By on November 5, 2015

Ferdinand-Piech

Ferdinand Piëch, the man who ruled Volkswagen like the king of a Teutonic fiefdom, was likely the cause of the diesel scandal that’s erased billions of dollars of value from Volkswagen as it looks down the barrel of a gun loaded with further billions of dollars worth of recall work, fines and law suits.

Or, at least, that’s the claim made by Bob Lutz.

Former auto industry executive Lutz called Piëch’s leadership style “a reign of terror” before saying “The guy was absolutely brutal,” in his latest piece for Road & Track.

Tell us what you really think, Bob.

Lutz alludes to a dinner in the ’90s where he and Piëch sat beside each other:

I told him, “I’d like to congratulate you on the new Golf. First of all, it’s a nice-looking car, but God, those body fits!”

“Ah, you like those?”

“Yeah. I wish we could get close to that at Chrysler.”

“I’ll give you the recipe. I called all the body engineers, stamping people, manufacturing, and executives into my conference room. And I said, ‘I am tired of all these lousy body fits. You have six weeks to achieve world-class body fits. I have all your names. If we do not have good body fits in six weeks, I will replace all of you. Thank you for your time today.’ ”

“That’s how you did it?”

“Yes. And it worked.”

It’s this management style that Lutz blames for Volkswagen’s current state. Why? Instead of me rewriting it, check out Road & Track instead.

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47 Comments on “Lutz: Piëch’s Brutal “Reign of Terror” Likely Cause of Diesel Scandal...”


  • avatar
    28-Cars-Later

    Which one is Hitler and which one is Stalin in this argument?

    • 0 avatar
      bullnuke

      Stalin shot first to encourage the next one in line before a failure occurred. The other guy would give time (6 weeks) to correct a failure before performing the high-speed cranial lead injection.

      • 0 avatar

        Nice story, bro. In reality, however, Stalin went the Piesche way. A famous case was the loss of wing covering on Yak-9 in 1943. According to Yakovlev’s memoirs, Stalin called both him and Dementiev, the minister of aviation industries and asked: “so, is that true that the airplanes passed all checks and were delivered, but crashed at the front before the enemy?” They had to admit that it was an accurate assessement. “In that case”, said Stalin, “it is what the most insidous enemey would do. You helped Hitler. You are Nazis!” At that point Yakovlev was sure it was the end of them, but Stalin then asked: “What do you propose to fix the problem?” Dementiev suggested that special teams of repairmen were formed and sent to the units at the front, in order to repair the coverings with correct chemicals. Stalin asked how long it would take. Dementiev promised to be done in 2 weeks. When Stalin dismissed them, Yakovlev asked Demeniev in the hallway: “Are you barking mad? How do you propose we do this amount of work in just 2 weeks?” Dementiev replied: “Do you want to be executed today? Better in 2 weeks!”

    • 0 avatar
      DubTee1480

      Ha, I just realized you Godwin’d this one with the first comment

      • 0 avatar
        VolandoBajo

        Although he mentioned Hitler, he was not engaged in an argument, so I would say that technically Godwin’s law doesn’t apply, as the law states that the first one to mention Hitler loses the argument. No argument, no law…the tool doesn’t fit the machinery in this case.

        Good story. Though very sad when you look closely at history and see how many people were duped into thinking that Communism would lead to a better world for all. Then about ten to fifteen million people died trying to make the world better, according to Stalin’s plan.

        Some people still think that the problem was just Stalin, and that other totalitarian leaders are somehow more humane.

        Sorry folks. Power corrupts. And absolute power corrupts absolutely.

        And several of the Cuban revolutionary soldiers who were on the Granma ended up dead or in prison because they refused to abandon the original democratic goals of the revolution, and go along with a shift to a totalitarian communist regime.

        For those who ask who, or want proof, look up Comandante Camilo Cienfuegos and Huber Matos, whose former rank I forget.

        If it weren’t so tragic, it would be funny how so many people readily acknowledge the damage that Hitler did, but tend to write off what Stalin did.

        What started out as a movement for land and freedom (Narodnya y Volya) ended up being one of the largest massacres in all of human history.

        Now I’ve bummed myself out.

  • avatar
    RideHeight

    Can’t that guy afford teeth?

  • avatar
    Nick_515

    Nah. Steve Jobs was like that too. That’s different. Lutz sounds dumb.

    • 0 avatar
      JohnTaurus_3.0_AX4N

      Really? So because someone else ran his company like a dictator, that makes it okay? There are better ways to get things done. Look how far Ford advanced under Mullaly. Im sure he had to be tough at times, of course, but I seriously doubt he scared people into doing what he wanted done.

      This guy ran VW when this was going on. At the very least, he’s responsible in that way. The Captain answers for the actions of the ship he commands.

      So, how many car companies have you run? And youve done a perfect job at each one? No mistakes? Okay, cool, just wanted to know if you were qualified to make such an assertation about Mr. Lutz, or if you were just talking out of your @$$.

      • 0 avatar
        Nick_515

        JT – my bad, should have given more context.

        Mullaly was not the same kind of leader. He was a savvy financial leader, as well as an astute “globalizator” – that’s not a word – who recognized two things. First, Ford was in precarious financial situation, and he confronted it head on instead of the typical winging companies do in such situation. Moreover he recognized and chose to overcome the separate product lines, banked on consumers paying more for the same nameplates, and upgraded the Focus etc by universalizing the European Ford models (one Ford etc).

        Piech does not sound like that kind of “business leader brought in to save car company” kind of guy.

        To answer your question more directly: it’s very important in what direction you push people. You can be brutal in demanding excellence, and it tends to pay off. The other direction is pushing people towards something they understand is morally wrong – Holocaust, wholesale cheating about emissions, etc. That is a very different kind of thing.

        So Lutz is taking the first type and substituting it for the second type.

        I also think Piech is responsible. But Lutz’ anecdote makes no sense. He challenged people to BE BETTER. People rise up to that. When you challenge people to cheat, it’s a different calculus.

        • 0 avatar
          S2k Chris

          “I also think Piech is responsible. But Lutz’ anecdote makes no sense. He challenged people to BE BETTER. People rise up to that. When you challenge people to cheat, it’s a different calculus.”

          This shows a simplistic understanding of the issue. Of course Piech isn’t telling people to cheat, but he’s telling them “make the problem go away or I’ll make you go away” without any desire to understand the nuance or anything else. When you do that, when you insist on a result at any cost Or Else, you inherently encourage immoral and illegal behavior. That’s just how it is.

          • 0 avatar
            Car-los

            Nick_55 the facts speak for themselves. These abusive bullies might be your ideal leaders but look at what Piech leadership brought to VW.

            This scam is far too big to pretend that Piech knew nothing about it and if indeed he didn’t know, well, that’s even worse!

            If you think that bulling people to the extreme of fraud makes them better you need to have your head examined. Because that is what Piech did.

            Piech should face criminal charges but he won’t, why? because we live in a world rule by fascists.

            The modern concept of fascism was define by no other that Mussolini (no doubt another of your heros).

            In a democracy, as Lincoln put it, a government is by the people for the people. But in a fascist state Mussolini said a government is by the corporations for the corporations. And that is exactly what we have all over the world and that is why no charges will be brought to Piech to his relief and yours.

          • 0 avatar
            its me Dave

            From Dr. Deming’s famous 14 Points:
            8/14 Drive out fear; create trust.
            10/14 Eliminate exhortations for the work force; instead, focus on the system and morale.

          • 0 avatar
            Nick_515

            S2k, I understand that. In fact I made a distinction between pushing people to excel, versus telling them to “make the bodies go away or else.” You’re arguing there is in fact no distinction, especially when once goes beyond the anecdote at hand. It’s conceivable the distinction means less in the business world than in my professional world.

        • 0 avatar
          jrhmobile

          Yeah, but when your @$$ on the line, you better believe it all adds up. Even with New Math.

          • 0 avatar
            VolandoBajo

            Ah, yes. The new math…five birds were perched in a tree. A hunter fired off two rounds, causing three of the birds to fly off. Question: how do you think the birds felt about hunting?

            I have heard of cases where they wanted kids to learn how to guess at answers, in case they were stranded on a desert island and had to do trigonometry without a calculator.

            And when some of the kids actually “did the math” and got the correct answer, they were told that this was wrong, that they needed to show a way to approximate the correct answer.

            Sure hope I don’t end up with one of those people navigating an intercontinental flight.

            “Look! We are over a big city. That looks like a pretty good approximation of NYC. Let’s land there.”

            Old joke: a helicopter pilot gets lost in a fog storm in the Pacific NW, and all his radio gear goes out at the same time.

            He drops below the level of the fog/cloud cover and sees a large building with lots of people with computers on their desks.

            So he writes a large sign that says “Where are we?”

            The people in the building hold up a sign that says “in a helicopter.”

            The pilot immediately knows what heading to take to get to a nearby landing pad.

            How did he know where he was, given the answer he received?

            ANSWER: He figured out he was over Microsoft HQ, because the answer, while technically correct, was useless.

  • avatar
    VW16v

    Lutz

  • avatar
    redliner

    The key is knowing when to push your employees to be productive, without pushing them (and yourself) off a cliff.

    • 0 avatar
      Kendahl

      +1 on that. There are two ways to handle a problem. One is to solve it. The other is to hide it. When a problem is difficult and the penalty for failure is high, people gravitate toward concealment. The difference between a good leader and a bad one is which way his subordinates feel they need to go. Although the consequences for GM were less severe than what VW is facing, its ignition switch cover up and the reasons behind it were the same.

  • avatar
    jeoff

    I had a friend who ended up leaving her genetics PhD program because of a professor like this.
    “You will graduate when the results show 500.”
    “But, the results show 400. Do you want me to make up data?”
    “You will graduate when the results show 500.”

    • 0 avatar
      Mandalorian

      The totally rampant cheating in schools these days is a parallel to the VW situation. “Get all As or you won’t get into a good college!” that kind of ultimatum like VWs emission targets breeds desperation and cheating.

      This problem beings at a much lower level then VW. It starts in schools.

  • avatar
    SCE to AUX

    Maximum Bob might be right this time.

    VW’s diesel issue is not a technology problem; it’s a cultural one. And a company’s culture stems from the top.

    • 0 avatar
      VolandoBajo

      The Philadephia Eagles are currently suffering a three year long decline from a more than a decade “almost but not quite” era under Andy Reid. Now they have former Oregon coach Chip Kelly, who stresses culture over talent. He has gotten rid of Pro Bowlers who he thought didn’t fit his idea of culture, and has replaced them with mediocre performers who haven’t made the team better just because they had culture.

      So for Eagles fans, which I am not, this VW thing bodes ill for the future.

      To this frustrated Monday morning QB, it seems like culture alone is not enough. You need a culture of winning, which requires a culture of performance, which requires a culture of doing it the right way.

      Drop the ball on that, and all you have is an autocracy, and one that is likely to end up running off the track at that.

      Eat is easier to get good performers to embrace culture, properly done, than it is to get good culture people to become top performers.

      Kelly is trying to use management techniques that enabled him to plug in who he wanted to plug in at Oregon, when in fact in the NFL the game is much tougher and the talent pool much less deep.

      It is an axiom of business that people will maximize what you measure and reward. And if you don’t measure bad emissions, and reward pushing product out the door, you get VW diesel emissions.

  • avatar
    runs_on_h8raide

    they were Piëch-trified!!!!

  • avatar
    Conslaw

    General Motors should publicly offer to tool up to sell to Volkswagen replacement 2.0 liter diesels to replace all the noncompliant VW engines. VW will decline the offer, and GM will score publicity points.

  • avatar
    CoreyDL

    Just imagine if Lutz had done this to the Cadillac people in 1987, when he heard about the upcoming LS400.

  • avatar
    Lou_BC

    GM leading up to its financial crisis in 2008 appeared to be adrift with a mediocre crew aboard. Like the Titanic everyone felt that “she was too big to sink”.
    We have a skipper of that mediocre crew saying that the skipper of another crew was a tyrant who made under-performers walk the plank. VW just happens to be the Titanic under a Teutonic flag.

    How each ship got to their metaphorical iceberg may be different but the results are the same.

  • avatar
    probert

    “This diesel fiasco is immeasurable in terms of damages—so much worse than Toyota acceleration, Ford Firestone tires, or GM ignition switches. In all those cases, tragically, people died, but it wasn’t premeditated. You settle with the victims’ families, pay the fine, put in the new parts, and for $1.5 billion, it can all be contained. But this Volkswagen mess is like the disaster that keeps on giving.”

    This from Lutz, is the key. Hundreds have/will die as a result of this premeditated plan. If jail time is not meted out, another crime will have been committed.

  • avatar
    RideHeight

    Yo, lordy… what’s German got to sound like without teeth?

    • 0 avatar
      VolandoBajo

      German without teeth probably sounds a lot like German with teeth.

      It is an extremely guttural language, coming from deep down inside. I don’t expect that a couple of minor mods to the fluid dynamics of the air when it comes out at the and of the windpipe would make much difference in the overall sound.

      Now, if you were to ask the same question, only about Castilian Spanish, I expect the difference would be much more noticeable.

      That is not a knock against German, and certainly not a knock against Spanish either. It is just that the dynamics of sound production for the two languages is quite different.

      Imagine the sound of “Jawohl, mein Herr!” contrasted with “Si, mi capitan!” or something similar, with and without choppers.

      The real question is “what would German sound like if it was growled at you by Piech?”. Not a pleasant thought.

  • avatar
    wmba

    I’ve been saying exactly this about Piech here on TTAC in the comments since Sept 20.

    Last time yesterday.

    About the only thing Lutz has expounded on with which I agree.

  • avatar
    Jack Denver

    Not to defend Piech, but I think there’s a big difference between “fix the body margins or you’re out of a job” and “Do whatever is necessary to pass this government test – nudge, nudge, wink, wink”. In the former, he was just demanding that people do their jobs properly. You can disagree with his management technique but do you run the world’s largest automaker?

    • 0 avatar
      Luke42

      In the US, those kind of threats are particularly insidious because it basically means “do what I say, or your kids can’t go to the doctor.”

      As someone who was laid off (through no fault of my own) in March, that kind of threat has no place in bare knuckle business.

      But, the treat to your children is implicit in every one of those type af conversations, and people behave accordingly. Which usually means that, when given an unreasonable ultimatum, most people say say “yes, sir” and spend the rest of the day updating their resumes and LinkedIn profiles and wondering how much their wife and kids will hate them if they have to move to another town to survive.

      It’s a dirty way to play, and I can guarantee it does less for productivity than the people who do it would like to think. It does get things re-priorititzed fast, though. Reliability? Meh. Servicability? Doesn’t matter anymore. It’s all about panel gaps now, and building a good car no longer matters, because management just told them that only one thing matters – and, if you don’t deliver that, their family life will be severely disrupted.

      Germany is a different culture, of course, and so I assume the unspoken threats are different. But still just as powerful — and presumably equally below the belt.

      Large employers have a lot of power over their employees. But that power only lasts until that last paycheck arrives, which seemed to come as a surprise to the upper level managers at my old work.

      I got a lot of experience and a big raise out of this misadventure, though.

  • avatar
    hgrunt

    When I first read this article, I got about halfway through and before checking the author because it sounded like something Lutz would say. A jovial comment made by someone at a dinner party doesn’t necessarily represent how he ran the company, or the kind of culture that was there. Maybe this is the case, but maybe it isn’t but as it stands, it’s just an opinion piece.

    I see some B&B draw parallels to Steve Jobs. Jobs’s uncompromising management style was partly to create an environment where there was no incentive for imperfection. Even their employee badges are impeccable. McLaren is much the same way, from the tiles on the factory floor, to how the needle in the tach projects a dot on the inside bezel of the gauge. Good leaders will continuously push boundaries that their subordinates didn’t know could be pushed, and it does take a firm hand.

    I can hear you reaching for your keyboard to point out botched product launches and all that stuff, like Apple Maps, or the MP4-12C’s door handles. No company is perfect. There are compromises that are made, mistakes that don’t appear manifest until later, but what it comes down to is: Hardware design is difficult, manufacturing and logistics even more so. There will be compromises made during all phases, but the true test is how a company chooses what to compromise on, and how they handle the consequences.

    In the case of the diesel fiasco, VW chose this one poorly.

    • 0 avatar
      VolandoBajo

      There was a good video posted somewhere on the Net, maybe yahoo?, about why Jobs was such a good leader. Didn’t save the link, but in the ten minute or so video, taken just after he had returned to Apple, an audience member leads off that he is obviously a bright person.

      He then asks Jobs to address how Java does or does not address the issues that features in OpenDoc address.

      Jobs delivers a brilliant explanation and apology about how sometimes good features are casualties of the product design process, but that he has learned the hard way that you have to start with what the customer wants and needs, and work back to a product, instead of building a “really cool” product and then trying to convince people that they have a need or a use for it.

      He seems demanding of a high standard of quality, but at the same projects a willingness to accept some failures as part of a trial and error iterative process of product development.

      He doesn’t seem to come off as someone who tried to improve Apple by throwing his weight around and threatening people to push product out the door on schedule or else. And believe me, I have seen enough of that kind of management in my career to have a nose for the kind of manager who smiles like a shark as he terrorizes his staff into covering up problems in order to make it look like he had succeeded in delivering on time and under budget.

      Try for example hiring analysts and talking them into accepting coder pay, because they were supposed to be coding from specs for the next phase that had already been written. Then when the troops (we were basically the Hessians) got there, they found out that they were really hired to do high level analysis to fix fundamental design flaws during an earlier phase, and to turn in resource allocation sheets that showed we were coding the next phase. After all, the previous phase had already been reported as having been completed and delivered!

      I won’t mention any names, but it was our tax dollars at work. Not a unique situation inside the Beltway by far, just a clearcut example.

      In that situation, you had two choices, either shut up and go along, or move on. Fortunately I was a contract employee and not a lifer, and I chose to move on at the first opportunity.

      Ironically, while trying to ponder what I should do, and looking out an office window, I saw some of the largest vultures I have ever seen (including in Mexico), sitting on the project’s other building across the way. Don’t know if it was a sign, but it sure seemed like it at the time.

      And the end project over all was finally delivered (or so it was reported) years after target, with redefined scope, and with large additional infusions of cash. I didn’t mind missing the end “celebration” a bit on that project.

      But no, I don’t think Jobs was a ham-handed manager pushing people to pretend in order to meet goals. I think that instead, that kind of deception would be one of the few things that might have caused him to get rid of someone who was a bright engineer.

  • avatar
    Pch101

    Type “Jose Ignacio Lopez” into your favorite search engine. Not a surprising outcome.

    • 0 avatar
      VolandoBajo

      Congratulations pch, at least marginally relevant. Though the fact that the guy has been gone from VW for almost twenty years would seem to indicate that he is unrelated to current events there. Unless you are arguing that he was merely a scapegoat, and that the corruption was much more widespread and entrenched. Though I don’t know how we would be able to know if it is a case of that, or just two different bad top managers, twenty years apart.

      Got anything else that might fill in the blanks on corporate culture during that twenty year interval?

  • avatar

    I see popup window on my PC which hangs at the bottom of page and is honestly annoying. It says “Massive Volkswagen Sale Going On! Get Our Lowest Volkswagen Price Now”. Do you know how to get rid of it? Thank you. I tired of all these annoying ads popping up on TTAC.

  • avatar
    Von

    On one hand, you have a very demanding docktor professor. On the other, there is a situation that could’ve been fixed in 6 weeks, but has festered until a threat on careers were made by someone with real teeth. So…I guess what I’m saying is that if you were to play the devil’s advocate, the blame is not entirely on the old man with no teeth.

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