Businesses depend on the trust of their customers to survive. But to paraphrase the old saying, a brand can take years to build and seconds to break.
Automaker Volkswagen faces a monstrous rebuilding job after seeing its reputation shattered by an emissions-testing scandal. Though all is not lost, companies must confront the loss of trust, according to Dan Ariely, a professor at Duke University's Fuqua School of Business and founding member of the Center for Advanced Hindsight.
"The problem is that violation of trust is not just a single event," said Ariely, the author of four books including The Honest Truth About Dishonesty. "Imagine that you've been married to your wife for 20 years and you have a one-night stand. You come clean and say, 'Look, it's only happened once in 20 years, the odds that it will happen again are very low.' But that's not how we treat it. It's not just about the single violation — it's something that you've learned about the other person."
In September, the Environmental Protection Agency cited Volkswagen for illegally programming some 11 million vehicles to meet emissions standards only while being tested. On Oct. 1, the firm's top U.S. executive Michael Horn apologized to Congress but denied there was any large-scale conspiracy at the company.
Horn did, however, concede that the vehicles had been intentionally programmed to cheat emissions tests. That, Ariely said, is what makes this hit to Volkswagen's reputation so immense.
"This idea of intentionality is that we don't just judge the outcome of what people do, we judge what they intended to do," he said. "That's why we have very different penalties for people who contemplated murders, versus people who were emotional about it. This is why if somebody plans something in minute detail, and tries to defraud, we feel that it says something much, much worse about them as an individual.
"In the Volkswagen case, it's not just the dishonesty," he said. "If there was just a bug in the software but nobody did it on purpose, or it was an honest mistake, the damage could have been the same, and we would have been upset about it. But the intentionality behind it tells us something about this company. They have portrayed themselves in a certain way, and have relied on our trust in a certain way, and then betrayed it."
Still, Ariely, said, there is good news for companies in this position.
"People have a tremendous willingness for forgiveness," he said. "We do understand that people make mistakes from time to time. We have all made mistakes. So the question is, will companies ask for forgiveness? If they do, I think people will forgive them and there's a way to move forward. But what you need to do when you ask for forgiveness is say, 'Here are the things we've done wrong and this is how we are going to prevent ourselves from doing this again.' Without this kind of reckoning, acknowledging the sins and apologizing, I don't see a way forward."