Leonardo to produce VW Dieselgate

Volkswagen has admitted to fitting 11 million vehicles on the planet with fraudulent emission-detection software. Meanwhile Leonardo Di Caprio has announced that he will be coproducing a movie about the scandal at a time when the VW corporation is facing enormous financial repercussions and brand depreciation for their deception around the world. This scandal is putting in the spotlight how corporate fraud can derail an entire quality management system in a company that prides itself on its quality and have dire consequences.

On 18 September 2015 the U.S. EPA served a Notice of Violation (NOV) on Volkswagen Group alleging that approximately 480,000 VWs and Audis, equipped with 2-litre TDI engines, and sold in the U.S. between 2009 and 2015, had non-compliant emissions software installed. But the consequences have been felt in many parts of the world. There are recalls, inquiries, government interventions and numerous class actions taking place in Canada, China, India, the European Union, and the United States.

Australian Owners

Volkswagen owners in Australia are launching a class action over the emissions-rigging scandal with possibly more than 91000 Australian owners being affected.  Mr Scattini from Maurice Blackburn lawyers argues that Australian owners of cars with fraudulent software were emitting many times above the accepted level of poison into the atmosphere. Mr Scattini suggests to drivers that cars fitted with the fraudent emissions-reducing software chip might be noncompliant with Australian emissions laws.  Models affected in Australia include Golfs, Polos and Skoda Octavias built within particular years.

Shifting blame?

 “This was a couple of software engineers who put this in for whatever reason,” Michael Horn, VW’s U.S. chief executive, explained to the subcommittee hearing. “To my understanding, this was not a corporate decision. This was something individuals did.” Horn, revealed that three VW employees had been suspended in connection with software that detects emissions in the company’s diesel vehicles. Reuters is reporting that VW will dismiss the heads of R & D of Audi and Porsche, as well as US chief executive Michael Horn.  Only a couple of engineers were to blame?

Challenge to Toyota on quality and innovation

Back in 2007 at VW’s headquarters in Wolfsburg, Germany, former Audi chief Winterkorn was optimistic about transforming the VW automaker into a world-leading car manufacturer by delivering strong profits and challenging the market leader Toyota on quality and innovation. “We will bring the Volkswagen group to a new and higher level,” said Winterkorn, the incoming CEO in January, 2007.   VW were attempting to gain greater market share on quality so they would have had a strategic direction in quality management. 

Quality Management

 From the 1920s when Bell Labs developed statistical control charts to the 1990s during which ISO 9000 standards gained acceptance in the United States, quality management has been evolving for more than a century in manufacturing.   VW would have a quality management system to ensure that all the attributes of an automobile’s quality- performance, features, reliability, comformance, durability, serviceability, aesthetics and perceived quality are taken into consideration.   The quality of a VW Golf, for example, would comprise of measurable characteristics and their limits of variability.  The same applies to the software components. 

Any quality management system necessarily needs to be a strategic management decision which pervades the entire organization. See the chart below for a model of how various dimensions (eg. people, processes, products) of a quality management system might be visualised within an organisation. 

 (source: Manfred Seika) 

When the outgoing US executive stated that there were just 3 rogue engineers to blame who devised the fraudulent software, my sense is that it is not credible. One can only speculate that it is more probable that managers and engineers from different departments (product development, mechanical, electrical and software engineering) collaborated on the solution in designing the emissions-detection algorithms. The trade-off between fuel efficiency, power and emissions would have been discussed and built into the hardware/software solution. The result was that it created an attractive product for customers, appealing to their environmental conscience, not compromising on power, while appearing to conform to the EPA and other regulations under various conditions.  

It is impossible to know at this time the full extent of the relationships and decisions that went on within the organization that lead to this crisis. Were the managers and engineers trapped in their role to conform to the dominant logic of the US subsidiary, while having poor sleep, with elevated levels of stress hormones?

We must learn that passively to accept an unjust system is to cooperate with that system, and thereby to become a participant in its evil.   M. L. King Jr.

Tesla driven by the environmental Zeitgeist

 In contrast Tesla has been scaling up in U.S. their electric car battery charging station infrastructure. Earlier in March this year, the innovative automaker, Tesla, announced that it had reached a milestone of having 2,000 battery rechargers worldwide, located at almost 400 Supercharger Stations in North America, Europe, Asia, and Australia for their electric vehicles.

 On being questioned about the effects of consumer’s perception of green technologies: Tesla Motors CEO Elon Musk: “What Volkswagen is really showing is that we’ve reached the limit of what’s possible with diesel and gasoline. The time has come to move to a new generation of technology.”

Whether we have reached the limit of what is possible with diesel is another discussion.  But as far as the quality management system at VW is concerned, it appears to have been ineffectual in the face of dishonest and fraudulent behavior at various levels of the organization, not least in the U.S subsidiary in a culture of complicity.  Ethical principles must prevail in corporate governance.  VW Golfs, rogue engineers, clandestine software development, car scandal of the 21st century….  maybe it will make a good movie Leonardo. 

How I discovered how to motivate cross-border virtual teams

“As inner work life rises and falls, so does performance.”

How can we motivate people to do activities at work that they may prefer not to do? For example doing the work of testing software infrastructure when there is little time?   In a manager’ toolkit what can systematically assist members of teams to be productive?  I wanted to test the basic proposition of a book published in 2011,  The Progress Principle, that a manager or team leader can improve a team’s performance by creating an environment to improve their inner work life.   As a team leader, I found that the guidelines to be highly practical heuristics.  People are more likely to act and get work done when they are provided with a supportive environment and a sense of making progress with small wins.

Why?

After I read The Progress Principle several years ago by Terese Amabile and Steven Kramer, I decided to experiment with applying the principles to see whether they are effective in working with virtual cross-border teams.   I needed to find a way to coordinate 20 teams in the Pacific, S. E. Asia, United States and the Middle East in working to tight deadlines, practicing new processes, identifying incidents and handling setbacks on a software transformation project.

The principle of progress?

The Progress Principle describes a method for a manager to create a psychological environment where people are more creative and productive at work.  The authors are husband and wife team, Steven Kramer and Terese Amabile.   Terese Amabile is a professor and director of research at Harvard Business School, with research interests in creativity, productivity, innovation and inner work life. Her team conducted research involving 26 projects teams in 7 companies in three industries. The researchers analyzed 12000 individual diary entries of knowledge workers to gain insight into their inner work life.   This data provided information about the study participants’ perceptions, emotions, and motivations during the day and how the dynamic interplay of these factors influenced performance.

Some conclusions

Some of the conclusions from this research were:

“inner work life influences people’s performance on four dimensions:

creativity, productivity, work commitment, and collegiality”

Also “inner work life matters for companies because, no matter how brilliant a company’s strategy might be, the strategy’s execution depends upon great performance by people inside the organization.”

(Source: The Progress Principle: Using small wins to ignite joy, engagement, and creativity at work. 2011 Harvard Business Review Press. Teresea Amabile and Steven Kramer p.6)

The results of their extensive research was that positive emotions unequivocally have the effect of improving an employees performance at work.

The components of inner work life

The authors describe the inner work life of an individual are a dynamic interplay of:

• Perceptions and thoughts (sense-making of events at work);
• Emotions and feelings (positive and negative emotions about events at work);
• Motivation (the desire to do the work).

My own experience

I have applied this methodology to leading 20 international teams in a multinational corporation as a part of an enterprise-scale software and infrastructure transformation project. I found that people positively respond to work when they know where their work fits into the overall purpose of the organization, when they feel supported and emotionally encouraged in the face of difficulties, and when I regularly emphasize that small daily wins is good progress. Progress can be slow, incremental and at times frustrating. It often can feel as if things are going backwards rather than forwards when the technology or a process is not producing the immediate results you want to see. Many teams were also resistant to changing their working habits with the implementation of new systems.

I developed a habit of frequently, everyday recognising and affirming that we are making progress each time we find a problem or an incident occurs!  This may seem counterintuitive but it works.  People need to know that risks, incidents and faults identified are crucial steps in their remediation in order to make a system robust and fit for purpose.

 An alternative viewpoint

There have traditionally been different views of what the key variables are that affect performance in the workplace. Some observers adopt the stance that short bursts of negative emotion can enhance creativity. According to this view, work performance can be catalyzed by stress, external pressure, discomfort, or any combination of the above. Whereas most of us have experienced stress or a negative event which has disrupted the performance of our work.  Other traditional views have centred on extrinsic rewards such as financial incentives.

An alternative view is that performance improves when positive emotion is elicited in the work environment when a sense of progress is being made.

The authors of The Progress Principle claim to have conducted more comprehensive research than previous studies. Their overall conclusion: positive inner work life promotes good performance.   This is called the inner work life effect.

“People do better work when they are happy, have positive views of the   organization and its people, and are motivated primarily by the work itself.”

Take home message

In my experience of managing cross-border teams on a global transformation program, I found that emphasising the importance of small wins when a problem is found, plays an important part in creating the subjective sense of making progress. Providing the time, resources, assistance, emotional support and encouragement are also critical.   Providing this environment affects someone at a positive, visceral level.   I found that The Progress Principle works. Productivity improves.  A sense of making progress is a key contributor to the inner life of members of a team.   If you want a comprehensive set of heuristics to increase the productivity of your team, then you might find this book practical and surprisingly instructive.

Reference:   The Progress Principle: Using small wins to ignite joy, engagement, and creativity at work. 2011 Harvard Business Review Press  Authors: Teresea Amabile and Steven Kramer