Tale of Olympus's CEO, fired after just two weeks

Fri Oct 14, 2011 8:28am EDT

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Oct 14 (Reuters) - Promoted to CEO just two weeks ago, Michael Woodford was a star at Japanese camera and endoscope maker Olympus Corp , where he joined as a salesman in a British subsidiary more than three decades ago.

His bosses were so impressed by the Briton's cost-cutting efforts and deep understanding of the local culture that they made him CEO, adding to the role he took in April of President -- the first non-Japanese to run Olympus.

In a glowing tribute on his appointment, the Board's Chairman said Woodford's change initiatives had an "extremely positive effect" and Olympus praised him for showing "great sensitivity and understanding of the different cultures."

On Friday, the same board fired the self-confessed "loud-mouthed" and "strong-headed" executive, saying he had shaken up 92 years of the firm's management culture.

The announcement marked an astonishing fall from grace for someone only months into his role as president and week's into his role as CEO.

When Olympus appointed Woodford as CEO, it said the board had been "extremely pleased with progress under Mr. Woodford's leadership in this role (president), which has exceeded the expectations at the time of his appointment."

It was also surprising because Japanese boards rarely fire top executives and the status quo is encouraged.

Woodford was credited with successfully cutting costs in Olympus' European division. Born in the English city of Liverpool, Woodford joined KeyMed, a medical subsidiary of Olympus in 1980 after working for Schweppes.

The British Chamber of Commerce in Japan, which put Woodford on the cover in its latest issue, quoted the straight-talking executive in an interview as highlighting the difficulties of instigating change in Japan's corporate culture.

In a rushed news conference on Friday, Olympus Chairman, Tsuyoshi Kikukawa, said: "We hoped that he could do things that would be difficult for a Japanese executive to do."

But the Olympus board said Woodford "has largely diverted from the rest of the management team in regard to the management direction and method and it is now causing problems for decision-making by the management team."

STATUS QUO

Woodford's exit spooked investors and the shares plunged nearly a fifth of its value. Brokers were quick to cut their ratings and earnings estimates.

Woodford told Reuters in May he would cut jobs at the 35,000-strong workforce to achieve his mid-term cost targets and reverse a slump in earnings while avoiding forced redundancies in Japan for cultural reasons.

"Companies, particularly when there are good times, put on corporate fat," he said. "Sometimes, the strong yen, the disaster or other things focus your mind," he added, referring to the March 11 earthquake and tsunami that struck northeastern Japan.

Woodford, who left Japan three days before the earthquake, rushed back 10 days later, despite an environment of fear and uncertainty and some opposition from his family.

"I came over on an ANA flight and I was the only Westerner on the plane. Before we landed, the air hostess got me eight bottles of water, and I was thinking-what have I got myself into?," he said in the interview with the British Chamber of Commerce in Japan.

Woodford lives in a new large apartment complex next to one of the biggest parks in central Tokyo in an upscale neighborhood favored by expatriates. Efforts to contact him were unsuccessful on Friday.

Some comments on the Internet pointed to Woodford's exit as symbolic of Japan Inc's slow attempt to change.

"Mr Woodford failed to understand that efficiency, modernization, speed of implementation, shareholder value and change are not the Japanese way of doing business, so he had to go and we will replace him with a clone of the former Japanese CEO's so we can go back to the old ways," read a post under name of tokyokawasaki on website japantoday.com. (Additional reporting by Isabel Reynolds and Tim Kelly in TOKYO; Editing by Neil Fullick)

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