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MAY 14, 2018

Four Unexpected Benefits of “Publicly Open Management”: The Case of Ishizaka Sangyo

By Kelvin Song

GLOBIS Faculty Advisor Kelvin Song shares his analysis of how Nikkei Woman of the Year Noriko Ishizaka instituted an unusual management philosophy to turn around her company—a waste processing facility—from a social outcast to an award-winning role model.

In 1999, Ishizaka Sangyo, a waste processing facility in Saitama (north of Tokyo), was being lambasted by neighboring residents. TV Asahi reported that highly toxic compounds were found in vegetables grown near the plant. Despite the fact that the reports turned out to be false, activists and local residents continued to camp outside the plant, monitoring its activities, with an objective to find evidence of pollution in order to expel the company from the town. It was a company which everyone hated, including the employees themselves.

Now, it is one of the most popular plant tours in Japan, with around 10,000 visitors every year. It is one of only two companies which were awarded the highest AAA rating from the Japan Habitat Evaluation and Certification Program, for its environmental conservation efforts. It is still a waste processing facility, but instead of burning and emitting harmful fumes, it now recycles up to 98% of its waste. Its CEO, Noriko Ishizaka, who led the turnaround, won the Nikkei Woman of the Year Award in 2016.

I had the chance to tour the factory last month, and, I must say, I was extremely impressed. I have never seen a waste processing plant so clean. The air around the plant was fresh. We even had the chance to taste the organic crops from farms around the plant, and they were delicious. But what impressed me the most were the employees. My tour guide was an employee in her twenties. Why would a girl want to work in a waste processing plant? Not only she was happy, but she had also introduced many of her friends to work there and is married to her colleague. She told me that marriage among employees is a norm. All the staff I met had big smiles on their faces. They feel a sense of pride in their work and wish to stay in the company until retirement. As a company which provides a superior working environment and contribution to the society, Ishizaka Sangyo won the White Company Award in 2016. It has become a company that everyone loves, especially the employees.

A Unique Management Philosophy Sparked the Turnaround

As a management professional, I was curious to learn how the company turned itself around. One of the keywords I heard from the staff was miseru keiei (見せる経営), which can be understood as “management by opening up to the public.” I was very intrigued by that, as I wondered why a waste processing facility would want to open itself up to visitors. As I pressed for reasons, I finally realized the ingenuity of the idea. The effect was four-fold.

First and foremost, this concept assures the community that its operations are clean, that the company had changed its previous habits. In her book, Ishizaka writes that despite her company’s efforts and results in reducing waste, local residents remained skeptical. The only way she thought that she could convince people was by having them see the changes for themselves. That was why the company started organizing tours of the factory. As I walked around on the tour, I saw happy residents playing and picnicking in the beautiful park the company owns. It definitely helped to establish itself as part of the local community.

Second, nothing motivates employees more than seeing their work being appreciated by visitors and the local community. Usually, companies are concerned that having visitors might cause hindrances or disruptions. But Ishizaka Sangyo views visitors as an important source of employee motivation. Employees whom I met were passionate about sharing about their company, products, and services. Every time I walked past an employee, I was greeted with a broad smile and a gentle “Hi.” Indeed, the company has won a few Omotenashi awards in recent years.

What kind of image do you have of waste processing plant? Many people imagine what Japanese call the 3 Ks: kitanai (汚い) for dirty, kiken (危険) for dangerous and kitsui (キツイ) which means “tough work.” The natural tendency for most companies like this would be to stay hidden from the public eye. And the environment could be dangerous for untrained visitors. Ishizaka Sangyo had a very different idea. They understood that having visitors around actually forces everyone in the company to maintain a clean and tidy working environment that is presentable to the public, and a place that even untrained people can work around safely. Simply put, it helps the management to enforce quality in the plant. Managers do not have to walk around to check on their staff because visitors do the job. Furthermore, visitors also gave valuable ideas to improve the plant. That’s open innovation.

But wait, I thought. Wouldn’t that also mean that competitors could easily observe and copy their operations? Many companies even forbid taking pictures within their factory compounds, as they are concerned about leaking confidential information. When I broached that concern, she replied, to my surprise, that they don’t mind competitors copying because it helps to drive down costs! The bulk of the costs comes from plant equipment. The more competitors that buy the same equipment, the lower the cost will be. Truly, if your competitive advantage is easily able to be copied, then it probably isn’t good enough.

If you were running a waste processing plant, would you open it up to the public? Even if you wouldn’t, miseru keiei is one strategy that you as a manager should have in your toolkit.