Insights (Essays)

Insights (Essays) February 2010

Toyota and Sumo: A Tale of Two Apologies

Neil Seeman

Two iconic Japanese industries received reputational body blows in recent weeks. First, Toyota fell; soon after, sumo wrestling.

Late in issuing what he called his "heartfelt apology" to customers for millions of recalled cars, Akio Toyoda, president of Toyota Motor Corp., could learn a lesson from the ex-grand champion of sumo, a 29-year-old Mongolian wrestler known to fans as Asashoryu. Asashoryu made a surprise announcement last week that he would retire following a drunken brawl on a Tokyo street.

Asashoryu had just won his 25th national tournament last month and is third on the all-time list of title winners. "I have caused a lot of trouble for so many people," a teary Asashoryu said at a press conference. "I decided to step down to bring this to a closure."

Sumo is bigger in Japan than Toyota, and Asashoryu is much bigger than Mr. Toyoda in strength, stature and influence. Toyota is a mere car company. Sumo is a national sport and centuries-old tradition. It symbolizes the Samurai culture. Asashoryu - otherwise known as Dolgorsuren Dagvadorj - is among the most successful sumo wrestlers in history. Asashoryu made his professional debut in 1999 and rose quickly through the ranks to yokozuna, or grand champion status, four years later.

Asashoryu is known as a bad boy given to challenging the sport's traditions. And so his apology to the nation was all the more compelling. By contrast, Mr. Toyoda, the grandson of the Toyota founder, has been near mute since his company's recall began. He has offered no serious contrition for the company's problems. He has apologized to customers for the "inconvenience" of the recall. Yet as of the time of writing, he had not answered whether the company planned to recall and repair software glitches linked to brake problems in the 2010 Prius, a hybrid car that has been a signature product.

Mr. Toyoda, 53, has explained his silence by saying his top quality executive, Shinichi Sasaki, is better suited to communicate with the public. Is this leadership model part of the legendary Toyota Production System quality approach? In every other publicly traded company I know of, responsibility for quality starts and ends with the CEO. Toyota is proud of its supposed company-wide commitment to Kaizen, aka continuous quality improvement and the "Toyota Way" - something for which the firm enjoys eye-fluttering infatuation from prolific management gurus and globe-trotting consultants. But if the CEO doesn't have the guts to stand up and offer a serious apology now, then Toyota deserves its sinking stock price.

When a CEO says he's offering a "heartfelt apology," and then doesn't make one, he's like the unctuous boss who tells his staff, "people call me blunt." Blunt leaders are just blunt; leaders who apologize effectively just do it, and do it quickly. Mr. Toyoda has resorted to email to tell his employees in Japan to explain the US recall, but he has been brief on specifics. He has asked staff to work together with him to win back trust and "work on building great cars". Part of the problem with email is that it encourages passivity just when a company needs it least. Mr. Toyoda should shut off his email and speak up more.

I don't know how to run a car company. But I am a stockholder and a customer, and I trust CEOs who apologize and are transparent when things go off keel. Otherwise I won't buy. You can hire the best crisis management team in the world - and unquestionably Toyota has pulled in the big guns - but your brand will be mud if your CEO makes the top "quality executive" the apologizer-in-chief. Weirdly, Mr. Toyoda, in his too-late non-apology apology, said "quality is our lifeline." Meanwhile, Cindy Knight, a Toyota spokeswoman, said the company has "beefed up" in "PR support, lobbying, and legal advice."

Quality executives and quality committees of boards of directors - in hospitals, in car companies, in any company - do not own accountability for quality. The CEO is like the grand champion of sumo. He or she symbolizes quality for the enterprise. For the ex-wrestler Asashoryu, his resignation means shame in a country that prizes saving face. Resigning also cost him considerable personal wealth. And yet, amid a shrinking fan base, and plagued by a series of scandals (including match-fixing), Asashoryu's resignation now offers sumo real hope for a resurgence. Meanwhile, Toyota's corporate face is crumbling.

Most serious financial analysts agree this is just the beginning of the nightmare for Toyota. The recall and lawsuits will balloon; next, the empty factory floors in North America; then come bankrupt coffee shops and restaurants that depend on the income from neighboring auto workers. In a slumbering global economy, this means more financial trouble for everyone in the industrialized world, whether or not you own a car.

Meanwhile, I see a grand future for sumo wrestling. Some laugh at what appear to be hulking men wearing loin cloth; but the sport is like an orchestral blast. Just seconds or minutes in duration, the winner of a fight is either the first wrestler to force his opponent to step out of the ring, or the first to compel his opponent to touch the floor with any part of his body other than the bottom of his feet. The men in the bout are basically naked, making it easy for fans to judge every move and twitch. Not so with the "Toyota Way".

About the Author(s)

Neil Seeman is director of the Health Strategy Innovation Cell at Massey College.

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