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What does the firing of Olympus’ CEO teach us about Japan?

What does the firing of Olympus' CEO teach us about Japan?

Outsted Olympus CEO and President Michael Woodford. (Yuriko Nakao/Reuters)

Japanese camera and precision-technology maker, Olympus, announced the firing of its president and CEO, the Briton Michael Woodford, last Friday. Woodford, one of the few foreign CEOs in Japan, apparently ruffled some feathers in Olympus’s hierarchy, leading to culture clash. The firing of Woodford illustrates how Japanese values are sometimes at odds with Western, and this lesson can help the West understand how things are done in Japanese society.

Like Sony CEO Howard Stringer, a Welsh-born American, and Nissan Motors President Carlos Ghosn, a Lebanese-Brazilian, Woodford was hired on the hope that his foreign ideas would bring much-needed change to the company. Because of the indirect nature of the Japanese character and communication style, along with the Japanese values of harmony and group consensus, Japanese CEOs tend to be indecisive, and meetings in Japan are usually long-drawn-out with little being discussed. Foreign CEOs are hired to be decisive and rapidly change a company’s direction. It appears Woodford was fired for doing exactly what he was hired to do.

Tsuyoshi Kikugawa, Woodford’s predecessor who’s still a powerful chairman at Olympus, said: “We hoped that he could do things that would be difficult for a Japanese executive to do. But he was unable to understand that we need to reflect a management style we have built up in our 92 years as a company, as well as Japanese culture.”

Kikugawa also said: “(Woodford) ignored our organizational structure and made decisions entirely on his own judgment. I told him repeatedly he couldn’t do that, but he didn’t listen.”

Woodford would often bypass Olympus’s hierarchy and communicate directly with rank-and-file employees. This is in line with the Western ideal of equality, but clashed with Japan’s ideal of Confucian-based social hierarchy. Woodford probably saw the hierarchy as inefficient, especially if those in the middle didn’t agree with his ideas and intentionally dragged their feet in implementing his commands. Bypassing the hierarchy is unforgivable in Japan. Those being passed over take it very personally, complaining of their feelings being hurt and believing they are being sabotaged. A Westerner would say: “It’s not personal. It’s strictly business.”

Some light was shed on Olympus’s harsh corporate culture earlier this year when an employee sued the company and won 2.2 million yen ($29,000) after being unfairly transferred for relaying a supplier’s complaint to his bosses.

If Olympus hopes to survive and compete in the modern, transnational economy, it needs to modernize its corporate culture. Olympus stock made a rapid turn-around after Woodford was chosen as CEO six months ago, due largely to his aggressive cost-cutting measures in the company’s European operations, but plunged drastically after Woodford’s dismissal last week.



Dustin Dye

Dustin Dye is the author of the YAKUZA DYNASTY series, available through the Amazon Kindle.

He lived in Okayama, Japan, where he taught English at a junior high school through the Japan Exchange and Teaching Program for three years. He is a graduate from the University of Kansas, where he received a bachelor's degree in anthropology.

His interest in Japan began in elementary school after seeing Godzilla fight Ghidorah, the three-headed monster. But it wasn't until he discovered Akira Kurosawa's films through their spaghetti Western remakes that he truly became fascinated in the people and culture of Japan.

He lives in Kansas with his wife, daughter and guinea pig.

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E-mail him: [email protected]