VW’s Matthias Müller Needs to Ask Himself, ‘What Would Lee Iacocca Do?’

This is a guest post by Alex Flores, vice president of communications at Global Strategy Group.

Volkswagen_5

This is a guest post by Alex Flores, vice president of communications at Global Strategy Group.

Sadly, an in-trouble automaker is nothing new. It’s newsworthy, but nothing we haven’t seen before. When auto manufacturers make bad headlines it’s usually because of a safety recall, where a number of people have been injured, or worse, lost their lives. Since 2008, and way back in 1979 (Chrysler), domestic manufacturers have made headlines because of their financial troubles too. But when that happens, automakers’ financial troubles are part of larger stories about the economy, so they don’t get all the headlines.

In recent weeks, though, Volkswagen has pioneered an entirely new way of making really bad headlines. And this time they aren’t part of a larger story, VW is the story.

On Sept. 18 the Environmental Protection Agency (EPA) accused Volkswagen of installing a software “defeat device” in its diesel engine vehicles that beats the EPA’s emission control tests. The software recognizes the vehicle is going through an emissions test and adjusts the pollution controls to reduce the output of nitrogen oxides that contribute to smog and other pollution. Environmentally diabolical.

How bad is it? In many crisis situations there is one big story that gets the lion’s share of the attention. Bankruptcy. An ignition switch. These are singular issues that pose enormous communications challenges for auto manufacturers, but they are for the most part, a focused issue. VW, on the other hand, is facing a communications battle on multiple fronts.

Governments around the world are calling for investigation, shareholders are running for the hills or filing class-action suits, and customers are turning to the courts as well.

And in the court of public opinion, VW is taking catastrophic blows. The damage this is causing to their brand cannot be understated.

Volkswagen is under siege, and it seems the contagion has spread. This week’s headlines revealed that Audi has several U.S. models that feature the same software cheat.

So if you’re the new CEO of VW, what do you do?

If VW sees this the way I do, that their predicament is an unprecedented PR nightmare, then they are on the path towards getting a handle on the situation. The new CEO, Matthias Müller, should ask himself “What Would Lee Iacocca Do?”

Iacocca, the legendary auto industry leader, didn’t rely on communications playbooks or precedent. For example, in 1956 as an assistant sales manager for Ford just outside Philadelphia, Iacocca didn’t simply pick up 1955’s sales incentives and re-purpose them for 1956. No, he created a new way to finance a vehicle that got the attention of Ford’s leadership in Dearborn, Mich. What he started in Philly went national, driving record sales.

In 1979 when Chrysler was in financial dire straits, Iacocca went to Congress to ask for what in today’s world would be called a “bail out.” This gave him the ability to right the ship and lead Chrysler back from the financial depths and into profitability. Until then, no automaker had ever gone to the government for a loan.

All this is to say that Müller should find inspiration in Iacocca’s leadership; be bold, and be speedy about responding to the crisis. To get there, Müller should look at the crisis plan and select those tactics that place him front and center. The answer to VW’s troubles lie somewhere beyond the ‘block and tackle’ crisis communications steps they have taken. The answers are in a place where bold, decisive, leaders spend their time. Where Lee Iacocca spent his career.

What kind of steps can VW take to begin turning the tide?

1. The company needs to boldly declare their responsibility and accept they’ve done wrong, coupling that admission with actions and programs aimed at undoing the damage they’ve done to the environment. These cannot be symbolic gestures, but actual plans with immediate steps. Don’t be BP after the Deep Water Horizon explosion in the Gulf. They did a lot of finger pointing and made it so the government told them what to do. Müller, do not let the world governments decide your fate. Offer solutions for how to make this right.

2. VW needs to communicate with the affected customers. Our research shows two thirds (67 percent) of customers prefer to be notified immediately while the remaining third (33 percent) want companies to avoid panic by gathering all relevant facts before being notified. The most effective customer communication follows three simple guidelines: 1) communicate the situation forthrightly; (2) burden the company, not the customer; and (3) provide reassurance the situation will be fixed as quickly as possible.

3. The company’s engagement with the press needs to be more frequent and more in-depth. VW is being investigated and attacked on multiple fronts, a Lee Iacocca-like move might be to do a town hall with the media. Take questions and answer them in real-time. Show, not tell, that you’re interested in being transparent and are looking to make things right. Blaze a new trail, Mr. Müller.

4. Create and announce at the World Climate Summit (WCS) in Paris this December, a joint task force made up of EPA officials, VW executives and members of other environmental agencies from around the world, a new partnership that will lead the auto industry towards the WCS’s carbon emissions goals.

Crisis communications plans and media outreach aside, it’s actions like these that will save VW. Big, bold, decisive ones that show a marked change in corporate culture and behavior. VW isn’t going to be able to “crisis plan” its way out of this mess, but the importance of communicating in a manner that provides transparency, is authentic, and more frequent will greatly aid in VW’s attempts to set things right.

I’ll end this by offering one last idea, maybe reach out to Iacocca and ask him “what would you do?”

Alex-Flores1

Alex Flores is vice president of communications at Global Strategy Group, a public affairs firm headquartered in New York City. At GSG, he serves as the digital and brand strategy lead, where he works to keep his finger on the pulse of all things digital and brand, crafting points of view, identifying trends, and creating strategies for GSG’s clients.

You can find Flores on LinkedIn.