As with every corporate scandal, trust commentators from a plethora of marketing and PR agencies have sounded the death knell of all the hard-earned trust built up over decades by Volkswagen.
Admittedly, VW’s deception around falsifying car emissions to appear greener and cleaner has done the company no favours. Ironically, the scandal also comes off the back of a series of articles about corporate apologies in the Harvard Business Review . So there's also an element of finger wagging and "told you so" going on here by media commentators.
In the latest of these article, entitled: “What VW didn't understand about trust", writer Andrew Winston writes about the impact of the scandal on the key value of trust, saying the breach of said trust goes way beyond the 11 million cars. He believes It has an impact on the core company value - half of which are intangible assets such as trust, brand value etc. No surprise there.
But like most commentators, Winston's assertions about trust are undifferentiated and exaggerated. I call it the "Iraq fire fizzer".
This is a reference to when the US invaded Iraq and oil fields were set ablaze. At the time, experts predicted – and the media obligingly reported – the fires would burn for years, if not decades, with a profound environmental effect. But none of that happened.
My prediction is that it will be similar for VW. The breach of trust in emissions testing has an impact on only one of the 6 trust facets. In our HuTrust model we identify 6 kinds of trust that make up overall trust.
These are trust in:
- successful future development
- an appealing relationship
- a valuable benefit
- an appealing vision and purpose
- the corresponding trust in the right competencies.
In this case, the relationship trust would be most affected by VWs deception. But because VW is also highly trusted in the other 5 trust facets, the overall trust impact for most will be negligible. Furthermore, we would assume that other relationship trust aspects will continue, not eroding even this trust facet too significantly.
While we agree that trust constitutes a large part of brand and company value, as well as having an impact on immediate sales results, trust, like any asset, has to be looked at in a differentiated and logical way.
Time will tell if the headline grabbing trust commentators are right - or if we are. But if VW manages the scandal with even a modicum of competence, the financial impact will be painful but short lived. And so will be any trust issues.
Stefan Grafe is the Managing Director of Brand & Market Management Consultancy, mext. He is also the co-developer of HuTrust, a proven effective methodology to analyse and build trust.