Woodford, Michael. Exposure : inside the Olympus scandal : how I went from CEO to whistleblower. Portfolio/Penguin, 2012.
In 1991, W. Edwards Deming was a distinguished speaker at Fuqua. Students packed into Geneen Auditorium to see the tall and frail 90-year-old man, who was credited for engineering the “Japanese economic miracle” with his theories on statistical process control. Japanese products were highly valued for their design, quality and reliability, and companies like Sony, Canon and Panasonic had already overpowered the U.S. electronics industry. Honda and Toyota were taking market share from GM and Ford, once considered impossible. At universities, MBA courses covered Japanese management techniques, such as lean production and continuous improvement (kaizen), as well as Japanese business culture, including a long-term strategic orientation, agreement by consensus and lifelong employment for employees. But soon after Deming’s visit, the Japanese economy entered a deep recession that lasted 20 years. In 2011, China replaced Japan as the world’s second largest economy.
This is the environment that Michael Woodford faces in 2011 when he is named CEO of Olympus Corporation, a Tokyo based company that manufactures imaging and medical devices that use cameras, such as endoscopes. In Exposure, Woodford tells the story about what happened to him and to this once revered Japanese company after he is named president, one of the first Westerners in history to lead one of Japan’s iconic corporations. For Woodford, a 30 year employee and head of Olympus’s European operations, this assignment is the pinnacle of his career.
Months after his appointment, Woodford receives a tip about questionable mergers and acquisitions that cost millions of dollars. As he tries to investigate the losses, he discovers a cover-up involving the firm’s chairman, other key executives and members of the board. Eventually he uncovers evidence of an accounting fraud totaling $1.7 billion, but instead of supporting their president, the board of directors forces him out. At a special board meeting, the directors uniformly vote for his dismissal to avoid exposing their losses. After Woodford hears rumors of Japanese mob ties to the fraud, he flees the country, fearful for his life. He contacts the Financial Times and blows the whistle on his own company.
The well-told story is highly recommended to anyone interested in international business, corporate governance, Japanese culture or business ethics. As a memoir, Woodford writes with candor about the scandal and about confronting Olympus’s chairman and board of directors. His escape from Tokyo is filled with tension. As a book on business culture, Woodford illustrates key differences between Japanese and Western businesses. The close relationships among the leaders of Japanese companies, as well as the relationships between Japanese companies, the banks that finance them and the media, create an insular environment that is resistant to change. And regarding business ethics, by the end of the book, the author’s commitment to integrity, while admirable, is also personally costly.
© Reviewer: Meg Trauner & Ford Library – Fuqua School of Business.
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