework in place information and knowledge would cross over departmental lines, becoming the first step towards a dramatic culture shift.

When other groups can better see and respond to what is happening, what is needed, more ethical solutions could be generated through expanded collaboration. Furthering this shift is the increased opportunity for peer-to-peer learning and managers striving to be stronger coaches and mentors in decision-making, rather than merely providing oversight, direction, and evaluation. This is the social element of 70:20:10 where increased sharing and collaboration lead to greater transparency, which ultimately heads off wrong-doing before it can cost billions in sales, recalls and worse - lost consumer confidence.  

Volkswagen will rebound. The question now is how soon? If, in addition to having executives walk the talk of openness, a 70:20:10 framework is employed opening the channels for informal, on-the-job-learning, observations, and questioning, their return to the top will be swift and sustained. However, if they default to only traditional approaches in leadership development such as formal programs, the change process will be incremental and put Volkswagen at greater risk, for ultimately, culture cannot be changed by courses. 

READ: How Volkswagen's Company Culture Could Have Led Employees to Cheat