In the mid-2000s, Volkswagen set an aggressive goal: to become the world’s largest automaker. To reach its goal, VW would need to make a huge dent US market. A key part of this strategy was the “clean diesel” engine, designed to meet America’s stringent emissions standards while still delivering the performance drivers expected.
There was just one problem–the engineers couldn’t get the engine to meet both standards simultaneously. Faced with this dilemma, a series of misaligned and unethical decisions were made at multiple levels of the company. Instead of reporting the technical failure, Volkswagen engineers deliberately programmed a “defeat device” into their diesel engines.
The fallout, when the truth was finally exposed in 2015, was catastrophic. The “Dieselgate” scandal led to the resignation of the CEO, criminal charges against executives, and a stock price plunge that wiped out a third of the company’s value. The financial cost has exceeded $32 billion in fines, settlements, and recall costs.
Beyond the financial devastation, the scandal shattered customer trust and had a real human cost. Researchers have linked the excess pollution to thousands of premature deaths worldwide. It stands as a monumental example of how a series of decisions, misaligned with ethics and long-term values, can bring a global giant to its knees.
Understanding Decisions and Governance
In the 7 D’s Business Alignment Framework, the Decision dimension (also known as “governance”) is about:
- Who decides
- How decisions are made
- When decisions are made
- What strategy is driving those decisions
- What guardrails limit the decision-making process
Companies make hundreds of choices a day, from one-way strategic bets to reversible operational calls. Decision alignment means those choices consistently reflect your Destiny (where we’re going) and your DNA (how we behave), are made at the right level, and are executed with clarity and speed.
When decisions are aligned, the business moves with coherence and integrity. When they’re not, you see zig-zag strategies, ethical mishaps, bottlenecked founders, and teams that hesitate because the criteria and call-makers are unclear. Think of aligned decision-making as installing a reliable compass plus a map: everyone—from CEO to frontline—knows the direction, the rules of the road, and who has the wheel for each turn.
Symptoms of Decision-Making Misalignment
- Strategy zig-zags: Quarterly U-turns on major priorities without a stable north star.
- Paralysis & bottlenecks: Minor calls escalate to the top; teams wait instead of act.
- Back-channeling: Real decisions happen after the meeting, outside the process.
- Reopened calls: Leaders revisit settled decisions, eroding ownership and speed.
- Inconsistent treatment: Similar customer/employee cases handled differently; no shared rubric.
- Rationale fog: No crisp “why”; justifications shift by audience or after the fact.
- Pet projects > priorities: KPI theater used to bless favorites over the plan.
- No success criteria: Decisions lack clear outcomes, reviews, or owners.
- Over-studying easy reversals: Two-way doors analyzed to death; learning slows.
- Under-vetting one-way doors: Big, hard-to-reverse bets made with thin scrutiny.
- Chronic lateness: Approval SLAs slip; windows close before calls are made.
- Exception creep & ethics drift: “Just this once” becomes policy; conflicts go undisclosed.
Why Misaligned Decisions Hurt
When decision-making isn’t aligned, a company can quickly lose its way. The Volkswagen scandal is a stark illustration of the consequences. The series of decisions to cheat on emissions tests was a moral temptation where the wrong path was chosen for short-term gain.
This was driven by a culture that prioritized aggressive sales goals over ethical considerations. The fallout was devastating: billions in fines, a shattered reputation, and a profound loss of trust from customers, regulators, and the public. It demonstrates that misaligned decisions, especially unethical ones, create a debt that will eventually come due, often with catastrophic interest.
Conversely, aligned decisions build strength over time. Think of Johnson & Johnson’s Tylenol recall in 1982. That decision to recall all Tylenol pills nationwide was hugely expensive short-term.
But it aligned perfectly with J&J’s credo of customer safety first. The result: they preserved trust in the Tylenol brand, which regained market share within a year. Decades later, people still cite that case as the gold standard of ethical crisis management.
Aligning Decision-Making
Now, how do we ensure decisions large and small stay aligned?
- Establish Decision Principles (“Guardrails”): These are like your company’s decision-making constitution. They derive from your DNA (values/mission) and Destiny (vision). CVS’s guiding principle was clear: any action must be consistent with their purpose of “helping people on their path to better health.”
- Use a Consistent Decision Process for Big Decisions: This could mean having a leadership meeting template: clarify the decision to be made, list options, weigh them against your principles and data. Using a framework reduces impulsive knee-jerk moves.
- Decentralize with Empowerment: Once principles are set, push decisions outward to the people closest to the action. Encourage employees to make decisions by referring to the values/vision. Zappos famously empowers its customer service reps to take unusual steps to make a customer happy without needing supervisor approval, because “delivering WOW service” is a core value.
- Learn and Adjust: Not every decision will be perfect. What’s important is to review significant decisions and outcomes: Did that choice uphold our values and move us toward our goals? If not, discuss openly and learn why.
A Case Study in Good Decision Making
In February 2014, CVS Caremark made a stunning announcement: it would stop selling all tobacco products in its more than 7,600 stores nationwide by October 1 of that year. The decision was a landmark in corporate social responsibility. It was also a massive financial gamble.
The company estimated the move would cost it approximately $2 billion in annual revenue ($1.5 billion from tobacco sales and another $500 million in associated purchases made by tobacco customers).
For a publicly traded company, voluntarily sacrificing such a significant revenue stream was almost unheard of. However, CEO Larry Merlo framed the choice not as a financial loss, but as a strategic necessity. As CVS was evolving from a retail pharmacy into a broader healthcare provider with in-store MinuteClinics and a massive pharmacy benefits management arm, the internal contradiction of its business model had become untenable. Merlo stated, “The sale of tobacco products is inconsistent with our purpose—helping people on their path to better health”.
The public reaction was overwhelmingly positive. The move was praised by public health officials, anti-smoking advocates, and even then-First Lady Michelle Obama. More importantly, the decision had a measurable impact. A peer-reviewed study found that in the months following the ban, cigarette purchasing declined significantly, with 100 million fewer packs sold in the first year alone. By making a difficult, values-based decision, CVS didn’t just earn good press; it fundamentally realigned its business with its new identity as CVS Health.
Quick Wins to Align Decisions
- Articulate a “Decision North Star” and share it. Boil down your decision-making ethos to a catchy mantra or question that everyone can remember. For example, an outdoor gear company might use, “What’s best for the customer and the environment?” as their decision north star question. Introduce this at a team meeting.
- Decision Post-Mortems (on a minor scale). Pick a recent decision your team made. In a team huddle, briefly discuss: Did the outcome align with our intended values and goals? What can it teach us? Keep it blameless and curious. These mini post-mortems instill a habit of reflective decision-making.
Above all, create an environment where values-based and vision-oriented decisions are celebrated. When someone makes a call that exemplifies alignment, share that story as positive reinforcement. Over time, this fosters “empowered alignment”—your people will make the right calls even when you’re not in the room.
