Toyota Crisis Throws Spotlight on Japan's Corporate Culture

Feb. 24, 2010
Toyota has been criticized as too insular and parochial for the modern, global marketplace.

When Toyota's boss enters the lion's den of a U.S. Congress hearing on Feb. 24, it will be a bruising test for a corporate chieftain more used to Japan's staid, insulated management world. While Akio Toyoda has already expressed his personal contrition for Toyota's mass recall over accelerator and brake system defects, he must now brace for the full media glare and a barrage of questions in a gladiatorial setting that is far removed from the deferential world inhabited by Japanese captains of industry.

The traditional Japanese management style practiced by Toyota tends to focus on team spirit and consensus more than a boss who leads from the front, inspires with bold vision and, when necessary, bangs heads together.

In Japan, top managers often rise through the ranks while avoiding making waves through radical reforms or open disagreements with colleagues, and take the top job once they have proven themselves as a safe pair of hands.

When crisis strikes, they are expected to act with honor. Japanese bosses are often the first to take pay cuts or swap the company car for the subway when the ink turns red. When things get really bad, they resign.

Toyota, Japan's biggest company, epitomizes both the strengths and weaknesses of this corporate culture.

Its pioneering "Toyota Way", which stresses continuous improvement and the role of each worker in the production process, has inspired the "lean production" system and been studied in business schools the world over.

But Toyota has also been criticized as too insular and parochial for the modern, global marketplace. Its all-Japanese executive board is headquartered not in Tokyo but the relative seclusion of a small town near Nagoya.

The first foreigner accepted onto Toyota's board of directors, in 2007, was American Jim Press, who had spent 37 years with the company. He resigned from the post after just five months and went to rival carmaker Chrysler.

The company was caught flat-footed by the spiraling public relations disaster as its global recall crisis worsened. Its chief waited weeks before giving his first full press conference.

"They lacked a real feeling for what was happening," said Mamoru Kato, an auto analyst at Tokai Tokyo Research Centre. "They failed to sense instantly what was going on in foreign markets."

Toyoda himself was groomed to take the job his father and grandfather once held. He spent his apprentice years in several company divisions and various overseas postings.

Although he earned an MBA from Babson College in Massachusetts, his spoken English is limited and the company says he will rely on interpreters at the hearing in the House of Representatives.

He initially said he would stay away from the panel and only publicly changed his mind once he was formally invited. Kato said Toyota vice presidents advised him to stay away from the U.S. lawmakers "even though he wanted to express his willingness sooner to appear.

"Toyoda didn't have a good brains-trust around him," the analyst said.

The crisis has shown that Japanese companies -- used to far less aggressive media and consumer groups at home than in the United States -- have trouble navigating the modern publicity landscape.

"Here in Japan companies have sometimes had problems because communications have been the last thing they thought of," said Deborah Hayden, a crisis management expert at PR consultancy Kreab Gavin Anderson Japan. "This particular issue is probably a wake-up call for Japanese companies to actually consider the planning and the strategic impact of communications. All companies are not necessarily as global as they think they are."

Noriko Hama, economics professor at Doshisha Business School in Kyoto, agreed that corporate "Japan needs to adapt itself better to the 21st century".

"It seems that their system and their practices have been okay up to now -- but not any more in an overwhelmingly globalized environment."

Copyright Agence France-Presse, 2010

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