Volkswagen’s Crisis: A Chain of Accumulated Strategic Missteps
Volkswagen (VW) has made several strategic decisions over recent decades that are now creating significant pressure on the company—contributing to discussions about potential plant closures in Germany. Below are key missteps and how a comprehensive error-management framework might have helped prevent or mitigate them.
1. Delayed Entry Into E-Mobility
For many years, VW continued to prioritize diesel and combustion engines while other manufacturers were already investing heavily in electric mobility. This delay allowed competitors—such as Tesla and several rapidly emerging Chinese manufacturers—to gain a considerable head start.
Error-Management Perspective:
A structured early-warning system for market trends could have highlighted the accelerating shift toward electrification far earlier. Regular benchmarking, scenario modelling, and transparent risk-assessment processes might have helped VW adopt a proactive e-mobility strategy and foster a stronger internal sense of urgency.
2. The Diesel Emissions Scandal
The diesel emissions scandal caused severe financial and reputational damage. The manipulation of emissions data was an attempt to achieve short-term compliance outcomes—but ultimately eroded long-term trust in the brand.
Error-Management Perspective:
A systematic compliance and error-management framework could have promoted a culture in which ethical standards, accountability, and transparent reporting were embedded into daily operations. Anonymous reporting systems and internal controls may have helped surface risks earlier and reduce incentives for short-term, high-risk decisions.
3. Complex Corporate Structure and Rigid Hierarchies
VW’s traditionally hierarchical organizational structure has often slowed its ability to react quickly to market changes. The transition to electric mobility, for example, progressed more slowly than necessary.
Error-Management Perspective:
A more flexible error-management system could have enabled faster, more transparent decision-making. Continuous-learning practices, shorter feedback loops, and structured risk reviews might have helped identify strategic misalignments earlier and correct course before they scaled into larger problems.
4. Limited Innovation Culture and Focus on Traditional Markets
For a long time, VW focused primarily on established markets like Europe, while competitors invested more aggressively in fast-growing regions such as China. As customer preferences evolved, VW lost ground to manufacturers that adapted more quickly.
Error-Management Perspective:
An innovation-management system built on experimentation, fail-fast principles, and structured pilot programs could have supported quicker testing and adoption of new ideas. Training in agile methods and systematic error-prevention approaches might have reduced innovation bottlenecks and improved responsiveness to emerging markets.
Conclusion
How Comprehensive Error Management Could Have Helped
A holistic error-management system—combining early-warning mechanisms, strong compliance structures, agile decision frameworks, and continuous market monitoring—could have helped VW anticipate risks sooner and respond more effectively. Such systems foster a culture of learning and innovation, which is essential for long-term resilience in a fast-moving automotive industry.
