How Olympus Should Refocus

In his latest column for Bloomberg Businessweek online, Drucker Institute Executive Director Rick Wartzman takes a look at the accounting scandal gripping Japanese camera maker Olympus.

Wartzman notes that former Olympus chief executive, Michael Woodford, who blew the whistle on the company’s decades-long effort to hide more than $1.5 billion in losses, has rightfully become a hero in many eyes. But Wartzman also explains that Woodford, who is actively trying to reclaim his old job, earned a reputation for being a micromanager. [EXPAND More]

“In spite of Woodford’s popularity and record of operational success during his 31 years at Olympus,” Wartzman writes, “it is worth asking if his tendency to forcefully press his opinion on the smallest of matters—down to what kinds of personal items employees can keep on their desks, as described this week in a Wall Street Journal profile—is really the best way to manage any company.”

Wartzman notes that Peter Drucker “very much appreciated leaders who pay attention to the details. . . . But the idea is to inspire every employee to adopt such a mind-set on his or her own—not to try and command it from on high.”

“Start empowering them by making sure they are trained properly to do their jobs, and then give them responsibility to do it,” Wartzman quotes Drucker as saying. “Provide room for failure.”

“For instinctively heavy-handed executives,” Wartzman writes, “this can prove difficult.” But, in the end, the “managers on the firing line” are “the ones on whose performance everything else ultimately rests,” Drucker pointed out in Management: Tasks, Responsibilities, Practices. “Viewed structurally and organically, it is the firing-line managers in whom all authority and responsibility center; only what they cannot do themselves passes up to higher management.” [/EXPAND]