Toyota Head Faces Culture Shock in U.S.

Toyota Motor Corp. President Akio Toyoda, speaks to reporters after meeting with Japan's Transport Minister Seiji Maehara at he ministry in Tokyo, Japan, Tuesday, Feb. 9, 2010. AP Photo/Shizuo Kambayashi

Hailing from a corporate culture that values consensus over decisive authority, Toyota President Akio Toyoda is in for a culture shock when he faces a barrage of questions Wednesday from U.S. lawmakers about quality lapses at the automaker.

Top executives tend to be revered in Japan's conservative culture, although they are generally not management professionals and are often lower paid than their American counterparts.

"I'm sure he is desperately getting a crash course in how to field all the tough questions," said Ryoichi Shinozaki, a crisis management expert at Kyodo Public Relations Co. in Tokyo.

His advice: Stay in control, remember you're always being watched, and, whatever you do, don't get teary-eyed, as some Japanese company presidents under siege have done in the past to win sympathy in Japan.

"Americans will just think you have no business running a company," Shinozaki said. "Stick to the key message that you will put customers first, do everything it takes and won't allow this to happen again."

Click here to read Toyoda's full testimony, as prepared for delivery.

In harmony-loving Japan, company heads are usually picked to be cheerleaders for the rank-and-file. Toyoda, because of his bloodline as grandson of Toyota Motor Corp.'s founder, was groomed to play that morale-boosting role.

"In a Japanese company, the top man isn't the one calling the shots. He is looked up to as a symbol, a bit like the emperor," says Toyoaki Nishida, professor of business at Chubu University, referring to Japan's imperial family, which wields no political power. "That's why Japanese company policies don't ever change even if presidents change."

Given such differences in corporate cultures between Japan and the U.S., it wasn't unusual that Toyoda initially said his U.S. executives were the best people to testify at the House Committee on Oversight and Government Reform on Toyota's recalls, now reaching 8.5 million vehicles globally for sticky gas pedals, braking glitches and faulty floor mats.

He agreed to go late last week only after getting a formal invitation and as criticism flared, especially in the foreign media, that he should be the one to explain the safety lapses.

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In three news conferences this month, Toyoda has stayed true to form as a Japanese president and left the details of the defects and quality measures to another executive. He has focused on sending the message that he is sincere and ready to correct where the esteemed "Toyota Way" of production has gone astray.

He even wrote an op-ed that appears in Tuesday's Wall Street Journal. The "Toyota Way" features early and prominently, as Toyoda writes "[I]ts pillars are 'respect for people' and 'continuous improvement.' I believe in these core principles. And I am convinced that the only way for Toyota to emerge stronger from this experience is to adhere more closely to them."

Parissa Haghirian, associate professor of International Management at Sophia University in Tokyo, said Japanese companies are group-oriented, and generally don't look to one person to steer a company, unlike the West, where executives are hired for ideas and leadership.

Japanese presidents are team leaders who coordinate everyone's views and care intensely about peer opinion because confrontation must be avoided, she told The Associated Press.

Japan has a special phrase to describe such behind-the-scenes consensus-building, "nemawashi," which translates as "laying the groundwork." Neglecting nemawashi is considered a foolish and sure way to walk into failure.

Nemawashi is bureaucratic and time-consuming, but once a decision is made, everyone is on the same page, and action proceeds quickly without infighting.

"There is usually no strong leader, who can push radical change within a Japanese firm," Haghirian said.

Japanese managers build their careers by moving up within the company and it is unusual for top executives to be recruited from outside. That makes for insular management that may be clueless about what's happening outside their companies, she said.

At Toyota's domestic rival Nissan Motor Co., it took a foreigner, Carlos Ghosn, a Brazilian-born Frenchman of Lebanese ancestry, who arrived in 1999, to slash jobs, get rid of money-losing units and save the automaker from bankruptcy - a task no Japanese Nissan president had dared to tackle.

Toyoda is relatively cosmopolitan - for a Japanese president.

But his lack of English fluency is the norm among even well-educated Japanese, including those hailing from top universities like Keio University, Toyoda's alma mater.

Admission at such universities call for intensive study, but conversational English isn't one of the requirements. English courses tend to be pedantic, focusing on grammatical rules, and starting foreign language lessons in childhood is rare.

Toyoda, who has a business degree from Babson College in Massachusetts, has no problems reading an English statement, but his halting English at news conferences indicates he will struggle to improvise answers when faced with a grilling from lawmakers.

Shoichi Yoshikawa, managing director at Hill & Knowlton in Tokyo and crisis-management expert, thinks what would prove most important is that Toyoda demonstrates "integrity."

"Don't laugh. Listen closely and don't give overly quick answers," he said.

Get an interpreter, and someone who understands American feelings, advises Yoshikawa.

Toyota officials in Japan said they can't comment on the whereabouts or schedule of Toyoda, except that he will attend Wednesday's hearing.

In another telling contrast of corporate cultures, Japanese chief executives are also paid far less than their American counterparts.

At last year's shareholders meeting, Toyota disclosed the overall tally of 1.6 trillion yen ($17.8 million) paid to 33 board members - about 48 million yen ($500,000) each. Companies in Japan aren't required to break down what each director made.

The average figure for Toyota directors is only slightly higher than the average for Japanese companies calculated by Sanro Research Institute at 36 million yen ($400,000). Such studies have estimated the salaries of past Toyota presidents at between half a million and a million dollars.

By contrast, Ford Motor Co. Chief Executive Alan Mulally's compensation in 2008 was valued at $17.7 million, including stock options and other perks.

Stock options are limited in Japan, though presidents do get chauffeur-driven limousines, expense accounts and sometimes private jets.

Toyoda, however, is widely viewed as having more at stake than the average Japanese president.

He owns more than 4.5 million shares in Toyota, largely inherited from his family, though that's less than 1 percent of all Toyota shares. Toyota dividends last year were 100 yen (90 cents) a share.

Toyoda has shown another difference: He has apologized to customers for inconvenience and worries, but only bowed in a routine greeting, not in ceremonial apology.

Kabukiesque atonement for Japanese company heads typically comes as a deep bow held for several seconds to show heartfelt remorse for wrongdoing. The president may then announce he is stepping down in symbolic "hara-kiri" to be replaced by another equally symbolic president.

Some Japanese crisis-management experts were critical Toyoda neglected protocol by dispensing with the humble bow. What awaits in Congress could be far more testing.

"Unless he goes extremely prepared, American people are going to wonder what he is doing if he approaches this as though he is addressing Japanese people," said Nishida, the business professor. "He didn't claw his way to the top. He was just placed on a pedestal. He became president in the most unfortunate of situations in the most unfortunate of times."
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