Decide Better!

One interesting aspect of Toyota’s botched crisis decision making is how the Japanese culture may have influenced its decisions. In studying decision making globally, I’ve found that business decisions are shaped by both corporate culture and national culture. Culture biases decisions. One company’s inclination and tendencies in decisions is different from others. Companies rooted in one national culture have decision inclinations and biases different from others. In my book Business Decisions I discuss how corporate culture influences business decisions. Let’s use the Toyota example to see how national cultures influence business decisions.

First, Japanese companies do not make good product recall crisis decisions. Historically, they tend to overlook product recall problems, even though they are good at quality. There have been several examples of this in the last decade. They generally respond very slowly and tend to minimize the concern of product risks on customers. Either a cause or effect of this is Japan’s product liability law, which limits damages in cases where customers are injured. In the Japanese culture the shame of product problems can loom large, so there is a tendency to hope it will go away. Second, there is more respect for higher authorities in Japanese companies. Workers don’t dare to speak out and challenge superiors. So in cases like this, even though some of the engineering and support people may have known about the sudden acceleration and braking problems, it was not in their culture to speak out. Finally, decisions in the Japanese culture are slow and deliberate. They study an issue like this extensively and build a consensus within the company before deciding what to do. Crisis decisions require a quick response from leaders. Toyota seems to have been studying these problems while customers continued to be killed or injured by the problems they were studying.

The way the Japanese culture influenced Toyota’s response may be an explanation, but it is not an excuse. Global companies must make decisions based on global expectations, not national culture. Otherwise Japanese companies which are now known for high quality because of the way they make decisions will also be known for risky products because of the way they make crisis decisions.

This entry was posted on Monday, February 8th, 2010 at 11:14 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.