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 The Tokyo-based company said Woodford had "largely diverted" from the rest of the management team and that the rift was causing decision-making problems.Its board of directors judged that the company could not fulfill its strategic plan under Woodford and unanimously demoted him to director, Olympus said in a statement. It appointed Chairman Tsuyoshi Kikukawa to replace him.
The unexpected news jolted investors and triggered a sharp sell-off. Olympus shares shed more than 17 percent to 2,045 yen ($26.60) on the Tokyo Stock Exchange.
Woodford, a 51-year-old British national, was among a handful of foreigners leading major Japanese companies. He became Olympus' first non-Japanese president in April amid a push to make itself more globally competitive.
Woodford did not attend Friday's board meeting.
Kikukawa offered some details of the discord at a subsequent press conference. He said Woodford made decisions for the entire organization without consulting division heads, leading to confusion within the company.
"He could not overcome the cultural barrier of Japan and Japanese companies," said Kikukawa, according to Kyodo News agency.
Decision making in Japanese companies is often more consensus-based than in Western corporations.
But some non-Japanese executives, like Nissan Motor Co.'s Carlos Ghosn, have managed to deftly navigate the cultural differences. Ghosn is widely respected in Japan for spearheading a massive restructuring at Nissan and saving the company from bankruptcy.
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 Friday's announcement sharply contrasts a glowing statement Olympus released just two weeks earlier giving Woodford the title of chief executive officer, in addition to his existing titles of president and chief operating officer.
Dated Oct. 1, the statement described the board as "extremely pleased with the progress made under Mr. Woodford's leadership" and that his performance had exceeded expectations.
His initiatives have "not only already had a positive impact on the financial results, but also in creating an environment where change is not only accepted, but actively encouraged," Olympus said at the time.
Olympus spokesman Akihiro Nambu said he could not comment on the discrepancy between the two statements.
Woodford is a 30-year veteran at Olympus, first joining British subsidiary KeyMed in 1981. He rose to become executive managing director of Olympus Europa Holding GmBH and is credited with improving profits in the region through cost cutting and restructuring.
[Associated
Press; By TOMOKO A. HOSAKA]
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