In an excellent piece of Wall Street Journal analysis on Toyota's (NYSE:TM) mishandling of its quality recall, Jeff Kingston points out a host of problems that routinely turn otherwise outstanding Japanese companies into headlight-bedazzled deer in the face of crisis.
We'd Rather Not Talk About It
Kingston notices that there is something in the Japanese corporate culture that causes companies in crisis to go into communications paralysis. The real story behind the Toyota recall is that even this most admired of Japanese companies is utterly incompetent when it comes to the fundamentals of strategic corporate communications.
The shame and embarrassment of owning up to product defects in a nation obsessed wit craftsmanship and quality raises the bar on disclosure and assuming responsibility. And a high-status company like Toyota has much to lose since its corporate face is at stake.
Kingston is brilliantly spot-on in his analysis, to the extent that his story should be translated into Japanese and duly memorized by every Japanese executive who ever seeks to sell a product outside of Japan.
Did They Export This, Too?
The only problem I have with the story is that Kingston implies that this particular form of non compus corparatus is somehow uniquely Japanese when in fact the problem is endemic throughout Asia. For all of their commercial, production, and engineering prowess, most of Asia's great companies share this giant blind-spot.
Twenty years ago, even ten, the severity of this problem might have been ignored. Protected by pliant local media all too ready to play down issues in deference to advertising dollars and coddled by governments at home and in countries where Asian firms set up large manufacturing bases, the specter of backlash was modest.
But in a world ruled by the radical transparency of the Internet, even the slightest stain on one's corporate laundry becomes a red flag for the world to see. And it is not just bloggers and tweeters driving this change, it is also a media desperate to sustain their relevance in the new information environment, and a nascent but growing anti-corporate, anti-globalization movement seeking to prove that corporations are, by design, malignant social actors.
In such an environment, an Asian company is dangerously exposed even on good days. On bad days - days like today as Toyota grapples with its current slow-motion nightmare - the company is on trial for its life in the court of public opinion.
The Blind Side
In over a dozen years in the communications business in Asia, I have encountered all manner of companies, startup to MNC, new and old, American, European, Japanese, Korean, Chinese, Singaporean, Australian. In all that time I have never had cause to discard my initial impression of Asian firms as almost utterly incapable of anything but the most planned, scripted, stilted and disconnected communications, suited for an age long past, and incapable of protecting themselves when the wolves come howling.
This must change, and it will, because the crises will not go away. Even after we stop reading about Melamine Milk, Lead-Laced Toys, Rotten Drywall, Tainted Dogfood and similar examples of Asian corporate moral failure, China's companies will discover that even enterprises with the best of reputations and purest of intentions can become overnight targets of a global foaming-spittle lynch mob.
The only question is how many fine Asian companies will be permanently damaged or destroyed, how many lives must be ruined, and how many fortunes must be lost before that happens?
The Fish Stinks from the Head Office
It is time to stop seeing corporate communications as PR, to stop seeing PR as the "press wrangling" function of marketing, and to stop choosing earnest and attractive but otherwise incompetent individuals to take charge of a company's reputation.
But let's make this clear: the fault here does not lie in the under-staffed, under-funded, under-appreciated PR departments stashed in back offices around the region. The problem goes all the way to the top. Poor corporate communications bespeaks inattentive or incompetent corporate leadership.
Until Asia's CEOs and managing directors start paying some careful attention to this problem, we are going to watch an embarrassing procession of our best firms self-immolate. After all of the effort to create world-class Asian companies, what a pathetic waste that would be.