Japan's Prime Minister Dr. Hatoyama, Debt, and Toyota

Having done case studies even in the late 1980s at U.S. universities on Kaizen (improvement) and Total Quality Management (TQM) that originated in Japanese industry, it now comes as a startling surprise to see the extent of the current eight million vehicle recalls affecting Toyota, an icon for quality manufacturing in past decades. There have been numerous reported accidents and deaths, including the widely-heard chilling phone call from a speeding car with a jammed accelerator and the deaths thereafter of a healthy family.
Courts will be hearing those cases for many years, including various class-action lawsuits that are pending. One can only hope that those who suffered and their families will be suitably compensated, even if the cost of death and disability are incalculable.

In the midst of such turmoil, one has to wonder about Toyota's risk management strategy and its responses to Congressional inquiries. The letter sent by Toyota's lawyers to U.S. House of Representatives' Oversight Committee Chairman Edolphus Towns appears to rather have been written keeping in mind the pending litigation since the document likely will end up as a court document. Surely, at least one Congressperson will undoubtedly ask "What did Toyota know and when did it know it" about the jamming accelerator problem. I think Toyota's CEO Mr. Akio Toyoda, having studied in the U.S., will find it difficult to speak in Japanese to the Committee because they will pin him on that point. English is a second language for Mr Toyoda, and for anyone who has attempted to speak technical matters in a second language, one has to sympathize with Mr. Toyoda at this time.

Insiders have been hinting that probably Mr. Toyoda was kept in the dark until very recently by his subordinates in the deeply ingrained cultural pathways in Japan where the boss should not be "troubled" as far as possible. But all such improper organizational methods may have to change in the impending rigorous competition that is around the corner, and it will take quite an effort to get back the pristine Toyota radiance.

Interestingly, at this time, Japan is led by an operational management expert, Prime Minister Dr. Yukio Hatoyama, who slogged countless hours to get his Ph.D. from Stanford University in operations research, which is the management of engineering using quantitative methods. At this moment, Dr. Hatoyama could be leading the way to regain the lost quality luster for some parts of Japan's industry. Instead, Dr. Hatoyama has had to spend time on quelling the calls for resignation emanating from some in Parliament and the media for two of his aides having mislabeled political donations to him from his mother, heiress to the Bridgestone tire company fortune.

The repeated apologies from Dr. Hatoyama should have ended the matter; instead, the indictment of the aides has generated a fresh spate of speculation within the punditry and media on whether, when, etc., the Prime Minster might resign.

Over the past decades, Japan has often presented the sorry spectacle of its Prime Ministers resigning every few months. There are, therefore, a large number of retired "former Prime Ministers" available to attend marriages and other ceremonies. For the second-largest economy in the world, it is embarrassingly damaging to see resignation after resignation for what might be regarded in other countries as trivial infractions or transgressions particularly because no public financing exists for campaigns and politicians have to raise money from somewhere to campaign, unlike bureaucrats who have lifetime employment, perks and privileges and no need to contest elections, ever. The fact that Dr. Hatoyama's aides had trouble even with a political donation from his mother reveals the depth of the problem.

Another matter, whether or not to move the U.S. military base at Futenma, Okinawa has led to charges of prevarication. But it should be clear, especially to President Obama and Defense Secretary Gates, that what the Prime Minister is actually doing is to placate a coalition partner, the SDP, at least until the Upper House election of mid 2010, since he currently needs that small party's support as Japanese legislation requires approvals in both houses of parliament, and the Prime Minister's party, the DPJ, is short of a majority by a few seats in the upper house, the House of Councilors.

Do these issues rise to the level of "high crimes and misdemeanors" that, for instance, the U.S. Constitution prescribes as the basis to remove the head of government? Obviously not. So why the speculation on resignation? Probably because at the drop of a hat, Japanese Prime Ministers have resigned in the past. Further, the Japanese people were well aware of both these issues when they voted overwhelmingly for Dr. Hatoyama and his party in the election just four months ago which resulted in his landslide victory.

The real scandal is in fact the two decades of economic malaise with the probability approaching certainty that at least two nations, China and India, each with about ten times the population of Japan will race ahead while the politicians and bureaucrats dilly-dally. To his credit, Dr. Hatoyama has visited both China and India soon after taking office.

Further, with the Japanese debt load being really high, there does not appear to be any new approach to deal with it and at the same time enable growth. Having initiated and organized the world's first debt for health research swap, I had suggested an innovative way for debt to be managed to ensure a sustainable, growth-focused pathway, and indeed it can be built on further.

Over the years, governments set up advisory committees comprised mostly of those from a previously revered generation, whose reports few people have ever even read. It is time to tap the energy and enthusiasm of another generation, especially those with deep professional and personal ties to Japan. And, most certainly, not the time for yet another Prime Minister to resign.