I’ve been a lifelong owner of Volkswagen cars. In some of my earliest memories, I’m singing along with John Denver on the 8-track tape player mounted under the front seat of my mom’s VW Rabbit. As a teenager, road trips in VW buses marked important life events. As an adult, I’ve owned a Passat and, yes, a turbodiesel Jetta wagon — which, luckily for me, I traded in for a bicycle a couple years ago.
I’ve always been a calm person, and I found myself unprepared for the rage I felt as I learned about this betrayal by a brand I had loved. This company engaged me in their deception. ME. They turned me, a brand advocate, into a liar. I actually recommended their ******* diesel cars to my friends and family, which feels immeasurably worse than having owned one myself.
So, This American Life has asked creative agency enso for their thoughts on how VW should begin rebuilding their company. I agree with most of the analysis — certainly there is no commercial they could possibly run that would influence me. If VW does follow the recommendation and invite an investigative reporter to take over the investigation, I will watch the hypothetical documentary “Coming Clean: Inside Volkswagen” with interest. My question is, would they look deep enough to find the true “cause”? Even if they did, and I believed it, is there anything VW could possibly do to regain my trust?
The real challenge is that such a documentary, if it is to find the real cause, should not confine itself to looking only at Volkswagen. Many, many corporate governance and ethics scandals share too much resemblance to ignore: Enron, Worldcom, Barclays; Bear Stearns, Lehman Brothers, Countrywide, and the entire mortgage industry; Phillip Morris and the entire tobacco industry; numerous cases of illegal dumping by many companies; and so on. The record shows that ethics is fighting a long (and frequently losing) battle against incentives.
I fear that the root problem is one of ownership design: VW has absentee owners, whose ownership interest is liquid, and which is valued at some multiple of earnings. The incentive to maximize this quarter’s profit flows from these absentee owners through the board, to the CEO, and down through the ranks of employees — and in this case, it produced this result.
The details of who did what and when may stir a prurient interest, but the details are nearly irrelevant to the root cause: our dominant technology of ownership, the capital market. This technology is very good at bringing a lot of capital to bear very quickly, and at extracting maximum short-term value from just about anything. However, it truly sucks at ensuring ethical conduct and value on time scales measured in decades or centuries.
So here is my prescription for what Volkswagen could do to regain my trust: find a way to become a generative rather than an extractive company. I believe that will require changing its ownership design — for example, by becoming owned by employees and stakeholders, and making that ownership non-liquid.
Is it possible? I’m not holding my breath.