Topos 3: Alternative Companies
In Topos 3, the third session, Mr. Yuzo Toda (Senior Executive Vice President and Chief Technical Officer, Director, FUJIFILM Corporation), Dr. Tadao Kagono (Professor Emeritus, Kobe University), and Dr. Ikujiro Nonaka (w3i Founder, and Professor Emeritus at Hitotsubashi University) took the podium to speak on the theme of "Alternative Companies."
This session contained presentations on "What should companies do now to prepare for an alternative society?" and "Can Japanese corporate management serve as a global alternative?"
Generating the Extraordinary out of the Ordinary: Advantages of Japanese Management
First to the podium was Dr. Tadao Kagono. He has observed and studied post-war Japanese companies' management and business for more than half a century, and he has disseminated its characteristics, uniqueness, and essence both at home and abroad. In this session, he spoke about his awareness of alternatives.
He compared "capitalistic market economies" as represented by the United States with "socialist market economies" as represented by China. With reference to the current state of the U.S., he said, "It may be necessary to consider whether the capitalistic market economy is really doing well." On the other hand, he pointed out that though China has been successful as a socialist market economy, this is not the case for all countries.
Instead of these two types of market economies, Japan and European countries have adopted "intermediate market economies", which are "characterized by transaction control achieved through buyer-seller negotiations without leaving everything to market power. The key is to pursue individual interests in moderation while pursuing common interests through innovation and maintaining sharing rules."
As a typical example, he cited Fujifilm, which successfully diversified its management into areas such as cosmetics and pharmaceuticals by using dividends and funds pooled within the company.
"There are things that are more important than money, such as the pleasure of work and the joy of contributing to society. Innovation does not occur merely as a result of increasing employees' financial incentives. What is great about Japanese management is that the middle tier of companies' and organizations' employees, not the management, makes innovation happen."
In addition, Dr. Kagono introduced Kyocera's core competence based on the Amoeba Management System and Konosuke Matsushita's way of life. He explained: "Something extraordinary comes out of the thorough pursuit of the ordinary. I think that is the advantage of Japanese companies."
The Era of Entrepreneurs and Alternative-Aware People
Next, Mr. Yuzo Toda took the podium. He led Fujifilm's move into the healthcare field as the color film business, the company's core business, declined. In this session, he presented under the theme of "Business Transformation as an Alternative."
He spoke about Fujifilm's regenerative medicine as the company's area of focus: "Color film products have faded away, but they provided us with a treasure trove of technologies. Products have a lifespan, but their supporting technologies do not have such a limited lifespan. I noticed that the structures, sizes, and properties of cells are very similar to those of color film, and I thought we could use empirical values obtained through color film in the field of cells by making further advancements."
He continued: "Companies never change unless we enthusiastically take on challenges for what we can, want, or should do without compromise. It is important for each employee to put alternatives into practice without giving up. First, define your strengths, turn your talent into principles and universal elements, and then connect them to create a story to reach the goal."
He listed three factors to establish a new business: "I have never failed, but I daily face things that do not go as I expect. If I call these events failures, I will lose my energy, so I do not call them failures so long as they bring me even one step closer to my target. In this way I encourage myself."
"It is not easy to realize alternatives. Since there is a huge gap between the current situation and the world to be realized, leaders should be crazy." He also said that leaders need partners and supporters who encourage them to keep going.
In addition to the above, Mr. Toda concluded his presentation with this thought: "Now that new technologies such as IoT and big data have appeared, innovation productivity has improved dramatically. This encourages me to think that the era of entrepreneurs and alternative-aware people is now arriving."
What Kyocera and Fujifilm Have in Common
The next speaker to the podium was Dr. Ikujiro Nonaka, who spoke of the potential of both Kyocera and Fujifilm, which the first two speakers regarded to be prototypes of Japanese management.
Kyocera upholds the action guidelines entitled the "Kyocera Philosophy," which consists of 78 items. Dr. Nonaka: "The Philosophy is extremely practical and incorporates provisions on truth, goodness, and beauty. Amoeba Management provides excellent evaluation standards, promoting value-added creation by all employees as well as constant interaction with the environment and quick responses to market changes."
He focused on Kyocera's "knowledge maneuverability" as an organization: "Kyocera's "Compa," casual after-work gatherings that involve drinking, provide important opportunities for employees to thoroughly exchange their honest opinions and ideas. At a Compa, employees and leaders discuss and fight intellectually over a predetermined theme while drinking in a large tatami mat room. The leader summarizes the discussion results at the end of the Compa, and everybody puts them into action the next day." Dr. Nonaka actually participated in and evaluated such a party: "It is hard to imitate their superb agility. It is an accomplished system born out of repeated trial and error that allow employees to share and embody the management philosophy."
Fujifilm places importance on the process of "See-Think-Plan-Do" in the stage prior to PDCA. "It is important to start with empathizing with others to face the reality and create a vision, grasping the essence of the reality, and feed the insights into the following process." He also explained that Fujifilm achieved sustainable growth by thoroughly building empathy and having customers and partners involved.
Dr. Nonaka added: "As the reality continues to change, the essence of knowledge maneuverability lies in constant organizational efforts to pursue truths, goodness, and beauty. The ability to grasp the essence and the grit, and courage to carry through to the very end are also indispensable."
Japanese-style Management as an Alternative to Western-style Management
Next came a video message from Dr. Mintzberg speaking on the theme of "Who Can Create Alternatives?" According to him, there are two types of people in the world: "stereotyped/programmed people" and "playful-minded people." Playful-minded people find interesting, new solutions to problems.
"It is sometimes the case that the plural sector faces a situation in which they have to address grossly biased social circumstances in which the private sector enjoys particular advantages. In such cases, people who can solve these problems in a more creative manner by opening up possibilities are needed." (Dr. Mintzberg)
He also pointed out that many corporate transformation processes are brought about by senior or top management: "This is authoritarianism and bureaucratism. It is useless for building a successful, sound organization. Now is the time to move beyond leadership-oriented management."
He continued, "More focus should be placed on community-ship than leadership, and it is important to build more flexible, adhocratic organizations. Such organizations rarely depend on big-boss leadership."
Dr. Mintzberg declared himself to be a big fan of Japanese management because the Japanese management model serves as an alternative to Western-style management, which is getting worse and worse.
"Such companies that are under excessive remote control tend to be distracted by things other than management or tend to be bureaucratic, autocratic, and top-down. By contrast, Japanese management is based on organizational culture, community-ship, and a spirit of cooperation." (Dr. Mintzberg)
Nurturing the Collective, Intrinsic, Intuitive Ability
After the three sessions completed, Dr. Nonaka summarized the conference.
"We had discussions under the theme of alternatives. Tacit knowledge and formal knowledge, sensitivity and intelligence, analog and digital, stability and change, and so forth are not contradictory concepts, but rather, they are complementary to each other. Two conflicting elements can exist in a single phenomenon. Alternatives allow such elements to coexist in harmony while retaining their characteristics and competing with each other."
He then expressed his opinion: "We should not see contradictory problems with "black or white" dualism, but rather, we should understand that things are "grey" and that what is important is to see which color is manifesting stronger than the other. We need to understand things from the viewpoint of "dynamic duality" and act to balance the opposing forces. Make mistakes and then fix them--I think this is an important stance."
He explained the difference between economics and the humanities based on an example from a book about hedgehogs and foxes: "The hedgehog aims to predict the future by discovering and understanding a group of general laws that control the world. For example, under this approach, you can forecast the future markets by learning mathematical economics."
"Conversely, the fox starts with the idea that the world is not so simple that it cannot be explained by general principles. For the fox, the world is always volatile, uncertain, complex, and ambiguous. This means that one must respond in a timely manner by using all kinds of knowledge and ways of thinking, while understanding that any knowledge or way of thinking is never perfect and is always subject to improvement." He added, "It is critical to review yourself and your ideas from different perspectives and never stop questioning, and openly accept contradictions when they arise. The key is to be humble."
Asked whether AI can replace human tacit knowledge, he replied, "It is humans that have the ability to empathize with others. How to live in the digital age while coexisting with analog is a major challenge."
"The more different the subjectivity of people is, the higher the creativity. The key point is, when faced with a contradiction, one can choose whether to justify one element and completely cut off the other to "solve" the contradiction or to accept the contradiction and create the best out of the strength of each opposing element. I think that pursuing better empathy and management is the key for Japanese management to lead the world from every perspective."
He commented that he had obtained insights from the speakers on how to enhance "collective eidetic intuition": "By enhancing the skills of collective eidetic intuition, we can build a community that can make the most out of the creative ideas born in the frontier of each workplace."
Lastly, Dr. Nonaka concluded the 12th Topos Conference with this message: "Refining the collective eidetic intuition may lead to the creation of concepts unique to Japan. Since this ability can be developed only through practice, I hope you make your best efforts in your daily activities."