Marketing Empathy and Creating New Value -- Eco Business Creation Association

JFS Newsletter No.58 (June 2007)

Beyond Environment-Friendly Manufacturing

Kanagawa Keihin Waterfront District along Tokyo Bay was reclaimed from the sea at the end of the Meiji Period (1868-1912), and most of the major factories that still underlie the industrial framework of the area today were built during the Taisho Period (1912-1926). As one of Japan's four major industrial districts, Kanagawa Keihin led the Japanese economy for a long time. However, following the energy crisis of the 1970's, some concerns were raised about a decline in its vitality due to a shifting of industrial base, company restructuring and the relocation of heavy industry.

Kanagawa Prefecture, where this area is located, and the Amita Corp., a company specialized in material recycling, launched a project to make Kanagawa Keihin a special green economy zone by revitalizing and transforming it into a model district of new eco-social design quite distinct from the 20th century industrial model. Against this backdrop, the Eco Business Creation Association (hereafter the association) was established in February 2002. It is a network organization of companies and local governments conducting pilot programs based on the spirit of Mottainai, a Japanese word meaning "waste not, want not" that conveys a message about saving resources & energy and reducing waste.

The "Eco Business" in the association's title does not only refer to environment-friendly manufacturing industries, but to the entire industrial system. At present this system is out of balanced: natural and social capital is degraded as industry grows due to policies that support a manufacturing-centered society. Psychological fulfillment is not even the point in this socio-economic model, fundamentally based as it is on increasing human desires as a way of selling more products.

Eisuke Kumano, president of the Amita Corp. and the chairman of the association, said "We are hoping to market empathy and create new value by restoring relationships, connections and trust." In his view, the sustainable social economy the association was established to promote is a completely new social design based on the principle that everything is interconnected. Pursing this kind of vision requires the participation of more than one company. The association's main feature is its function as a resource for members seeking ideas for business innovation through a process of involving many companies and repeatedly verifying relevant hypotheses.

Thus, the association's work is based in corporate innovative effort, and as of June 2007, 16 companies and local governments are participating as members. Currently, it is divided into three sub-committees that conduct various studies and trials: the Eco-design Workshop, for designing products designed to be recycled after use, YUI Town, a project for to promote collaboration between local residents and businesses to revitalize local communities, and Secure and Safe Design, which focuses on design solutions for achieving, a secure, safe and sustainable society.

The Next 'R' after '3R' - 'Refurbish'

One of the association's business projects involves the "refurbishment" concept. The 3Rs -- reduce, reuse, recycle -- are well-known, and refurbishment is the newest "R." The idea is that, after primary use, a product retains its basic form but is refurbished to sell as a new product with added value, rather than being broken down into recyclable parts or materials. This extends the product's lifecycle and reduces wastes and environmental impacts. The association has put efforts into developing this concept.

Many products are amenable to refurbishment. One business model launched by the association involves refurbishing old trucks. This was one of the more urgent issues requiring attention, because the environmental impacts of using or disposing of old trucks are considerable.

This business model aims to encourage consumers to meet strengthened environmental standards for trucks by refurbishing their old vehicles to meet stricter regulations on exhaust gases. It also aims to prevent "pollution export" resulting from the release of old, sub-standard trucks to the export market.

The Orix Corp, IFCO Corp. (currently the Orix Auto Corp.), Amita Corp, JFE Holdings Inc., Nippon Koei Co, and Kokuyo Co. worked together on this project because they wanted to pursue a new type of business model. These six companies employed their respective strengths to pursue the needed research. After considerable trial and error, the group carried out trial production and sales of refurbished trucks to determine their feasibility in terms of technology and cost, subsidized by Kanagawa Prefecture and commissioned by the Japanese Ministry of the Environment.

A "Cooperative Town" through the Mutual Support of Citizens

Fujino Town is located near the northwestern edge of Kanagawa Prefecture, with a population of 10,672 (May 2007). Even though it is only one hour from central Tokyo, it has a rich natural environment, including the abundant waters of clear stream-fed Lake Sagami, and is surrounded by mountains rising from about 500 to 1000 meters. It is also called "Art Town" as it attracts many artists and hosts a variety of art events.

One of the association's sub-committees is pursing a new initiative in Fujino, called "Yui Town," "yui" meaning "knot." The sub-committee aims to help Fujino become a sustainable "Cooperative Town" by implementing mutual support projects, symbolized by the concept of a knot.

The "Cooperative Town" project involves applying cooperative housing design and technology to a community building scheme. The idea is to create a community through the collaboration of citizens and businesses sharing common hopes and needs in the community. The town plans to build a community with residents' participation, using local strengths such as material leasing of local timber and eco tourism.

For example, some people are interested in farming but hesitate to start because they work on weekdays. At the same time, there are local elderly people experienced in farming who grow their own food while leading a relatively leisurely life. In this case, idle fields left unused for many years could be leased to those who want to farm only on weekends, with local people managing the fields during the week. This kind of innovation could lead to the creation of new businesses without having to attract outside companies. In other words, rather than regarding land and houses as property to own or invest in, making use of them to translate the concept of "Yui" into action leads to tangible collaboration and mutual trust among people.

This illustrates the commitment of the association to encourage the creation of eco business in a broader sense, involving not only infrastructure and technology but also systems and services.

A Prototype for Sustainable Social Design

A variety of obstacles must be overcome in any attempt to build a new social model. In case of refurbished trucks, one of the challenges was that Japan's mandatory system of vehicle inspection requires more frequent inspection for old cars, hampering commercialization of refurbished vehicles, despite a number of feasibility studies. As for the case of YUI Town, another round of coordination and negotiation became necessary when Fujino Town was integrated into Sagamihara City in March 2007. Even though these are private-sector-led projects, national policies and collaboration with local governments are obviously essential to produce genuine innovation.

It takes time to achieve tangible results, but carrying out such experimental activities does accord considerable benefits in that association member companies can identify problems and explore possible solutions in the process of collaborative trial and error. In other words, joining the association offers member companies opportunities to learn about real-life problem-solving approaches that cannot be anticipated or learned from a book.

Kumano has been calling on small and middle-sized enterprises (SMEs) to participate in the association, encouraging them to seize all opportunities to take advantage of these benefits. Currently, most of the association's corporate members are relatively major companies. The association hopes more SMEs will join its activities in a spirit of "utilizing" big companies to provide momentum for encouraging innovation. Furthermore, it plans to develop a framework for establishing a new prototype of sustainable social design specifically relevant to solving global environmental issues. It hopes to share ideas among not only domestic companies and local governments but also foreign enterprises and non-governmental organizations.

A wide range of "green" products have already been developed for the purpose of encouraging the shift towards a sustainable society and away from business as usual based on mass production, mass consumption, and mass disposal. Still, even though we endeavor to make products greener by reducing resource use and utilizing recycled materials, it may not be a fundamental change as long as we fail to use products frugally while continuing to generate a significant amount of wastes. The association further hopes to create and support a broad range of eco-businesses, aiming to bring about a shift towards a truly sustainable society and economy by sharing ideas and learning from each other.

(Written by Kazuko Kojima)