Crisis-hit Volkswagen Group appears to have torn up its Strategy 2018 masterplan that committed it to becoming the largest car manufacturer in the world – shredding it so quickly, it hasn’t even had time to come up with an alternative.
Instead, CEO Matthias Müller has announced “five key steps to realign the Group” while the board taps out a new corporate Strategy 2025. They are, in order of priority:
Support customers
Investigate the scandal, “uncover the truth and learn from it”
Decentralise management and give more independence to brands and regions
Realign Group culture and management behaviour
Transform the now-defunct Strategy 2018 into Strategy 2025
Müller’s going to reveal the new strategy in 2016 but says it is not going to be focused on size at all costs. “The point is not to sell 100,000 more or fewer vehicles than a major competitor. Instead, the real issue is qualitative growth.”
Few knew Strategy 2018 wasn’t actually all about size, he admitted – including many people within the company. “A lot of things were subordinated to the desire to be “Faster, Higher, Larger”, especially return on sales.”
[Volkswagen’s margins have been falling for quarter after quarter: they’re currently around 2%. Audi makes almost 10% on each car it sells; even Skoda makes 7%.]
This is a fascinating insight that precisely reveals the conditions that made cheating acceptable. Engineers felt nothing but rapid growth was acceptable and to do anything else other than find an on-time solution was wrong.
Clearly, making a diesel car meet U.S. Tier 2 Bin 5 emissions regulations without SCR was impossible. But adding SCR was also impossible. So they cheated.
Gone: first Winterkorn, now his strategy
The mastermind of Strategy 2018, the formidable Martin Winterkorn, is now gone. So too will the management culture he created, hopes Müller. Keep the pursuit of perfection, but change how mistakes are communicated and handled. “We need a culture of openness and cooperation.”
Time for everyone to be more courageous, more creative and more entrepreneurial in how they deal with one another, he says. Something that clearly before would have put the fear of god into them.
Interactions such as the tour of the Hyundai stand by Winterkorn at the Frankfurt Motor Show 2011 reveal the old way. If that’s what he was like in public, is it any wonder cheating occurred?
No wonder Müller can’t bin his masterplan quickly enough.