There was a time, and not all that long ago, when America was enthralled with any business story with a connection to Japan. We were convinced that their global tactics, their commitment to quality control and of course, their management style was far superior to anything we could claim. Today we see that temptation plays in the International world of business ethics.
There were cautions to the contrary. For example, all of their world class quality control methodology did not originate in Kyoto, but in Sioux City, Iowa, and the philosophy of W. Edwards Deming. We may not have followed those philosophies, but they were there for the taking, and we ignored them.
Over the past few decades, we have seen examples of Japanese management arrogance and their unwillingness to accept help. The Fukushima Daiichi nuclear power plant disaster took place in March 2011, and to this day they have under-reported its magnitude and consequences to the world.
Understand please, that I am not Japan-bashing. I am only expressing the obvious – Japan is fundamentally no different than any other business environment of any other world power. They have ethical dilemmas, and though cloaked in culture, they are subject to the same abuses as any other country. This fact was made abundantly clear this week with manufacturing powerhouse Toshiba.
In an Associated Press article by Yuri Kageyama (July 21, 2015) entitled: “Toshiba CEO resigns over doctored books,” we learn:
“Toshiba’s chief executive resigned to take responsibility for doctored books that inflated profits at the Japanese technology manufacturer by 152 billion yen ($1.2 billion) over several years.
Toshiba Corp. acknowledged a systematic cover-up, which began in 2008. Various parts of the Japanese company’s sprawling business including computer chips and personal computers were struggling financially, but top managers set unrealistic earnings targets under the banner of ‘challenge,’ and subordinates faked results.”
The Hierarchy
Japanese companies have an established hierarchy. Upper management can be stubbornly independent and insulated from criticism and their top-down directives, no matter how unreasonable or irrational, are forced on employees as goals to be met.
Toshiba called it “The Challenge Initiative,” and it was akin to forcing blood from a stone. The expectations were wholly unrealistic. In Japan, losing or leaving one’s job is a terrible thing and so the managers, department heads and executives were left with a set of choices.
There is a popular term for the Japanese executive; he (and by and large it is a he) is called a Salary Man. They dress pretty much the same and work pretty much the same; long hours, never overtime, late hours socializing with co-workers. Occasionally, there is another term, Karōshi; it is when a salary man works himself to death.
At some point, presumably around 2007/2008, one salary man looked at another and asked, “How many hours in a day?” Meaning, if there were 30 hours in a day they still could not meet expectations. Worse, upper management knew it as well.
As time went on, and in connecting the dots, the very same electronics that were part of the failed nuclear reactor in Fukushima, were made by Toshiba. Nuclear reactors in Japan and around the world that employed Toshiba parts went off-line as confidence was lost in their technology. The loss of reputation of the company was only exacerbated as the $1.2 billion difference was made public.
Instead of making an honest and realistic evaluation, analyzing their business problems and then announcing they could not meet expectations, the great Japanese company of Toshiba decided to “cook the books.” They inflated their income, over-reported their sales, and committed one of the most unethical acts a company can make; they consistently lied to their shareholders and to the market. The stock price floated on a cloud of lies and fantasy.
When the former CEO of Toshiba, Hisao Tanaka, bowed in deep apology and shame, I did not see the shame of a Japanese executive; I saw the result of hundreds of bad choices leading to a predictable consequence.
While it is easy to gloat, Tanaka’s shame was no different than the face of any other executive regardless of nationality or industry. In my career as an ethics speaker and consultant, I have seen many such faces.
Tanaka’s sad face was, for a while, the face of the company. However the true face was the invisible face of investors and stakeholders who were harmed by his unethical actions.
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