I find myself simply scratching my head, wondering how a company could be so clever about being so stupid.

I find myself simply scratching my head, wondering how a company could be so clever about being so stupid.

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I find myself simply scratching my head, wondering how a company could be so clever about being so stupid. 

Originally shared by Gideon Rosenblatt

VW: The Impact of Lying to Regulators and to Customers

Here’s what you need to know about _what” Volkswagen did: 

“The results showed the VW vehicles to be higher in real word emissions by 15 to 30 times,” said Dr. Arvind Thiruvengadam, a professor engaged in the study.

According to Thiruvengadam and others familiar with the technology, diesel engines emit substantial amounts of nitrogen oxide, which in combination with other pollutants causes smog and can be unhealthful.

Most diesel cars — including those built by VW, BMW, Mercedes, Porsche, Chevrolet and other companies — are equipped with devices or systems that eliminate most of that nitrogen oxide.

In Volkswagen’s case, those devices functioned properly only when the vehicles were being monitored in typical testing circumstances, such as on a dynamometer in a smog test station, as required by the DMV.

Thiruvengadam and his associates found, using their portable testing devices, that those devices stopped functioning when the vehicles were being driven in real-world situations.

The company has been caught in a tremendous, mind-numbingly large deception, perpetrated not just on government regulators, but also on customers, who thought they were buying vehicles that were less harmful in terms of the climate. 

The fallout is huge. So far, the stock has dropped from $255 a share before the outbreak of the scandal to $106 today. And, this just in, Volkswagen CEO Martin Winterkorn – has just resigned. 

All of this leaves me scratching my head, wondering “what the hell were these guys thinking!?!?”. The stupidity here is mind-boggling. It is also a critical reminder of just how important being a good corporate citizen actually is. Good business, business as a force for good in the world, starts with resisting the temptations to take shortcuts and to deceive. In the end, it usually catches up with us, as VW is learning, quite painfully, today. 

#volkswagen   #climatechange   #scandal   #ungoodbusiness  

http://www.latimes.com/business/autos/la-fi-vw-7.3-billion-emissions-scandal-20150922-story.html

31 comments

  1. Such short sightedness is a result of greed and nothing else. Trying to cut cost, woo investors, better profit numbers etc etc. All at the cost of environment and people living in it. Sad part is these exec see themselves as something different from society and environment when they are not. They are not hurting “others” but everyone, including themselves. So sad.

  2. Good “one” !!! Gideon Rosenblatt​

    #LegalCrimes #Euro

  3. The CEO resigned with How much compensation ?  one wonders

    Someone should do jail time … for those that complain about to many Government regulations,  it’s because of dishonest companies like this.   (end of rant)      Gideon Rosenblatt 

  4. Gideon Rosenblatt had a long conversation with my friend Peter this morning who bought a VW diesel about 60 days ago.  He is outraged by the deception mainly because it was touted as being lower in emissions and as a bonus he averages 900km on $45 of diesel, more on the highway.  The fallout to this is really big and beyond installing new equipment in all the vehicles, I cannot see how they can fix this.

  5. That’s an excellent point, Praveen K, one that’s really worth highlighting. One of the key problems in the way that we’ve set all this up is that companies do somehow see themselves as separate entities. Sure, there’s all kinds of integration of supply chains and dependencies on customers and distribution, etc. But in the end, the thought that externalizing costs like this, simply dumping them onto the environment and onto society, will somehow not come back to bite them on the ass is a fundamental misperception of the true interconnectedness of all forms of commerce. We have a failure to see this deep web of reliance. Now VW is paying the price, a very steep price that hopefully will serve as a warning to others. 

  6. Darius Gabriel Constantine, I don’t see it quite as starkly as you do. I see, perhaps, more reasons for hope in initiatives like the B Corporation. But you are right in the systemic nature of the problem. For me, and I’m a bit of a broken record on this one, it comes down to shareholder primacy – the belief that the primary responsibility of the corporation is to maximize returns for shareholders. 

  7. Gideon Rosenblatt Exactly. I have read “How Google works” and Eric Schmidt said that if a company’s mission statement contains the word “shareholders”, chances are they are not honest about their mission or don’t know what it is. 

    I make it a point to read vision and mission before I dig deeper into a company.

  8. Gideon Rosenblatt I think they are many reasons for not seeing the web of reliance. Failure has certain stigma attached to it which is wrong. Any idea that’s groundbreaking will see failure before becoming a reality. Its the idea behind the failure that matters. We fear to fail, we fail to learn. Anyone who learns, can see how deeply connected we all are. I like to think of our bodies as an illusion that keeps us from understanding what connects us.

    Second is how west measures success and how that measure is creeping into eastern society as well. Its money. In words of Jason Silva, new definition of billionaire should be touching a billion lives in positive manner. And it should be everyone’s dream to become a billionaire.

    Any company that seeks to make profit has eventually changed the goal to surviving and not thriving.

  9. Yeah, Ron Serina, it’s a really interesting question. Will anyone do jail time for this? Sakari Maaranen shared an interesting post about that very topic in the Good Business Community a couple weeks back:

    https://plus.google.com/+SakariMaaranen/posts/9c9rRozbGN3

    There may be some movement towards that kind of accountability, but my sense is that it will be really hard to enforce.  

  10. Gideon Rosenblatt Ron Serina Jail time is merely a deterrent. I don’t see much value in it except perhaps a sense of satisfaction by taking revenge. It won’t solve the problem.

    The social contract we have with society is that if you don’t get caught stealing, you earned it. Its the culture that we need to change. We need to teach our future generation “why” something is not right and not just “what” is not right.

  11. This sad situation is the constantly repeated consequence of a situation in which, in your work you are held accountable primarily for the growth of the share price and returns for shareholders in the window of time during which you have influence. Long term considerations to reputation, health, environment, fellow humans are all worthy but secondary. Secondary by design. The corporate model at a certain level demands this hierarchy and rewards those who understand its implicit priorities.

    Greed like this is shortsighted not just because these VW chickens were always going to fly home to roost at some stage. It’s shortsighted also because of these corporates who lack the imagination (literally myopia) to see how it damages us all

  12. If the EPA or any other government agency were truly upset over this, every one of these vehicles would be taken off the road.  But then, whoever really believed the government was truly concerned about the environment?  If it doesn’t turn a profit, it doesn’t matter, right?  And before anyone jumps on this as a matter of more big government, no.  Just make VW refund the price paid (regardless of mileage) and take the cars back.  Better than any fine or regulation that will come out of this because it will be their pocketbook that takes the hit.

  13. To me this is a big event. Very deceptive. Large money consequences.

  14. V……….ERY

    W……….RONG

  15. Well, it makes some semblance of sense if you read CAR WARS by Jonathan Mantle. #carwars http://www.amazon.com/Car-Wars-Backstabbing-Infighting-Industrial/dp/B006G845LU

  16. David Quinn​, yes. Did you ever read The Divine Right of Capital by Marjorie Kelly? I thoroughly recommend it.

  17. Many thanks Gideon Rosenblatt​ I’ll check it out

  18. Good Faith is very relevant to this. Thanks for that link, Ron Serina​.

  19. I think it could be the definition of a “burst bubble” in terms of one company a lot of us were looking to as example of doing well by doing good, with lots and lots of global consumer support. I do not own a VW, but had long had my eye on the company for my next vehicle (which, given that I drive SO little and have a perfectly good very old Subaru, is not soon). I”m almost taking this personally, in an odd way. Very disheartening.

  20. Yeah, Andrea Learned. I was just driving my Prius this morning and was behind someone at a light who was driving a VW, and I thought, I wonder how this is affecting this person. Did they buy that car partially because of brand aura of goodness that surrounded VW? 

    I also remember a friend of mine giving me flack a few years ago for falling for the whole hybrid thing when VW diesel engines were so much better for the environment. 

  21. I’m with you.  I heard an interview on NPR (I think) with a guy in California who very specifically bought a diesel VW wagon and was really at a loss.  Like I said – it can be oddly emotional, because maybe we are all getting ahead of ourselves in investing in the hope of “good business”… 

  22. We have two Jetta TDI’s, 2010 and 2014. I love the way the car handles!

    IDK if we’re one of “the ones.”

    I just cannot believe anyone would risk their reputation for something that seems (IDK) small in comparison.

    Like you Gideon Rosenblatt, what were they thinking????

  23. As for addressing some of the systemic issues we seem to converge on here, I second Gideon’s suggestion to read The Divine Right of Capital. Here an excerpt. http://www.corporation2020.org/corporation2020/documents/Resources/Kelly.pdf

  24. Meg Tufano That’s what I’ve heard about those models.  Hard to give up on that idea (of good handling/good for planet)

  25. Beyond the profit motive, how about questioning the role of Boards who set up the CEO’s contract and performance objectives? When executives leave, why not board members as well?

  26. paul beard uhm… no offense yeah, and even though 1) I myself am appalled by VW’s behavior here:

    plus.google.com/communities/111501143630019486196/s/VW

    as well as 2) in general very much in the “lower our energy footprint” / Green / #fivesixfive  bandwagon… 3) nor have I been accused of being a friend to Big Corp Brother… >>

    plus.google.com/communities/111501143630019486196/s/Big%20Corp%20brother

    …however as a German I just have to say: Before calling for the destruction of VW (and we’ll see in due time if it can survive as a brand, especially in the U.S.), where were those calls for Toyota to be destroyed over their AirbagGate, or GM over IgnitionGate, etc. etc. – all of which actually DIRECTLY killed people…?!

    Yes, there is plenty of justified outrage, especially by those that purchased VW Diesels in recent years and are now facing severe devaluation of their investments, which is sure to cause lawsuits aplenty in coming months/years (will U.S. dealerships sue VW for losses as well…?!).

    On the other hand, ask yourself how much of the outrage is also stirred up by competitors through “Astroturfing” etc. All of this is very sad/ironic, given that VW had always been among the German car brands the one NOT obsessed with High Speed / Performance, and instead creating a frugal (including in an energy-usage sense), sensible consumer brand.

    No one is asking GM, Ford, or Dodge/RAM/Jeep about the perennially poor-fuel-effiency vehicles they produce, including the many needlessly “tank-like”/heavy/oversized/”off-roady” vehicles that waste fuel every single day for no good reason at all besides playing to people’s unconscious insecurities / status needs / etc. etc. with branding trickery/hype (yes, BMW, Mercedes, and Audi are also guilty of this, though many of their offerings at least had to shoot for better fuel-econ due to long-standing high European fuels taxation).

    I have for a very long time (since my first used VW Gold Diesel ’81 model…) been a fan of these cars/engines, with their long life and 40 MPGs plus fuel econ, and while they improved significantly over the years (in that sense they are truly “clean diesels” when comparing 80s, then improved 90s, and finally today’s models), of course one would wish that VW had used its energies on finding an engineering solution to capturing the NOxide rather than foolishly cheat on some tests.

    /cc Alexander Becker Walter H Groth 

  27. paul beard interesting about your own VW experiences. BTW, the other cases also involved knowledge by mgmt that lives were directly at risk. Maybe put things in perspective a bit:

    www3.epa.gov/climatechange/ghgemissions/gases/n2o.html

    Transportation is a mere 5% of the total NOx emissions load…

    That’s not to minimize the serious issue of metro-area smog from Diesels (and again, if anyone wants to construe me to be a VW-apologist, they are thoroughly mistaken), but then one also has to ask what the total % contribution to that is/was VW “clean Disels” vs. all other sources such as ubiquitous/universal light-truck, full-truck (“18 Wheeler”) sources.

    BTW, as you likely know, the U.S. trucking industry has successfully lobbied to be subject to as few regulations as possible…

  28. paul beard P.S. 2011 numbers:

    http://www.epa.gov/region1/airquality/nox.html

    http://www.greencarreports.com/news/1097513_which-states-have-the-most-diesel-vehicles-new-data-gives-results

    Trucking industry lobbying example:

    http://www.uschamber.com/sites/default/files/ata_ozone_comments.pdf

    This one is pretty telling, may also apply to VW’s (ill-conceived) motivations of course:

    http://www.masterresource.org/cafe-standards-auto-bailout/regs-for-rigs-update-epa-diesel-trucks/

    Various useful stats:

    http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/index.html

    http://www.nrel.gov/transportation/fleettest_fleet_dna.html

    “Annual Wasted Fuel Due to Congestion” [especially in Very Large Urban Areas]

    http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/html/table_04_28.html

    www3.epa.gov/airquality/peg_caa/carstrucks.html

    “…Beginning in the late 1980s, Americans began driving more vans, sport utility vehicles (SUVs), and pickup trucks as personal vehicles. By the year 2000, these “light-duty trucks” accounted for about half of the new passenger car sales. These bigger vehicles typically consume more gasoline per mile and many of them pollute three to five times more than cars.”

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