Conflict among leaders changed Toshiba culture

Conflict among leaders changed Toshiba culture
PHOTO: Japan News/ANN

Intensifying conflict among high-ranking officials of Toshiba Corp. changed its corporate culture, placing the highest importance on profits and leading to deliberate accounting irregularities, according to a report by a third-party panel investigating the company and other sources.

The panel and sources have been trying to establish what went wrong at the innovative manufacturer, a prestigious firm known worldwide as one of Japan's leading companies.

On Tuesday, President Hisao Tanaka and two other top-ranking officials - Vice Chairman and former President Norio Sasaki and Adviser Atsutoshi Nishida - resigned from their positions over the accounting irregularities scandal.

"[My resignation is to allow the company] to take the next step and move forward as soon as possible," Tanaka said as he announced his resignation during a press conference Tuesday. With just two years having passed since he assumed the post, observers said he could not have imagined having to step down voluntarily.

Then President Sasaki and then Chairman Nishida were present when a press conference was held in February 2013 to announce Tanaka's appointment as president. Reporters were surprised even then as they witnessed the extraordinary spectacle of Sasaki and Nishida criticising one another in public.

During the press conference, Nishida said, "I expect that [Mr. Tanaka] will bring the company back to a path of growth once more."

Meanwhile, Sasaki had said, "I think I was able to fulfil my role and put the company on a growth path."

When Sasaki succeeded Nishida as president in 2009, they appeared to be in a honeymoon phase. It seems, however, that they grew apart as Toshiba's business performance fell short of achieving the satisfactory results intended.

Nishida said at the press conference, "[Mr. Sasaki] nipped growth in the bud by cutting fixed costs, and did not establish a new managerial method." On a separate occasion, Sasaki said, "The numbers reflected [Toshiba's good performance.] Mr. Nishida has no right to say such a thing."

The conflict between the two extended to other executives and their subordinates.

Sasaki rushed after profit growth, and gradually built up intense pressure on operational management to achieve high profits.

Unorthodox sales star

This year, Toshiba marks the 140th anniversary of its establishment.

Famous post-war corporate managers such as Taizo Ishizaka and Toshio Doko, both former chairmen of the Japan Business Federation (Keidanren), are among Toshiba's previous presidents.

Doko displayed his competence as a chairman in the government's second ad-hoc administrative reform commission, splitting the national railways into several private companies and attracting public attention for his unpretentious lifestyle.

Former Toshiba President Taizo Nishimuro and the three consecutive presidents after him were appointed vice chairmen of Keidanren.

Toshiba carved out a path to a new age with its technology. The company developed the nation's first incandescent light bulb in the Meiji era (1868-1912), and the electric rice-cooker after World War II - both of which changed peoples' lifestyles. Toshiba's products, such as colour televisions and notebook computers, displayed its brand power.

Its corporate culture was said to have been relatively peaceful at that time, but things changed when Nishida became president. Nishida rose to president of the company from a position at an overseas subsidiary, and was known for his aggressive sales stance.

The unorthodox sales star of Toshiba, Nishida changed the corporate culture to focusing on profit.

The third-party panel showed that Toshiba's accounting irregular practices started when Nishida was president. Nishida's successor Sasaki was worse, as he was obsessed with short-term profit in a rivalry with Nishida. Sasaki often rejected earnings targets suggested by his subordinates, saying the figures were below targets that had been announced.

He consistently used abusive language to directors in charge, and often made subordinates rewrite documents such as requests for managerial decision and proposals dozens of times.

The two men have different fields of expertise - Nishida rose from the personal computer business while Sasaki was from the nuclear power business. However, one former Toshiba executive said, "I think Sasaki didn't want to fall behind Nishida in terms of business performance and reputation as a president."

An executive of a company that had dealings with Toshiba said, "[Mr. Sasaki] shouldn't have been president."

Caught between Nishida and Sasaki, Tanaka also seemed unable to stop accounting manipulation practices. At the company's monthly meeting in March 2014, Tanaka pressed operational management for explanations and applied pressure, saying: "What a mess. Television is hopeless. We promised the market that we'd go back into the black in the second half. We'll have to quit this if you can't make it profitable."

Toshiba placed highest importance on current term profits. Had the problems not surfaced, this corporate culture might have continued.

"I'm truly ashamed of the company. Mr. Sasaki used his position to harass subordinates. [Mr. Nishida] also should be blamed, as he criticised Sasaki in public. The company must completely change its structure," an influential former Toshiba employee said.Speech

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