Lesson 1: Failing to think through the possible

consequences of your actions can lead to bad decisions.

Whoever at Volkswagen is responsible for this massive cheating did not consider the
possibility of getting caught by the authorities, or at least did not give this possibility
sufficient weight. This perfectly human behavior of wishful thinking and not sufficiently
considering adverse outcomes may have been exacerbated in this particular case by two
factors: hubris and experience.

Being Europe’s and in the first half of 2015 even the world’s largest car maker can get to
some peoples head and make them believe they are more clever than anyone else and
can get away with anything. Such a self-delusion may have been supported by the
experience of rather tame authorities in Europe that did not seem to have questioned
the emission tests for Volkswagen’s diesel engines seriously enough.

Lesson 2: An inferior strategy cannot be fixed with tactical

measures.
The interesting question is why a successful car maker is doing such systematic cheating
on a grand scale. One possible explanation could be that Volkswagen ran into the limits
of its Diesel strategy: fulfilling tightened emissions standards with its so-called clean
diesel technology and at the same time stay within the cost limits for middle-class cars
seems to have posed a strategic problem for the corporation to which it didn’t find an
appropriate answer.

Compensating the shortcomings of the clean diesel strategy with cheating may have
been more tempting than admitting the the strategy was wrong. However, in retrospect
it might have been better to have an honest re-evaluation of the clean diesel strategy at
the headquarters in Wolfsburg, Germany, instead of trying anything to justify the clean
diesel strategy.

Lessons 3: Seemingly remote events can affect your

business.
One might think that Volkswagen’s European competitors have now every reason to be
happy about the deep fall of the market leader. However, the opposite is true,
particularly for German car makers.

[tweetthis remove_url=”true”]The #Volkswagen emissions scandal may undermine

customer trust in diesel cars in general. http://bit.ly/1LVSfzW #Dieselgate[/tweetthis]
The emissions scandal has not only damaged Volkswagen, but also raised suspicion
against other German car makers. All major European car makers have invested heavily
in diesel technology and are dependent on the sales of diesel cars. The emissions scandal
may undermine the customers’ trust in diesel cars in general.

However, the effects of ‘dieselgate’ may even go further and could damage the good
reputation of all German tech firms, as Volkswagen has been a beacon of tech products
made in Germany.

Lesson 4: Corporate values are an important strategic

factor.
Volkswagen, like other multinational corporations, is officially promoting commendable
values: “For the Volkswagen Group, sustainability means that we conduct our business
activities on a responsible and long-term basis and do not seek short-term success at the
expense of others.” (Volkswagen Sustainability Report 2014)
Having corporate values written down in glossy brochures is one thing, implementing
them on all levels worldwide is another thing. While some may still think that corporate
values are something for do-gooders and not for successful executives, the truth is that
implementing values in a credible, transparent way, can lead to a strategic advantage.
Failing to implement corporate values, on the other hand, can have disastrous
consequences, as ‘dieselgate’ illustrates.

Lesson 5: Investing in strategic thinking is cheaper than

paying for strategic failure.
There is no guarantee for avoiding strategic failure. However, it is quite feasible to avoid
strategic failure on an epic scale, as just experienced by Volkswagen. It requires that on
all levels where decisions are made, the decision makers are trained in strategic
thinking, which involves having the competence to rationally discover and compare
options as well as foresee consequences of those options. The decision makers at
Volkswagen directly responsible for ‘dieselgate’ have demonstrated, that a lack of
strategic thinking in combination with a lack of responsible, value-based behavior can
lead to dire consequences for themselves, their company, and even an entire industry.