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In a World of Globalization and Shareholder Capitalism

Uncertainty over the future has become rife in both firms and society. In a world of globalization and shareholder capitalism, corporate management hasbecome narrowly focused on short-term financial performance, a shift to downsizing and frequent re-organizations. These trends are leaving employees increasingly isolated, with disparities growing. Workers are increasingly feeling a sense of uselessness, even as they perform their jobs in an apparent vacuum.
According to sociologist Richard Sennett^* in his recent book The Culture of the New Capitalism (Yale University Press, 2007), this typifies the present corporate environment.
Sennett concludes that structural changes in corporate management have created three deficits in firms: they have reduced institutional loyalty, diminished informal trust among workers, and weakened institutional knowledge. Without informal trust-in other words, understanding of each other's thinking and behavior-Sennett observes that firms are nothing more than “impersonal and opaque” groups of people, something likened to “superficially organized paper.”

• * Born in Chicago in 1943. Professor at the Massachusetts Institute of Technology and the London School of Economics.

Knowledge Dynamics Initiative (KDI)

Conditions where all employees can work with enthusiasm, hope, and security are essential to corporate and social sustainability.
One group within Fuji Xerox is pursuing the goal of reviving Japanese firms by maximizing the knowledge creation capacity inherent in human beings-Fuji Xerox Global Services' Knowledge Dynamics Initiative, or KDI. KDI's office has done away with traditional work desks and strict personnel hierarchy. It is a group of “social entrepreneurs” who all create knowledge with the aim of realizing a society in which people can work with energy and joy.

KDI's original proponent, Kazue Kikawada (currently a professor at Osaka University), approached Fuji Xerox's top management with the argument that, given the forthcoming knowledge society, a major gambit was needed to transform the 21st century management paradigm. Companies had to serve as a sound social infrastructure and create a society in which everyone could enjoy their work and experience happiness.
Kikawada wanted to create a frontline group to serve as a driving force for society, making Japan a joyfull, happy place. KDI's basic concept is to realize dynamic individuals and dynamic spaces known as “ba.”
“The last decade or so has seen the spread of a management style that prioritizes means and ends with immediate effects even where this is recognized as only partial optimization,” says Takahiko Nomura, senior manager of KDI. “As a consequence, many employees have been buried in routine tasks, unable to engage in knowledge creation that transforms work. At KDI, we believe this is one cause of organizational lethargy. If all staff approach the continually changing social and business environment with greater sensitivity and flexibility and create new value, utilizing knowledge across organizational boundaries, the joy of sharing thoughts and ideas through work will spread throughout the organization, almost invariably energizing it.”

Client Company Challenge

What kind of gambit might be effective in inspiring employees and organizations? Since 2005, KDI has been working with Tokio Marine Nichido Systems Co., Ltd. on one approach. Tokio Marine Nichido Systems was created in 2004 through a merger of three companies to handle systems development, operation, and maintenance and repair for the Tokio Marine Group. Then-president Josuke Shindo (currently chairman and CEO of Japan Post Insurance Co., Ltd.) wanted to revive employees fatigued by the merger and create a company capable of proposing ITbased insurance business to parent company Tokio Marine & Nichido Fire Insurance Co., Ltd., which is its major client. Hideki Iwai, who currently is the Division Director of IT Solutions Division (Life Insurance Business), volunteered to lead the project. Noting the philosophy of KDI's first leader Kikawada of drawing out human potential through knowledge creation, he advised management to set up a committee on work styles.
In March 2005, that committee used KDI tools to launch a study on organizational culture and work styles. Iwai recalls the alarm with which management greeted a host of results indicating limited employee interest in technologies and users as well as a high level of employee introversion. In July that year, committee members visited various Tokio Marine & Nichido Fire Insurance operations, conducting an in-depth analysis of client work styles and how these related to their work.
Since December of that year, frank discussions were held offsite as to what needs to be done.

Relationships Created Through Earnest Communications

When Hiroshi Yokotsuka took over as president in 2007, he encouraged employees to create hobby and study communities, and the company too provided assistance such as registering and advertising activities and providing facilities. For example, with software development becoming increasingly globalized, a woman employee in her 20s with a teaching qualification put her hand up to launch an English conversation community. In other communities, senior management and staff go along together to watch sports and seek out ramen noodle shops . A community for sharing the joys and woes of child-rearing has launched a workplace visit group that invites employees' families and children into the office.
“To become a company with a performance that exceeds customer expectations, Tokio Marine Nichido Systems needed to strengthen relationships both within and outside work,” says Yokotsuka, who notes that organizational barriers along divisional lines are already breaking down in terms of responding to customers' needs. “I thought that the key was to bring in values that go far beyond work and bolster earnest relationships among employees.”
The growth in human relationships has led to a deeper understanding of individual personalities , which has allowed the company atmosphere to transform gradually.
Employees have begun to express their own opinions at meetings, not those of their departments. As employees have come to understand that they are not disposable commodities, they have started to view job challenges as opportunities and rivals as colleagues.
“Some people might think that the company has allowed too much frivolity into the workplace,” says Yokotsuka. “However, relaxing the rules a little allows people to notice their thoughts and emotions. I've seen for myself an increase in the number of employees who automatically think about the bigger picture.
Of course, if you compare it to a track event, we've only just passed the first hurdle. Our goal is to become the world's leading group.
We won't take any shortcuts in fostering firstclass personnel,” he notes happily. In March 2009, the company ranked ninth in the country in the third list of Japan's best workplaces published by Great Place to Work ® Institute Japan. It won't be long before the firm's organizational and personnel capacity blossoms, enabling it to propose new business solutions to its parent company, Tokio Marine & Nichido Fire Insurance.

“Ba” (Space) for the Practice of Knowledge Creation

To strengthen the relationship between specialist researchers and client firms taking on the challenge of corporate reform, KDI hosts a range of events, including knowledge communities for learning about the theory and practice of corporate reform, reform leader exchange meetings primarily aimed at middle management, and executive exchange meetings for senior management.
The discoveries that emerge from the accumulation of various types of knowledge and experience provide a wellspring for KDI's value creation.
“In this job, you have to be prepared to learn both theory and practice,” says KDI's Yayoi Kubota, who led the project with Tokio Marine Nichido Systems. “When you work with your clients to relax human relations within the organization, and that organization evolves from the ‘safety and security’ stage to the ‘mutual trust’ stage, deepening relationships with other people becomes exciting and people's faces come alive. It's amazing when that willingness to take on risks and challenges manifests in the workplace and goes on to change society and companies.”

Back to CSR Basics

The 2006 edition of Violence at Work, published by the International Labour Organization, warns that the instability of many types of jobs is causing greater pressure in workplaces, with workplace violence increasing worldwide, and reaching epidemic levels in some countries. This is borne out by the growing number of Japanese companies struggling with employee disinterest , sectionalism, hostility and confrontations and harassment. Managers must be observing a mounting sense of deadlock and apathy among employees and worrying about their firm's future if the situation is not addressed. “In today's management and planning, knowledge creation has been squeezed in around the edges of operations, but from here on we have to look at it the other way around,” says Taro Sengoku, KDI Group Manager. “If there isn't enough discussion about the future-for example, how society will look in 20 to 50 years, what value our company should offer society, and where investment should be focused to that end-you can't break an organization out of its deadlock. The sustainability of a company depends to a great extent on its management having a clear vision as well as a scenario to accomplish it.”
The CSR debate originally emerged in the 1990s in Europe, where the social structure was causing unemployment, poverty, social disparities, and antagonism. To rebuild society, we now need to return to those roots and objectively reconsider the ideal relationship between companies and society and the kind of company management that will bring out the best in people.