Organizational Change
OMRON:
Building a Sustainable Company by Responding to Social Needs

This post has been translated from Japanese — read the original interview here.

While most companies aim to respond to customer needs, Japanese electronics company OMRON aims to respond to ‘social needs’. This difference stems from the constant consideration of the relationship between business and society by the company’s management team, which it has done since its founding. In addition, OMRON is determined to pursue sustainability alongside business revenue, and the company includes sustainability in the board’s evaluation. Sustainable Brands Japan (SB-J) spoke to Fumio Tateishi, Chairman of OMRON, to learn more about how a focus on generating societal benefits drives its business strategy.

Giving back to society

‘Innovation driven by social needs’ is one of the three values emerging from the OMRON Principles, which were revised in 2015. Generally, companies use the phrase ‘customer needs.’ Why does OMRON focus on social needs?

Fumio Tateishi: That idea dates back to our founder, Kazuma Tateishi. He was born in Kumamoto in 1900. When he was a first grader in elementary school he lost his father, and from fifth grade, he supported his mother and brother with a newspaper delivery job. Through his job, he came to know and value the community in which he was delivering newspapers.

After that, he was awarded a scholarship and graduated from the Kumamoto Technical High School, now the Faculty of Engineering at Kumamoto University. With this background, Tateishi decided to give back by creating a better society both for the nation and for the world. His thoughts still guide OMRON's values.

So, there was a focus on addressing social issues from the very beginning?

Tateishi: OMRON declared 1955 to be ‘Year One of Automation’. We pioneered the automation business in Japan. We developed the world's first unmanned train station system, which included automated ticket gates, traffic-responsive electronic signals, and automated cash dispensers. Now, we build systems and devices from hundreds of thousands of components. Our business needs cannot be addressed if we only look at the needs of our customers. It is very important to consider society as a whole and its requirements.

We do not operate with a short-term vision. We consider how we can run our business sustainably from a medium- to long-term perspective, and how we should contribute to society rather than simply pursue profit as a company. With these aims in mind, our founder established ‘To improve lives and contribute to a better society’ as a company principle.

OMRON exists to follow this principle, resolving social issues through business and contributing to the creation of a better society.

The other is that OMRON should be unafraid of failure, take the initiative, and play a pioneering role in the world. A better society will never materialize if we just wait for it. Someone must take initiative, challenge the status quo, create new value, and become a pioneer to create a better society. OMRON is determined to be that ‘someone.’

In 1990, we changed the name of the company from Tateisi Electronics to OMRON. At the same time, we replaced the company’s constitution enacted in 1959 with the OMRON Principles. We encourage all employees to familiarize themselves with our principles to both heighten motivation and ensure they are better able to fulfill social needs.

Sustainability and business are inseparable

OMRON has also introduced the principle of sustainability in their board evaluations.

Tateishi: Following the OMRON Principles revision project, we conducted a year-long review of how to practice sustainability in 2015. We decided to place a greater emphasis on sustainability in our business, but also reviewed our response to the voices of the global community and our stakeholders concerning business initiatives with non-financial value.

If we are to integrate business and sustainability, it is necessary for the board of executives to make employees aware of how to promote and accelerate sustainability.

We decided to reflect third parties’ objective evaluations of OMRON’s sustainability promotion in the medium-term in our board’s remuneration.

Running or working for a business often causes one to wonder ‘what am I working for?’ The answer can be that I work for my boss; or for the president, which is not wrong; but if the corporation is working to improve society, then you are also working directly to make society better. If all employees clearly recognize that, there is nothing left to question and the corporation stands strong.

Private companies are tested on how they redistribute finite resources. If you work directly to create a better society, you cannot think that sustainability and business are separate.

Backcasting from 2030

You are also Vice Chairman of the Corporate Citizen Council (CBCC), founded by the Keidanren (Nippon Keizai-dantai Rengōkai, Japan Business Federation). In November 2017, for the first time in seven years, Keidanren revised its Charter of Corporate Behaviour and placed the Sustainable Development Goals (SDGs) at the forefront.

Tateishi: As I mentioned earlier, in 2015 we revised the OMRON Principles to make them simpler to practice. At that time, the United Nations adopted the SDGs, and since then we are increasingly hearing the term ESG (environment, society, governance) in Japan.

The increase in the awareness of social issues in the world coincided with the period in which we worked to revise the OMRON Principles. SDGs are also incorporated in our management plan. Since 1990, OMRON has reformulated its long-term vision every ten years. Fiscal 2017 is the time frame in which we execute the final medium-term management plan (2017-2020) of our third long-term vision (FY 2011-2020).

The flow of change in the world quickens, and simply continuing our medium-term management plan from FY 2014 to FY 2016 will not keep up with this change. If we do not prepare a management plan with backcasting from 2030 — the target year of SDGs — we cannot carry on from now on.