Prologue
From the past to the present, cases continue in which corporate scandals cause a loss of trust, leading to a decline in corporate brand value and, at worst, corporate bankruptcy.
Recently, companies seem to be strengthening their morals by reinforcing CSR (corporate social responsibility) and establishing compliance programs, but
there are many cases that make me wonder whether companies are really strengthening their morals.
In this column, I would like to raise once again the importance of moral management.
*Many examples of corporate scandals and how to deal with them are posted on the web and elsewhere, so they are omitted here.
Three cases I experienced
The three cases I am about to introduce are ones I actually experienced within the past two years.
(1) The disappointing reason behind a certain consulting firm's nonpayment
This case involves a consulting firm belonging to a certain zaibatsu-affiliated group.
One of our producers was asked to support the “business development of the consulting firm itself.”
The firm wanted to make its consulting services remote, and our company was to carry out the system development.
As the project progressed and we were just about to deliver, the person in charge contacted us to say they could not pay for the work done so far.
When asked why, he said, “While the project was in progress, we also asked a credit research company to check your company's credit, and the result was negative. As a result, we cannot get credit approval internally.” There were plenty of purchase orders, estimates, project emails, documents and so on, and even from a legal standpoint, such a statement sounded like nothing more than a ploy to fool a child.
We had fallen victim to a similar tactic in the past and won a civil suit 100%, so I was not shaken at all.
I immediately had our lawyer contact the consulting firm and the credit research company.
The truth came out quickly.
In short, it seemed the person in charge at the consulting firm had pushed ahead with this business development without proper approval; no budget had been approved,
and naturally the firm could not pay us. So he had no choice but to tell that lie.
Our lawyer, too, considered this a matter that could fall under both criminal and civil law, such as defamation and the Unfair Competition Prevention Act,
and sent a notice to that effect to the consulting firm.
Needless to say, that very day a visibly shaken superior from the consulting firm came to our office to make the payment & apologize.
However, since this consulting firm bears the name of a zaibatsu-affiliated group, I wondered what they would have done if we had sued and the information had leaked to the media.
The losses, such as a sharp drop in share price, would probably have been immeasurable.
It was a case that made me wonder whether the consulting firm was properly training its staff.
(2) Copyright theft by a major printing company
This case involves a certain major printing company.
We had received requests from that company and made several proposals.
One was for an exhibition.
It was not a large budget, but it was a pitch nonetheless, and we created renderings of booth decoration for a certain IT company's exhibition,
and prepared a proposal that also included staging and operation plans.
Later we were contacted and told we had lost the pitch.
One day, when I had forgotten about that pitch, I went to an exhibition where one of our clients was exhibiting.
It was the same exhibition we had proposed for in that pitch, and remembering it, I went to see what kind of decoration the company we had proposed to had ended up with.
And then...
A design I felt I had seen somewhere before.
Yes, it was exactly the same as the design we had submitted.
It was outright plagiarism.
Around the same time, one of our staff contacted me and we discovered that copy we had submitted for a certain convenience store's campaign
had also been plagiarized.
Then, around the same time, yet another case of plagiarism came to light.
This printing company is a large company that even runs TV commercials, but
if these facts became public,
it would be another big problem.
What made this case memorable was that,
unlike the consulting firm mentioned earlier,
a different person was in charge of each project.
This suggests that a “habit of plagiarism” is part of the company's culture itself.
(3) The Subcontract Act and a certain zaibatsu-affiliated manufacturer
Finally, let me introduce the case of a certain zaibatsu-affiliated manufacturer.
When we signed an outsourcing contract, I noticed something odd about it.
Incredibly, the payment terms were five months.
Under the Subcontract Act, payment terms are determined by the capital of the ordering party and the capital of the contractor.
In this case, the ordering party, the zaibatsu-affiliated manufacturer, would normally have to pay us within two months from the date of delivery.
If it fails to comply, it will be listed on a government agency's website as a company engaging in improper practices, as a public warning.
We therefore (with good intentions and politely) pointed this out to the manufacturer and asked them to correct it.
However, I received a phone call from his superior, who was furious.
“Every company uses these payment terms. What are you people going on about now?”
“Um, you'd better look into the Subcontract Act. If things stay like this, your company will be in serious trouble.”
“Are you threatening us?”
“No, it's nothing like that...”
I was already exasperated, so I didn't get angry,
and since I had another meeting coming up,
I said, “Just look into it, please. We can talk after that,”
and hung up.
Ten minutes later,
while I was on the train, he contacted me.
He sounded quite apologetic.
“I'm very sorry about earlier. We have just changed the payment terms.”
“Ah, as long as you understand, that's fine.”
I still remember feeling sad, thinking, “This person has probably been using the size of his company as a shield to intimidate many companies,
and he has never been educated in legal knowledge either.”
The fact that large companies break the law
The above are just a few examples I have experienced recently, so not all large companies necessarily do such things.
However, I have also heard of many such cases from colleagues in the same industry.
So my impression is that
while large companies have brand power, they have often become arrogant.
Do they think they can get away with anything because they are a large company?
In reality, however, the actions of such staff are causing them to lose the trust of customers and business partners.
One additional, personal case: the other day, a major cable TV company contacted me and said it needed to check the line inside my condominium unit.
They said that if they did not check all the lines, it would cause problems for the entire building, and that the condominium owner had also requested it.
Later, as scheduled, a technician came to my unit.
I kept working while he promptly checked the line in my unit, but
partway through he tried to sell me a new service.
I said, “Wait a moment. Do you know that making a sales pitch without prior notice is a violation of the law?”
He apparently didn't know, and turned pale.
And as he was leaving, he asked, “Actually, I'm a university student working part-time, and I'm thinking of joining this company. What do you think?”
I was surprised by the sudden question, but I answered as follows.
“I don't know much about this company, but at the very least you'd be better off joining a company that puts its customers first,”
I replied.
But a major cable company having a university student commit illegal acts—that alone instantly made me dislike this company.
The true brand power of companies without brand power
The companies mentioned above also carry out branding activities such as TV commercials.
Naturally, they are companies everyone knows.
However, the impression (brand) these companies gave me was the worst.
Do they really understand what branding is?
At the very least, a truly genuine corporate brand is not “large company, well-known company = brand power,”
but rather “even without name recognition, strong products and services, supported by customers and business partners = brand power.”
Isn't that what such a company is?
Then what is the way to cultivate a true corporate brand?
I think the poor companies described above lack moral spirit, even before their products and services.
There is probably also a corporate culture that neglects moral spirit.
In corporate branding, logos, products, services, improving employees' skills and so on are certainly important, but
before that, I believe moral spirit must be the foundation. Yes, I believe morality is an important factor in corporate branding.
How to practice moral management
Large companies like those in the cases above surely have compliance programs and CSR.
Even so, because moral spirit is absent, they fail to notice the potential loss of corporate value resulting from scandals, or the decline in their brand power.
I think these companies should first realize the essence of a brand and break away from CSR and compliance programs that exist only in form; going forward, moral management (ethical management) will become essential for companies.
I would now like to describe what companies should do to break through this situation, but in fact our company is developing a moral management scheme.
We hope to introduce its methodology in this column on another occasion.
Even so, for those who want a “remedy” right now, I have a recommendation: “watch and read Japanese folk tales.” They contain many of the theories that form the foundation of moral management. (Half serious, half joking.)