3 reasons the VW scandal matters to your business
In the world of business, we are often asked to draw parallels between what enormous global enterprises do, and to consider how we might apply those same learnings to our business. We are told Apple has a strategic advantage having built a ‘walled garden’, and you should have one also. We learn that 3M has innovation within it’s culture and you should have one also. We are led to believe that if Google provides meals for employees, we also should.
But we all feel that most times, there is almost no connection to us ‘real world’, mere mortals who are business owners.
What resonates the most are genuine, authentic stories from real people with real businesses. How did Paul use Core Values in his landscaping business or how does Carly show employees what Core Values mean?
Often when business owners hear about stories from large enterprise businesses, they simply think “well that doesn’t apply to me, it doesn’t matter”.
Well I suggest to you that when it comes to the recent Volkswagen emissions scandal it does matter. In fact it matters a lot and here are 3 reasons why.
1. VW customers are your customers
Regardless of your industry or location it is highly likely that your customers drive a car, and with 14% of the global market, they could drive a VW, and if you have more than 10 customers statistically they probably do. Put simply many of these people feel misled. Many people bought a VW with it’s environmental credentials high on the list of reasons why.
This is the first sentence of the current Volkswagen group global strategy “Our Strategy 2018 focuses on positioning the Volkswagen Group as a global economic and environmental leader among automobile manufacturers”. But this shouldn’t be news to you. We all know the VW brand which has evolved over many decades to be positioned as the environmental leader with videos such as this one “Sustainability with Sean: A VW film about Environment“. This has led VW to become the 67th most valuable brand in the world according to Forbes.
The problem is that with these people, who are also your customers feeling misled, it decreases their trust with brands in general, and if general apathy increases amongst your customers, it becomes your problem.
2. Everyone knows about the deception
So you only have a few customers, or the environment isn’t important to your customers? Doesn’t matter. Everyone knows what the scandal is, and they know the allegations from the EPA involve cheating emission tests whilst at the same time promoting the vehicles strong environmental credentials with ‘clean diesel’ marketing.
In the words of VW America boss Michael Horn “We’ve totally screwed up” and Martin Winterkorn, Global VW CEO said his company had “broken the trust of our customers and the public”.
Within days of the scandal being released, journalists were calling it larger than Enron, suggesting whilst Enron damaged the accounting profession, that this would damage the trust of both the engineering and technology fields.
Because everyone knows about the deception, it reinforces a perception that businesses are untrustworthy. It makes it more difficult for you to make an authentic Brand Promise in the market and have people believe you will deliver on this.
3. Employee trust is damaged
In exactly the same manner as above with clients and the general public, employee trust has been substantially damaged. It is probably a fair statement to suggest that the most passionate people about the VW ‘clean diesel’ brand actually worked at VW. Sure, not the people who knew about the software which avoided emissions tests, I am talking about all the others, the people everywhere else in the company and all the subsidiaries and dealers. Also, exactly the same as the above, employees who are not involved in the VW scandal may also increase their apathy towards employer brands. Scandals such as this make it harder for genuine business leaders to make a promise to employees about what the business stands for, have it believed and develop trust.
What can you do about it?
- Announce your Brand Promise. Blend it into your sales dialog and engage both the sales and operations elements of the business to live it.
- Measure your Brand Promise publicly. Use dashboards around the business, and if appropriate even on your website to provide transparency around your commitment and importantly how often you do and don’t meet your promise to customers.
- Develop and announce your Catalytic Mechanism. When VW offers to provide a $1,000 gift card to compensate affected vehicle owners it is far too late. How does the Catalytic Mechanism work? It provides a compensation to your customer in the event you don’t meet your Brand Promise. A simple example might be the Video Rental store VideoEzy who in the 1990’s claimed “Get it first time or get it free“. ‘Get it first time‘ referred to the customers ability to get the video they wanted the first time they went to the store, and the ‘or get it free‘ referred to the Catalytic Mechanism which enabled customers who didn’t get the video they wanted on their first visit to rent the video for free when the video was next in store. This both empowers the customers and builds trust with the brand.
It is easy to dismiss global scandals as being in another world. But that world is made up of the same people who live in your world and trust is at the centre of both customer and employee relationships. When something is done that could damage that trust, it matters.