Rethinking corporate value: A conversation with Yoshimitsu Kobayashi

Kaiteki “the sustainable well-being of people, society and planet Earth,” is fundamental to the identity of the Mitsubishi Chemical Holdings Corporation and the KAITEKI Institute, MCHC’s think tank and research institute. The concept aligns seamlessly with the goals of Arizona State University’s Global Futures Laboratory, which seeks to shape a future in which Earth and all its inhabitants can thrive. ASU and MCHC have partnered to support research aimed at realizing the concept of kaiteki through the Global KAITEKI Center.

MCHC Chairman Yoshimitsu Kobayashi visited ASU on Oct. 24 to kick off the center’s activities. At the event, Kobayashi and ASU President Michael Crow shared their visions for a sustainable future, and the two organizations pledged to work together to advance these goals.

Here, Kobayashi explains kaiteki management, how it can be applied, and why partnerships between industry and academia are essential to achieving this ambitious vision.

Question: How do you explain kaiteki to others?

Answer: The Japanese word kaiteki means “comfort” or “well-being,” and I firmly believe that it’s the most appropriate name for the type of value sought by a company with Japanese origins. The forms of value provided by Mitsubishi Chemical Holdings are separated onto three axes: the economics axis, which indicates profits and efficiency; the technology axis, which indicates innovation and new frontiers; and the sustainability axis, which indicates contributions to public interest and the environment. We quantitatively measure and assess the values along each axis, increasing all three in a balanced way. We call this kaiteki value.

Q: How did kaiteki become a driving principle for MCHC?

A: When I became CEO in 2007, I felt strongly that the company’s almost total lack of an established corporate identity was very risky. Unlike beer or car manufacturers, we’re engaged in a diverse range of businesses — spanning everything from pharmaceuticals by the milligram to petrochemicals by the ton — and it’s difficult to explain what kind of company we are in simple terms.

So, in 2007 I made sustainability, health and comfort our decision criteria, as well as our slogan, and I established as company policy that we would undertake business activities in line with these criteria in order to solve problems faced by society, including the problem of carbon dioxide emissions, and to help people live more comfortable lives. We then carefully considered this policy in connection with our market capitalization, intrinsic corporate value and general existential value.

We concluded that value formed on three axes — Management of Economics, Management of Technology and Management of Sustainability — would itself constitute our corporate value. In 2011, we began to refer to corporate value generated on these three axes as “Kaiteki Management.” Everyone in the Mitsubishi Chemical Holdings Group, both inside and outside Japan, comes together and pursues all corporate activities under the kaiteki banner; this is our identity.

Q: Why is kaiteki so very important in today’s world?

A: Humanity currently faces a number of pressing challenges, including climate change and marine plastic pollution. In light of these challenges, which pertain to Management of Sustainability, corporations that are greedy in pursuing profit alone will not last long. We believe we can achieve sustainable growth by employing technology and innovation to provide solutions to social and environmental issues — Management of Technology — and thereby increase business income — Management of Economics — which is none other than the pursuit of what we call kaiteki value.

In August of this year, the Business Roundtable, an association led by major U.S. companies, announced its departure from the shareholder supremacy principle. The time has come for the world to rethink the meaning of corporate value. We believe our decision in 2011 to institute Kaiteki Management was appropriate to the age in which we live.

Q: How do you envision kaiteki applied in business?

A: Realizing kaiteki value in business means undertaking business activities that lead to sustained growth while solving social issues. This encompasses energy-generating solutions like organic solar cells, energy-storage solutions such as lithium-ion battery materials, and energy-saving solutions such as carbon fiber-reinforced plastics and gallium nitride, as well as solutions related to health and living such as regenerative medicine and new forms of agribusiness — though these businesses are still in the maturation process.

In connection with communities, we have declared our support for the Task Force on Climate-Related Financial Disclosures, and we participate in the Alliance to End Plastic Waste (AEPW) and the Ellen MacArthur Foundation’s Circular Economy 100 Network. We also chair the Carbon Recycle Fund, an association of private-sector companies, as a part of our participation in government efforts to expand the circular economy, as well as the government-sponsored Japan Initiative for Marine Environment, which is tasked with addressing the problem of plastic waste.

Q: Why are partnerships important to advancing this vision?

A: Climate change and marine plastic pollution are global challenges that go beyond national borders. And with ICT and other technologies growing more sophisticated and information becoming widely available, society in general is demanding that problems be solved with considerable speed.

In light of this, companies and research institutes have neither the time nor resources to handle the entire process from crafting a vision to seeing it through all on their own. To provide the value that society requires in a way that is timely and precise, it is becoming all the more important to combine the scholarly perspective of the academy with the business perspective of the private sector in the form of open innovation.

Q: Why did you decide to partner with ASU? 

A: I owe a debt of gratitude to ASU’s Dr. George Stephanopoulos for this partnership. He has been a good friend of mine since he served for two years as CTO of Mitsubishi Chemical Holdings from the year 2000, and I have often discussed Kaiteki Management with him.

In addition, under the leadership of President Crow, ASU has emphasized education and research that strongly promotes innovation, established the expectation that achievements contribute to the public interest, and acquired a track record in actively pursuing collaborations between industry and academia that pivot on sustainability. We believed that these factors will help create synergies for realizing the kaiteki that we have proposed and pursued.

Q: How will working with ASU and the Global KAITEKI Center support kaiteki and building a sustainable future?

A: We have high expectations, in particular for ASU’s Julie Ann Wrigley Global Institute of Sustainability and the new Global Futures Laboratory. I firmly believe that joining our kaiteki concept with ASU’s sustainability-focused technology, research capabilities and sophisticated social scientific perspectives will make it possible to create new methodologies and roadmaps.

Q: If a company wanted to realize kaiteki, how should they begin?

A: I think it is first important that all stakeholders, including shareholders, customers, employees and the general public, recognize the meaning and importance of kaiteki value. Deepening communication with stakeholders and providing society with solutions through the products and services that result from this communication will generate kaiteki value.

Q: What three key things need to happen in order to realize kaiteki world-wide?

A: The kaiteki vision needs to be shared with shareholders, employees, customers and other stakeholders worldwide.

Management of Sustainability, one of the three axes of Kaiteki Management, needs to be visualized, quantified and standardized, even while 80% of the focus may remain on Management of Economics.

In addition, alliances need to be promoted between companies and universities for the purpose of creating kaiteki value — as is the case with ASU.

Q: What legacy do you want to leave on the world?

A: Kaiteki is a beautiful Japanese word that means “comfort” or “well-being,” and ever since founding the KAITEKI Institute, my dream has been to make that word as familiar as “kaizen” or “teriyaki” all over the world. Another goal is to visualize and quantify Management of Sustainability value and to standardize it as an important assessment indicator alongside economic value. I believe this would significantly change how corporate activities are assessed and judged.