What I Learned In The Rainforest: Lessons For World Environment Day
Thank you for the honor of speaking with you today. I am pleased to lend my voice of encouragement to each company in this room to join with the principles of the Global Compact.
Some of the perspectives that lead me to this view come from my experience as a Chairman and CEO of Mitsubishi Electric
Some come from my ten years as Managing Director of Mitsubishi Electric Corporation.
But my most important lessons about business did not come from my companies.
My most important lessons about business I learned in the forest. Let me explain.
My first lesson in the forest happened 45 years ago, days after I graduated from the
I was asleep when I got my lesson. This was unfortunate, because at the time I was driving a little British car, through the forests of the Canadian Rockies.
It is not advisable to drive a car through the
When I woke up in the hospital, I had plenty of time to reflect upon what I could learn from this incident. I remembered advice that my father had given me a few years before.
He knew I was an adventurer, and a risk taker. He liked that, but he didn’t want me to have too much of a good thing. So he took me aside and told me: "Do whatever you want. But don’t die."
I wanted to call my father to tell him that I had taken his good advice. But my jaw was clamped shut. So I couldn’t.
He found out anyway. The Japanese Consul General saw an article on my adventure in the local newspaper, and sent it to him.
I have since passed along my father’s advice to others. I think about it when people ask me what I think about SUSTAINABILITY.
To me, this is what it means: "Do what you want. Follow your purpose. But don’t die."
For a young man, driving off a cliff in the
STAY ALERT. WATCH WHERE YOU’RE GOING.
It seems to me that the global business community is driving quickly toward a cliff, on autopilot, and with our eyes closed.
The engine powering us toward our unintended destination is the same that took me over the edge four decades ago: Petroleum.
In the past century, petroleum powered a 40-fold leap in productivity in the developed world, and delivered extraordinary prosperity to 600 million of the earth’s inhabitants. Petroleum literally powered the industrial revolution.
But oil won’t last forever. That is fortunate. Petroleum dependence is a risky, unreliable crutch. It drives global insecurity, depletion, and pollution. If
So even if we would never run out of fossil fuels, we want to end the petroleum age, because our dependence does so much damage to society.
Fortunately, our success doesn’t come from fossil fuels. It comes from innovation, and there is plenty of that left. The technologies to free us from petroleum are at hand. Many have been pioneered by the companies and people in this room.
Now it is time to step forward to the next great challenge: to foster a new century of opportunity and prosperity for today’s developed world, as well as the other 90 percent of humanity.
To do so, we must resist the temptation to stay asleep at the wheel, as we take what we think is the easy road. When the world was proceeding in a consistent and dependable direction – when petroleum was abundant and we could predict our future by extending a trendline in the direction we were already going – then running our companies like machines on autopilot was functional.
But today, as we approach the end of the fossil fuel road, the world is changing in fundamental ways, and this mechanical devotion to business as usual can bring disastrous consequences.
The antidote is to apply a simple principle that has driven the success of our companies and economy for many generations. That principle is FEEDBACK-AND-ADAPTATION.
That may sound simplistic. But it is not. The vitality of nature – its capacity to cultivate ever more advanced forms of life, and to support them, for billions of years, on finite resources and a fixed flow of energy from the sun – this capacity comes from the process of feedback-and-adaptation through which nature evolves.
In the economy, the same is true. The success of the capitalist system is based on its capacity to harness marketplace feedback-and-adaptation.
The problem is that, in a global economy, too many costs are externalized to people OTHER than customers and shareholders, and never show up on the financial statements. As our companies extend our reach thousands of miles from headquarters, we become less and less tied to the communities we serve. We cut ourselves off from feedback. We know less and less of our impacts on people, culture, health, or the environment. We subsist only on the shallowest feedback: direct internal financial returns.
This is dangerous. It leads, in effect, to false statements of corporate returns. These corporate statements ignore huge and growing cost categories. Because these costs are external, they build over time, to take dangerous and sometimes deadly forms.
Shareholders may not notice these unstated costs.
But STAKEHOLDERS DO notice these costs.
They notice the environmental costs when a forest in Indonesia is destroyed to extract trees to feed the industrial machines of Japan.
They notice the cultural costs when Islamic traditions thousands of years old are pressed aside as western dollars enter the oil-rich nations of the Mideast.
They notice the social costs when a new Walmart undermines a vibrant town.
We might choose to close our eyes to the negative side of these cost ledgers. We might ask: aren’t all these changes beneficial for the people they affect?
Don’t they bring jobs, opportunity, and economic growth?
Yes, many of them do. And in the long run, those benefits may exceed the costs.
But to REACH the long run, we all must survive the SHORT run. To do that, we must understand the dangers of RAPID GLOBAL CHANGE.
To understand these dangers is NOT to resist change. It is to ENABLE change.
Too often, we in business CUT OURSELVES OFF from the impacts of the changes we help drive. We insulate ourselves from feedback. But companies and economies that systematically repress feedback from this larger marketplace – economic, cultural, AND environmental feedback – will ultimately doom themselves, and potentially all of us.
That is why the Global Compact is more than simply an exercise in corporate philanthropy or social responsibility. It is a source of feedback, and a tool of enlightened self-interest.
That brings me to how I got my second lesson from the forest.
Around Earth Day ten years ago, I received a small stack of letters from a class of elementary school students, asking me to do what I could to stop harming the rainforest.
The letters confused me at first. I was CEO of an electronics company. We had no timber holdings. We made no forest products. We used very little paper or wood. What’s the connection?
It turned out they were talking about another company that shared the Mitsubishi name. We’ve been separate companies for 50 years, since 1946. But no one knows this except us. So long ago, we stopped trying to convince people we are separate companies. It’s much easier just to try to do something about the problem, instead of worrying about the name confusion.
Solving problems and fulfilling needs, after all, is how businesses discover new markets, and generate new profits. Even better if the company isn’t invested in whatever caused the problem -- so there’s no trapped capital to lose.
So on my next trip to Asia, I visited the Malaysian rainforest. I met with expert foresters. I visited timber cutting sites, as well as reforesting and research operations. I spoke with visionary environmentalists and executives. What I learned changed my life as a corporate executive.
LESSON NUMBER TWO:
I learned how one company – our company – could take a simple step that would help save the rainforests.
That step was to be the FIRST company to tell our suppliers that we would NO LONGER BUY paper products from old growth clearcuts.
Once we set that example, 400 other companies followed our lead. Together, we changed the market for timber, and saved millions of acres of forest.
Soon, I received a call from executives at Canada’s largest forest products company. They wanted to know how we had solved our dispute with the group that had organized the boycott against us.
A few months after that, we had worked with that company in Canada to create an even more important agreement – an historic agreement that environmentalists called “the biggest step forward in north American forestry in 17 years,” and that the CEO of the timber company called “the future of forestry.”
In the process, I learned a lot about how companies could begin to save the rainforest.
But I learned something else in the rainforest, something more profound. I learned how we might operate our company not just to SAVE the rainforest, but to BE MORE LIKE the rainforest.
Let me explain. As we continue to run out of petroleum, we will need to learn how to run our companies, and our economies, on INNOVATION instead. How will we do it?
When I visited the rainforest, I realized that it was a model of the INNOVATIVE organization. A place that excels by learning to adapt to what it DOESN’T have.
A rainforest has almost no resources. The soil is thin. There are few nutrients. It consumes almost nothing. Wastes are food. Design is capital. My model for the innovative company. An organization that is like a rainforest.
Here is what a banker would say if asked to make a loan to a rainforest: "No way!"
After all, it has no productive assets.
Yet rainforests are incredibly productive. They are home to millions of types of plants and animals. More than two-thirds of all biodiversity in the world. Those plants and animals are so perfectly mixed that the system is more efficient, and more creative, than any business in the world.
Imagine how creative, how productive, how ecologically benign we could be if we could run our companies like the rainforest?
How can we begin?
By operating less like a machine, and more like a living system.
For us, this means two things: First, we must have our eyes wide open, and see the economic, cultural, and environmental costs and benefits of our business. Second, based on what we see, we must take action.
See costs -- and reduce them.
See benefits -- and increase them.
See needs -- and fill them.
Not just inside the company, but throughout the community, locally and globally. We must take responsibility for the impacts of our products, from cradle to cradle.
Which brings me to my third lesson from the rainforest.
How can rainforests be so productive when they seem to have no capital assets?
They are productive because their capital is hidden in their design.
LESSON NUMBER 3:
TRUE PROFIT COMES FROM DESIGN, NOT MATTER.
In fact, the most important natural capital is its DESIGN. Its RELATIONSHIPS. Like those we see in the rainforest, or in our communities, or in our companies.
In Japan we have two terms to describe this: omote and ura.
Omote is the surface or front of an object, ura its back or invisible side. Omote and ura. External reality and underlying reality.
When I visited the rainforest, I thought: 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.
What is valuable is ura -- the DESIGN, the RELATIONSHIPS, from which comes the real value of the forest.
When we take trees from the forest, we can ruin its design. But when we take LESSONS from the forest, we further its purpose. We can develop the HUMAN ecosystem into as intricate and creative a system as we find in the rainforest. We can do more with less. Grow without shrinking.
Ura, not omote.
We are beginning to learn the value of this in business. Consider the microchip. A microchip’s omote -- its physical content -- isn’t very valuable. Silica is the cheapest and most abundant raw material on the planet -- sand. But a microchip -- it’s shape, its design, its unseen artistry -- is extraordinarily valuable. Yet it comes from a source that seems almost unlimited -- the knowledge and inspiration we draw from the human mind and spirit. That is the most valuable resource, and the most abundant.
This becomes the most important question for today’s corporate executives to answer:
How can we redesign, reinvent our corporations, so that they fully harness the human mind and spirit? How can we transform our top-down hierarchies, our petroleum-powered monocultures, to engage the magical creative qualities we see in the forest?
That brings me to LESSON NUMBER 4:
TO SUCCEED IN THE POST-PETROLEUM WORLD, WE MUST OPERATE BY THE DESIGN PRINCIPLES OF THE RAINFOREST. The design principles of nature’s most innovative systems.
There are at least four of these design principles. Listen to them carefully. See if you agree, and see if you can tell what connects them.
They are:
1. Get feedback
2. Adapt. Change.
3. Differentiate.
4. Be a Good Fit.
Let me explain what I mean.
1. Get Feedback.
I know from my drive over the cliff, 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 the 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 corporate level -- are nowhere near as developed.
That is why we are here today. The Global Compact is a simple set of guiding principles that each of our companies can use, to monitor our performance against the expectations that today’s world has of us.
For each of these 10 principles, there are many performance criteria – actions we can take, to align our companies with the principles.
To begin to introduce the Global Compact to your companies, I invite you to participate in a process called a “360” [three-sixty].
This is not a typical 360. It is a Global Citizenship 360. It measures your performance against the ten principles of the Global Compact, and 200 individual criteria that align with those principles.
We created the 360 to make sure our company is as responsive to a changing world as possible.
Now many other companies have adopted this 360 as well.
Coca-Cola has all 300 of its top suppliers and bottlers apply the 360, to protect the world’s most valuable brand name in 200 countries.
General Motors uses the 360 to identify assets the company can leverage to build the political relationships it needs today to survive in the face of extreme competition.
Computer companies, advanced materials makers, and global entertainment conglomerates use the 360 to help them understand the new marketplace they now serve.
The Conference Board provides the 360 to its member companies.
If you are interested in participating, please give me a business card.
If your company is not already a signer of the Global Compact, or a user of the 360, then I invite you to give me your business card, and I will arrange for you to try it. The 360 is an efficient and effective way to bring the principles of The Global Compact into your companies.
But applying the Global Compact through a 360 is still just a start. Design principle number 2 is:
2. Adapt. Change.
It is not enough just to look ahead and see the cliff. We must turn. We must change.
For that, we must put to use what we LEARN about ourselves through the Global Compact and the 360.
The method for doing this is STAKEHOLDER ENGAGEMENT.
In the old economy, the most important stakeholders we served were our SHAREHOLDERS, our CUSTOMERS, and our EMPLOYEES.
But in a global economy, we must also take account of OTHER stakeholders. Community groups, media, and activists, who often have the power to VETO or AFFIRM our actions in the marketplace.
By engaging with these stakeholders, and aligning our interests with theirs, we build the support we need to sustain our success in the marketplace.
Hewlett-Packard is one of the best examples. HP has a business unit called E-Inclusion. E-Inclusion provides computer and Internet services to some of the poorest communities in the world. They start creative new local businesses, that give people SHARED ACCESS to these technologies – to educate their children, buy and sell on-line, take out micro-loans, or even create music.
Through E-Inclusion, HP is touching and improving the lives of the world’s poor. Since those poor are its future market, they are also building the future of their company.
Coca-Cola is another example. In some communities, where the Coca-Cola coolers are the ONLY refrigerators in town, it means donating space in each cooler for MEDICINES.
In other communities, where the Coca-Cola plant is the ONLY source of clean water, it means building a larger water treatment system, and donating water to the community.
These initiatives are NOT just charity. They are STRATEGIC initiatives that leverage the company’s assets, deepen the company’s brand, and create long-term business and social relationships.
Which brings me to the third principle of the rainforest economy.
3. 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.
Only then -- after we differentiate -- is it time to reduce costs, and grow more efficient.
By being different, we are also better able to fulfill design principle number 4:
4. Be a Good Fit.
The old way of thinking was that only the fittest survives. There is only one winner.
This is the way of the jungle in nature – the way of the old Fortune 500 in the economy – the way of war. In a simple, primitive system, only the one fittest survives.
But in the rainforest, the law takes a different form. Similar organisms compete. As they do, they evolve into different forms, and fill different niches. From this process of differentiation, a complex ecosystem emerges, filled with a rich array of niches. In the rainforest, the law is: Survival for all who fit.
The same can be true in our economy, and in our world.
Remember: In a rainforest economy, it is not a question of who is MOST fit – west or east, north or south, Christian or Muslim, industrial or developing, corporate or NGO. It is a question of where we all BEST fit.
If we in the business community FIT -- if we solve a social problem, fulfill a social need -- we will survive and excel. We will follow in the footsteps of the great business leaders of our past, and CREATE a new burst of wealth.
This is the legacy of our greatest business leaders – Andrew Carnegie, Henry Ford, Iwasaki of Mitsubishi, William McKnight of 3M, William Hewlett and David Packard, and others, the inspired business activists who created some of the first great companies. Their greatness is NOT that they saw opportunity in selling to the already wealthy. Their greatness is that they saw opportunity in the needs of the masses. The poor became their customer base, and ceased to be poor. And here we are, gathered here today.
At the global level, if we in the industrial world FIT – if we advance the interests of all six billion of our neighbors – we will survive and excel. If we frighten and alienate them, we will not.
I am often asked whether the needs of the corporation and the world are in conflict. I 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. The ECONOMIC bottom line ONLY EXISTS to feed the SOCIAL bottom line.
My philosophy is this: We don’t run our companies to earn profits. We earn profits to run our companies. Our companies have meaning and purpose -- a reason to be here.
That suggests the final lesson I learned -- so far -- from the rainforest:
THE MISSION OF BUSINESS -- THE MISSION OF CIVILIZATION -- IS TO DEVELOP THE HUMAN ECOSYSTEM, SUSTAINABLY.
To take our place in the global ecosystem. In all our diversity and complexity.
What I learned from the rainforest is easy to understand. We can use less, and have more. Consume less, and be more. It is the ONLY way. For the interests of business, and the interests of environment, are not incompatible. They are the Japanese omote and ura, the Chinese yin and yang, Christianity and Islam, product and process, economy and ecology, mind and spirit -- two halves.
Only together can we make the world whole.
