How can we explain the issues in the Volkswagen case? How can we explain why so many fine engineers and good managers engaged in bad behavior? [MUSIC] In the third part of this module, we're going to step back from Volkswagen. But we will return to it and ask in general, why do good people and good organizations do bad things? And there are lots of reasons for it. Sometimes people have blind spots, we just don't see or recognize a problem. So think about driverless cars and you're going to be able to look at that. The driverless cars have a problem of how to program their software so they don't run into anything, very difficult. A second way that good companies often do bad things is they look in, what I call, a silo mentality. The engineers look at the world this way. The managers look at the world this way. If you go back to the American, too, of their shuttle explosions, the Challenger and the Columbia. In both those cases, the engineers said, we've got something wrong with these shuttles. And in both cases, the manager said, well, they've never blown up before, so they won't blow up this time. And so guess what happened? In both cases, and they're absolutely similar, except in the exact engineering bit themselves, in both cases, nobody thought out of their role responsibilities, you remember that. Nobody thought carefully about what they were doing and nobody was. The engineers weren't questioning the managers, and the managers weren't thinking in terms of what the engineers were talking about. And then sometimes, bad things happen, what I would call wilful ignorance. Volkswagen knew this was a problem, all the way up to the CEO. They knew this was going on, and they pretended it wasn't going on. They lied. So, notice how engineers at Volkswagen were just following orders. They were doing exactly what they were told to do. And the managers were just trying to respond to the market. Customers wanted a cheap diesel that followed the emission standards, right? So they're just following the markets. So are we to blame? We wanted inexpensive cars, yeah, I wonder. I think that's wrong. And then the executives at Volkswagen say, they said, we don't know anything. Well, that of course turned out to be a lie. But everybody was sitting in their engineer silo, their manager silo, and their executive silo. Engineers were following orders. Managers were thinking about markets and not thinking much about what they were doing, and executives pretended they didn't know anything about this. And when that happens, of course, bad things can happen, and they usually do. Another way good people engage in bad things is by consensus or peer pressure. At Volkswagen, apparently everybody was pressuring everybody else not to say anything. So you don't like to stand out and be weird and say well, I think this is wrong. So nobody did. So they just went along. Nobody asked the question. And they were all pushing each other. And people don't like to be different. You know how it is. You don't want to be different. And it goes all sorts of ways, blackballing or excommunication, disfellowship, discharge, expulsion, denial. Nobody wants to be the outsider, nobody wants to be the troublemaker who blows the whistle. Whistleblowers have an awful time in their organizations afterward, because people think they're tattle tails. They're telling on the company, even though the company is doing bad things. So at Volkswagen, everybody kept their mouths shut. And then, engineers want to keep their job, right? They care about that. So they don't want to rock the boat. And then a second thing is often what we call a slippery slope. Sometimes, I just do a little something, just a little something wrong, and I'm pretty sure that adds up and adds up and adds up and becomes a big avalanche. So at Volkswagen, probably there was some, shall we say, creative engineering going on, before this massive creative engineering. And they got used to it. And it becomes a habit. And you don’t ask questions. And then, companies, once they start on this path, it’s very difficult to make changes. It’s too expensive and, of course, it’s costing Volkswagen, I don't know how many billions of dollars, that's still up in the air. But it will be detrimental. It's also killing their dealers. The people who are trying to sell these cars have difficulty because nobody trusts any of their cars, even the non-diesels. So they're not in good shape, it hurt their markets. It's just costing them, costing them, costing them. Another taught behavior, sometimes I don't have the courage. People at Volkswagen just thought I might lose my job. Why should I be the one that sticks out and blow the whistle? Why not? And sometimes we just don't look at the information that we need. Now the CEO, the heads of Volkswagen, the chief executive said they didn't know anything. And they couldn't do the engineering. Well, they probably are not telling the truth, but still, we often make mistakes. And here we saw, of course, the corporate culture. They're ingrained habits. Ingrained habits of always being obedient, of going along with what the executives, of going along with the program, as we say. Not questioning that, and that is the term, I just work here. I just follow orders. When you hear that, ask yourself, wait a minute. And what's wrong with that? What's going on here? Nobody at Volkswagen asked that question. So there's some other things that happened. We've always done it that way. That's a habit. Why do you do this? We've always done it this way. But the worst part is following orders. Yes, I know better, but you told me to do that. I'm not the boss, I'm not responsible. Engineers often say, I'm not responsible. I just create stuff and then the managers will take care of it. That's a really bad mistake. I'm just an engineer, not a very good why. But it is a why, and why this happens again, and again, and again.
