Trail of tears

Watch these CEOs cry: Sharp and Panasonic join Japan’s best corporate apologies

November 6, 2012
November 6, 2012

Last week, while forecasting the company would make a $9.8 billion loss this year, Panasonic president Kazuhiro Tsuga said his company was in the electronic industry’s “loser group.” The CEO of Sharp, which may seek a government bailout after hemorrhaging ¥103 billion ($1.28 billion) this year, is also beating himself up publicly. Takashi Akuda of Sharp said last week: “We have lots of great technology and we want to tap that asset to revive and make money, but I can’t say we are now a company with that vitality.”

American CEOs, fearful of class action suits and depressing the value of their stock options, tend not to admit to any weaknesses. But in Japan, bad corporate performance—or  fraud—is almost always admitted to in emotional and heartfelt language. Tears tend to be shed.  In the US, companies that have done the worst tend to say the least, evidenced by WorldCom’s former bosses’ refusal to talk during a 2002 congressional hearing about the company’s collapse. Yet in Japan, the need to apologize takes precedence and judges routinely ignore attempts at litigation based on company leaders’ admissions of guilt.

“It is a social expectation in Japan that, if you’ve slipped up, your immediate responsibility is to apologize,” says Luke Nottage, professor of comparative and transnational business law at Sydney Law School, whose work focuses on Japan and the Asia Pacific region.

He adds that “even though apologies are admissible as evidence in Japanese courts, in practice the courts don’t use them. They just think, well, everyone apologizes all the time. This is different to America, where juries, lawyers and judges can make a big deal about apologies, as the social context is very different.”

So Panasonic and Sharp have just performed a time-honored ritual.  The apology is such a part of corporate life that Japanese newspapers often round up groups of them during earnings seasons, instead of reporting each one individually. Still, some particularly dramatic, colorful or entirely unnecessary apologies tend to stick out. Here are a selection of the best:

Toyota’s Akio Toyoda’s multiple, self-flagellating, sometimes tearful apologies.

The car company has posted good earnings of late. But after founder’s grandson Akio Toyoda took the helm in late 2008, the safety record was bad. Western CEOs might have employed aggressive public relations staff to steer the media away from reporting the problems. Not Toyoda. He gave himself a stern talking to instead, and shed some tears.

In February 2010, Toyoda attended a US congressional hearing after Toyota recalled millions of cars. At the hearing (video) Toyoda said “I take all responsibility” for the recalls. He castigated himself for allowing Toyota to put company expansion before safety, adding “our priorities became confused.” Later, apologising to Toyota’s US staff about the recalls, Toyoda cried (video). Choking over his words, he thanked them for being “there with me” at the congressional hearing and said “we, Toyota, are at a crossroad. We need to rethink everything about our operation to regain customer confidence.”

In early 2009, when most of the car industry was devastated by the great recession, Toyoda said during a Japanese press conference that his company faced “capitulation to irrelevance or death.” The firm, he added, was “grasping for salvation.”  Instead of blaming the global economy, as Western CEOs like to, Toyoda said his company had simply not built good enough cars.  “They say that young people are moving away from cars,” he said. “But surely it is us—the automakers—who have abandoned our passion for cars.”

Daio Paper Corp’s Mototaka Ikawa: I spent the company’s money in casinos. 

Mototaka Ikawa did not apologize in person. But on the day last November when he was arrested on suspicion of using his family firm’s money to gamble in casinos, he let his admissions flow freely. Even though it would be months before he stood trial, Ikawa admitted in a statement issued just after his arrest: “It is true that I spent most of what I borrowed at casinos.” He continued: “It started after I made large gains at a casino after having made significant losses due to such things as stocks, futures and foreign exchange deals, and I fell deep into it.” He was recently sentenced to four years’ imprisonment.

Yamaichi Securities boss Shohei Nozawa, who cried and cried and shouted and cried.

After the stockbroker he led went bankrupt in 1997 due to accounting fraud, president Shohei Nozawa stood with a microphone under his chin and sobbed. In what became an iconic image of Japan’s financial crisis, he bowed deeply, over and over again. And with each bow, he howled some more. He also reportedly shouted: “It is management’s fault, and not the rank and file’s fault!” Sadly, this gem has not made it onto YouTube.

West Japan Railway: there was a 15-minute delay and no one missed their train. We are so deeply sorry. Hat tip to the Wall Street Journal for spotting this one . Kyoto station opened 15 minutes late on the morning of Oct. 29 this year because a railway worker briefly fell asleep. That was enough to prompt the company responsible for the railway to issue a statement (Japanese) on its website explaining the mishap and saying that the delinquent employee would receive disciplinary training so “such an incident doesn’t occur again.”

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