Design flaws that blight German business – FT.com

Scale also exacerbated a problem that VW shares with many of Germany’s best-known companies: an excessively centralised corporate structure. Business has failed to learn the lessons of ancient Rome, which thrived in large part because of the autonomy of its provinces. Its unwieldy corporate empires look more like Prussia.

The tight chain of command has played a large part in enabling Martin Winterkorn to build VW into a formidable manufacturer in his eight years at the top. But centralisation can be an impediment. It encourages managers to spend energy defending their fiefdoms, and can reward executives for telling their superiors what they want to hear, leaving headquarters without the sensory system it needs.