I have learned my most important lessons about business in the forest.
My first lesson came 37 years ago, days after I graduated from the University of British Columbia. I was asleep. This was unfortunate, because I was driving through the Canadian Rockies at the time, headed toward a cliff. After waking up two days later in the hospital, with my jaws wired shut, I had plenty of time to reflect upon this incident.
Since then, I have come to believe that the global business community is driving quickly toward a cliff, with its eyes closed, and will soon suffer a similar fate. If we opened our eyes, we would see that 600 million of the earth’s inhabitants in Europe, Japan, and the United States enjoy the material benefits of industrialism and that 2.5 billion more from China, India, and the former Soviet republics will join us. After them, the final 3 billion deserve the same. Yet to accomplish that goal today, we would need the resources of three planets. But we have only one. Thus our businesses need to begin creating affluence without effluence.
I am often told the needs of business and environment conflict-that the highest mission of a corporation is to maximize profits. But in the long term, there is no incompatibility. For example, a large market will arise for photovoltaic solar cells, especially in the developing world. Mitsubishi’s work on such devices serves the company but also the global environment. Ultimately, profit is just money-a medium of exchange. You always trade it for something else. We don’t run our business to earn profits. We earn profits to run our business.
And imagine how creative, how productive, how ecologically benign our businesses could be if we ran them according to the design principles of the rainforest. With thin soil, few nutrients, and almost no resources, rainforests could never qualify for a loan. Yet rainforests are more productive than any business in the world, home to millions of species of plants and animals, so perfectly mixed that they sustain one another and evolve into ever more complex forms. These environments excel by adapting to what they don’t have.
Emulating the rainforest means following basic principles of ecology:
1. Get feedback. In the rainforest, feedback leads to Darwinian evolution of a complex array of diverse organisms.
Individual humans have excellent feedback systems-our eyes, our ears, our minds. But in our companies and communities, our collective feedback systems are not so well developed. My priority at Mitsubishi Electric is to create the world’s best corporate feedback system so that we know the costs and benefits of every product-including the social and environmental needs we can help fulfill-better than any other electronics company. In business, feedback indicates the potential for market demand. If consumers favor products and companies that avoid doing harm to the environment, then an alert company will profit by making such products. For example, Mitsubishi developed one of the first refrigerators that did not use chlorofluorocarbons-the chemical responsible for eating away the ozone layer-and is now a leader in that market.
2. Adapt and change. It is not enough to see the cliff-the opportunities. We must turn. We all know that what gets measured gets done. Thus starting next year, Mitsubishi Electric will track not only quarterly profits but also our facilities’ level of polluting emissions and how efficiently they use resources. We will also create incentives that reward people when they take steps to reduce damage to the environment. Such rewards might go, for example, to those at the company who develop a television picture tube that does not contain lead and that therefore can be disposed of in a landfill without poisoning the earth.
3. Fit a niche. In the rainforest, conformity causes extinction. If two organisms have the same niche, only one survives. The other either adapts or dies. It is the same in many high-tech businesses. If two companies make exactly the same leading-edge product, only one survives. But in the rainforest, there are many winners. The same can be true in our economy. The question is not who is most fit, but where we best fit. If we fit-solve a social problem, fulfill a social need-we will survive and excel.
But what are most companies doing today? They are downsizing radically, desperately seeking the lowest cost. It is smarter to differentiate-to create distinctive products and fill unique niches. Mitsubishi learned this the hard way. We found we could not compete by always selling the cheapest TVs, stereos, and appliances. Rather than kill or be killed by our competitors, we must sidestep them by creating unique products that appeal to particular consumers.
4. Cooperate. The rainforest’s vitality and diversity stem from the fact that all the organisms together create a more efficient whole. Today, as companies grow different, we need each other to fill our gaps. Mitsubishi, for example, no longer expands simply by buying companies as subsidiaries. We profit more from cooperative joint ventures in which our partners retain their independence, specialty, and core competence. In one example of such a venture, Mitsubishi is working with an independent appliance dealer in Wisconsin to create a new company, Air Tech, to market a passive air exchanger and cooler that both lowers energy costs and helps prevent “sick building” syndrome. The product grew from collaboration between Mitsubishi Electric, which knew the technologies, and the dealer, who grasped the potential market for such a system among architects and builders. These cooperative relationships are now as vital to our future as are our products.
In Japan, we have two terms that help us understand why: omote and ura. Omote is the surface or front of an object-the external reality. Ura is the underlying reality. 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. The real value of the forest lies in its ura-the design and the relationships among species. And the highest mission of business is to help fully develop the human ecosystem, sustainably like the rainforest, in all our diversity and complexity.