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July 31, 2007

 

Shifting from the age of uncertainty to the age of certainty

kumanosan.jpg Copyright JFS

Lecturer: Eisike Kumano, President, AMITA Corporation

Although it is very difficult to explain to the young generation what a private company is, I would like to define it as an existence that generates something people think valuable. In other words, it is a social function that realizes the needs of society or of the age. The gauge of value is profit. No matter how good job you may do, your message cannot be conveyed. This is because the company is not considered to attain its objective unless it is successful in producing a profit. Even a large enterprise may be forced to withdraw from the market, if it fails to meet the needs of the age. On the other hand, a small company may exert a direct effect on a society, if it can fulfill the needs. This is what a company is all about, I believe.

History of AMITA -- Starting from scratch

A company can only be valuable when it receives constant recognition from this uncertain society. It means a company must allocate its management resources to such a society, that is to say, to expectation instead of the fact. Now, I would like to talk about what kind of future or expectation AMITA has invested in and what the company is like now as a result.

With a mission "Placing top priority on realization of a sustainable society and constantly cultivating and establishing a new relationship", we at AMITA are committed to providing a recycling-oriented and sustainable system by proposing, measures against environmental risks in the fields of agriculture, forestry, fisheries, industry and commerce. We provide a project named "DoTank" that coordinates projects of CO2 absorption by forests; analysis and consulting for zero-emission; recycling solutions such as recycling and reenergizing of organic and inorganic substances; and Japan's first forest certification business as well as Asia's first fishery certification from November 2006.

In this way, AMITA commercializes the value of environmental protection. I would like to emphasize that we are not engaged in these businesses after having developed the necessary conditions. This is a result of simply having pursued the needs of the customers and of the age.

Our company was not involved in the environment business at all in its early days. It marketed ingots of nickel and copper. When founded, it had almost no credibility, no fund -- or what is even worse, deficit in the second year -- and no technical capabilities. It had only three members but had enough time. Our laboratory was a garage. We started our business at this level and only have pursued customer needs earnestly.

"The most valueless person is the one who gives up things before trying," said the captain of the Japan's first wintering party in the Antarctic, and this is my favorite sentence. I was 23 years old when I founded the company. Even though such a young guy wanted to sell nickel of 99-percent purity, no one would buy it. When I was told to go away, I didn't give up and said, "I will do anything. Don't you have any trouble?" Then, muddy industrial wastes were presented in front of me. "The price of reclamation sites is skyrocketing and we cannot afford it. I would like to reduce the cost of disposal," he said. I brought back and analyzed them. The nickel content was as high as 15 to 20 percent, when I was importing nickel ore of only two to three percent purity from New Caledonia.

From risk management to prevention

High quality was not enough to sell the products in those days. They say that no product is marketable if it is made from wastes produced by others. And thus our products were refused. After a while, luckily for me, Japan fell into a recession and people started to buy wastes at last. This is the start of what is now called "resource recycling business."

Even after this, I encountered a number of difficulties. But I constructed a factory and tackled a new business of producing raw materials for coal and nickel as a frontier in Japan. While I was involved in resource recycling business, I realized that prevention would be indispensable. It is an after-the-fact way of doing things even if you handle risks as business, while prevention is proactive. After the Big Bang liberalization of the financial sector and the September 11 attacks, our society came to be called a crisis-management society, where risk management is said to be necessary even in the field of environment. In this way, I developed today's environmental solution business to realize a risk prevention market. It was still the time where people believed that they would pay a penalty only when something bad happened and they would not pay any cost before it happened. I was against that idea and presumed that the environment business would be a risk prevention market.

When I look back the history after the foundation, the second oil crisis triggered the advent of a resource recycling market. The Plaza Accord and the sharp appreciation of the yen created an environmental risk management market. We have experienced financial liberalization called "Big Bang," crisis management, terrorism, etc. and we created a risk reduction market; in other words, we faithfully gave shape to what the age needed, I believe. The next market will be a sustainable society.

What are social needs?

As long as you are students, you may not have realized that making money is easy as a matter of fact. If you exploit others' weakness, you can make a profit soon. Then, what about continuing to make a profit? If you can anticipate the future, it is not difficult. How can we anticipate the future? Actually, this is a difficult question. Let me give you a clue. The future resides only in our mind. The history of mankind tells that we have only realized what we have in our mind. Therefore, the point is whether we can see what we have in our mind or not.

Imagine there are two PET bottles of drink of the same quantity made by the same manufacturer. Product A is cheaper than Product B by 10 percent. Which do you choose? Many will choose Product A, because it is cheaper. But, in fact, people buy more bottled drinks at fixed prices at convenience stores than those sold at reduced prices at major supermarkets. Now is not the time where products sell only because they are inexpensive. This is an evidence indicating that prices are not the only social needs.

Who is said to be a competitor of a convenience store? It is a mobile phone especially for young people. The more money they spend on mobile phones, the less frequently they go to convenience stores. Then, who is a competitor of a mobile phone? It is a low-end digital camera. Such cameras are being replaced by mobile phones.

In this way, we simply compared a product with another in the past. But today, we compare invisible values. Convenience stores sell not only goods but also services named "convenience" including bank transfer and express courier service. They offer convenience, which is an invisible and intangible value.

What is an invisible value?

Now, what a value means will be an important question. This is what we have pursued since establishment of the company. What do we hope? What kind of future do we expect? What have human beings desired? The one single and simple answer is eradication of starvation and poverty.

In Japan we are not facing such starvation or poverty that may make us die if we fail to obtain food or become ill. Only approximately 600 million people in developed nations out of 6.5 billion people all over the world accomplished the dream of humankind. We must have reached to the Garden of Eden at last. Then, why do we have more people who commit suicide or suffer from neurosis in developed nations? Schumacher mentioned in his book Small is Beautiful (1972) that if the economy grew in a society where neurosis and suicide were very common, it must be totally reviewed and reexamined. Are we really happy? What is happiness at all?

When I was young, I tried to identify what kind of happiness I would like to achieve. I found innumerable desires in my mind. I wanted to be popular among girls, eat delicious foods, wear good clothes, earn money and so on. Then, I thought what incomparable unhappiness was. I hit upon only one answer; loneliness. No one thinks that a lonely person is happy even if he is a man of wealth. It may be said that mental starvation and poverty of today are caused by worries about loneliness in a sense. If the elimination of mental starvation and poverty would be the needs of the age, it should be the duty of an entrepreneur.

People in developed nations are wasting massive amount of energy, resources and food. Now, we must consider what will be the next market, based on the fact that we cannot become happy only with material satisfaction. Only when we can restore relationships between people and people, between people and nature, and between people and society, we can eliminate loneliness, I believe. What future businesses must do is to make the trust tangible.

Upon this hypothesis, AMITA endeavors to build a comprehensive environmental platform based on its technologies of environmental risk prevention in the fields of agriculture, forestry, fisheries, industry and commerce, which was first realized in Japan, as well as of recycling organic and inorganic substances. In future, I would like to integrate our businesses into three pillars; development of terrestrial resources, creation of an industry for sustainable use of natural resources, and outsoucee of environmental business, and then move forward into a business to create business models that restore relationships for realization of sustainable society.

To restore relationship -- altruistic instinct

Why relationship among people has been impaired? I dare to be exposed to criticism and let me take an example of a relationship between a husband and a wife. The husband is engaged in economic society through his work outside home and the wife is engaged in a local community as a housewife. Economy constantly changes and he tries to catch up with it. After 20 years, he finds his wife has not changed at all. If he complains that his wife needs to make more efforts, she may retort that she has built good relationships with neighbors in place of him. It means she conserved a local culture.

In this way, the sense of value is totally different in economic society where catching up with change is valued and in community where conserving regionality and culture is valued.

In addition to the above example, similar opposition is observed between modern times and the past, between a city and a local region, and among different areas on the earth. The gap in values may hinder understanding and cause distrust. As a result, today is the time where not only distrust but also hatred spreads out in a ripple effect.

Can't we unify the sense of value once again? For this purpose, industrialization of communities or bringing industries into communities is essential. Can't we seek the possibility to live only on energy, resources and food that are locally produced? We must become independent in terms of energy through the use of natural energy, in terms of resources through recycling and in terms of food by restructuring food culture. Only by doing so, a community can be independent.

It is vital for us to connect all processes from production to consumption with a value chain and restore relationships based on invisible trust and sense of security. We produced goods first and added value to them in the past. Today may be the time where we must consider how we use the production skills to realize such uncertain things as the value of the environment and comfort. In short, this is a switch-over from production of goods to creation of a new sense of value.

Reediting information will be indispensable

As one of the skills of making uncertainty certain, I believe that a skill of reediting information will be necessary. What will be required is information production technology to reedit information in light of a certain knowledge, and create new valuable information.

For example, I have an experience of being asked by mayonnaise manufacturers and large patisseries that they are in trouble with 100 to 200 tons of eggshells. If they only say, "Anyone needing eggshells?" only a person or a company who needs eggshells will appear. We, as a company handling resources, analyzed them and found that they consisted of 99.8-percent calcium carbonate and were extremely pure resource. So, we announced, "We can provide 200-ton limestone of higher quality than natural one on a monthly basis. Don't you need it?" The result is that many companies using limestone wanted the eggshells.

When the information of "eggshells" was reedited into "resource of better quality than natural limestone", a new market emerged all of a sudden. Ability to edit information for a specific purpose will be important. Break down the existing knowledge by yourself, select only the elements necessary for your purpose, and restructure them in your brain. Such training is exceptionally important. How can you question prejudice you have? If today's young people have this kind of flexibility, a brilliant future will be carved out.

Profile

Eisike Kumano is president of AMITA Corporation. He started a recycling business ahead of competitors under the slogan of "realization of a sustainable society." In 2005, Institute for Sustainable Economies was established. AMITA is expanding its domain as a company providing comprehensive environmental solutions. He served as Regional Revitalization Advisor of Japan Foundation for Regional Revitalization, a project under the auspices of the Ministry of Internal Affairs and Communications. Now, he assumes the roles of Director of the "Rediscovery and Redifining Japan" project, Chairman of the Eco Business Creation Association for Keihin Waterfront Area, Kanagawa Prefecture, and part-time instructor at Tohoku University.

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