Schools for a Sustainable Future - What I Learned in the Rainforest, Part 4 October 1999

Part 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:

Get feedback.
Adapt. Change
Differentiate.
Cooperate.
Be a Good Fit.

Let me explain what I mean.

Get Feedback. I know from my drive over the cliff that 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 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 #1 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#1 to being the most effective electronics company in the world, I believe.

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

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.
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.

Be yourself, Be.

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 televisions, stereos, and 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 #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:
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. l 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?

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	Window on the Future... What I Learned in the Rainforest by Tachi Kiuchi
	Part 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: Get feedback. Adapt. Change Differentiate. Cooperate. Be a Good Fit. Let me explain what I mean. Get Feedback. I know from my drive over the cliff that 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 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 #1 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#1 to being the most effective electronics company in the world, I believe. But it is still just a start. Design principle #2 is: 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. 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. Be yourself, Be. 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 televisions, stereos, and 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 #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: 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. l 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? Introduction Part 1 Part 2 Part 3 Part 5
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