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More lessons from firing of Olympus CEO

More lessons from firing of Olympus CEO

Ousted Olympus President and CEO Michael Woodford (REUTERS)

Last week I wrote about Olympus firing its president and CEO, Michael Woodford, over reported “cultural differences.” Olympus Chairman Tsuyoshi Kikugawa blamed Woodford for ignoring the company’s organizational structure, circumventing the hierarchy that is typical in Japan. I thought this was a strange rationale for firing Woodford, since one reason a Japanese corporation might hire a foreign CEO is because as a foreigner he is not as bound to Japan’s cultural norms, and is therefore able to act more quickly and decisively. That post was written before the whole story came out, and as a few people pointed out in the comments, the actual story is much deeper and darker.

One document Woodford leaked to the media shows that shortly before he was fired, he had asked Kikugawa about a $687 million fee paid to an unnamed financial advisor in the $1.92 billion acquisition of Gyrus, a British medical instruments company, in 2008. The fee was 35.8 percent of the cost of the acquisition–much higher than the typical 1 or 2 percent advisor fee. Woodford has sent related documents to the Securities and Exchange Surveillance Commission, who should look into the suspicious fees. While the identity of the advisors who profited so handsomely from the Gyrus acquisition remains unknown, I have my suspicions.

One “cultural difference” related to Olympus’s stated reason for firing Woodford could be that he had asked Kikugawa too many questions. Japan is a famously non-confrontational society, which is rooted in the high value the Japanese place on social harmony. Another cultural difference, which is also related to social harmony, could be that Woodford acted too individualistically in commissioning PricewaterhouseCoopers to look into the Gyrus purchase for the leaked memo linked above. This may have violated the Japanese value of uchi and soto. Uchi means “inside,” and soto means “outside.” The Japanese view the world in concentric circles of in-groups and outsiders. They are intensely loyal to their uchi, but grow increasingly indifferent to the soto the further it moves from the central uchi. Woodford may have violated Japanese sensibilities by going outside the uchi.

Like my previous post, my understanding of Olympus’s reasoning is pure speculation, since I can’t crawl into Kikugawa’s head and see how he thinks.

There could also be an organized crime aspect to this story. Woodford himself has implied that the yakuza may be involved in the suspicious advisor’s fees, saying: “I’ve been advised by contacts in Japan that I should take care of my safety. There is a potential for organised crime to be behind some of this.” If the yakuza was indeed involved, more lessons could be learned about how deeply entrenched the Japanese mafia is in the economy.



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]