Whatever happens to Toyota following the forced recall of millions of its autos, its story will remain legendary. Toyota’s rise from humble origins as the “offspring” of a family textile machinery company in a remote area of central Japan to become the dominant global automobile maker and a synonym for quality is astonishing. Along with a small number of other Japanese corporate icons — for example, Sony, Honda and Canon — Toyota was the bright star of the Japanese economic miracle and global challenge.
It remains to be seen whether Toyota’s current problems are temporary or irreversible. Its current humiliation notwithstanding, it retains tremendous advantages — and in any case, the competition is not that much greater. But, to ensure its global position, Toyota — and most other Japanese multinational corporations — needs a cultural transformation.
As was vividly illustrated by the obfuscating delays by its chairman and CEO (and grandson of the founder), Akio Toyoda, in responding to calls to appear before the US Congress, Toyota has a serious global communication problem. That problem is a reflection of a broader Japanese weakness in foreign languages, especially English. But as a dominant global player and the world’s biggest automobile company, that excuse is just not good enough.
I have had a close acquaintance with Toyota for three decades. In the 1980s, as Western corporations in diverse sectors faced the onslaught of what was seen as the daunting Japanese challenge, I accompanied Western managers to Japan to learn about the country and its management and production techniques. This invariably included visits to Toyota factories. It was well worth it — and almost certainly still is — as the Toyota Production System deserves admiration and emulation.
In the course of the decade, however, I noticed a subtle change. By the latter part of the decade, Western management delegations continued to be politely received, but more often than not professional guides were appointed to show them around, and there was no dialogue with the Toyota managers, who previously had been keen to teach and learn. On the contrary, there was an undisguised sense of condescension toward the visiting foreign executives.
As Toyota proceeded to globalize, in the late 1990s it established a greater European manufacturing presence and a European headquarters. My institute, IMD, was contracted to undertake a series of executive development programs for Toyota Europe.
The “normal” pattern is that when we do a program for, say, the global management team of Nokia, a proportion of the participants will be Finns from Helsinki’s head office. To be successful globally, one must have the capacity both to receive and transmit information; the foreign executives must learn about Nokia, and Nokia must understand the dynamics of the markets in which it operates. To that end, virtually all global companies (including Sony, the one Japanese exception) have adopted English as their working language.
Toyota, however, had different plans. The IMD program would be for the Europeans, and no Japanese from the head office would attend. The message was clear: It was up to the Europeans to learn the Toyota “way,” and it was not necessary for Toyota to learn about the business and cultural dynamics of the European societies in which they are operating.
Eventually, Toyota chose to leave the IMD learning network, because, as one executive bluntly told us: “We do not feel we have anything to learn from the other network corporate members” (which include global companies like Nokia, Nestle, Unilever and Daimler).
That conclusion seems highly questionable. Toyota’s European executives were, to be sure, proud to be part of the company and full of admiration for its products and production methods. But I found that there were also problems of trust and communication. While a number of Europeans nominally held senior positions in Toyota Europe, Toyota Japan invariably appointed Japanese nationals as “shadows” to oversee them. This led at least one of the most senior European executives to leave the company.
Indeed, although Toyota claims to be “global,” its board of directors is exclusively Japanese.
Toyota Europe’s executives felt that making English the working language would contribute to improving trust, communications and efficiency, and also to retaining high-quality staff. But Toyota’s Japanese management rejected that proposal out of hand.
If Toyota and other Japanese companies want to become truly global, their managers must learn to communicate effectively with all their foreign stakeholders. In this global age, the language of business is English. In a recent international test of English proficiency, Japan ranked 136th, well behind South Korea, at 89th, and even North Korea, at 111th. While journalists in South Korea used this survey to demand reforms to improve English instruction in their country’s schools, the same survey hardly received any coverage in Japan.
The language issue goes beyond competition with English-language countries — and even beyond business. English is, for example, the official language of ASEAN — which numbers 600 million people in Japan’s neighborhood.
Toyota’s top managers will find that English is useful not only to explain, and apologize for, the company’s recall of 8 million cars, but also for listening and learning as they try to reverse the erosion of trust among customers. If Toyota’s communication problem can be resolved, there is no reason why Toyota’s fortunes cannot be revived. The same is true of Japan’s economy.
Jean-Pierre Lehmann is professor of International Political Economy and founding director of the Evian Group at IMD Business School.
Copyright: Project Syndicate
Many foreigners, particularly Germans, are struck by the efficiency of Taiwan’s administration in routine matters. Driver’s licenses, household registrations and similar procedures are handled swiftly, often decided on the spot, and occasionally even accompanied by preferential treatment. However, this efficiency does not extend to all areas of government. Any foreigner with long-term residency in Taiwan — just like any Taiwanese — would have encountered the opposite: agencies, most notably the police, refusing to accept complaints and sending applicants away at the counter without consideration. This kind of behavior, although less common in other agencies, still occurs far too often. Two cases
In a summer of intense political maneuvering, Taiwanese, whose democratic vibrancy is a constant rebuke to Beijing’s authoritarianism, delivered a powerful verdict not on China, but on their own political leaders. Two high-profile recall campaigns, driven by the ruling party against its opposition, collapsed in failure. It was a clear signal that after months of bitter confrontation, the Taiwanese public is demanding a shift from perpetual campaign mode to the hard work of governing. For Washington and other world capitals, this is more than a distant political drama. The stability of Taiwan is vital, as it serves as a key player
Yesterday’s recall and referendum votes garnered mixed results for the Chinese Nationalist Party (KMT). All seven of the KMT lawmakers up for a recall survived the vote, and by a convincing margin of, on average, 35 percent agreeing versus 65 percent disagreeing. However, the referendum sponsored by the KMT and the Taiwan People’s Party (TPP) on restarting the operation of the Ma-anshan Nuclear Power Plant in Pingtung County failed. Despite three times more “yes” votes than “no,” voter turnout fell short of the threshold. The nation needs energy stability, especially with the complex international security situation and significant challenges regarding
Most countries are commemorating the 80th anniversary of the end of World War II with condemnations of militarism and imperialism, and commemoration of the global catastrophe wrought by the war. On the other hand, China is to hold a military parade. According to China’s state-run Xinhua news agency, Beijing is conducting the military parade in Tiananmen Square on Sept. 3 to “mark the 80th anniversary of the end of World War II and the victory of the Chinese People’s War of Resistance Against Japanese Aggression.” However, during World War II, the People’s Republic of China (PRC) had not yet been established. It