Calls for Executive Firings Miss the Greater Economic Context
Football is a business. But it's time to stop treating business as football. Specifically, I'm referring to the "Fire the Coach" approach to management. We've seen a lot of that lately, especially in the global automobile industry where business has been miserable.
The latest target, or victim, depending on your viewpoint, is Katsuaki Watanabe, president of the hugely successful Toyota Motor. The rumor mill has Watanabe heading out of office because the hugely successful Toyota is no longer hugely successful. It is projected to lose nearly $1.7 billion in its fiscal year ending March 31. That would be Toyota's first operating loss in nearly 70 years.
Never mind that Watanabe has led Toyota since June 2005 -- taking the company to record sales and profits in 2007, the year Toyota toppled General Motors as the world's biggest car company in terms of global production and sales. The media have been beating drums for Watanabe to throw himself on his sword because Toyota will record a rare loss -- under his stewardship.
And because Toyota's governing board seems headed in that direction -- pushing Watanabe out in favor of someone who presumably will never ever lose sales or money -- some in the media are holding up Toyota as the standard of corporate responsibility and accountability.
Here's a snippet from a Dec. 29 column by James B. Treece, industry editor of Automotive News:
"Corporate Japan believes in CEO accountability, in contrast with the United States, where General Motors Chairman Rick Wagoner still has his job."
GM, as we all know, has lost substantially more than $1.7 billion. In fact, it has lost $72.3 billion since 2004 under Wagoner's reign. By that measurement, applying Fire the Coach rules, Wagoner is 40 times more deserving of dismissal than Watanabe.
But here's arguing that all of that is sloppy logic and in many ways inherently unfair. Here's also suggesting that Fire the Coach management will solve nothing -- or remedy very little -- in an arena where game policy is athwart common sense, as it is and has been in a United States absent effective industrial and energy policies.
And here's the kicker: I'd venture that Toyota is facing its first operating loss because it played the game as aggressively as its domestic rivals in the United States.
Let us examine: