Volkswagen, grey swan for Germany and the industrial economy ?
Trust in the post-industrial age
My friend Jon Husband, coiner of the wirearchy, described the Volkswagen scandal as a “dark grey swan” yesterday.
The resignation a few minutes after 11.15AM US/Canada Eastern time of VW’s CEO Martin Winterkorn is the first shoe to drop. How VW navigates the next few days&weeks will surely impact the company but most crucially Germany’s industrial brand. That brand is central to the country’s economic standing in the world.
What VW and Germany are learning is that in today’s world, brands can be under attack with a single event, when trust is breached.
A bit of perspective: Volkswagen, one of the top 3 carmakers in the world, is under the microscope after their fudging of pollution tests was revealed. The only 2 currencies that matter in the world — trust and attention — are at play and the next few days/weeks/months are going to be more than interesting. There’s a good chance other carmakers will be caught with the same fudging but, the VW emissions “scandal” could spell a death spiral for VW and German engineering itself. Germany bet their entire economic future on their branding ie top-quality engineering and honesty in their business dealings, which both command higher prices. The reckoning is going to hurt, in more ways than one. VW is a very particular company, the standard bearer for German co-management. Unions sit on their board, as does the regional government. VW could be the tip of the proverbial iceberg….
11M vehicles to date, 1/3 of market cap evaporated in 48 hours, we’re about to see a quasi indestructible company potentially go down like the Titanic. This is the post-industrial age and branding/trust/honesty are at a premium, those that run afoul will be shamed&brought down, hard.
For another interesting angle on this momentous event, Patrick Stähler nails it on his Business Model Innovation blog: “And that is the key take-away. Get your behavior aligned to what you promise. It’s a walk on the tightrope. Don’t overpromise. Don’t build up a brand image which is an illusion.”
