Volkswagen's emissions scandal is a case-study in how power distance can kill a company.
It began in 1999 when new rules were established on how much nitrogen oxide could be emitted from exhausts on vehicles. The new rules phased in between 2004 and 2009. Around 2007 Bosch, a German engineering company, gave Volkswagen (VW) access to software that could rig the emissions test, but warned VW that it was for testing purposes only and not to be used illegally. VW ignored them and in 2008 started selling cars with the test-rigging software in the UK. They began doing the same thing in the US in 2009.
Things went well for VW until 2014 when a group of scientists at West Virginia University submitted a proposal to the International Counsel on Clean Transportation that ultimately got the attention of the EPA. And the rest is history.
The latest disclosure shows that the test-rigging software has been found in 85,000 vehicles, now including some Audi and Porsche models.
Analysts estimate the "actual eventual cost" of this scandal will land somewhere between $34 billion and $43 billion. Ouch.
When Martin Winterkorn, former VW CEO, gave his resignation speech in September 2015, he said:
"As CEO I accept responsibility for the irregularities that have been found in diesel engines and have therefore requested the Supervisory Board to agree on terminating my function as CEO of the Volkswagen Group. I am doing this in the interests of the company even though I am not aware of any wrong doing on my part."
At the time, many struggled to believe that Winterkorn, the CEO, would not have known about a decision of this magnitude. However, in the time since, that fact has shown itself to be true. The question now is, "Is it Winterkorn's fault that he didn't know?" |
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