How can effective sustainable enterprises tackle social issues and, in the process, employ the important contributions that Eastern philosophies can make in this area? The model proposed here can stimulate innovation and concurrently address social issues while working toward important global priorities such as the United Nations’ Sustainable Development Goals (SDGs), a collection of 17 global goals covering social and economic development issues, set by the United Nations General Assembly in 2015. However, this model requires flexibility and even a certain level of ambiguity in areas that cannot be explained by theory and rationality. At the same time, there is still a need for the “science” of Western business practices.  In other words, the best model combines Eastern and Western approaches.

Business for Good in East Asia

This collection of articles, sponsored by the Leping Social Entrepreneur Foundation, delves into the cross-sector collaborations driving the latest social and environmental innovations throughout East Asia, including China, Japan, Korea, and Singapore.

 

Open Innovation and Art Thinking

We face a range of complex and diverse social issues across the globe. This situation also provides a range of opportunities to modify certain social structures. Solutions that make use of market mechanisms have come into the spotlight.

 

Solving social issues is not solely the province of government and nonprofits. In principle, the role of government is to serve the public good, but government is often unable to see the details of social problems. As a result, government tends to focus on symptomatic treatment of social issues and does not have the tools to solve them at a fundamental level. This can also be seen, however, as a great opportunity for business to flourish while tackling social issues. Also, given that a lot of social problems have been created by the market, often it is ultimately only the market that can resolve them.

At the same time, a recent evolution in innovation—from a closed model to a more open one—is in the process of becoming more ecosystem-centric. Of note is the trend away from the maximization of corporate value and toward maximization of social value, as shown in “The Evolution of Innovation.” Thus, innovation emerges from relationships with society and diverse stakeholders, and corporations must adapt to this by integrating social awareness and economic values. Such a change brings a new perspective to innovation theory.

 

Analysts of innovation theory are beginning to pay attention to a concept known as “art thinking,” explored in depth by New York University professor Amy Whitaker in her book, Art Thinking: How to Carve Out Creative Space in a World of Schedules, Budgets, and Bosses. Previously, what was known as “design thinking” had been favored, but its rigid adherence to logic left a feeling that something was lacking in this era of open innovation. The importance of ambiguity came into focus. Art thinking involves depicting the future as we want it to be and applying art production processes to the field of business. Innovation can be born out of this ambiguity. This approach has had an impact on corporate models, as “Points of Contrast” (above) shows. Stimulation of innovation requires identification and interfacing with social issues. The corporate world cannot afford to ignore this.

As approaches to innovation and the tackling of social issues have come to embrace vision and ambiguity, effects can be seen in corporate business models. Currently, corporate modeling is becoming more of a hybrid of economic concerns and social ones. This movement started in the 1980s with the concept of stakeholder management, in connection with development of the “corporate social responsibility” (CSR) concept. Since the 2010s, other models, such as Michael Porter and Mark Kramer’s “creating shared value” (CSV) as a business strategy, and Rosabeth Moss Kanter’s “great company” and John Mackey and Raj Sisodia’s “conscious company” as corporate models, have emerged.

The latest corporate model, known as “sustainable enterprise,” is defined as one in which the corporation contributes to the building of a sustainable society through its management style while minimizing conflict between stakeholders. This style does not deprioritize stakeholders, but it still works toward the important development goals such as SDGs. The key principles revolve around the provision of a product or service that addresses social issues, causes no unnecessary harm, and contributes to the enlightenment of minds. Among these three elements, the emphasis is on avoiding generating new social problems rather than solving existing ones.

 

From an innovation perspective, business models featuring this kind of management style make sense. Current innovation theories favor collaboration between a variety of stakeholders (Open Innovation 2.0). The emphasis in open innovation has shifted away from maximization of economic value in the corporation toward finding resolutions to common social problems. Accordingly, it has become crucial to nurture relationships with society and position the businesses as entities that help deal with social issues, or, at the very least, don’t contribute to them.

This business model is more mission oriented than the model to maximize profit. There are several examples of sustainable enterprises worth looking at in depth, notably Patagonia from the United States, Lush from the United Kingdom, Eko Plaza from the Netherlands, and Ikeuchi Organic from Japan. Ikeuchi is one of the best-known towel makers in East Asia: It manufactures only 100 percent organic cotton towels. The cotton it uses is grown organically, and most of it has been sourced from the same farms for many years. It uses low-impact dyeing methods, which are deemed suitable for babies and toddlers under 3 years of age. The products are made with wind-generated power at the first 100 percent wind-powered factory in Japan since 2002.  

As these cases demonstrate, there has been a global diffusion of this business model. What these examples have in common is a commitment not to create social problems or harm. For example, Ikeuchi Organic defines its mission as “making textiles with the utmost safety and minimal environmental burden.” Patagonia’s company philosophy includes “Build the best product” and “Cause no unnecessary harm.” It is clear that doing no harm is considered to be as important as endeavoring to solve existing problems—and in reality existing problems are not being tackled. This is because it is extremely difficult to focus on issues that are hard to visualize and are consequently virtually incomprehensible.

This is largely due to a predilection for separating the economy from society. Under these conditions, society and economics are dealt with separately in accordance with such schools of thought as CSR or CSV. Ultimately, the integration of business and society needs to be considered if both are to thrive. As a result, this has created a need for a business philosophy that does not create new social problems, does not cause harm or loss to stakeholders, and integrates economics and society.

We need an approach that involves a business model that tackles social problems, and a business model that encompasses society and business and integrates the two.

 

Integrating Eastern philosophy

One way of making headway on this conundrum has been the exploration of Eastern philosophies. Business leaders such as Yvon Chouinard, founder of Patagonia, are enthusiasts of Zen Buddhism, the heart of which is zazen (sitting meditation), the most direct way to see into the mind. Historically, it has been an uncommon approach but is gaining traction in business situations around the world. Many large companies, even Google, have introduced “mindfulness” as a tool for the management of creativity and innovation.

One often-seen feature of Eastern schools of thought is the concept of the bird’s-eye view—taking in things in a comprehensive manner. In Eastern medicine, root causes of health problems can be identified in the bird’s-eye view, though they may remain unidentifiable or invisible to the Western approach. The Eastern approach strips off layers until the essence of the problem is visible. For example, this means that you can approach the essence of the problem by setting aside logic and rationality. This way, the risk of disregarding what is not yet understood, which can be a feature of the Western approach, is avoided. The whole entity is focused upon, including elements about which little or nothing is known.

There is, therefore, an aspect of this approach that coincides with art thinking, in the sense that one maintains one’s awareness of the invisible, or that which is not yet readily identifiable. Eventually, this ambiguity can secure the emergence of innovation and the sustainability of the company. Consequently, a vision can be crystallized whereby social issues can be tackled. This explains the adoption of Eastern philosophies or art thinking by many companies in recent years.

The dichotomy that often dominates Western thought can result in a categorization of the subject at hand into two aspects. This dichotomous approach does not lend itself to finding realistic approaches to innovation or to social problems. But given that a scientific approach is sometimes necessary in business, this mind-set has its value. A more Western approach favors separation of invention and innovation. Both business and innovation require nonscience, such as art thinking, and science, led by Western philosophy, as well as a bird’s-eye view (Eastern philosophy) that connects them. Corporate management needs to incorporate aspects of both Eastern and Western philosophies.

For a fully integrated approach to society and economics, analyses that rely purely on Western schools of thought fall short, so the development of management modes and styles informed by Eastern philosophies is needed. The program offered by the Johns Hopkins Carey Business School and Maryland Institute College of Art in a joint MBA/MA in design leadership is a step in the right direction. It shows how art thinking and design thinking can complement each other, and also how visions for the future can be set forth within an art context, while the design context creates a business platform for that vision. It specifically integrates the philosophy of the CEO with the business side of the equation. The curator brings meaning to these relationships, and consequently the nurturing of these curators will be increasingly important.

To manage the ambiguity, corporations need to set vision, enable free interpretation for stakeholders, and govern the ambiguity’s interpretation through communication with management. As a result, corporations are required to supplement the science of management with conceptual aspects like vision and philosophy.

The most appropriate corporate model is one of sustainable enterprise—specifically, one that incorporates Eastern philosophy. This sustainability will not only be good for individual companies but also enable the achievement of a sustainable society.

Read more stories by Nobuyoshi Ohmuro.