The first rule of branding: Do no harm.
Volkswagen managed to seriously damage over 50 years of brand credibility with their stupid “diesel dupe” software scandal. Share value has fallen over 30% since news of the debacle broke. Trust will take years to rebuild. And who knows how many “Was going to buy a VW but now I will not” missed sales are out there.
A quick perusal of the VW corporate site reveals no brand purpose, mission or vision statement. The only overarching corporate mission is growth. That’s not to say the brand elements don’t exist. But when an organization does not clearly proclaim them internally and externally, it leads to suspicion that they don’t take them too seriously.
When your business focus lacks the foundational grounding of purpose, mission, values and character, employees will take whatever route expediently delivers on the business goals, not what’s good for the long term prosperity of the brand.
As Berthold Huber, Deputy Chairman of the Volkswagen Supervisory Board, said: “The test manipulations are a moral and political disaster for Volkswagen. …We can only apologize and ask our customers, the public, the authorities and our investors to give us a chance to make amends.” That chance he’s asking for is going to be very, very expensive.
For the sake of poor brand management, billions have been lost. “We will review all planned investments, and what isn’t absolutely vital will be canceled or delayed,” Volkswagen CEO Matthias Mueller told workers at Volkswagen’s headquarters in Wolfsburg, Germany. “And that’s why we will readjust our efficiency program. I will be completely clear: this won’t be painless.”
The Bottom Line:
Branding is first and foremost a risk management tool. Had VW been paying more attention to it, the creation of emissions-cheating software would have gotten no further than a tasteless joke in a lower management meeting. Thousands of customers have been cheated. An asset decades in the making is seriously weakened. Branding is serious risk management for your business. Ignore it at your own peril.
Interested in learning more about brand strategy as a risk management tool? Let’s talk.