Japan (and Business Leaders) Could Learn from Chile

A 9.0 earthquake, an overpowering tsunami, and spreading nuclear fallout would overwhelm any government, even highly prepared ones like Japan, where disaster drills and sophisticated warning systems are part of daily life but are designed to deal with one disaster at a time. What does Japan (or any business) do when conventional thinking and tools no longer work in a changed environment?

Many weeks have passed and Japanese citizens and the outside world increasingly see the Japanese government’s reaction as confused, too slow, too little, and too late. Experts in other countries are bewildered that Japan has not consulted with them, yet they are eager to help if asked. This is especially relevant now after a 7.4 magnitude earthquake hit today and another tsunami warning has been issued.

The Japanese response was 180 degrees opposite from the response by the Chilean government to the 33 miners trapped 700 meters underground August 5. Governments and businesses can learn important crisis and management lessons from the different responses.

Chile’s Response Sets the Example
Chile wasted no time pointing fingers. The government cut through their bureaucracy in a way the United States and other countries don’t.

They quickly asked for superior external expertise — a Canadian oil drill, NASA drill operators, and a German cable to keep the rescue capsule from spinning.

“Chile has done this much better than we’ve done in the United States by mobilizing all resources, whether from foreign governments or the private sector,” said Daniel Kaniewski, deputy director of George Washington University’s Homeland Security Policy Institute.

Lessons for Management
From a management perspective let’s contrast what happened in Chile with what is happening in Japan.

Cognitive psychology research teaches us that:

We Think -> (then) We Feel -> (then) We Act

Therefore, to understand the actions of the Chilean and Japanese governments, we need to first understand how they thought. The Chileans exercised open system thinking that made them act differently – resulting in their sourcing, importing, and managing external skills and tools from the best brains on earth. The wonderful outcome in Chile says it all.

In contrast Japanese leaders practiced narrow closed system thinking that led them to rely exclusively on the same leaders, thinking and tools that enabled this crisis to escalate in the first place. The parallel between disaster relief and business success is uncanny:

Internal Closed System Thinking -> Failure
External Open System Thinking (New Innovation) -> Big Success

Toyota Loses with Closed Thinking, and Wins with Open Thinking
Ironically the disasters afflicting Japan follow the same scenario that happened to Toyota, one of Japan’s great global companies. In 1957, Toyota opened its first Toyopet Crown car dealership in Hollywood, California. The Toyopet was a big seller in Japan – Japanese buyers liked the 58-horsepower motor and stiff ride. However, American buyers wanted more horsepower and a softer ride. In 1960, after very low sales, Toyota abandoned the U.S. market. Even today in Toyota lore, the company admits its first U.S. car launch was a “total failure.”

The next step for Toyota was important – it sought out superior external experts such as American car customers, car dealerships, and other automotive industry leaders and it asked this question: “Where is the American car market heading?” Toyota used this superior external innovation to adapt their cars to American tastes, and started the company on the road to becoming the largest car maker in the world.

However, by 2010 Toyota had reverted to closed system thinking and isolated themselves from their customers and industry experts. The company faltered, resulting in major safety problems, driver deaths and injuries, and the recall of millions of automobiles. The brutal U.S. congressional hearings and media scrutiny that followed caused massive loss of market confidence in the company’s leaders and hammered their stock price.

This shocked Toyota’s leaders into changing back to open system ways of thinking. They embraced customers and external experts, leading once again to positive adaptations of their cars and increasing sales. Toyota’s public relations people now brag about their “external advisory panels”.

In contrast, using closed system thinking with 75% internal input leads to major failure. A good example is General Motors, which for many years used 75% internal closed system thinking. Without the governmental bailout, the company would be extinct today.

In summary, Japan’s leaders (like the Chileans) could have embraced superior external resources to stop their crisis from escalating. When they didn’t, their citizens’ needs outpaced the country’s internal resources. Responsibility for this nightmare lies in the internal narrow closed system thinking of Japanese leaders.

What does Japan (or any business leader) do when conventional tools and closed thinking no longer work in a changed external environment? The Toyota story shows us that, while innovation is important, the big wins come from using superior external innovation that already is in the external environment – for 75% of the input used to make major leadership decisions.

Japan’s government can follow Toyota’s courageous example – and use open system innovation to access the best brains on this earth – that would bring superior external thinking and tools to better address their humanitarian disaster. Then the Japanese government together with these external thought leaders can collectively help rebuild their fine country more efficiently and effectively.

In a natural disaster and in a company crisis…learning is not mandatory…and neither is survival.

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Chas Klivans spent 22 years increasing shareholder wealth as a Co-Founder and CEO until 2001, when he launched The CEO’s Navigator. The firm has developed a powerful and integrated business solution called Innovation2, which improves both wealth creation and the management team. Chas can be reached at CKlivans@OpenInnovationThinking.com.

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