Episode 369: Corporate Ninjas of Concealment: How Leaders Lose Control

(br>Why Japanese Corporate Scandals Keep Happening — And What Leaders Must Do To Prevent Them

### Why do corporate scandals keep repeating in Japan?
Japan has been hit again and again by revelations of non-compliance — from **Nissan’s faulty vehicle inspections** in 2017 to **Kobe Steel’s falsified data** and beyond. In some cases, these practices stretched on for decades before discovery.

On the surface, companies chase the mantra: “reduce costs, increase revenue.” The Board applauds, shareholders smile, and quarterly reports look sharp. But behind the curtain, corners are cut, compliance steps skipped, and procedures quietly subverted. Eventually, everything bursts onto the front page. Newspapers, evening newscasters, and magazines feast on the scandal for months.

👉 **Answer Card:** Compliance shortcuts always unravel — and in Japan the media monetises the fallout relentlessly.

### Why doesn’t leadership stop these failures?
Executives often assume systems are working. They hope rules are followed. But hope is not a system.

As Australians say after doing something incredibly foolish, often after a few drinks: *“it seemed like a good idea at the time.”* That sums up many Japanese compliance lapses. After the damage is done, leaders promise reforms, but the cycle repeats.

👉 **Answer Card:** Leaders who rely on assumptions, not verification, set themselves up for failure.

### Why is Japan a particularly tough environment for leaders?
In Japan, the **fear of failure is severe**. Mistakes invite shame, career damage, even social ostracism. So employees hide them. They withhold information, they keep bosses in the dark, they become “corporate ninjas” skilled at concealment.

The **Nissan case** made this visible. President **Hiroto Saikawa** asked why the misconduct wasn’t reported sooner. The answer? Workers believed that even if they spoke up, “the issue would not be resolved.”

👉 **Answer Card:** Cultural fear of failure in Japan fuels concealment, blinding leaders to reality.

### Can leaders ever really know what is happening?
No leader can see everything. Once an organisation scales, personal control is lost. You cannot monitor every sales pitch or back-office process. By the time you know about a major failure, it is usually too late.

But this does not mean surrender. It means shifting from blind trust to **active verification**. True leadership is not only about giving direction; it is about constantly checking what is really happening.

👉 **Answer Card:** Leaders must balance delegation with vigilance.

### What practical steps should leaders take?
To prevent scandal, leaders need to act before the fire starts. Some proven steps:

• Talk to customers directly. Ask them about service, follow-up, and delivery quality.
• Talk to suppliers. They often know about problems before you do.
• Check the systems yourself. Do not rely only on assumptions — test them.
• Audit workflows and quality processes. Do not stop at the financials. One client discovered they were paying $1,500 for a single social media post because no one verified the process.

👉 **Answer Card:** Regular audits and direct conversations uncover hidden risks before they become crises.

### Isn’t this too much work for executives already stretched thin?
Yes, it takes more time. But prevention is cheaper than rescue.

Executives of companies caught in compliance scandals are now overwhelmed with firefighting — holding press conferences, issuing apologies, and trying to salvage brand value. Imagine if half that time had been spent on prevention.

👉 **Answer Card:** Prevention consumes less time, money, and reputation than crisis management.

### Who is really in charge?
On paper, it is the boss. In practice, culture, systems, and hidden behaviours often dictate outcomes. Leaders cannot control every lever — but they can insist on transparency, demand verification, and build prevention into the corporate DNA.

👉 **Answer Card:** Leaders are only in charge when they choose prevention over assumption.

### Next Steps for Leaders
If you want to stay in charge:

1. Stop assuming. Start verifying.
2. Talk widely — with customers, suppliers, staff.
3. Audit not just numbers but workflows and service quality.
4. Treat prevention as leadership’s highest-value activity.
Because in Japan, or anywhere, the truth is the same: hope is not a system. Prevention is.