Sunday, February 14, 2010

Crisis Prevention and Toyota's Corporate Culture

The Economist suggests a connection between Toyota's continuing manufacturing problems and a corporate culture that fails to raise problems because it is overly deferential.  I have separately heard that Asian airplane co-pilots have had to be specifically trained to overcome their traditional cultural deference and challenge the actions of pilots, if warranted, in emergency situations.  Here's an excerpt from article:

Toyota’s problems are its alone, but they highlight broader failings in Japanese corporate governance that make large companies particularly vulnerable to mishandling a crisis in this way. Such firms typically have a rigid system of seniority and hierarchy in which people are reluctant to pass bad news up the chain, thus keeping information from those who need to hear it in a misguided effort to protect them from losing face. In many firms, including Toyota, family ties make challenging the boss all but impossible. Any attempt to short-circuit the hierarchy is deemed an act of disloyalty and a violation of the traditional consensual corporate culture. Groupthink becomes entrenched because there is so little mobility between companies: hiring from outside is thought to disrupt a firm’s internal harmony, and an executive willing to move will be stained as a disloyal “job-hopper”. This further hinders firms’ ability to take bold, decisive action. The preference for harmony crowds out alternative viewpoints.

BGS

http://lawprofessors.typepad.com/mass_tort_litigation/2010/02/crisis-prevention-and-toyotas-corporate-culture.html

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Comments

Toyota dropped the ball on handling the recalls , they should have came forward with a full disclosure. Instead of waiting for a huge media blitz and tons of public pressure. But Toyota is not alone , I never seen so many car companies having recalls all at the same time.

Posted by: Scott Thomas | Feb 14, 2010 8:39:33 PM

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