The “people’s car” company Volkswagen is currently in news
for the wrong reasons. But before getting into the wrong side of the company,
let’s get the big picture of the world’s second largest car company in 2014.
The VW group sells its vehicles in 150 countries. It owns marquee brands like
Bentley, Lamborgini, Bugatti, Audi, Skoda and SEAT besides, of course, the
Volkswagen brands including some all time popular brands like the Golf, Beetle
and Passat. Not that, they make only cars, they do make commercial vehicles under
different brand names as well as motorcycles like the Ducati. The group clocked
annual revenue of $ 262 Bn, $ 12 Bn in profits and employs about 600000 people.
Yes, VW is truly a people’s car company catering to the needs and aspirations of
millions ranging from the daily commute to flaunting the opulent mean machines around
the globe.
Back to the more recent news. After the US investigators
accused the company of cheating the emission tests on their cars, the company
has accepted that it has indeed deployed a software algorithm that can show the
pollution levels within acceptable levels while actually emitting many times
higher levels of pollutants. It is found that this has been happening since
2009 on many of their diesel models affecting at least 11 million Volkswagen
cars. Yes, 11 million, not a small number. Accepting the crime is probably the
second best thing the company could do after being caught rather than
defending. Well, they fired the CEO and took many other steps to contain the
situation.
German engineering is renowned for its precision and
reliability. Now, they prove to be good at engineering legal compliance. Or is
it moral engineering? Like many of us they too know that when being good is
difficult make sure you look good. Is it something attributable only to one
company or one country? The answer is no. We can say that it happens with
companies and not with individuals. Well, companies are run by people like us.
Most humans cheat, regardless of nationality or ethnicity. It
is not a western thing or an eastern thing. It is not a capitalist or socialist
phenomenon. It has little to do with urban or rural difference nor has it do
with rich or poor. This is not to say that everyone is equally capable of
cheating. As in other human capabilities different people have different threshold
and risk limits. Some resist cheating beyond a certain level and some go too
far depending on various factors. These factors could among others, include the
skill levels of the person to carry out such acts without attracting the public
scrutiny.
Individuals can improve skills and companies can hire
skills. Public companies do plan and provide for legal and reputation risks.
There are legal departments and image consultants advising and protecting them.
There are insurance companies that undertake such risks for a huge premium. In
legal parlance, the materiality is what matters and not the act itself. For
instance, in the case of VW, imagine they were caught in this cheating act
within three months in 2009 and it affected a few batches of cars from the
production line, this would have been listed as a technical lapse requiring a
fix and at best the recall of a few cars. Therefore, smart companies manage
their risks by staying below the radar of materiality either by limiting the
quantum of such instances or by controlling the time limits of defective
delivery.
Most of us intrinsically know the Lincoln dictum that ‘you
can fool some people all the time and all of the people some of the time, but
you cannot fool all of the people all the time’.
But what does it mean really?
The average human beings (majority) are capable of cheating
only some people for all the time or all people for some time. And it is only
the super intelligent or super foolish people attempt to cheat all people for
all the time! If you find it a
disappointingly pessimistic, I can present it very optimistically for you. The
average human beings are capable of being honest with a few people all the time
or with all the people for some time; only the super intelligent or super
foolish can be brutally honest with all the people all the time! Would you like to socialize with the minority, or go with the average Joe?
‘Character is like a tree and reputation like a shadow. The shadow is what we think of it; the tree is the real thing.’ – Abraham Lincoln
