Mario Buchinger: Fraud scandal at VW - Consequences of a flawed target setting

Mario Buchinger: Fraud Scandal at VW - Consequences of a Faulty Goal Derivation In recent days, this question has been frequently discussed: Is it possible that a board member of a large corporation, such as Volkswagen, knew about the deception? Even though it seems unlikely given the known extent, one must still ask whether the top management levels must or can know everything. The answer is quite clear: No, they cannot. However, they should still bear responsibility for what takes place in their company. Unfortunately, this rarely happens or is insufficient. Even if not every action of the management levels below the executive board is directly controllable by the corporate leaders, they still have an indirect influence. It is about the expectation of goals and the resulting goal derivation at the corporate level, which is then further broken down to individual areas. Middle managers usually do the things that enable the achievement of the goal agreements. Therefore, the top management must always consider how they formulate their goals and what they align the company with. In the case of VW, it was the pursuit of being the absolute number 1 in the automotive market. This can, as happened here, lead to attempts to gain market share through unfair means. These means obviously not only bypassed the customer and their needs but deliberately deceived the customers, resulting in a huge damage to the company's image. And once again, the question arises about the meaningfulness of the goal expected by the board. What is the added value for customers in becoming the number 1 in the industry? In reality, none. This goal only satisfies the egos of individual corporate leaders and can be well marketed at shareholder meetings. When it comes to goal derivation, in many companies, vision and strategy are confused with wishful thinking. What is often sold as a vision is actually a list of mostly monetary wishes for the future. Some form of market leadership is often sought. But that is anything but a vision. A vision encompasses content that provides added value to customers and therefore to society. Developing a real vision is known to be one of the most challenging tasks for management. The term strategy is often misused as well. In many cases, key performance indicators are set that should be achieved within a more or less foreseeable period. However, what often lacks is a clear and comprehensible understanding for all parties involved about the desired target state of a company, with all the resulting consequences for the individual areas and departments, as well as the necessary steps for implementation. This target state must primarily be defined with the customer's perspective and has nothing to do with a basket full of key performance indicators. Key performance indicators can only be a measure with which the effectiveness of measures can be assessed, but they are never the actual goal, as key performance indicators are not reality but merely an abstraction of it. Only a few companies understand how to systematically develop, represent, and implement their target state. One approach known in Japanese as "Hoshin Kanri" cascades a system from top to bottom with the eyes of the customers, involving all employees and managers in the process. This inevitably requires breaking the traditional thinking in departmental structures (= silo thinking) to develop the company holistically and sustainably. If Volkswagen had such an understanding, the goal of wanting to become the largest automaker would probably never have emerged, as this goal is irrelevant to customers. Toyota, their competitor, never had such an orientation. They became so due to their actions, and even though they have always capped their own growth. Summary: Actions at the base and in middle management often have decisions in leadership as the cause, even if the connections are not immediately visible. You can find an interesting video about the VW scandal on the Buchinger | Kuduz YouTube channel (https://www.youtube.com/watch?v=tSwAV_L45s0) To learn more about Dr. Mario Buchinger, visit his profile here: http://www.trainers-excellence.de/redner/mario-buchinger.html