How Sony Is Following the Japanese Scandal Playbook

DOWN: Kaz Hirai

The new Sony CEO doubles the company's projected annual loss to $6.4 billion, its worst ever, and will trim 10,000 jobs. (Big layoffs at the film and TV studios are not expected.)

The company's reaction is in line with strict codes that govern corporate Japan

Most aspects of Japanese culture are governed by a strict form, or kata, which dictates how a situation should be handled down to the finest detail.

Corporate scandals are no different, and nearly all end in the same ritual apologies, deep and long bowing of heads for the cameras, followed by a resignation or two, token or otherwise. The road to the apology press conference is also often remarkably similar: silence, denials and, finally, admission of guilt.

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The current hacking scandal engulfing Sony Pictures Entertainment is different for its Tokyo-headquartered parent in the sense that it is very much a problem made in America, but there are also elements that are eerily familiar to those familiar with corporate Japan.

One defining characteristic of Japanese corporate scandals is a lack of initial response after problems come to light, and the silence so far out of Sony Corp. in Tokyo has been deafening.  

"Japanese companies are very concerned with checking all the facts before making any announcement. Until this confirmation, they try to limit public statements as much as possible," says Dr. Jochen Legewie, head of consultancy CNC Japan and an adviser to corporations in times of crisis.  

Because the chain of command is often vague in Japanese corporations, "finding a single person or even division [that] can take responsibility can be difficult," says Legewie, who was head of communications for Mitsubishi Motors until 2004, when it was involved in a huge scandal over a defect cover-up that led to at least one death. "So, the top guys then often take voluntary disciplinary measures, such as a three-month pay cut."

Whether due to ingrained inertia or an almost allergic reaction to change, a failure to learn from past scandals has been another recurring theme for Japanese corporations.

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A prime example of this is Tokyo Electric Power Co (TEPCO), which in 2002 was exposed as having falsified at least 29 safety reports relating to its nuclear reactors dating back to the 1980s. The president and a handful of senior executives stepped down after a subsequent investigation unearthed a culture of secrecy and weak regulatory oversight.

Fast forward to March 2011, and a tsunami was swamping TEPCO's Fukushima Dai-Ichi Nuclear Plant leading to a triple reactor meltdown. It later emerged that TEPCO ignored warnings about the danger of tsunamis. A subsequent investigation unearthed a culture of secrecy and weak regulatory oversight.

While Sony's sins are not in the same league as TEPCO's, fingers are being pointed for a failure to learn lessons after the PlayStation Network was hacked in April 2011, when personal information of up to 100 million users was stolen.  

Security experts have said that the current hack would have breached 90 percent of companies' defenses. Some would say that having already suffered a major hacking, Sony should have been among the 10 percent.