VW Lessons Learned: Why You Can't 'Position' Trust

Like everyone else remotely aware of the car business, I have been watching in shock as the VW emissions cheating scandal plays out. Suffice to say, VW Group has foolishly squandered the most important driver of brand equity and corporate reputation...it squandered years of hard earned trust. 

And it has done so at a time when corporate reputation is becoming almost as important as the efficacy of products and services in driving purchase decisions.

Consider these startling statistics from Cone Communications 2015 Global Corporate Social Responsibility Study:

• 80% of consumers would be willing to buy a product from an unknown brand if it had strong social and environmental commitments
• 57% would purchase a product of a lesser quality or efficacy if it was more socially or environmentally responsible

Moreover, in a 2014 study by Weber Shandwick, 40% of those who liked a product they owned and were were surprised that product came from a company that they didn’t like, stopped buying the product.

So, here is VW Group. Owner of some of the best known and loved automotive brands in the world, with one of the strongest reputations for quality caught lying about their environmental responsibility! How could this have happened??

While no one knows for sure, I decided to do some research on corporate reputation and social responsibility. Every year, the Reputation Institute publishes their 'Global Trak 100' ranking of corporate reputation.

Their methodology is quite simple with 7 factors including governance, leadership, and social responsibility comprising their ratings. And while some companies can be good in one or two areas, how do the top companies excel across the board? I decided to look at the stated commitments that the top ten companies on the Reputation Institute's list make to their stakeholders.

These top ten include companies like Google, Daimler, Lego, Apple, and Intel. Each one states a clear social purpose for their being that goes directly from their core business out to the benefit of society:

• Google: Organize the World's information and make it universally accessible and useful
• Daimler: Playing a pioneering role in the ongoing development of mobility, especially safety and sustainability
• Lego: Inspire and develop the builders of tomorrow
• Apple: (as stated by Steve Jobs): To make a contribution to the world by making tools for the mind that advance mankind
• Intel: Foster innovation worldwide

When I searched for a comparable statement from the Volkswagen Group, I found this: 

• 'To position the VW group as a global economic and environmental leader among automotive manufacturers.' 

This statement falls short of the leaders in 2 critical areas.

1) 'Positioning' is becoming an Obsolete Practice

First and foremost, in a post scandal context, the word 'position' jumped off the screen! Perhaps it was the most important word in the sentence. 'Positioning' typically involves the shaping audience perceptions by telling them how you are different and better than others. And the idea of positioning relies on the obsolete assumption that your audience will patently believe what you tell them. 

The fact is, brands and companies can no longer 'position' themselves, but rather audiences position them based upon the brand and company behavior. Take Audi's 'Truth in Engineering' tagline. While it told you Audis desired positioning, this has now been exposed as a blatant lie. Audiences will likely position Audi completely opposite from its stated position.

2) Social purpose is becoming corporate cost of entry 

Secondly, the statement references its desired outcome as a competitive benchmark, rather than a positive societal impact. In a global study conducted by Cone Communications, 94% of consumers expect companies to be in business not just to make profits, but also to actively support broader environmental and societal issues. 

Simply put, companies should be in business for a greater purpose that goes beyond profits. And that purpose should become the north star for everything that the organization does. And that's what the companies at the top of the Corporate Reputation list do.

For instance, Lego, is committed to inspiring and developing the builders of tomorrow. They deliver on that commitment in every corporate behavior..from their core business and theme park, extending through all of their CSR initiatives.

Only time will tell if VW Group can rebound from this current scandal. But is is probably time for some deep soul searching for VW to discover their purpose, make a public commitment to fulfilling that purpose, and behaving it every day in every corner of their company.