The Difference Between Tylenol and Volkswagen: The Imagination of Disaster

Below, an excerpt from The Atlantic, with a lesson for anyone who wants to run their organization in an ethical manner

What James Burke, Johnson & Johnson’s CEO, did was anticipate the possible results of pressures, well before they built up. He shared Henry James’s “imagination of disaster.” And it’s why he introduced, if you will,  a set of counterscripts. It was a conscious effort to tinker with the unconscious criteria by which decisions at his company were made. The result was an incremental descent into integrity, a slide toward soundness, and the normalization of referencing “Our Credo” in situations that might otherwise have seemed devoid of ethical content.

What we know of Ferdinand Piëch, Volkswagen’s chairman before the scandal, is that he was no James Burke. At a 2008 corruption trial that sent one VW executive to jail, Piëch referred to alleged widespread use of VW funds on prostitutes as mere “irregularities,” and chided a lawyer for mispronouncing Lamborghini. (“Those who can’t afford one should say it properly” were his precise words.) This was around the time the emissions cheating began.

“Culture starts at the top,” a businessman recently said in an interview with the Association of Certified Fraud Examiners. “But it doesn’t start at the top with pretty statements. Employees will see through empty rhetoric and will emulate the nature of top-management decision making … A robust ‘code of conduct’ can be emasculated by one action of the CEO or CFO.”

The speaker was Andrew Fastow, the former CFO of Enron, who spent more than five years in federal prison. He got one thing right: Decisions may be the product of culture. But culture is the product of decisions.

To read the rest of the piece:  What Was Volkswagen Thinking?  On The Origins of Corporate Evil-and Idiocy