The first time Tokyo listed Olympus appointed a foreign CEO it ended in tears.
Michael Woodford’s tenure was short-lived. Woodford questioned huge fees paid to unknown companies which had links to criminal entities. Dismissed, he sued Olympus. The case concluded with a substantial out of court settlement in Woodward’s favour.
Then Olympus was synonymous with cameras. That business has since been sold to private equity.
Now Olympus’s priority is med tech, specifically endoscopes and therapeutic devices.
Although Olympus is listed in Japan, only 16% of its revenue is from Japan. Flick through its annual report, it waxes lyrical about Olympus becoming a ‘truly global’ company.
Last week Olympus announced plans to appoint its second foreign CEO, German Stefan Kaufmann.
In the US over 30% of CEOs of big corporates are foreign. It’s a similar number in Germany where a third of DAX-30 executives have foreign passports. In major Japanese corporations it’s now around 7%. In China, foreign CEOs are almost unheard of.
Sony was once run by Howard Stringer, a Welsh-American brought in when the business was loss making and challenged by Apple and Samsung. Stringer took Sony into the media business.
Takeda, a Japanese drug firm, is currently run by a Frenchman, Christopher Weber. He took the controversial decision to buy Shire, a large pharmaceutical business over objections from the Takeda family.
Amongst major Japanese food businesses foreign directors are few and far between. Kirin which has been more active than most on International markets has one non-Japanese, non executive board member.
Why has Olympus appointed Mr Kaufmann CEO?
International markets are its future source of growth. Not only is Japan’s population shrinking but spending on healthcare is much higher elsewhere. The US has the highest per capita spend with countries like Switzerland, Germany and Norway following closely.
Although endoscopes are the main source of revenue, Olympus will look to expand its category footprint. The company has acquired just 6 businesses in the last 5 years. Japanese companies are much better at organic growth than M&A, in my opinion.
Intuitively, I suspect the Olympus board would have preferred a Japanese national as CEO. It is notable the current CEO, Yasuo Takeuchi is being promoted to Chairman, however at 64 age is not on his side.
This is an aside, but an important one. Last week I read a report on business school rankings. There was not one Japanese business school in the top 100.
There is a severe shortage of Management talent.