Volkswagen needs leaders who can make sense of its challenges
Carmaker will have to cultivate capacity to improvise as it navigates the profound uncertainty it faces
Volkswagen chief executive Oliver Blume calls it “the greatest transformation our industry has ever seen”. To withstand accelerating and overlapping technological, demographic and competitive pressures, he is now considering closing four of the carmaker’s factories in Germany and cutting as many as 100,000 jobs.
VW workers can’t say there was no warning. A week or so before the restructuring leaked last month, Blume told shareholders the group had “mapped out a clear plan for the future”. Strategic actions to make the group “faster and more effective” include “leaner processes” and “clearer decision-making paths”.
The problem is that for VW, as for many companies, the future is not clear, and no amount of planning will make it so. VW does not need more decision makers; it needs more sense-makers.
Sense-making is a way of understanding uncertain, fast-evolving situations — in other words, coping with the world as it is. Sense-making leaders quickly develop a shared understanding of the new reality, giving team members the confidence to move forward.
The guru of this approach, though he would have laughed at the title, was the psychologist and organisational theorist Karl Weick, who died in May aged 89.
“Where others asked how organisations make decisions, allocate resources, or process information, Karl asked something more unsettling — how do people figure out what is happening at all?” wrote Kathleen Sutcliffe of Johns Hopkins Carey Business School, in one of many online tributes.
Much of Weick’s work focused on crises, as in his influential book Managing the Unexpected, co-authored with Sutcliffe, and how “high-reliability organisations”, such as air traffic control centres or nuclear plants, avoid them.
Increasingly, though, waves of disruption — pandemic, war, inflation, AI — mean his insights are applicable to leaders at all organisations. They are embroiled in what feels like endless crisis management. Commentators glibly urge them to practise “adaptability” and “agility”. Weick’s work suggests how.
One of his most famous papers used the fatal 1949 Mann Gulch wildfire in Montana to illustrate how disorientation in the face of unexpected challenges can lead to calamity. Trapped by a fast-moving fire, all but three of a team of 16 firefighters perished after failing to heed an order from their boss to “drop their tools”, which were impeding their escape.
Think of VW engineers, steeped in the traditions, processes and organisational hierarchies of nearly a century of successful, profitable car manufacturing. To meet the competitive threat posed by Chinese rivals, selling cheaper electric vehicles, they are being asked, in a sense, to drop their old tools and adopt counterintuitive approaches. It should be no surprise if, like the Mann Gulch firefighters, they have the “frightening feeling that their old labels [are] no longer working”, as Weick wrote in a paper on the disaster.
What sort of leadership does this perilous moment require? Neither “extreme confidence” nor “extreme caution”. “Both can destroy what organisations need in changing times,” he wrote, “namely, curiosity, openness and complex sensing.”
Weick was determined to study the dynamic act of “organising” not static organisations. He recognised that, faced with the unknown, sometimes the only way forward was not to follow a map but to take action and respond to the consequences. A jazz enthusiast, he used the genre to illustrate his point: the performance evolves as the musicians play, improvising within an agreed framework of musical key and rhythm. In the 2015 edition of Managing the Unexpected, he and Sutcliffe expressed their impatience with the idea that organisations had to “change or die”. Instead, they advocated “continuing adaptation”.
In interviews and profiles, Blume has been depicted as an uncommonly good listener. That is heartening for VW. One key attribute of well-run organisations is mindfulness: not regular meditation sessions, but an unusual attention to any signals that may presage problems.
VW’s future now depends on Blume’s ability to cultivate in himself and his staff an improvisational capacity to meet the huge challenges they face and a willingness to correct course if his “clearer decision-making paths” lead nowhere. He may not succeed, so deeply embedded is VW’s industrial culture. But like business leaders everywhere, he has no choice but to try, and to go on trying, because, as Weick once wrote, “no sooner do people make sense of the world than that sense is out of date”.