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How Mitsubishi Electric CEO Tachi Kiuchi Created a “Living Systems” Approach to Business

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As a 27-time marathon runner and a skydiving enthusiast, Tachi Kiuchi has always been a “get-involved” type. Knowing his adventurous streak, his father advised him as a youth to follow his purpose but keep his eyes open. As Chairman and CEO of Mitsubishi Electric America, he brought this drive forward to champion Mitsubishi’s environmental sustainability efforts at a time when the field and practice was newly emerging. Kiuchi made a strategic shift to operate Mitsubishi less like a machine and more like a living system which can learn and adapt, and thus, transitioned the company successfully from the old, industrial economy to the new, information economy.

Converting a Challenge into an Opportunity

Tachi Kiuchi, Mitsubishi, America Knows How

In 1993, Kiuchi found his company at the center of an environmental boycott – they were accused by the Rainforest Action Network (RAN) of destroying the world’s rainforests. As it turns out, Mitsubishi Electric had no investments in tropical timber. The real culprit was the Mitsubishi Corporation, which at the time held approximately three percent of the world’s timber market. Mitsubishi Corporation shared a highly recognizable name with Mitsubishi Electric and Mitsubishi Motor Sales of America (also targeted by RAN), but it was otherwise a separate entity.

Rather than ignore the issue or go on the defensive, Kiuchi chose to meet the challenge head-on. If his company’s name was associated with deforestation, he felt it was his responsibility to learn about the impacts and address them. In order to understand the situation first-hand, he paid a visit to Borneo, Malaysia, to see how deforestation was affecting the environment and community. What he learned changed his business philosophy forever. He realized that the rainforest was a model of a perfect learning organization – it was incredibly productive, while using very few resources. To thrive in the new economy, businesses had to be more like the rainforest and shift from growth based on consumption to growth based on knowledge. “We can use less, and have more. Consume less, and be more. It is the only way,” he says. “The  interests of business and the interests of environment are not incompatible.”

Collaboration for Collective Impact: Stakeholder Engagement

Kiuchi and Mitsubishi Motors CEO Richard Recchia were determined to engage directly with the activists at RAN and find a way to end the boycott. To demonstrate Mitsubishi’s new awareness of the issue, Kiuchi gave a keynote address about the rainforest at Ecotech, a technology-themed environmental conference. This helped convince RAN that Mitsubishi was open to a meaningful dialogue. Bill Shireman, then head of the non-profit consultancy Global Futures, was brought in to facilitate an exchange between Kiuchi, Recchia, and RAN. Says Shireman, “They realized they could accomplish more together than as adversaries.” The organizations began collaborating on a strategy for rainforest protection that would benefit all parties.

By partnering with RAN in this way, Kiuchi and RAN helped establish the practice of direct stakeholder engagement – having in-depth dialogues with all parties who are affected by your organization. Though groundbreaking at the time, this process is now a field in itself and a key component of a successful corporate sustainability plan.

Leveraging Buying Power to Drive Progress

Tachi Kiuchi, Mitsubishi, America Knows How

With the insights he had gained from his rainforest explorations, Kiuchi recognized that deforestation was a problem of industrial-economy short-term thinking. The solution required a new-economy, systems approach that involved the whole supply chain.

Kiuchi, Shireman, and Recchia began with the premise that environmental and economic progress could be directly related. They realized that by leveraging their buying power, they could help change market demand and create environmental and social benefits while enhancing their reputations. Together they drafted the Mitsubishi RAN agreement, in which Mitsubishi Electric and Mitsubishi Motors committed to purchasing only sustainably harvested timber, and phasing out paper products from old growth sources. They also pledged to reduce their paper usage by 75 percent. With Mitsubishi Electric and Mitsubishi Motors as the first two companies to make these commitments, RAN used this agreement as a precedent to engage more than 400 other companies, including 3M, Kinkos, and Home Depot, many of whom then adopted their own forest protection initiatives. As the market began to demand more sustainably harvested products, the timber companies began to respond and shift their practices as well.

Along with their purchasing and paper usage commitments, Mitsubishi Electric and Mitsubishi Motors created a Forest Community Support Program to help restore and preserve old-growth forests and protect indigenous communities.

The companies also agreed to set up a joint environmental accounting process to measure their impact. This policy (and the software tool that was created to measure it) had another far-reaching effect – it helped give rise to sustainability reporting, now a common business practice for measuring corporate social and environmental performance.

Openness and Leading by Example

Along with the commitment to sustainable paper goods, Kiuchi also helped implement paper-free processes at Mitsubishi Electric, pushed to integrate more environmental planning into the design of products, and established a large-scale recycling plant for electronics.

And in order to thrive in the new, information-based, 21st-century economy, Mitsubishi Electric developed a long-range business plan they called Vision 21, based, as Kiuchi puts it, “on the use, not of raw materials and fossil fuels, but knowledge.” Some of these new domains included making solar and fuel cells, designing new Internet technologies, and building satellites that could monitor the global environment.

When Kiuchi began implementing these initiatives in the 90s, the idea of reducing one’s carbon footprint was still relatively obscure. He was able to engage his company through a policy of transparency, approachability, and open lines of communication, making sure his employees were constantly aware of what Mitsubishi Electric was doing and why. “I enjoy every minute of my communication with my employees,” he says. “That is a very important attitude, I think.” Whenever he published an article on the topic in a magazine or journal, he would distribute it, but let employees take the initiative to read it. “Freedom to do this creates willingness,” he said. “Otherwise it’s like homework.”

As CEO, Kiuchi stressed the value of every individual. “My style is I’m not above them – we are on the same level. My interest and their interest is the same thing.” To make sure his management team knew what was expected and could ask any necessary questions, Kiuchi set a monthly timetable for his company’s sustainability and innovation goals. And if he didn’t know the impacts or opportunities Mitsubishi had or the challenges they faced in a particular region, he made a point of seeking out the person with the answers.

One of Kiuchi’s mottos is “Say and do.” As Shireman puts it, “He knew he had to be part of the solution; it was in his nature. When he makes a commitment, he follows through on it and expects everybody in the company to behave the same way.”

Seeing the Global and Local Picture

In an increasingly globalized world, Tachi stresses the importance of understanding local impacts and of protecting both the local community and your own employees. "When you talk about climate change, you must have the worldwide picture of what’s going on," he says. “If you’re establishing an office or facility somewhere, it’s vital to know the history of that place from an ecological, health, and security standpoint. Though a facility may take up only a small portion of the regional map,” he says, “you have to enlarge that portion so that you can make yourself familiar with [the full scope of] what's going on there.” He encourages climate leaders to form a clear idea of the answers they need to seek and get as much detailed information from local sources as possible.

Advancing Sustainability

Tachi Kiuchi, Mitsubishi, America Knows How

While working on the agreement with RAN, Kiuchi and Shireman co-founded Future 500, an organization that uses stakeholder engagement to help corporations find market-based solutions for achieving sustainable economic growth. The two men also collaborated on a book, What We Learned in the Rainforest, about applying the dynamic principles of the rainforest – innovation, diversity, feedback, adaptation – to the emerging economy.

Kiuchi then went on to establish and chair E-Square, the Japanese division of Future 500. Their goal is to strategically incorporate environmental and social changes into business management, creating a new definition of corporate value and helping to build a vibrant, prosperous society.

Though he’s been part of many major advancements in sustainability, Kiuchi is modest about his accomplishments and knows there’s still much work ahead for the climate movement. “If we’re singing the same song, we will have impact,” he says. “Our target is the indifference of people. How can we wake them up?”

KEYS TO SUCCESS

  • Engage your stakeholders - hold in-depth conversations with the people and organizations, both internal and external, who are connected to your company. Find out the environmental and social impacts of your business activities, and incorporate stakeholder feedback into your strategies for improvement.
  • Take personal responsibility – your company’s reputation is increasingly based on your social and environmental impacts. Make sure you lead by example to align your core values with your business practices.
  • Set a precedent – if you know something is the “right thing to do,” don’t hesitate to pursue it. The untried strategy or unconventional partnership that you embrace could end up being the success that forms your legacy.
  • Involve your team – make sure that your employees are motivated by, informed on, and up to date on the goals, plans, and timing of your sustainability initiatives.
  • Study and apply what you learn – be aware that there are many regional factors that can impact the safety and security of your employees and many ways your company’s presence can affect the well-being of the environment and local community. Seek out as much information from regional experts as possible to develop a complete understanding.

 

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