In the Race for Leadership, should Brands Fuss about the Means or the End?

29 Aug,2019

 

By Avik Chattopadhyay

 

On August 25, the automobile and business world lost Ferdinand Piech, the erstwhile chairman of the supervisory board of the Volkswagen Group. Credited with creating what Audi is today and the powerhouse that the Volkswagen Group is, Piech was declared the Car Executive of the Century in 1999. A grandson of Ferdinand Porsche, he was both revered and feared by those around him and across the world. His professional career ended on a smoky note when he resigned due to the ‘Dieselgate’ scandal involving Volkswagen and other group brands.

 

Though I never had a chance to meet him, I did work in the empire he had created. And interacted with a few senior people in the management board of Volkswagen. I could feel the passion with which Piech led the group every time I visited Autostadt in Wolfsburg.

 

My 17 months in that assignment was one of the most tumultuous in my career. A deep-down conflict developed between the brand as a business operation in India and me as entrusted to nurture it. One instance sums up the fundamental friction. In the annual meeting with the global director of marketing and sales, he proudly announced that the group has set the goal of selling 10 million vehicles worldwide, and they will meet the target “come what may”! I found it disturbing as the key driving force of an organisation its size, and asked the director as to why is the goal of not being the most respected and admired automobile brand across the world?

 

Why does a brand have to necessarily “win”? Why is winning the means as well as the end?

 

In a year of my leaving the brand [frankly, before they could sack me!], the Dieselgate scandal hit the brand and the group. While the details of what exactly is the scandal about can be read up on the internet, the fundamental decision to fit a ‘cheat device’ in a vehicle to lie about emissions was with the sole purpose of selling more vehicles in the key US market. “Come what may.” To sell the 10 million vehicles, the organisation went to great lengths to cheat and hoodwink the regulatory system in one of its key markets, in the hope of not getting caught!

 

Did Piech know? Of course, he did. Did he approve? Of course, he would have as the decision making then was uber-centralised. Did he own up? Never.

 

For Piech and the entire group management wanted to “win” at any cost.

Win, and not “lead”.

To be a winner and not a leader.

 

A contemporary of Piech was Fujio Cho, the chairman of Toyota Motor Corporation. Interestingly, they are of the same age.

 

There are three instances of Cho’s journey which are imprinted in my mind. In 1991-92, Lexus had taken the US market by storm. Topping all the quality reports and costing significantly lesser than the European rivals like Mercedes-Benz and BMW, the brand had brought its competition to their knees, making them re-think their US strategy, especially BMW’s plan of entry. It seems Cho took the unprecedented decision of cutting back Lexus production so that the other brands also could continue selling and BMW enters the US market. His unique logic was that without competition, Lexus would not be able to benchmark and improve!

 

In the mid-1990s, when the automobile world was obsessed with launching more powerful cars and larger SUVs, Cho went the other way and launched the Toyota Prius in 1997. It was to make a statement not only of Toyota’s R&D capabilities in making hybrid vehicles but also the concern for the environment and the generations to come. Environmentally-friendly cars will soon cease to be an option, he remarked, they will be the necessity!

 

In the mid-2000s, when the annual data for US sales was released, in a certain year, Toyota was shown as #1 closely followed by Ford. However, Toyota realised that there was actually a calculation error and Cho went to the press to formally announce that Ford was the true #1.

 

Cho never built an edifice like Autostadt. He never bothered with creating a vehicle like the Bugatti Veyron which Piech did. Cho had once famously said: “First we build people, then we build cars.”

 

Cho clearly wanted Toyota to lead.

Piech was focused on VW to win.

 

Toyota is loved and respected.

Volkswagen is feared and revered.

Both are admired and aspired for.

Toyota leads, always.

Volkswagen wins, occasionally.

Toyota fusses about the means.

Volkswagen bothers about the end.

 

In a world of increasing conflict and shortening attention span, we need more brands to lead than just win. For the focus on the means and to be sustainable is far more responsible and relevant than merely hitting temporary number targets. Leading is the means that should typically end in winning. Winning is the mere outcome. And not necessarily the rigour, ethos and credibility with which one operates.

 

So, while I still find the VW Karmann Ghia fascinating, as an investment I would go in for the Toyota Corolla Altis with my eyes closed!

 

Winning sure is macho, but leading is more meaningful.

 

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