Suppose you're an engineer in a large German multinational company and you've been asked to do some creative engineering in order to deceive the regulators. Should you do that? [MUSIC] In this module we're going to raise the question of why do good people and good organizations engage in questionable behavior, or do bad things, by talking about the Volkswagen case. A very famous ongoing case in the media, and for those of you who are not familiar with it, certainly go online and find out more about it. Volkswagen, as you probably know, was the largest manufacturer of automobiles in the world, it's still very big, and it makes cars and sells them all over the world. It sells gas-driven cars and diesel cars, and they have a code of conduct. Their products will help ensure mobility, that is everybody getting a car, in an environmentally friendly and safe way. That's written in their code, all of their employees know about it. However, the other issue is Volkswagen has a lot of engineers. It has to. How are you going to design cars right without engineers. But engineers are also not merely employees. They are professionals. And engineers all around the world no matter what kind of engineer they are, have a code that safety is always first. It's always their priority. So why is that a problem? Well, this is the facts of the case. I'm only going to give you a brief, broad outline of the facts. For those of you who are interested, I recommend you go online. There's hundreds and hundreds of articles on this case, so. There much more that you can learn and if you'll interested you want to learn. The facts are until 2014 Volkswagen installed emission software in more than half of a million diesel cars in the United States. 10.5 million worldwide. Volkswagen engineers design that software, by the way in partnership with Bosch which is the largest auto making manufacturer of parts in the world, it is also a German company. The software allowed the autos to sense unique parameters of emissions. Those set by the United States Environmental Protection Agency. Those are very strict emissions standards. However, those devices were supposed to detect emissions from steerings, throttle and other impents. And interestingly though, Volkswagen installed two sets of software in every one of their diesels. One software was used for testing the car, and that software was completely compliant with the U.S. standards, and so, globally, with all global standards for emissions. But, when the car drove normally, that is, on the road, the computer switched to another set of software. Now this is complicated. That changed the fuel pressure and changed the injection timing and changed the exhaust gas recirculation so that the cars got better mileage and were much more powerful. But that mode that software had enormous emissions. It caused enormous emissions, some up to 40% above the regulatory standards. Now, not every car had 40%. All cars have had some bad emissions. Some were less than 40, but many were up to 40% emissions, much greater than the standards in the United States, and they emitted something that causes lung cancer, among a lot of other things, I'm sure. Now the question. This is a good company. This company has a world-wide, had world-wide positive reputation. It is a huge company. It has a code of ethics, has standards, trains its people well, does all the things we think are right. So my questions are why would engineers who knew better, and they had to know better, design these two softwares. Why would managers allow this, in fact push it? And why didn't anybody at Volkswagen, there were hundreds, at least hundreds of people, maybe thousands, who knew about this. Why didn't somebody blow the whistle? Why didn't somebody say, look what we're doing? And it's wrong, it's against the law. I don't have an answer to those questions, but those are the questions we have to ask. Because here was a good company engaged in very questionable and actually illegal behavior. [MUSIC]