NOT CLEAR ON YOUR STRATEGY HERE

Posted in Quick Hits on September 22nd, 2015 by Ed

By now even people who don't follow automotive news have heard that Volkswagen has been caught red-handed pulling a scam on US and EU regulatory agencies. By submitting cars with altered software for testing – allowing its diesel models to appear to produce considerably less pollution than they do in reality – the company effectively defrauded consumers, government regulators, their own dealer network, and, you know, the planet. Even before lawsuits and criminal penalties are handed down, the scandal figures to cost the company at least the $7 billion it has set aside for the cost of updating consumers' cars to meet the stated pollution standards. For the unfamiliar, diesels achieve excellent fuel economy and tend to be more durable in the long term with the downside that they are very dirty in terms of emissions. For years the promise of "clean diesel" seemed too good to be true. Turns out it is.

This is no accident, of course. The deception was premeditated, cleverly planned, and flawlessly executed. Whenever corporate America is caught in a scandal like this I am left scratching my head at their logic. In this instance it was, from the very inception, only a matter of time until the truth was uncovered. Some car magazine or consumers' group would conduct a test using their own equipment and find exhaust emissions far dirtier than the company stated (and EPA certified) figures. How does the company simply plow ahead in this situation? Do they start down the path of trying to cheat and then, finding themselves in too deep to back out, go for the gusto? Do they delude themselves into thinking that they are so brilliant that they will fool everybody? Do they believe that they will be caught but that no one will dare prosecute them? Did they cynically decide that they would make more money off of the deception than getting caught would cost them in the long run? Or do a handful of people within the company decide that since they are highly unlikely to be held legally responsible personally, they will benefit from the deception handsomely and then live off the proceeds after they're eventually discovered (and probably fired)?

It's hard to conceive of any situation in which this wouldn't end badly for the company. If anyone could come up with a suitably grand delusion, though, it's the kind of people one finds in corporate boardrooms and office complexes these days.