Toshiba is currently in crisis. As one of the top Japanese corporations, it has drawn much criticism and attention on both domestic and international levels.
The underlying problem of corporate governance in Toshiba may have reminded many people across the world of the Olympus scandal, which occurred four years ago. This is indeed very true.
In the media, this has been featured in an article in Newsphere [in Japanese] and a major article in the Financial Times (registration is necessary to read the article). Furthermore, the Financial Times article was followed by a piece by Leo Lewis, “Problem of culture: Ever fiercer profit target imposed,” in which he mentions the National Diet of Japan Fukushima Nuclear Accident Independent Investigation Commission (NAIIC), of which I served as Chairman. He describes the problem underlying the Toshiba scandal as being similar to issue behind the nuclear accident, as pointed out in the NAIIC report.
The description is eerily similar to that used in the independent report on the Fukushima nuclear disaster, which blamed Japan’s “reflective obedience” and “reluctance to question authority” for contributing the poor handling of the disaster.
Trust is built on the principles of transparency, openness and independence, especially in a world that is connected through the internet. Currently, trust in Japanese corporate governance is wavering. One wonders, even if companies appoint external directors or board members, is it just for the sake of appearance? How is the actual governance being conducted? These questions must be asked.
The book by Mr. Uda (Project Manager of NAIIC), “Obligation to Dissent: Why Organizations Fail,” which I featured on this blog from September 22nd to October 27th last year, examines this issue and focuses on the importance of organizational governance.
Changing the mindset and accepted cultural norms in Japan is a major challenge. It is difficult to regain trust once it is lost.