Volkswagen and Weber

A huge scandal has erupted in the United States – but with global consequences – about the German car company Volkswagen. In brief, it has been revealed that VW installed software so that their diesel cars would meet emission targets when being tested, but when in actual use emissions were way greater than permitted.

We don’t yet know the full details of how and why this happened but, for sure, it is an organizational story, and one which well-illustrates some of the core arguments in my book. In particular, I make a lot of use of the distinction, derived from Max Weber’s work, of formal and substantive rationality (introduced pp. 21-25) and the various ways that this sets up conflicts and contradictions in organizations, including goal displacement (where following a formal regulation becomes an end in itself, forgetting the substantive purpose of the regulation).

I go on to say that these “are not anomalies and anyone who works in an organization or reads the news will know how pervasive they are” (p.30), and give a couple of examples. One was from education, and the way that faced with a target designed to raise educational attainment teachers focus on that target to the detriment of educational attainment. Another was from healthcare, with rules about waiting times designed to improve healthcare being followed blindly so that all that matters is meeting the formal target, to the detriment of substantive healthcare. The VW case provides a further illustration of this. The organizational response to a formal rule designed to achieve the substantive goal of protecting the environment by controlling emissions was … to follow the formal rule without regard for the substantive purpose.

The VW scandal also illustrates an aspect of another of the main themes of the book, again derived from Weber, about the inefficiencies of efficiency. Presumably, some person or people in VW decided that the best way to sell cars in the US market was to cheat on the tests. And, indeed, VW enjoyed very successful US sales. But the unintended consequence of this decision has been to wreak massive damage on the company, its brand image and very likely its future sales and profitability, as well as potentially crippling legal actions. Where’s the efficiency in that? My guess – it’s only a guess – is that as with the Enron scandal the decision will have been made by ‘the smartest guys in the room’ – so smart that they are stupid.

So I think that this case once again shows the enduring relevance and explanatory power of the concepts of formal and substantive rationality, goal displacement, bureaucratic dysfunctionalism and so on. This in turn means that the likely proposed solutions – smarter regulations on emission testing, more stringent internal procedures within VW and perhaps other car firms – are unlikely to have much traction: they will just provoke further goal displacements, new rules to blindly work to. Not until emission minimization – in this case – forms as much of the taken for granted for engineers and their managers as any other principle of engineering, rather than being seen as something external and alien to those principles, is anything really likely to change. The same analysis could be applied to huge numbers of other cases: prudential banking regulation being an obvious example.

Finally, although this blog is connected to the ‘very short etc’ book, I will shamelessly plug my next book (Jana Costas & Christopher Grey, Secrecy at Work. The Hidden Architecture of Organizational Life. Stanford University Press, to be published March 2016). Because from what is known so far it does seem likely that the decision to rig the tests was kept secret from VW’s senior managers by those who took it. How and why such a thing might happen is explained by …. well, read the book to find out!

The wrong man at the right time?

The British Labour Party has, against early predictions, resoundingly elected a new leader, Jeremy Corbyn. A veteran left-winger, his success can be seen as an emphatic rejection of the New Labour period in which, under Tony Blair, the party embraced much of the neo-liberal agenda. Many of Corbyn’s policy positions chime with things I have argued on this blog at least as regards his anti-austerity economics and his internationalism with respect to immigration and asylum policy; less so with respect to the EU.

Corbyn’s appeal lies less, I think, in his socialism that might be thought. For that matter, many of his policies would hardly have been considered socialist even a few decades ago. An interesting article compares those policies with those of the 1983 SDP manifesto (the SDP being at the time a breakaway party from the right of Labour): they are not much different. More relevant, I think, is that the really striking thing about Corbyn is that he clearly says what he believes whereas the other three candidates for the leadership were almost visibly worried about saying the wrong thing or saying something controversial. They were constantly calibrating what they said, and as a result ended up saying nothing. Hearing them interviewed during the campaign it was just impossible to know what they actually stood for.

That I think is one of the legacies of New Labour – news management and triangulation - and it now feels very tired. In the 1990s Blair could just about get away with content-free rhetoric about combining social justice and economic efficiency which allowed everyone to read anything into it they wanted, but it doesn’t work anymore. The consequence is that, Corbyn aside, none of the candidates were able to articulate what are the things which are distinctively Labour and non-negotiable for any Labour leader. If there’s no answer to that then there’s no compelling reason to vote for them.

For that matter all the talk during the campaign of winning from the centre doesn’t really mean anything. Where is the centre? And it’s no good saying that because Blair won three elections he had some magic insight into how to win now. New Labour’s approach was formed 25 years ago and, as its acolytes used to say, you have to change with the times. One big part of that change is that the strategy of seeking to appeal to swing voters in southern marginals whilst assuming the core vote will stay solid is a dead duck given what has happened in Scotland. To put it another way, there’s no longer a single ‘centre’ from which to win and that is in large part a legacy of the New Labour project, to which replicating the New Labour strategy can’t be an effective answer.

And yet (unlike, I must admit, many of my friends) I can’t at the moment feel that Corbyn offers the answer either. He has a lot of baggage which, fairly or not, will be used against him. He doesn’t have the deep roots and support that might enable him to hold the Labour Party together or to manage the party machine or the parliamentary party: he’s always been a maverick and an outsider. Whilst transparently honest, he’s not a great orator nor an original thinker, and he doesn’t even seem to have any great desire to lead the party or the country (and certainly did not expect to). None of that is bad in itself, but all of it presents severe practical problems for leading a mainstream party.

Politics in the UK is much more unpredictable than in the past because of the breakdown of traditional party loyalties and low turnout in elections. No one predicted Corbyn’s victory a few months ago and it would be stupid to predict how he may fare as leader. In electing him, the Labour Party have decisively rejected the neo-liberalism of the New Labour years, and the carefully-calibrated presentation that went with it. Great. But that is a one-shot deal. If it goes wrong, then it’s hard to see anyone having a second go at effecting the same kind of shift. It is a potentially interesting, important and exciting time, both for Labour and for UK and world politics because a shift from neo-liberal consensus in the UK is a big deal. Leadership theory often tells us that what is crucial is not so much the personal qualities of leaders as the congruence between those qualities and the time and circumstances in which they are deployed. I have a feeling that Corbyn is the wrong man at the right time.

 

 

Crisis? What crisis?

The flow of people across Europe, mainly fleeing war in Syria, is the biggest news story across the continent. Sometimes the focus is on arrivals in Greece, other times points of transit in Macedonia or Hungary. In the UK much attention is given to the people gathered at Calais, trying to get to Britain, although the numbers here are much smaller than those in many other places.

Invariably, this is described as a crisis. But I think that is misleading in two ways. First, it implies that it is a temporary phenomenon that will soon be over. That is highly unlikely, although the end of summer may well temporarily reduce the numbers of people making the dangerous sea crossings to Europe. Second, it implies that what is happening suddenly arose from nowhere. That is highly misleading. It is a situation that has been developing over several years, mainly as a result of war, instability, poverty and repression in the Middle East and Northern Africa. The ‘crisis’ motif is also rather offensive in that it suggests that it is the countries of Europe that are suffering: yet if there is a crisis, then those experiencing it are surely the people whose lives have been destroyed, setting them on horrendous journeys of desperation?

Beyond the way that what is happening now has a past and a future that makes the idea of a crisis moment implausible is something else which is more directly relevant to the themes of the book and to the study of organizations and management more generally. It is the nature and meaning of globalization. Every student of management, and for that matter every citizen and voter, has been told for decades that we live in an increasingly globalized and inter-connected world. But that almost always references the globalization of organizations, markets and trade. Moreover, it has a sanitized, upbeat sense of a world of opportunity. Yet global inter-connectedness applies no less to people, and can have a reality which is more about squalid suffering than the breathless, bloodless nostrums of corporate strategy documents.

Confronted with these people and this reality it seems that many in Europe recoil in horror. In many countries, including the UK, that is exacerbated by years of highly negative and stigmatic depictions of immigrants, refugees and asylum seekers. So whereas in the UK (as I point out on pp. 106-7) the globalization of ownership has been treated as a matter of no importance, the globalization of people is a very different matter.

There’s little point reprising all the familiar and fallacious responses that have always been made to immigration (except when we do it – then we are ‘expats’): that ‘we are full up’, that it will cause unemployment or housing shortages, that it will damage cultural cohesion. However, I do want to discuss an increasingly vociferous comment about the current situation that I have noticed, which is that those who think that refugees should be allowed to settle should personally offer to house them, otherwise they are hypocrites.

This seems a very peculiar logic. By extension it would mean that those who want a health service should turn their houses into operating theatres, those who want schools should hold classes in their living rooms, those who want electricity should have power stations in their back gardens or even dig the coal to fuel them. Or perhaps more pertinently that those who don’t want to admit refugees should be obliged to go and tell them why and to man the barricades to keep them out.

I am not a psychologist, but I think there is a psychological logic to this illogic. Precisely because when people, rather than ownership, move around the globe it acquires a human face, and the response therefore takes a human form. That can sometimes call forth an empathetic response. But it can also fuel a bitter anger against those making such a response, which is what fuels the ‘hypocrisy’ charge. This I think is a psychological defence against the witnessing of suffering: to say that those who insist on acknowledging that suffering are to blame.

Beyond that, there is a tendency – visible, too, in debates about poverty, unemployment and welfare – to blame the victims. In the case of refugees this takes the form of saying things such as that they should have sought asylum in the country of first entry (a dubious legal argument, and in any case a wholly unrealistic one), or that they seem to be young, healthy males who should not have abandoned their families and countries (this latter seems especially perverse – it is always those who can undertake migration who do so). Here I think the psychology derives from the terrifying fear that any of us could be poor, unemployed, ill or, in this case, displaced by war. By configuring such fates as individual failings (laziness, dishonesty, cowardice, avarice) those doing so can indulge the fantasy that it would never happen to them, since they are made of sterner and better stuff.

So these illogical responses are driven by fear and, in a certain way, a sensitivity to suffering. Yet we should not feel too much sympathy. Those fears may be psychologically real, but they hardly equate to the material reality of being bombed out of one’s home, having one’s life ripped up, and being left with no alternative but to embark on an arduous, dangerous journey into the unknown. That’s a crisis.