Why Prioritising Quality Culture is Vital Even in Times of Crisis

For many years the mark “Made in Japan” immediately meant “high quality” to consumers across the globe. Japanese brands were famed for manufacturing excellence around the world and had a stellar reputation at home and abroad.

However, in recent years Japan’s impeccable image in manufacturing excellence has suffered some significant setbacks. Who doesn’t remember the millions of vehicles recalled by Toyota in 2009-2011? It cost Toyota not just billions of dollars and devaluation of their stock by 15%, but also affected the company’s reputation at a time when the world’s largest car manufacturer was still reeling from the financial crisis of 2008.

Yet the troubles in Japan did not begin and end with Toyota. Just last month, the CEO of Kobe Steel – Japan’s third-largest steel manufacturer – Hiroya Kawasaki has resigned after admitting that the company has been falsifying data on specifications of its steel, aluminium and copper divisions for the last 5 decades, affecting more than 600 of its customers.

To make matters worse, the Kobe Steel case is only one of several revelations that have recently been unleashed among the heavy hitters in Japanese industry with admittance of product data fabrications at Toray Industries and Ube Industries as well as Mitsubishi Materials Corp. At the same time, Nissan Motors are being issued heavy fines for using uncertified staff to conduct vehicle inspections and Subaru Corp. have a third lawsuit filed against them for concealing engine defect problems from customers.

What's going on?

The obvious question in response to these surprising events is: what is going on? And for us, dealing with company culture, certain alarm bells start ringing looking at the timing of these revelations. Having a high performing quality culture during a time of prosperity is a different beast from having one during a time of crisis, when production targets are under pressure. But it is precisely at a time of crisis that we can form a truer picture of where quality lies as a priority.

According to Jeff Kingston, a lecturer at Temple University in Japan, you rarely see a Japanese company perform well during a crisis, due to the same old problems: a deferential corporate culture, where information takes too long to flow through the company since employees don’t want to tell their boss what he doesn’t want to hear, and because Japanese companies have a tendency to try and squash bad stories before they get to press (Business Insider, Feb 2010).

These types of problems often arise in companies that are feeling financial strain. Managers start prioritising production speed and cost above all else often thinking that what they’re doing is saving the company, and it is what’s necessary to keep their competitive edge. But the reality is that eventually this catches up with the company and the results are often catastrophic. VW is still not out of the woods from their emissions scandals. How many billions could they have saved if only quality remained a top priority instead of seeking short-term gains that have resulted in multiple lawsuits, 30$ billion in buyback costs and a serious breach of trust from consumers?

We need to stop this misconception that good quality culture is a soft value. It is what you need to have - not only if you want to become an industry leader - but if you aim to remain at the top of your class as well.

Yes, companies with a good culture are nice to work at, but that’s not all they are. Companies with a strong quality culture produce high-quality products no matter what. Not just when the going is easy, but also when the going gets tough. And that often keeps them in business during times of crisis and financial instability.

For Culture Excellence members, you can see how differing priorities are balanced across different levels and areas of your company, and where potential risks and conflict may arise. We advise paying particular attention to the Priorities view on the online platform, and keeping an eye on how this may change over time.

Dr Joanne Taylor and Ringaile Bulatovic-Schumer