From today's WSJ:
WOLFSBURG, Germany—Soon after Matthias Müller took the helm at Volkswagen AG in the wake of its emissions-cheating scandal, he walked into a factory here to address 20,000 workers gathered before a makeshift stage carpeted in the company’s trademark silver color.
“I’d like to rip this carpet out,” he barked, according to two people present. The new chief executive didn’t want to be treated like royalty, he said, because Volkswagen managers are businessmen, not rock stars.
When Mr. Müller in September promised to change Volkswagen’s culture, many observers expected just business as usual. But he has surprised company veterans and outsiders by starting to dismantle an unyielding hierarchy that critics say laid the seeds of the emissions scandal rocking the company.
After yanking the carpet, Mr. Müller jettisoned an even starker symbol of Volkswagen executive privilege, the corporate Airbus jet, though it retains several smaller planes. And he has accelerated decision-making.
“The difference is like night and day,” said Andreas Renschler, the board member running Volkswagen’s truck business who joined from Daimler AG last year, in an interview. “We all realize that the crisis gives us a huge opportunity to change the company.”
And despite upheaval under Mr. Müller the company needs deeper transformation, say insiders and outsiders, but faces opposition to those efforts.
Mr. Müller aims to jump-start change by hiring outsiders and pulling the rug from under a generation of second-tier managers groomed in the old culture. He also wants to change the company’s culture, starting from the top.
The new CEO usually leaves his office door open, a notable contrast to his predecessor, Martin Winterkorn, who permitted few people near his office.
Ideas for many changes afoot began under Mr. Winterkorn but Mr. Müller is accelerating implementation and has vowed to present a new global strategy by midyear. He has eliminated three positions on the management board and replaced more than a dozen senior executives, including the CEOs of Volkswagen’s Skoda, SEAT, and Lamborghini units.
At Porsche, which Mr. Müller ran until September, he elevated production chief Oliver Blume, a 47-year-old engineer and amateur soccer player. Mr. Blume was critical in building the capacity to help double Porsche’s sales in five years.
Mr. Müller has leapfrogged a generation of executives who made their careers kowtowing to the company’s autocratic executives, assuming obedience meant advancement, say veterans. In their place Mr. Müller has installed outsiders and younger executives, many with no ties to the old regime and hungry for change. They now have more autonomy than their predecessors ever imagined possible.
The new chief also has attacked its executive bureaucracy. Under Mr. Winterkorn, the CEO’s position became a bottleneck for decisions ranging from shifts in corporate strategy to the angle of windshields. Crucial decisions, such as the right product mix for the U.S. market, never got made.
“Strategy, synergies, and driving the issues of the future—that’s how I see our, my role on the management board,” he told his top team at a management summit in October. “Whether the windshield is one degree steeper or not, that’s something I won’t and don’t want to get involved with.”
Since then, he has nearly halved the number of executives reporting directly to him, to about 17.
He filled two key new positions on his team with outsiders: chief of strategy and chief of digitization.
His new strategy chief is Thomas Sedran, 51 years old, whom he poached from Adam Opel, the German unit of General Motors Co., where Mr. Sedran helped draft survival plans during GM’s bankruptcy. He must now draft a global game plan for Volkswagen’s 12 brands.
Looking further ahead will be the digital chief. At Porsche, Mr. Müller quipped that the sports cars wouldn’t become “smartphones on wheels” but he takes the threat from Silicon Valley seriously and poached Johann Jungwirth from Apple Inc.
‘We are moving faster. ’
—Klaus Bischoff, VW chief designer
The 42-year-old engineer worked as a researcher for Daimler AG’s Mercedes-Benz car unit before joining Apple’s special projects group, where outsiders believe he worked on the AppleCar project.
As a leader, Mr. Müller is known for promoting dialogue, taking controversial positions and occasionally shooting from the hip. Unlike his predecessor, he doesn’t appear to brood over decisions. Speed could be an asset given the need for sweeping change and crisis response.
“There is no more hemming and hawing,” Klaus Bischoff, chief designer at the Volkswagen brand, said in an interview. “They make decisions, we are moving faster.”
Michael Horn, president and chief executive of Volkswagen Group of America, used to wait months for responses from Wolfsburg. Now, he says, he has Mr. Müller’s mobile phone number and is encouraged to call.
Mr. Müller’s makeover faces pushback from labor. Workers control half the seats on Volkswagen’s supervisory board, comparable to a U.S. board of directors, and have a strong ally in the state of Lower Saxony, which owns 20% of the voting stock and holds two seats on the board. Volkswagen is the largest private employer in the state.
Bernd Osterloh, the powerful boss of the company’s labor council, warned recently that plans to boost productivity at Volkswagen’s German factories were causing “unease” among workers.
“We will not support a further drive toward performance,” said Mr. Osterloh, adding job security is a given.
The IG Metall trade union, which represents Volkswagen’s nearly 300,000 German workers, has threatened to strike if management tries to use the emissions-cheating scandal to forego wage increases this year.
And despite significant changes inside Volkswagen, some outside investors say more change is needed in its corporate governance.
Yngve Slyngstad, head of the Norwegian state pension fund, one of the biggest investors in the world, recently complained that the Porsche and Piëch families, which have controlled Volkswagen since 2009, continue to hold an iron grip over the company.
Write to William Boston at [email protected]
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