Recently, I came across a lecture by Professor Lv from the National Taiwan University on Coursera, telling the story of the first emperor in ancient Chinese history. Among them, Shang Yang, a famous reformer in Chinese history, aroused my great interest. I attempt to analyse Shang Yang’s reforms and compare them with the recent reforms of Volkswagen Group CEO Herbert Diess, hoping to glean some experience.
Shang Yang is a very important figure in Chinese history. He was a significant reformer during China’s Warring States period, as well as one of the representative figures of the ancient Chinese Legalism. Shang Yang’s reforms, known as the Shang Yang Reforms, were a major change in ancient Chinese history, which significantly drove the power of the Qin dynasty.
Shang Yang was born in the Wei dynasty(now Weixian, Henan), and his family was the nobility of Wei. As a young man, Shang Yang went to the Qi dynasty to study, becoming a student of Gongsun Long, the founder of the Legalism. While studying in Qi, Shang Yang delved deeply into Legalist theory, developing his own political and reform concepts.
In 362 BC, Shang Yang arrived in the Qin dynasty. At that time, the power of the Qin dynasty was relatively weak. Shang Yang proposed a comprehensive reform plan to Duke Xiao of Qin, known as the Shang Yang Reforms. This plan mainly included land reform, military reform, and political reform. Shang Yang’s reforms resulted in rapid economic development in the Qin dynasty, greatly enhancing the dynasty‘s power.
However, Shang Yang’s reforms also sparked resistance from some nobles and the existing power hierarchy. In 338 BC, Shang Yang was killed, with his death being an extremely cruel form of execution he himself invented – dismemberment by five horses.
Shang Yang’s story tells us that reform is an extremely difficult thing, requiring great courage and determination. However, only through reform can a nation and society progress and prosper. Shang Yang’s story provides those studying business society with an example of how to drive socio-economic development and increase productivity through reform. His story also reveals the importance and complexity of reform. Reform requires not only a well-considered plan and firm determination, but also sufficient authority and influence to overcome resistance from various quarters.
There are many ways in which Shang Yang’s story can be applied to business research. Firstly, Shang Yang’s reform plan is essentially a strategic decision, which is an important lesson for business leaders. Business leaders need to have clear strategic goals and the courage and determination to implement changes. Secondly, Shang Yang’s story also reminds us that reform always meets resistance, especially when it touches upon vested interests. Therefore, business leaders need to have strategies and wisdom to deal with and overcome these resistances.
In sum, Shang Yang’s story is one about reform, leadership, and strategic decision-making, which provides significant insights for business leaders and researchers.
We can examine why Herbert Diess was dismissed.
The real reasons for the dismissal of Herbert Diess are complex, but the main issues seem to revolve around his internal conflicts at Volkswagen, and the failure of several key projects he was promoting. What follows are some reasons that I think are crucial:
1. Loss of support from the Porsche family:
The Porsche family is a major shareholder in Volkswagen, and they were very supportive of Diess’s vision for an electric future, including innovative models such as Volkswagen’s ID.4 and the upcoming ID. Buzz. However, a deterioration in Diess’s relationship with the Porsche family resulted in him losing this strong backing.
2. Failure of key projects:
The apparent main cause of Diess’s departure seems to be the underperformance of the Cariad department, which is responsible for developing the next generation of autonomous driving software within VW. The department’s progress was significantly behind expectations, leading to a one-year delay for the Macan EV and consequently delays for Volkswagen’s entire product portfolio, including brands like Bentley and Audi. These brands bring in a substantial amount of cash for the group, and adjusting release dates is a sure way to upset shareholders.
3. Inability to effectively resolve software issues:
Volkswagen’s software problems have been in the public eye in recent years. For instance, the launch of the ID.3 was delayed in 2020 because the software was not ready, and even when the vehicle arrived in its 1st Edition form, some functionalities were missing. These issues can be traced back to 2019, before the launch of the ID. series vehicles. Even now, if you frequently visit online communities specifically discussing Volkswagen’s ID.3 and ID.4 cars, you can still see that problems persist.
4. Employee dissatisfaction:
Diess’s tough stance sparked controversy in Germany’s union-strong automotive industry. Although he drove Volkswagen’s transformation, his internal conflicts within the company seem to have impacted his career as well.
It’s important to note that while we as laypeople can glean these details from public reports, the actual situation may be more complex, as the decision-making processes and dynamics inside companies are typically not fully disclosed. Nevertheless, from the currently available information, there appear to be some similarities between Herbert Diess’s experience at Volkswagen and the experiences of Shang Yang:
1. Role of reformer:
Both Shang Yang and Herbert Diess are viewed as reformers in their respective fields. Shang Yang is renowned for implementing Legalist reforms, reshaping the Qin state’s legal, military, and economic systems. Similarly, Diess also spurred a transformation in the automotive industry by vigorously promoting Volkswagen’s transition to electric vehicle production, making it a leader in the electric vehicle revolution.
2. Challenging established order:
Shang Yang’s reforms shook the existing privileges of the nobility, inciting opposition from the aristocracy and existing power strata. Diess’s electric vehicle strategy and promotion of new technology also challenged traditional modes of car production and sales, possibly inciting some dissatisfaction internally and among shareholders.
3. Failure of reforms and dismissal:
Both Shang Yang and Diess were ousted due to failures in some aspects of their reforms. Although Shang Yang’s changes temporarily bolstered the Qin state’s strength, overly strict laws and excessive nationalisation incited dissatisfaction among the people and nobility, leading to his reputation declining in the public eye and ultimately his execution. For Diess, his commitment to electric vehicles and the lagging of the Cariad department (responsible for developing next-generation autonomous driving software) may have lost him the support of shareholders, leading to his eventual dismissal.
4. Lasting impact of reforms:
Even though both Shang Yang and Diess have left their positions, their reforms have had a profound impact on their societies and industries. Shang Yang’s legal reforms allowed the Qin state to accumulate power in the short term, laying the foundation for its unification of the six states and establishment of the Qin Dynasty. While Diess is no longer CEO, his work at Volkswagen has driven the company and the entire industry towards a transition to electric vehicles, a trend that may continue despite his departure potentially having some impact on this process.
Despite Shang Yang and Herbert Diess being figures separated by over 2000 years, their experiences provide important lessons about change:
1. Deep understanding and respect for the status quo:
When implementing change, it’s critical to understand and respect the existing culture, customs, and power structures. Shang Yang’s reforms in Qin directly challenged the power of the nobility, which led to hostility among the nobles and the people. Similarly, Diess’s electric vehicle strategy may also have challenged Volkswagen’s traditional car manufacturing business, causing internal discontent. Therefore, when pushing for reforms, it is important to understand and respect the existing organizational structure and culture as much as possible.
2. Communication and ongoing collaboration:
Driving change requires continuous communication and negotiation to gain support from multiple parties. Shang Yang’s reforms may not have sufficiently taken into account the needs and views of all stakeholders, which could have exacerbated the opposition against him. Diess also may not have been able to effectively address shareholder and employee concerns about his strategy. Open communication and continuous collaboration are key when driving change.
3. Flexibility and adaptability:
Change may require a balance between adhering to principles and being flexible. Shang Yang’s laws may have been too strict, lacking sufficient flexibility to adapt to various situations. Diess’s insistence on electric vehicles may also not have taken into account other company needs and real-world challenges. Flexibility and adaptability are necessary when driving change, to handle constantly changing circumstances.
4. Long-term vision and patience:
Change often takes time to show results, so a long-term vision and patience are needed. Both Shang Yang and Diess drove significant changes in their respective fields, the impacts of which may take years or even decades to fully manifest. When pushing for change, a long-term vision is needed, along with the patience to wait for results.
These lessons don’t guarantee success in implementing change, as every situation has its unique circumstances. However, they provide a framework for thinking about change that can help us better understand and handle the challenges of change.