Was ousted Volkswagen Group chairman Herbert Diess a victim of the frozen middle? The suspicion that the Tesla-admiring Diess was given the push from VW because he failed to convince change-resistant junior managers – the so-called frozen middle in business terminology – is hard to ignore.
Volkswagen is a difficult ship to steer at the best of times, and Diess was in charge of overseeing the biggest structural change to the company since it rebuilt following its industrial involvement in the Second World War.
He was hired from BMW in 2015 as Volkswagen brand chief and made overall group chairman in 2018. His lack of previous history at the group following the scandal of Dieselgate was a big plus in his appointment, but that lack of a past network within the company might have cost him when it came to pushing through changes.
Volkswagen’s pivot to electric started with his predecessor Matthias Müller in 2016 with the unveiling of a concept that strongly hinted at the 2020 VW ID 3. But after Müller’s ousting, it fell to Diess to implement the plan and it was on him that the blowback was directed from the German workforce and their representatives when it became clear just how disruptive the shift to electrification was going to be, particularly when it came to jobs.
Diess was often publicly admiring of the disruptive force unleashed by Tesla and its CEO, Elon Musk. It was often reciprocated too. “Diess deserves a lot of credit for moving VW rapidly towards electrification. They’re lucky to have him,” Musk tweeted in April this year.
Volkswagen’s supervisory board backed Diess in his plan to spend big on new technologies, with the bill coming to €73 billion between 2021 and 2025, or 50% of total investments. Volkswagen has always been vertically integrated, and Diess wanted the same control over the new technologies such as battery production, software and autonomous driving. The list included moving to a direct sales model, and were all strategies that have proven to work at Tesla.
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