The failure at VW to consider today the impact of today’s decisions on tomorrow was available for all to see, if only they knew where and how
I have written elsewhere about what I think might have gone wrong at Volkswagen. In particular I wrote about risk appetite and risk culture. So let me just tell you what I would have done about the risk culture, if I had been asked… Indeed, what I would do today, were Mr Müller to ask me…
I would look at the artefacts of the risk culture: the conversations about risk that are happening formally and informally day-by-day, week-by-week in VW. I would look at conversations in formal meetings and conversations at the water cooler. Each conversation is an artefact of the culture which tells you what really inspires people to think about tomorrow: whether it is the pressure they are under to grow sales, or the pressures that they are under to deal with a pesky emissions problem. Or whether they are worried that VW is not living up to its corporate responsibilities. Or if they are just a little bit uncomfortable doing things they don’t quite like.
How many times did someone talk about the importance of ethical business practices compared with the number of times they spoke about the problem of emissions?
I would compare the risks that I found from this analysis with the formal risk documentation, to see whether the formal recorded risks have anything to do with the concerns expressed on the shopfloor. I would compare the construct of the conversations, the meta-data, with the espoused values: how many times did someone talk about the importance of ethical business practices compared with the number of times they spoke about the problem of emissions?
I would be looking for hints of new problems that are being discussed midway through the organisation but which never quite seem to escalate to the top: the issues that are too hot to air. I would bring a list of those topics to Mr Müller and ask him how many of them he knew about, and what the implication of them was for the future of the business.
Do superiors ever initiate conversations about risk with their direct reports, or do they just simply listen?
I would explore how risks travel through the organisation: how many people in any department talk to people in other departments? Did anyone in engineering or engine design talk to the marketeers in the United States? Or did they ever consult their colleagues who were the guardians of the brand values? Did they, or do they now, consult their superiors? Do superiors ever initiate conversations about risk with their direct reports, or do they just simply listen, filter and report upwards?
Did they ever discuss risk with their extended enterprise?
I would see whether any conversations about risk escape the strict confines of the legal entities that are the Volkswagen Group? Did they ever discuss risk with their extended enterprise? If they did, how did they make sure that the information filtered into decision-making?
I would explore the balance between today and tomorrow
In addition to analysing the artefacts of the risk culture, I would explore the reality of the organisational culture. I would find out about fear. I would ask about rewards. I would find out about cultural barriers and the filters that allow conversations to be kept within strict boundaries. I would explore the balance between today (the here and now) and tomorrow.
Are risk managers enabled to be the disruptive intelligence that pierces perfect place arrogance?
Above all, I would explore whether risk managers are enabled to be the disruptive intelligence that pierces perfect place arrogance. And all of this I would do using the platform that I have developed with my partners that we call Risk Conversations: the only diagnostic approach to risk culture that explores the artefacts of culture, and which we can let loose so that it goes viral through your organisation.
We saw an initial stock price fall of 30%
All of the warning signs seem to have been there at VW: if the press is to be believed Bosch had told VW not to use the software as a solution. Alternative approaches were costed and discarded. People in VW were worried about the approach adopted. And yet… and yet, we saw an initial stock price fall of 30%, we are seeing the shaming not only of VW, not only of the car industry, but all of German engineering being blackened by this tarnished approach to problem-solving. The failure at VW to consider today the impact of today’s decisions on tomorrow was available for all to see, if only they knew where and how.
The culture of the organisation is about today, the risk culture is about our multiple futures tomorrow. And if we get the balance wrong, we do so at our peril
How many more times do we have to listen to stories about organisations that have gone horribly wrong, before we get it: the culture of the organisation is about today, the risk culture is about our multiple futures tomorrow. And if we get the balance wrong, we do so at our peril. We have the tools to understand the problems and to deal with the consequences. This is the responsibility of all of the Mr Müllers out there, and all of the non-executive directors who are contemplating just how they get to the heart of the issue.
If you would like to find out more about Risk Conversations, then contact us here.