Mitsubushi and RainForest Lessons

The following is a keynote address to the World Future Society on July 19, 1997, by Tachi Kiuchi, Member of the Board of Mitsubishi Electric Corporation, Chairman of the Future 500, and immediate past Chairman and CEO of Mitsubishi Electric America. Mr. Kiuchi heads the global communications and Industrial Ecology programs of the Mitsubishi Electric companies.

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Thank you for the honor and privilege of speaking with you this afternoon.

I have been fascinated by the global perspectives I have gained at my first World Future Society conference, and I appreciate all that I have learned from you.

I come to speak on the two issues most vital to the future of my business, and perhaps of the world: the environment, and the emerging information economy.

To me these topics seem intimately linked. Perhaps this is partly because I work for an electronics company, and I see our impacts on the environment.

But my most important lessons about the link between business and environment and economy did not come from my company.

My most important lessons about business and environment I learned in the forest. Let me explain.

My first lesson in the forest happened 37 years ago, days after I graduated from the University of British Columbia.

I was asleep when I got my lesson. This was unfortunate, because at the time I was driving a little British car, through the forests of the Canadian Rockies.

It is not advisable to drive a car through the Rockies when one is asleep. You might drive off a cliff, which is exactly what happened to me.

When I woke up in the hospital, I had plenty of time to reflect upon what I could learn from this incident. I remembered advice that my father had given me a few years before.

He knew I was an adventurer, and a risk taker. He liked that, but he didn't want me to have too much of a good thing. So he took me aside and told me: "Do whatever you want. But don't die."

I wanted to call my father to tell him that I had taken his good advice. But my jaw was clamped shut. So I couldn't.

He found out anyway. The Japanese Consul General saw an article on my adventure in the local newspaper, and sent it to him.

I have since passed along my father's advice to others. I think about it when people ask me what I think about SUSTAINABILITY.

To me, this is what it means: "Do what you want. Follow your purpose. But don't die."

For a young man, driving off a cliff in the Rocky Mountains teaches a valuable lesson.



It seems to me that the global business community is driving quickly toward a cliff, and we have our eyes closed.

If we opened them, here is what we would see:

Today, 600 million of the Earth's inhabitants -- in Europe, Japan, and the United States -- enjoy the material benefits of industrialism.

Soon, 2.5 billion more -- China, India, the former Soviet republics -- will join us.

And after them, the final 3 billion will seek the same. They demand and deserve to share in the benefits which we enjoy.

To do that today, we need three planets. But we have only one.

We must learn a new way of life.

We must learn to provide affluence without effluence.

We must develop prosperous human communities, with meaningful work and social equity between various groups.

And we must do so by consuming LESS from the environment, not more.

Population explosion. Habitat destruction. Resource consumption. Those are signs that may worry us. But as we approach the 21st century, I wonder if you all see, as I do, positive signs as well, signs of the dawn of an entirely new era, an era when all our businesses, yours and mine, will undergo dramatic change.

That new era could move us beyond the industrial era, when we used machines to expand human muscle. It could carry us into a new era when we expand the human mind.

To excel in this new era, Mitsubishi Electric Corporation has developed a long-range business plan. We call it Vision 21. Vision 21 challenges us to excel in several emerging business domains, all based on the use, not of raw materials and fossil fuels, but KNOWLEDGE. For example:

We make some of the world's most efficient solar cells.

We make fuel cells that turn simple hydrogen to electricity, with no pollution.

We make microchips for companies like Hewlett-Packard and Sun.

We introduced the world's first CFC-free refrigerator, and won the U.S. Environmental Protection Agency's award for our innovation.

We design and engineer technologies of the Internet, that allow us to communicate without paper, to travel without going anywhere.

We make the satellite systems that can continuously monitor the global environment, and feed that information back to nations, businesses, and people who can take action in response.

Through Vision 21, we are shifting our investments away from the ecologically harmful practices of the old economy, toward the information-based technologies of the future. We are shifting from growth based on consumption to growth based on knowledge.

The pace of change, however, is extremely fast. To succeed, we must be Agile. And we must be Creative. And that requires that we operate our businesses in bold new ways.

In the old days, we operated our businesses like they were machines. But machines are not agile. They are not creative. They do not respond well to change.

In the future, we need to operate our businesses according to a different model.

That brings me to how I got my second lesson from the forest.

Around Earth Day five years ago, I received a small stack of letters from a class of elementary school students, asking me to do what I could to stop harming the rainforest.

The letters confused me at first. We are an electronics company. We have no timber holdings. We make no forest products. We use very little paper or wood. What's the connection?

It turned out they were talking about another company that shares the Mitsubishi name. We've been separate companies for 50 years, since 1946. Not subsidiaries, not divisions. Separate. But no one knows this except us. Everyone thinks they own us, or we own them, or somebody else owns us all.

So long ago, we stopped trying to convince people we are separate companies. It's much easier just to try to do something about the problem, instead of worrying about the name confusion.

Solving problems and fulfilling needs, after all, is how businesses discover new markets, and generate new profits. Even better if the company isn't invested in whatever caused the problem -- so there's no trapped capital to lose.

So on my next trip to Asia, I visited the Malaysian rainforest. I met with expert foresters. I visited timber cutting sites, as well as reforesting and research operations. I spoke with visionary environmentalists and executives. What I learned changed my life as a corporate executive.


I learned that saving the rainforests -- in fact, saving the environment -- is more than an environmental necessity. It is a business opportunity. In our case, it is an opportunity to further advance Vision 21, to pursue business opportunities that use creativity and technology to SUBSTITUTE for trees, for resources of any kind.

After I visited the rainforest, we spoke with Amory Lovins, the famous expert on resource efficiency. We asked him to lead a global study team, to discover what opportunities BUSINESS had to save forests. He agreed, and established the Systems Group on Forests. In a few weeks, his Systems Group will release a series of reports that show how businesses like yours and mine can help to REVERSE the systemic causes of forest destruction.

If you might want to take advantage of these opportunities, and invest in business pursuits that could help save the rainforests, please give me your card.

But I learned something else in the rainforest, something more profound. I learned how we might operate our company not just to SAVE the rainforest, but to BE MORE LIKE the rainforest.

Let me explain. As I said earlier, today's fast-changing business environment requires that we be alert, and responsive. Agile, and creative.

To do so, we must structure our company so we are a LEARNING ORGANIZATION. Not top-down, but bottom-up. Not centralized, but decentralized. Not limited by rules, but motivated by objectives. Not structured like a machine -- which cannot learn -- but like a living system, which can.

When I visited the rainforest, I realized that it was a model of the perfect learning organization. A place that excels by learning to adapt to what it DOESN'T have.

A rainforest has almost no resources. The soil is thin. There are few nutrients. It consumes almost nothing. Wastes are food. Design is capital. My model for Mitsubishi Electric. An organization that is like a rainforest.

Here is what a banker would say if asked to make a loan to a rainforest: "No way!"

After all, it has no productive assets.

Yet rainforests are incredibly productive. They are home to millions of types of plants and animals. More than two-thirds of all biodiversity in the world. Those plants and animals are so perfectly mixed that the system is more efficient, and more creative, than any business in the world.

Imagine how creative, how productive, how ecologically benign we could be if we could run our companies like the rainforest?

How can we begin?

By operating less like a machine, and more like a living system. An Industrial Ecosystem.

That is why, at Mitsubishi Electric, we have begun to adopt an environmental management system founded on principles of Industrial Ecology.

For us, this means two things: First, we must have our eyes wide open, and see the environmental costs and benefits of our business. Second, based on what we see, we must take action.

See costs -- and reduce them.

See benefits -- and increase them.

See needs -- and fill them.

Not just inside the company, but throughout the community, locally and globally. We must take responsibility for the impacts of our products, from cradle to cradle.

So instead of keeping environmental affairs separate from the core operations of our company, we are integrating it.

For example: We recently combined our Environmental Management and Quality Management programs. From now on, it is not just quality of product. It is quality of the Earth.

We also combined our Product Take-Back effort with our Design for Environment program. The United Nations awarded us the Habitat II award for this initiative. I have copies of an article on this program, for those of you who are interested.

We combined ISO 14000 -- the new international environmental management standard -- with our Natural Step program. The Natural Step is a program developed in Sweden to help companies avoid products and processes that violate principles of sustainability in nature. We recently trained all our North American managers in The Natural Step, the Swedish-based program that helps companies operate within nature's limits. I am told I was the first CEO of a major company to take The Natural Step training. Now we are working with Paul Hawken and Karl Henrik Robert (row-BEAR) to help bring the training to Japan.

Finally, we are looking for ways to combine our efforts with those of others. Maybe some of you.

To do that, we are sponsoring a series of roundtable discussions about Industrial Ecology and advanced resource productivity. We call the participants in these discussions The Future 500. Time will tell whether the name is correct.

I invite you now to join in this process.

If The Future 500 and Industrial Ecology are subjects that interest you, I hope you will join me at two events -- write the dates in your calendars now:

September 18 to 21 -- the Ecotech conference, in Monterey, California.

And April 24 to 26, 1998 -- Industrial Ecology III, in San Francisco.

Through these discussions, we intend to find business opportunities that will help preserve the Earth. We intend to redirect our investments in ways that will be as productive as a rainforest.

Which brings me to my third lesson from the rainforest.

How can rainforests be so productive when they seem to have no capital assets?

They are productive because their capital is hidden in their design.



In fact, the most important natural capital is its DESIGN. Its RELATIONSHIPS. Like those we see in the rainforest, or in our communities, or in our companies.

In Japan we have two terms to describe this: omote and ura.

Omote is the surface or front of an object, ura its back or invisible side. Omote and ura. External reality and underlying reality.

When I visited the rainforest, I thought: As business people, we have been looking at the rainforest all wrong.

What is valuable about the rainforest is not omote -- the TREES, which we can take out.

What is valuable is ura -- the DESIGN, the RELATIONSHIPS, from which comes the real value of the forest.

When we take trees from the forest, we can ruin its design. But when we take LESSONS from the forest, we further its purpose. We can develop the HUMAN ecosystem into as intricate and creative a system as we find in the rainforest. We can do more with less. Grow without shrinking.

Ura, not omote.

We are beginning to learn the value of this in business. Consider the microchip. A microchip's omote -- its physical content -- isn't very valuable. Silica is the cheapest and most abundant raw material on the planet -- sand. But a microchip -- it's shape, its design, its unseen artistry -- is extraordinarily valuable. Yet it comes from a source that seems almost unlimited -- the knowledge and inspiration we draw from the human mind and spirit. That is the most valuable resource, and the most abundant.

This becomes the most important question for today's corporate executives to answer:

How can we redesign, reinvent our corporations, so that they fully harness the human mind and spirit? How can we transform our top-down hierarchies, our conformist monocultures, to engage the magical creative qualities we see in the forest?

That brings me to LESSON NUMBER 4:

TO SUCCEED IN THE NEW ECONOMY, WE MUST OPERATE BY THE DESIGN PRINCIPLES OF THE RAINFOREST. The design principles of nature's most advanced learning organization.

There are at least five of these design principles -- and no doubt many more that I have yet to learn. Listen to them carefully. See if you agree, and see if you can tell what connects them.

They are:

1. Get feedback

2. Adapt. Change.

3. Differentiate.

4. Cooperate.

5. Be a Good Fit.

Let me explain what I mean.

1. Get Feedback.

I know from my drive over the cliff, there are two kinds of feedback: advance, and direct.

Advance feedback is when we see the danger, and have time to change.

Direct feedback is when we don't see the danger, drive off the cliff, and are hurt or die.

This is the path chosen by the 99% of all species who have lived on the earth, and are now extinct.

Needless to say, I like advance feedback better.

Humans have the best individual feedback systems anywhere in nature -- our eyes, our ears, our minds. But our collective feedback systems -- at the community and company level -- are nowhere near as developed.

This is now my Number One Personal Priority: To create at Mitsubishi Electric the best system of corporate feedback in the world. So that we know the costs and the benefits of every product and service we create, and the social and environmental needs we can help fulfill, better than any other electronics company.

We will do it by listening -- like I am here, today and yesterday.

But even more, we will do it by measuring, in ways I will describe in a moment.

This -- getting feedback, by listening and measuring -- is step number one to being the most effective electronics company in the world, I believe.

But it is still just a start. Design principle number 2 is:

2. Adapt. Change.

It is not enough just to look ahead and see the cliff. We must turn. We must change.

For that, at Mitsubishi Electric America we will create incentives. When people are creative and innovative -- when they find ways to reduce costs and enhance benefits -- they will be rewarded.

We all know that what gets measured gets done. So we will no longer just measure quarterly profits, return on investment, and GNP. Beginning in 1998, we will also measure three new things: pollution intensity, resource productivity, and quality of life.

We will create systems that reward people whenever they think and act to reduce costs or increase benefits -- inside or outside our company.

We have already begun -- our decentralized management and team-based structure encourages people to be creative about reducing costs internally. Now we want to do the same to reduce costs for the environment, for society as a whole. We want to eliminate the last vestiges of our machine-age structure, and apply the principles of Industrial Ecology to become as creative and innovative as a living system.

We will also share our methods with every other company, through the Future 500.

3. Differentiate -- Be Yourself, Be Unique.

In the rainforest, conformity leads to extinction. If two organisms have the same niche, only one survives. The other either adapts, or dies.

In today's economy, the same happens. If two businesses have the same niche -- make exactly the same product -- only one survives. The other adapts, or dies.

So what are most companies today doing? They are trying to be the one that survives. Cutting costs. Downsizing radically. Desperately seeking the lowest cost.

We think: it is much smarter to differentiate. Create unique products, different from any others. Fill unique niches. Don't kill our competitors, or be killed by them. Sidestep them instead.

Only then -- after we differentiate -- is it time to reduce costs, and grow more efficient.

We have learned this the hard way. We sell millions of TVS, stereos, appliances. We cannot compete by being the lowest-cost operator. Instead, we must offer products that are different, distinctive. We must choose and fill our unique niche.

This is new for many in Japan. The philosophy used to be: Don't differentiate. Don't be different. If the nail sticks out, it will be hammered down.

Now, I say our philosophy must be: Stick out, or you will rust away.

By being different, we are also better able to fulfill design principle number 4:

4. Cooperate.

Today, many people think "competitiveness" is the key to business success.

Their thinking is out-of-date.

In the old economy, when we were all the same, we competed. We had no choice -- we all made the same products. We filled the same niche. We could not coexist peacefully in the same community. In the end, only one of us could survive.

Today, as we grow different, we learn that none of us is whole. We need each other to fill in our gaps.

For example, at my company, we no longer look to grow bigger simply by acquiring more and more companies as subsidiaries.

Instead, we are engaging in cooperative joint ventures with many others. Each company retains its independence, its specialty and core competence. Together we benefit from our diversity.

Which brings me to design principle #5:

5. Be a Good Fit.

We used to say, only the fittest survives. There is only one winner. But in the rainforest, there are many winners.

The same can be true in our economy.

In the old, uniform, monoculture economy, only one form wins, only the most fit survives. At least until a new invader wipes him out.

In this new, diverse, rainforest economy, it is not a question of who is MOST fit. It is a question of where we BEST fit.

If we fit -- if we solve a social problem, fulfill a social need -- we will survive and excel. If we only create problems, we will not.

I am often asked whether the needs of the corporation and the needs of the environment are in conflict. I do not believe they are. In the long run, they cannot be.

Conventional wisdom is that the highest mission of a corporation is to maximize profits. Maximize return to shareholders.

That is a myth. It has never been true. Profit is just money. And money is just a medium of exchange. You always trade it for something else.

So profits are NOT an end. They are a means to an end.

My philosophy is this: We don't run our business to earn profits. We earn profits to run our business. Our business has meaning and purpose -- a reason to be here.

People talk today about businesses needing to be socially responsible, as if this is something new we need to do, on top of everything ELSE we do. But social responsibility is not something that one should do AS AN EXTRA BENEFIT of the business. The whole essence of the business should be social responsibility. It must live for a purpose. Otherwise, why should it live at all?

That suggests the final lesson I learned -- so far -- from the rainforest:


To take our place in the global ecosystem. In all our diversity and complexity.

What I learned from the rainforest is easy to understand. We can use less, and have more. Consume less, and be more. It is the ONLY way. For the interests of business, and the interests of environment, are not incompatible. They are the Japanese omote and ura, the Chinese yin and yang, product and process, economy and ecology, mind and spirit -- two halves.

Only together can we make the world whole.

Global Futures. All rights reserved.

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