Responsible Profits

Japan's latest export is about to enter Western business culture in the guise of a new standard for corporate behavior. If you don't know about it yet, you'll need to learn soon.

For nearly two years, the International Standards Organization (ISO) has been developing a new benchmark that will bear the designation “ISO 26000” when it is published some time in 2007.

If you want to prepare yourself for its arrival, I suggest that you first look at the English-language pages of almost any major Japanese company’s Web site. What you’ll be searching for is a section labeled “CSR.” Click on the tab or pull down the menu and read what you find. Because if you intend to remain globally competitive in the years to come, you will need to absorb a lesson that was first learned by the Japanese many years ago.

“CSR” stands for “Corporate Social Responsibility,” and you may be forgiven if you don’t know the term. The concept is not widely embraced in the United States and Europe, and its tenets are sometimes foreign to the Anglo-Saxon business model.

To the Japanese, however, CSR is as fundamental to the management of a company as cost controls or market research.

CSR encapsulates a point of view that some would call distinctly Asian. Others might say it borders on the mystical. In truth, however, it is a simple, common-sense formulation that can be summed up as follows: While growth and development are recognized as vital goals of a corporation, they must not be pursued in ways that would upset the harmony that should exist among the corporation, society as a whole and the natural world.

The key word there is “harmony.” The implicit message of CSR is that an unbalanced approach to business – too great an emphasis on short-term profits, for example, or insufficient consideration of the environmental impact of a new plant – is ultimately destructive to all of the company’s stakeholders, from its shareholders and top management to its employees, its customers, the communities in which it operates and, finally, the whole wide world.

Consider the stated approach of NTT DoCoMo Inc., the Japanese mobile communications giant and global leader in 3G technology. While pursuing its corporate economic goals, NTT DoCoMo also wants to “contribute to the realization of a rich and vigorous society.” The company “seeks to maximize its corporate value” not for short-term rewards, but because its ultimate objective is to be “greatly trusted and highly valued” by both shareholders and customers.

Or how about this sentiment from Tokyo Telecommunications Engineering Corp.? “The first and primary motive for setting up this company,” wrote co-founder Masaru Ibuka in the organization’s prospectus, “was to create a stable work environment where engineers who had a deep and profound appreciation for technology could realize their societal mission and work to their heart’s content.” The first management policy of the company? To “eliminate any unfair profit-seeking practices, constantly emphasize activities of real substance and seek expansion not only for the sake of size.”

If you’re scratching your head about the identity of Tokyo Telecommunications, be apprised that its prospectus was written in 1946. Twelve years later, the company adopted the name by which it is still know today: Sony.

Much of the wisdom that the Japanese have preached among themselves for decades will be incorporated into ISO 26000. And although the new standard is not initially intended for use in an official certification process, that eventuality seems inevitable over time. At the very least, the publication of ISO 26000 will undoubtedly affect the way you do business. Because according to the International Standards Organization itself, the new benchmark “will be a tool for the sustainable development of organizations while respecting varying conditions related to laws and regulations, customs and culture, physical environment, and economic development.”

Don’t get it yet? Then take a word of advice from the Japan Business Federation, which points out that, in a globalized economy, CSR “has become an important criterion for selecting products and services, as well as evaluating corporations….”

In other words, even if ISO 26000 is not yet an official yardstick, the concept of CSR has seeped into the collective unconscious of people around the world. “Harmony,” it seems, is an idea whose time has come.

If you’re smart, you’ll learn to sing along.

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