Several years ago I had the opportunity to talk with Robert H. Waterman, the then-McKinsey consultant who, with his colleague, the more visible Tom Peters, wrote In Search of Excellence (1982).

We chatted about things like the need for companies to transform themselves, whether it was to embrace lean manufacturing principles or to take on a thoroughgoing quality initiative. Both of those things simply seemed to make sense to me and I was mystified as to why corporate leaders wouldn’t take on such efforts, particularly in companies that were drifting toward irrelevance or nonexistence. What were they waiting for? Couldn’t they see that companies that were pursuing such programs were becoming more and more successful?

Waterman explained to me that it generally required a “near-death experience” for an organization before there was sufficient understanding as to why something had to be done post-haste. Otherwise, the status quo would be maintained. A shock to the system was—and is—necessary for things to change in substantive and meaningful ways.

It struck me as I wrote the words “lean manufacturing” and “quality” that these are terms that are rarely heard nowadays. One might make the argument that they have both been, by and large, embraced by organizations, with seemingly every OEM and supplier having its own “operating system” that encompasses lean and quality. (You can have quality without lean, but you can’t be lean without having quality. And if there is quality without lean, chances are there is so much waste in the system that it will soon collapse.)

The industry has had to embrace the two because on the one hand, lean means providing customers what they want when they want it and in a way they can afford it (relatively speaking) and quality means that those cars and trucks are built in such a way that there is reliability and durability (and even delight) baked in.

Many a car company had a “near-death experience” before getting the religion associated with lean and quality. Now most car companies are singing from the same hymnal.

One company that has recently faced an experience characterized by levels of catastrophic shock is Volkswagen. The diesel cheat device scandal continues to reverberate and is likely to until the last of the 2.0- and 3.0-liter TDI engines are fixed, crushed or somehow taken out of the world’s fleet.

What has to be taken into account about this is that there was, apparently, a corporate culture that permitted—and possibly encouraged—the undermining of tests for the benefit of the corporation, not society at large. Consumers were led to believe that they were driving “clean diesels.” VW earned money. People who breathe gained a whole lot of nitrogen oxide.

But something good may come of this. Volkswagen is undertaking a program to create a culture of integrity. The pilot for the program is occurring at the VW Wolfsburg plant and then will be rolled out to other facilities and the other brands of the Volkswagen Group.

Dr. Christine Hohmann-Dennhardt, Group Board Member for Integrity and Legal Affairs, says, “It is important that employees understand what behaving with integrity means for the success of a company.” And what behaving without it can do to a company.

Importantly, they are putting people in place who will serve as links between the Board of Management and the workforce. It is all too easy to overlook the fact that the diesel scandal wasn’t the result of a bunch of guys on line 8 in the powertrain plant thinking they’d pull a fast one. This is something that went way higher in the organization, so just like lean and quality have to go all the way to the top, so, too, does integrity. So it is good that Hohmann-Dennhardt added: “Everyone, particularly management, is called on to engage in the initiative. We will only be successful if our managers act as role models for integrity and values-oriented leadership and set an example for their teams.”

Here’s hoping that people at other organizations and companies—and not just in this industry—understand and behave with the utmost levels of integrity—even without having to face a near-death experience.

And while the whole notion of ethical norms might seem somewhat hard to understand, there is a simple yardstick that can be used to determine whether you’re acting with integrity: If you told your mom what you were doing, would you feel good about it?  



Gary Vasilash invented this magazine in 1996 and wrote a column for its predecessor publication starting in 1987.  Chances are, if you’re reading this, you know him by now, possibly for a long, long time.