Grading VW’s Mathias Müeller: 6 Takeaways for All CEOs in Handling a Crisis

From getting to the bottom of who rigged the tests to holding criminal prosecutors at bay, meeting the information demands of regulators on several continents; protecting VW against the tens of billions of dollars of likely government penalties and legal damages; dealing with the huge blow to sales and brand equity around the world; figuring out how to compensate owners of the cars in question; reconstituting a top-management team; stemming the internal cultural damage; coping with restive and powerful labor interests; going back to the drawing board on an American-market strategy now in tatters; and keeping frustrated U.S. dealers in the fold, Müeller is one CEO who has got his hands full with problem solving.

As a CEO yourself, how do you think he is performing? And is there anything you would do differently? From his mountain of difficulties, we’ve crafted several suggestions on how other CEOs might handle a similar situation.

“Volkswagen always has been a joint enterprise with Germany’s powerful labor unions, which represent VW workers, and Müeller wisely has moved to keep them in the same camp with management.”

1. Create some room to work. Müeller has made it clear from the moment he took over from scandal-damaged Martin Winterkorn in September that it would take a long time for him to figure out and address all the implications of the scandal and, of course, to restore the company to its former glory. He probably had no idea when he said that just how many layers of difficulty he would uncover in subsequent months, but Müeller was wise not to promise on Day One that he’d have Dieselgate wrapped up by Christmas.

2. Get to the bottom of things quickly. On the other hand, it has now been several months since Müeller promised to figure out exactly who the perpetrators were, and their identities still haven’t been finalized. He made a strong point of insisting that just a few bad apples within Volkswagen engineering caused this disaster, but despite all the resources that Müeller has trained on getting to the bottom of things, he hasn’t been able to do it yet. This has kept the CEO from notching an important victory and moving on: fingering the bad guys and reassuring everyone that justice is being done to them.

3. Don’t get lost in translation. Müeller’s first big foray as CEO into the crucial U.S. media throng was a disaster. Whether through a flawed strategy or unforeseen difficulties in communication, at an event in Detroit before the North American International Auto Show in January, Müeller downplayed the company’s moral failings in an interview with National Public Radio, insisting that the company “didn’t lie” to regulators when first asked about emissions cheating. After an uproar about his remarks, Mueller apologized and insisted that noisy surroundings for the first interview were responsible. Then he dutifully said, “We fully accept the violation.”

4. Keep your friends close. Volkswagen always has been a joint enterprise with Germany’s powerful labor unions, which represent VW workers, and Müeller wisely has moved to keep them in the same camp with management. This month, Mueller agreed to jointly develop a long-term strategy with the head of the company’s works council after labor leaders had complained about executive bonuses and cost cuts in the wake of Dieselgate.

5. Protect the good guys. From nearly the beginning of Dieselgate, one of the few VW executives whose integrity has stood out was Michael Horn, who had been named head of VW Group in the United States at the end of 2013. He was well-liked by U.S. dealers who in 2014 began dealing with a paucity of new products that was hurting their sales, and last fall he apologized for Dieselgate on behalf of the company. Mueller kept Horn on for a while, but he mysteriously departed a few weeks ago, contributing to a revolt among American dealers that is still reverberating.

6. Take aim at the underlying culture. How could Dieselgate possibly have happened? Müeller’s most important long-term task is changing the culture at Volkswagen that brewed the cheating in the first place. He certainly recognizes this priority, and early in his tenure took symbolic actions such as jettisoning the corporate Airbus jet for executives and accelerating decision-making. But he hasn’t been able to do much so far about the cronyism and bureaucracy that long have stifled Volkswagen, and Mueller probably won’t be able to get to that agenda item until after he has dealt with all of the more immediate demands of the scandal.