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MAY 14, 2018

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

By Kelvin Song
Photo credit: Kelvin Song

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 these reports turned out to be false, activists and local residents continued to camp outside the plant, monitoring its activities and hoping to find evidence of pollution in order to expel the company from town.

Ishizaka Sangyo was a company everyone hated, including the facility’s employees.

Photo credit: Kelvin Song

Now it’s one of the most popular plant tours in Japan, with around 10,000 visitors every year. In fact, it’s 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.

Ishizaka Sangyo 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.

Photo credit: Kelvin Song

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 organic crops from farms around the plant, and they were delicious.

But what impressed me the most were the employees. All the staff I met had big smiles on their faces. They expressed a sense of pride in their work and a wish to stay at the company until retirement. My tour guide was a young woman in her twenties. She wasn’t just happy there – she was so happy that she had introduced many of her friends as job candidates. She even married a colleague and explained that marriage among employees is a norm.

As a company which provides a superior working environment and contribution to society, Ishizaka Sangyo won the White Company Award in 2016. It has become a company that everyone loves, especially the employees.

The unique management philosophy that sparked a 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, which can be understood as “management by opening up to the public.”

Why would a waste processing facility 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 changed its old habits. In her book, Ishizaka writes that despite her company’s efforts and results in reducing waste, local residents remained skeptical. The only way 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. Throughout the tour, I saw happy residents playing and picnicking in the beautiful park the company owns. It definitely helped to establish the facility as part of the local community.

Photo credit: Kelvin Song

Second, nothing motivates employees more than seeing their work being appreciated by visitors and locals. Usually, companies are concerned that visitors will hinder or disrupt daily operations, but Ishizaka Sangyo views visitors as an important source of employee motivation. The employees I met were passionate about sharing their company, products, and services. Indeed, the company has won a number of Omotenashi Selection awards in recent years.

Photo credit: Kelvin Song

When most people picture a waste processing plant, they imagine what Japanese call the 3Ks: kitanai (dirty), kiken (dangerous), and kitsui (tough). The natural tendency for most companies like this would be to stay hidden from the public eye. The environment could even 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 – a place that even untrained people can walk around safely. Simply put, it helps the management to enforce quality in the plant. Managers do not have to walk around to check on staff because visitors do that form them. Furthermore, visitors can be a source of valuable ideas to improve the plant.

Open innovation.

But wait, I thought. Wouldn’t that also mean that competitors could easily observe and copy their operations? Many companies even forbid photos on factory compounds, as they are concerned about leaking confidential information.

When I broached this concern, Ishizaki replied that they don’t mind competitors copying because it helps to drive down costs! The bulk of 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 copied, then it probably isn’t good enough.

Miseru keiei is clearly one strategy that every manager should consider.

Photo credit: Kelvin Song