I would like to begin by saying that I believe the keyword for the 21st century is "sustainability." I am wondering if the culture, the life and the peace that we are all enjoying can be sustained for the next generation and the one after it. The sustainability debate is about how to make that possible. With this in mind, I would like first to reflect on the 20th century.

The Devastation of the Human Spirit and the Destruction of Nature in the 20th Century, Brought About by an All-Powerful Market System

Market economies thrived in the last decade of the 20th century, the end of the Cold War between East and West came to an end, and it seemed that capitalism had defeated communism, with market economy singing its praises throughout the world. In short, we got globalization. This has been supported by the advancements in scientific technology. The 20th century saw truly remarkable advancements in scientific technology. First of all, transportation means and means of delivery were completely transformed with the use of fossil fuels. Similarly, petrochemistry, using petroleum resources, thrived and has produced synthetic fibers and plastics. Advances in electronics have brought us to the present-day IT revolution. There have also been many advances in biochemistry and medicine. The developed nations have come to enjoy material prosperity and to sing the praises of the market economy, globalization, and scientific and technological advances.

This has been a series of remarkable plusses, but on the other hand certain minuses have emerged. One is that excessive competition occurred. To paraphrase, it says "The market is omnipotent, because the market reflects the voice of God." The one who attains market superiority appears a hero and is idolized these days, and excessive competition has increased. As a result of this, several gaps have widened. One is the widening of the discrepancy between rich and poor. Another is a civilization gap. For example a gap called the "digital divide" has emerged between the societies in which IT technology is sufficiently made use of and those in which it isn't. Also, sharing of the market has changed gradually. It has become a world in which the strong have become stronger and the weak weaker. In market economies such weak persons or countries become, essentially, non-participants. They can't participate in the market because they don't have the money to do so. Consequently, it becomes difficult for their voices to be heard.

Another negative of the market is that future generations cannot participate in them. The future generations are the ones that are going to suffer the consequences of our environmental problems, yet their voices are not reflected in today's markets.

What might result from this situation? For starters, the devastation of the human spirit. We all think that the human spirit has already been devastated in the current political, economic and social situations. There are other negatives as well, symbolized by the non-participation of future generations in the markets. The earth's resources are being gradually depleted and we are encroaching upon the earth's beautiful nature. Looking at this, what should be done in the 21st century? Simply put, the market economy must be reformed. Such reforms must be both people-conscious and earth-conscious: economic aspects must be emphasized, obviously, but it is also essential that there be people-consciousness and earth-consciousness. That is how society should be made to prosper in good health. We must make a value conversion from material prosperity to spiritual prosperity. A sustainable society should be built up by SCM (Sensitivity Conscious Management) for people-consciousness, and by ECM (Ecology Conscious Management) for earth-consciousness. These are the keywords for the 21st century.

If you think about it, the awakening for the need to care for the earth is a relatively recent thing that began in the 20th century, around the 1950's. The beginning of the human species, the period when humans first began standing erect, is put at between 2 to 5 million years ago. If we say, for the sake of argument, that humans originated 5 million years ago, then humans had not been aware of the earth's limits for 5 million years minus 50 years, an extremely long period. What I'm getting at is that I think one can say that because "sustainability" was something that first came to be taken seriously 50 years ago, it is something that has become our responsibility in the 21st century, and as such is a matter of overriding importance. It is a truly recent matter. Consequently, some people think that "sustainability" will become a cultural revolution.

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Diversification and Development from Cameras to Photocopiers and LBPs (Laser Beam Printers)

The issue of container recycling is the top issue that the beer industry overall is dealing with. Container recycling is said to be good for the environment. Containers used include cans and bottles, and the beer industry has joined forces with the related industries to create bodies such as the Aluminum Can Recycling Association and Beverage Industry Environment Beautification Association, and is putting an effort into aluminum and steel can recycling. Through such actions, the resource-recovery rate of aluminum cans in Japan has reached 80.8 percent, and for steel cans it is 84.2%. These are relatively high rates, and they are still improving. Almost all beer bottles are returnable. Steinies are returnables-we made an effort to develop them as products that are good for the environment, have good style through commitment to design, and can be opened without a bottle opener, making them very convenient. They are also very popular.

At this point I would like to completely change the subject to talk about Canon, where I had been president. I think the reason that Canon is so strong a company is that it has stressed both SCM and ECM as fundamental policies of its company. If we first analyze what Canon's strengths are, one of them is diversification, another is globalization. As to diversification, although Canon was originally a camera company, it became a copier company and then a printer company. In particular it became a company that produced LBPs (laser beam printers), making printers that use laser beams. It grew very strong with these LBPs. It later came out with ink jet printers but I think it would be correct to say that Canon's current strength comes from its copiers and its LBPs. I would like to describe how Canon got those two products. It's a very interesting story.

Several decades ago, around the time I was appointed chief of the team developing copiers and was researching copiers around the clock, the firm ADL (Arthur D. Little - a well-known research firm in Boston) issued a report. According to this report, in the copier genre there was one company that was in the vanguard, and that company had extremely strong technology. Not only that, the report said this company had also patented the technology and was holding on to it fiercely. One result would be that until the patents expired several decades later, there would be absolutely no way for subsequent manufacturers to enter the market. Furthermore, there was another big barrier for secondary manufacturers to enter the market. That was because the prior manufacturer had figured out a way to market their copiers. Rather than selling the copiers to their customers, they leased them, receiving money ("copy charges") for each copy made on them. At the time, copiers were machines that accumulated extremely high service costs. They were very complex machines requiring maintenance, so the amount per copy that manufacturer charged included the cost of servicing the machines. Such being the case, the machines themselves were the property of the manufacturer. These copiers belonging to the manufacturer were depreciated year after year and their book value became cheaper. When the book value becomes cheap, secondary manufacturers compete with the low book value. These were the "barriers to entry."

At the time, I was still very young and as an engineer I was convinced that, despite technical barriers, technology is limitless, and there is definitely a technology that can break this barrier. As to the "barriers to entry," I thought "if a famous research company like ADL has published such a report, our current competitors will probably be afraid and won't enter the genre. If that's the case, then if we can develop a new technology and enter the market, we and the prior manufacturer should be able to lock up the market." In other words, I thought this was a chance for a market oligopoly. We decided to enter the copier market, thinking that the prediction can be proven wrong. I will speak later about the specifics of our entry into the market.

I will now speak about how we got into LBPs. At the time, we were doing things like using computers to design lenses. In those days printers were big and noisy and the print was dirty, so we were researching for a better kind of printer. The first thing we came up with was to have electron beams carry the image signal, spraying electrons in a vacuum as with a television cathode-ray tube. In other words, they carried signals of varying strengths. Something called insulating paper, coated with an insulating layer, would be put in a vacuum and the electron beams would strike it. As a result the static charge on the insulating paper would change with the strength of the electron beam. The image could then be created when the paper would be removed from the vacuum and developed. However, since the scanning had to take place in a vacuum, inserting and removing the paper from the vacuum would be a complex, technically difficult operation, and the cost would surely be high and so this idea encountered a roadblock. At the time, I was head of the research labs and the engineers came to me for advice. An idea popped into my head - "The difficulty is because electron beams are being sprayed in a vacuum; why not try using light beams through the air instead?" So that's what I suggested. It was just the time that helium-neon lasers had come onto the market, and, experimenting with these, we found that we could make images nicely. Canon became the first company in the world to invent, present and market laser beam printers. Analogies, such as this one from electron beams to light beams, are very important to the way in which we conceive matters.

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Environmental Consciousness Lead the Way for the Copier Industry

I would like to continue specifically. First of all, this is about the copier business. In the case of the copier industry, environmental consciousness created the industry. The light-sensitive drum of the copiers made by the prior manufacturer was a metal drum coated with a heavy metal called selenium. When a light struck the heavy metal selenium, its electrical resistance was lowered in only the places that the light struck it. Consequently, the light pattern became the resistance pattern. The image was made using this. Selenium, however, is a heavy metal and accumulates inside the body. If there is selenium on the outside of the drum, the developer is exposed to it, the paper touches it, and it can come in contact with human hands through the paper. Although the image is transferred to the paper, a small amount of the image remains on the drum, and there is a device called a cleaner that cleans the drum in order to make the next print, and this cleaning device is also exposed to the selenium. The selenium gradually wears off and enters the developer, gets on to the paper, on to the prints, and on to people's hands. Wouldn't that accumulate in the body? Would this not be one of the flaws in the prior technology? With the idea that we could clear up this environmental problem (pollution problem) we first attached a film of clear polyester to the heavy metal. By doing so, nothing will come in direct contact with the problematic heavy metal any longer. It also eliminated wearing off onto the paper and thus onto people's hands and into their mouths.

Canon's strength comes from a combination of a management that thinks about sustainability, and a management that considers humans and the earth (SCM and ECM) in addition to economics.

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"Kyosei" Necessary for the 21st Century- the "Three E's" and Sustainability

At this point, as a discussion of companies to come in the future, I would like to use some examples of models that the companies of the 21st century should be like. One thing is to become a symbiotic company. ("Kyosei" literally means coexistence, living together and symbiosis. To give the word "Kyosei" more positive meaning, Canon defined it as "Living and working together for the common good.") That is a company that seeks "Kyosei" of people and people, people and things, and people and nature. When I was president of companyCanon around 1991, we proposed this kind of thinking as a "Kyosei" initiative. Another thing is to have a "three E's" company. This is the integration of economy, ecology, and ethics. A company should strive to be sophisticated about three E's. I received a prize called the Management System Prize from the Japan Industrial Management Association in 1997 for this idea. The third thing is to try to become a sustainable company.

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Optimum Corporate Behavior Spurred by Market Competition

Breaking out the "three E's" to be achieved, they are "Economic Reforms," "Ecological Reforms," and "Ethical Reforms" (meaning reforms focusing on corporate ethics). As to what drives these, for the economic aspect it is money; for the ecological aspect it is materials, energy and such; and for the ethical aspect it is people.

For the economic reforms the base is fundamentally economics, and they must after all, proceed with an eye on the market. As the means of doing this, we must make efforts to improve capital productivity through increased efficiency, rationalization and new business introduction, effecting efficiency and rationalization to the fullest extent and maximizing new business introduction.

As to the next, the ecological aspect, ecological science is the base here and the fundamentally we must learn it from Nature. In practice, the first thing we have to do is to minimize input, output, and life cycle. Among the fruits of these efforts will be not only the conservation of nature, but also improvements of productivity in resources and energy. This time, productivity in resources and energy will be improved.

As to the ethics, when one says "ethics" he might think it difficult. In this case I would like you to think of it as "conscience." There are many types of conscience - conscience as someone working for a company, conscience as top management, and conscience as an engineer. I believe we must ask our own conscience as we go forward. The way we do that is of course by having conscience penetrate through and through. As to methods, technology should be pushed to the limit. Management must also be pushed to the limit, and furthermore the corporate behavior should be optimized. For example, Canon had HP (Hewlett-Packard) and Apple sell the LBPs and in return it sold their strong products: computer. As this example shows the segmentation and partnerships can optimize the corporate behavior. It is usually thought that market share is maximized through market competition, but when it is maximized the competition becomes messy and it turns into a bloody war to reduce the cost. What I recommend, then, is optimizing corporate behavior. That is, rather than for maximum market share we must aim for optimum market share. Among the benefits that could be obtained from the ethical management would be an improvement in the productivity of human qualities and abilities. When there is behavior that lacks social justice, the punishment for such behavior is, regrettably, that competent persons do not come forth. After all, these things must be made not to happen, and human productivity must be improved.

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Conscience Must Permeate Through Top Management and Employees

When we talk about these same reforms at the employee level, we must keep in mind that an employee wears many hats. With economic reforms, the subject is the employee as a person who has been hired. With ecological reforms it is the employee as a habitant. With ethical reforms it is the employee as a citizen. They must all be dealt with.

As to the question of what the companies should do with respect to their employees, for the economic aspect they should raise the employee satisfaction level with the company. For that to happen they must offer a workplace that is worthy of satisfaction. At the same time, implement a proper evaluation system. Much is being said these days about "result based evaluation" but regardless of that, I think there must be a proper evaluation system implemented whereby people can do meaningful work and reap the benefits.

As to environmental reforms, we must aim to attain employee empathy. Since we are dealing with the employee as habitant, if the company does something good with respect to the environment the employees will certainly relate to it. The aim must be to raise that empathy. For this purpose it is important that "EQCD" be thorough. The "E" stands for "environment." Until now we have had "QCD", which stand for quality, cost and delivery (meaning how many days after the order are placed before the product is delivered). Until now companies or factories that skillfully handled all three of the "QCD" - quality, cost, and delivery - have been considered superior companies and factories, but we are now going to put an "E" in front of the "QCD". In other words, those factories must not be faulty from an environmental aspect. The "E" has been placed so firmly in front of the "QCD" that, for any factories that have environmental problems, it would necessitate the cessation of operations.

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"Zero Emission" Activities Aimed At Realizing Sustainability

I would like to speak about sustainable enterprises and realizing sustainability. Our own "zero emission" activities are aimed, without limits, at a "loss zero" society, and involve long-term economic activities, environmental activities, and social activities. Our economic activities go after loss of capital. Our environmental activities go after losses in nature, resources, and energy. Our social activities go after losses of people. Through this we make a sustainable society. But we don't just go after the losses. At the same time we also vigorously go after changing the losses to something positive. As an example here I would like to talk about two things - production and products.

Firstly, "zero emissions" focus on creating clusters (industrial ecosystems). Company B receives Company A's waste as raw material , then Company B's waste goes to Company C as its raw material, and so on. If this goes well, Company A, which had been the first company, will take the waste of the last company, Company Z; thus to form a loop ("cluster") would be beneficial. From an economics standpoint it means that waste product can be used as something of high value. In other words, as waste it would have to be disposed of at some expense, but as raw material it might be taken by Company B. Or Company B may purchase it from Company A. From an environmental standpoint, the industrial group attains zero emissions. From a social standpoint, we can realize that an ecosystem has been introduced to an industrialized society.

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Tetra Pak Products Use High-LCV Paper As Raw Material

For examples of products with high LCV Life Cycle Value = a comprehensive valuation of industrial products throughout the life cycle, considering all the aspects of economic, environment and society) I would now like to turn to a discussion of our product, a Tetra Pak package. First, as to market values, a Tetra Pak package is extremely light. Comparing it to plastic bottles, a plastic bottle is 1.3 to Tetra Pak's 1. Glass bottles are 19 times heavier. Another feature is its square shape, making it possible to load more into the same space, compared with a bottle or a can which bottom shape is round (approx. 27% more). Being able to load in more means that shipping costs are minimized. From an environmental standpoint, shipping energy is minimized.

Furthermore, Tetra Pak uses paper, a renewable material that is made from trees. The replacement rate is 70%. 70% of the package's total weight is paper. That is a very high replacement rate. Also, it is recycled. The paper component goes back to paper, and the non-paper component is thermally recycled as RDF (refuse derived solid fuel). Furthermore, its life cycle energy consumption is very low. A calculation known as an LCA (life cycle assessment) shows that it has about the same energy consumption as returnable glass bottles washed and re-used 20 times.

The paper we use is very good, tough paper. This is because it is made with the wood of coniferous (softwood) trees. The paper is made from softwood pulp of paper manufacturers in Northern America, Canada, and Northern Europe whose own forest management is extremely sustainable. Coniferous trees mature in 50 years. As you know, when they mature their absorption of the warming gas CO2 decreases. Consequently each year the companies log one fiftieth of their own trees. They then plant seedlings. Young trees absorb a lot of CO2 in order to grow. That is better for CO2 absorption as well. Logging one fiftieth of the trees does not mean that all the trees on a given mountain are cut. Rather, since the companies own many mountains, their method is to log a small amount on each of the mountains. Where there are streams they take care to not cut down any of the trees around them, since there are thriving ecosystems around streams. As to the logged trees, the centers of the trees are made into square lumber for use in building houses or making furniture. The wood that is used to make our paper is the sawed-off wood from the outer part of the trees or lower branches that are trimmed off during the forest management. When lower branches are cut, those branches are used. They all becomes pulp, and so I can tell you that our product is very sustainable. This has social value.

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Creating Beautiful Regions Leads to a Sustainable Earth

I would like to talk about creating sustainable regions rather than creating sustainable companies. What I mean by "creating beautiful regions" is creating sustainable regions. How to do this is the subject of the table I would like to show you.

I believe that doing these reforms is the foundation for building sustainable communities. I think that building such sustainable communities, more than having itself as the purpose, is a new, important perspective of increasing tourism resources and making tourism spots, and creating beautiful regions is an important part of the perspective.

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