This article is by Saj-nicole Joni, chief executive of Cambridge International Group. Get Big Things Done: The Power of Connectional Intelligence, by Saj-nicole Joni and Erica Dhawan, is available in book, ebook, and audio formats.
The shock waves of the Volkswagen emissions scandal are reverberating around the globe, and in the coming weeks the new management team will have to contend with investigations, implications, lawsuits, and of course, trying to run the business.
While there will be many pressing things for the new chief executive to deal with as he works to save and transform the company, Matthias Mueller must first stop and ask, “How can it be that the environment at Volkswagen allowed people to imagine they could do this and not get caught?”
Today, accountability extends far beyond the authorities in charge of the rules of commerce. Everyone has access to data, computational power, sophisticated algorithms, networks, and social media. There are many people, people you don’t even know exist, who can and will hold you accountable.
Look at Lance Armstrong. He was the world champ. He had won. He had retired from biking. It was over. His system of bullying the press and the people who tried to tell the truth about his big cheat had worked. But the world had changed, and because of networks, computational power, and constant, relentless communications, it wasn’t over. Even Lance couldn’t keep his doping secret forever.
In Lance’s case, his final undoing started with scientists (led by Dr. Michael Ashenden) who were not part of the formal testing regime. Passionate about the issue, they crunched the data on their own and in new ways, and they presented new evidence that pointed to doping. With the website NYVelocity.com, they created buzz and courageous conversations that would not go away. Virtual biking communities made it possible for different people who had tried to tell the truth to come together and realize they were not alone. Social media fired up, all culminating in compelling the authorities to take another look. The momentum and power shifted, and eventually the truth came out.
This is similar to how Volkswagen’s massive cheat was exposed. The inquiry was started by independent environmental groups and researchers. They weren’t looking at Volkswagen because of suspicions of cheating; they actually were looking to use results from U.S. diesel cars to further their clean air agenda in Europe. When they found major discrepancies in the data, they took their results to the regulators. Volkswagen tried to wriggle its way out of the problem with untrue explanations, but faced with the combination of environmentalists, scientists, data, media, and regulatory pressure, the company was eventually forced to admit its many years of deception.
This is the reality of business today. Publishing numbers, making claims, interacting with customers—everything is fair game. Your claims will be checked, and not just by your competitors and regulators. You will be checked by any number of people who obsess about getting to the truth, who have their own agendas, and who have access to resources outside the standard systems to back them. When these people make discoveries, they will not keep quiet. They can and they will access the whole world of global media as their stage.
Fame and brand are not protection. In fact, they invite scrutiny from all corners. Look at the case of Thomas Herndon, who in 2009 was an unknown young man doing graduate work at the University of Massachusetts, Amherst. Working on a homework assignment, Herndon looked into the economics paper “Growth in a Time of Debt,” by two renowned Harvard professors, Carmen Reinhart and Kenneth Rogoff. Herndon could not replicate their results. He thought he just wasn’t smart enough, but he kept at it. He emailed them, finally got their data sets, and then was stunned to find that in their key calculation, Reinhart and Rogoff had included only 15 of the 20 countries they had analyzed. They’d left out Australia, Austria, Belgium, Canada, and Denmark. Additionally, one bad year’s numbers for New Zealand, a small economy,– was given the same weight as 20 years of numbers from the United Kingdom.
Herndon’s conclusion: “Coding errors, selective exclusion of available data, and unconventional weighting of summary statistics lead to serious errors that inaccurately represent the relationship between public debt and GDP growth among advanced economies in the post-war period.”
This was not a small, obscure conclusion. Many economists had used Reinhart and Rogoff’s thesis and findings to argue that the way out of the current recession was not increased government spending, as in the New Deal in the American Depression of the 1930s, but rather very tough austerity.
Despite his being an unknown graduate student, Tom’s work was not lost. His paper was picked up by elite economists and the media, and he sparked a conversation around the world. The conversation changed decisions at the top of global finance, a world Tom could only dream of. According to Stanford University economist John Taylor, Herndon’s discovery of the error was a factor in the decision to omit specific deficit or debt-to-GDP targets in the 2013 G20 meeting of finance ministers and central bank governors.
In our highly connected world, there are new forms of scrutiny. Just about anyone can piece together dispersed bits of information in new ways. A company that prides itself on customer service cannot have angry customers constantly tweeting or anyone with a smartphone may piece together the incongruity. And the ability to piece things together is changing the whole concept and meaning of anonymous data. For example, in 2006 Netflix made public a large, supposedly anonymous database of movie ratings as part of a competition for the Netflix Prize. Although the data sets were designed to preserve customer privacy, two researchers from the University of Texas were quickly able to identify a surprising number of individual users by matching the data with film ratings on the Internet Movie Database. (Netflix cancelled the prize after settling a class-action law suit on privacy). Today’s reality that anonymization often isn’t sufficient to prevent reidentification is just another example of how risk, compliance, and corporate responsibility are changing fast. In addition, today’s electronic trails make it almost impossible to erase an information trail once the bloodhounds of public perception are on it. Look at Hillary Clinton’s emails. She allegedly turned over to the State Department all the “work” emails on her private server, and deleted all the “personal” ones. But it now appears that the FBI has retrieved all those supposedly deleted personal emails.
The rules of access, controls, and secrets have changed. In the past, leaders focused on preventing corporate fraud by developing an ethical culture that would not tolerate cheating. For Volkswagen’s new leadership, tackling issues of ethics and leadership is necessary but not sufficient for transforming the company. In addition, it is vitally important that the board and new management investigate Volkswagen‘s apparent and pervasive blindness to today’s realities.
In the end, this is not just a question for Volkswagen. In light of the realities of our changing technologies, networks, communications, and constituencies, everyone needs to take a good look at their own environment and ask, “Do my basic beliefs about what is possible also have major blind spots?”
