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:
Be a Good Fit.
Let me explain what
Feedback. I know from my drive over the cliff that there are two
kinds of feedback: "advance" and "direct".
This is the path
chosen by 99% of all species who have lived on the earth, and are
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
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:
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.
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,
So what are most
companies today doing? They are trying to be the one that survives.
Cutting costs. Downsizing radically. Desperately seeking the lowest
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:
Today, many people think "competitiveness" is the key
to business success.
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
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:
a Good Fit. We used to say, "Only the fittest survives".
There is only one winner. But in the rainforest, there are many
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
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
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?