10/12/2015 12:59 pm ET | Updated Oct 12, 2016

Volkswagen's Dumb Culture

The most striking fact about the scandal in which Volkswagen is currently embroiled is how hopelessly dumb the whole plot was.

In case you missed the story, it is a tale of systematic cheating. For cars to be sold in the U.S. and other countries, they have to pass an emissions test. Volkswagen rigged the software of its diesel engine line-up to perform to one standard when a car is being tested and according to a 40 times less stringent standard when actually driven. For example, the car might detect that the engine is being gunned but the steering is immobile. Bing! On goes the emissions test-defeating program. This is not something that affected a few cars. It affected 11 million cars worldwide.

Amazingly, Volkswagen pulled this off for years. An obvious fact about this scheme is that it was certain to unravel. If regulators were somehow unable to figure it out, there was an abundance potential leakers. For example, it is impossible that this scheme was executed by one person. It would take dozens if not hundreds of employees to implement the scheme. The scheme depended on the complete silence of a large number of people over a very long time -- and was, thus, dumb.

If the dumbness of this scheme is obvious, how did Volkswagen, a company known for its technical prowess, come to implement it? This brings us to the heart of the matter. Even though many brilliant people work for Volkswagen, it has a dumb corporate culture. Only a company with a dumb corporate culture could convince itself that such a scheme was viable.

When I call a corporate culture dumb, I mean a culture which is so ingrained that it ignores anything -- including facts -- that disagree with it. In a dumb culture right and wrong are dictated by the culture. While plenty of people inside of Volkswagen probably knew the scheme was wrong, there was no place for their belief on the inside. When I consult to big companies with ethical problems, it is almost always the case that the organization's culture helped blind it ethically. While a strong culture definitely makes all the oarsmen pull in the same direction, it can also lead them to keep pulling when there is a typhoon dead ahead.

Volkswagen's culture is not necessarily to blame for dreaming up the emissions scheme. But it is to blame for the fact that Volkswagen believed that it could get away with it. If this sounds familiar, it is the same culprit that was to blame for GM's ignition switch disaster. Inside of GM, you just did not go outside of the line of command. As obvious as it is that it is wrong to build cars with a known safety defect, this truth just did not compute inside of GM.

I spend most of my time working with companies that seek to improve their ethical standards or cope with an ethical issue or problem. The companies with the most success are companies that have cultures of questioning, a culture that makes it easy for employees to report concerns outside of the line of command. When a company is doing something wrong, someone knows it is wrong. Usually, a number of people know it is wrong. The trick is to give these individuals a voice that cannot be easily ignored at the top levels of the organization. A common trait of organizations with such high ethics cultures is that retaliation against individuals who report concerns, no matter how uncomfortable for leadership, is strictly prohibited. This is a good place to start if you want your organization to avoid ethical blunders and the related risks of a dumb culture.