A Case from Japan: The New Role of Large Companies in Mission-Driven Innovation
21. Feb 2024“We think a mission-oriented approach would be key to working for a broader impact with various stakeholders,” says IHI, a Japanese manufacturing firm. This article examines large corporations’ roles in leading a mission for societal impact. There are three core aspects of a new value model creation and four critical enablers for implementing the model
IHI, a prominent heavy manufacturing company with more than 170 years of history in Japan and +28.000 employees, has previously achieved innovation through a human-centered design approach. However, they are currently grappling with emerging challenges.
We spoke with them as part of our Mission Playbook Vol. 2. In this article, they share some reflections on changing their strategy approach to a mission and impact-driven one. They have just embarked on the journey of working with missions and impact, yet they share some relevant insights and considerations.
IHI’s reflections point to what role large corporations can play in achieving a sustainable society and what transformations are necessary to foster new value creation. Our work at DDC points to three core aspects of a new value model creation and four critical enablers for implementing the model.
IHI: How to expand solutions to a societal scale
To tackle broader societal issues and achieve impact with various stakeholders, IHI is trying to reform its research and development process and strategy.
Dr. Chie Fukuoka, Deputy General Manager of Technology & Intelligence Integration at IHI, states:
“Our R&D efforts have been conducted through a bottom-up approach, driven by researchers’ proposals and the technologies they possess. However, we are keen to shift our R&D portfolio towards adopting a mission-driven, top-down approach based on long-term goals. Nevertheless, at the same time, excessive reliance on top-down approaches may overly turn into methodologies that are too analytical, leaving little room for innovation. We are striving to find an appropriate balance between these approaches.”
In the last few years, IHI decided to change its strategic approach to a mission-driven one. The company, based in Tokyo, experienced challenges in expanding its solutions and overall strategic goals on a societal scale. They needed another method.
“As a B2B heavy manufacturing company, we must have a broader societal-scale perspective for innovation. Although design thinking was a handy tool for uncovering users’ unarticulated needs, focusing too much on specific customers’ needs also risks overlooking the societal impact of the business. Sometimes, we had difficulty expanding the solution on a societal scale beyond specific users’ needs. Our current strategic areas, like carbon neutrality or climate change, cannot be dealt with by one specific solution or organization. A holistic perspective and collaboration with diverse actors would drive a new, effective approach to those wicked problems. We think a mission-oriented approach would be key to working for a broader impact with various stakeholders,” says Dr. Takuya Suzuki, Manager of the Department of Technology & Intelligence Integration at IHI.
A crucial stepping stone for IHI has been to actively mobilize its ecosystem toward a shared mission. An action we’ll explore later in the article. But this particular part of the approach has not only been easy:
“I think the definition of a good ecosystem entails fostering healthy interdependence among other players. Thus, I believe the key to constructing an ecosystem for a mission lies in cultivating better interdependencies while engaging diverse players. To be honest, I felt some level of struggle in transitioning from the conventional approach of addressing challenges solely within one’s organization to embracing new ways of making an impact with various actors. However, for the sake of both the company’s growth and societal impact, there is a determination to courageously advance this approach,” explains Dr. Takuya Suzuki.
IHI works strategically with startups to drive innovation. The company will also apply the ecosystem transformations to its relations with startups and other actors as well.
Dr. Chie Fukuoka elaborates on the crucial role of startups:
“When addressing global challenges, it has become crucial to have a variety of perspectives and options on relationships with startups. We have tried Corporate Venturing internally and collaborated with startups, experiencing numerous successes and failures. It’s not uncommon for startups and large corporations to have differing goals and perspectives. Nowadays, in collaborations with start-ups involving Corporate Venturing, it has become crucial to create a relationship beyond adopting the dynamics of investor and investee. Rather, the emphasis should be on a mission and collectively on how each company can contribute its value propositions and ideas towards achieving the mission. It is essential to move beyond goals such as joint product development and instead define roles based on individual strengths, aiming towards greater collective impact.”
This article is part of our Mission Playbook.
Explore the other articles here.
"Sometimes, we had difficulty expanding the solution on a societal scale beyond specific users’ needs"
Dr. Takuya Suzuki
Manager of the Department of Technology & Intelligence Integration, IHI
Taking a mission-driven approach means you are almost bound to experience failures. Failures are an integral part of design processes and even more so when mobilizing ecosystems toward a shared mission. A lesson and reflection IHI shares – but also knows how to react to:
“Setting ambitious and challenging missions together which cannot be tackled by a single entity alone becomes increasingly important. While failures may inevitably occur in pursuing these missions, creating an experimental environment that embraces failure as a positive learning opportunity is pivotal. It is essential to get insights, reframing them as valuable learning experiences. Furthermore, we aim to create a learning process that extends beyond the current scope of imagination, integrating these insights into subsequent innovations internally and externally,” says Dr. Chie Fukuoka.
As stated earlier, IHI is still in the early stages of working with impact and mission-driven innovation. But they are exploring how to work towards building a new business by tackling issues on a planetary scale, such as achieving a circular economy.
Indeed, business challenges for broader societal issues require new ways of thinking and innovative approaches. Their value creation models must undergo fundamental transformations to effect meaningful change and drive impact.
Through our experience and discussions with companies aiming to elevate societal issues to a central pillar of their business activities and strategies, like IHI, there are three core aspects of new value creation and four critical enablers for implementing the new value creation model.
Let’s dive in!
"We think a mission-oriented approach would be key to working for a broader impact with various stakeholders"
Dr. Takuya Suzuki
Manager of the Department of Technology & Intelligence Integration, IHI
Three transformations in the value creation model
- Impact-driven
In the new role of large corporations, companies aspire to create customer and societal value by mobilizing them toward a sustainable future. It entails redefining the conventional role and the ‘meaning’ of business, transcending the confines of the existing market or customers. While addressing customers’ needs remains central to value creation, as IHI underscores, there needs to be a new value creation model amidst the growing expectation for companies to confront more significant, complex societal challenges.
In this sense, companies must transition from being problem-driven to impact-driven.
Silver bullets or individual geniuses do not resolve complex issues, and there is never a stable state where all problems are solved. That implies that multiple pathways and initiatives may emerge to address these challenges, each presenting unique opportunities for business innovation. All processes can be connected, and they can become business opportunities. The impact value creation model is not based on problems but on opportunities, revealing new possibilities within the system’s complexity.
For example, looking at the healthcare system from a narrow problem-driven perspective, one might consider the healthcare system solely as activities within hospitals or involving home care nurses, among other elements. By contrast, an impact-driven model, zooming out the scope at a systemic level, recognizes patients traveling by car, interacting with transportation systems, and hospitals being part of heating infrastructures, thus discovering these as new opportunities.
Nevertheless, of course, this doesn’t mean you can neglect the process of problem-findings. Businesses can identify more critical chances when the problem and opportunity work together. However, without defining the desirable future state in the impact, hidden opportunities may be overlooked, and there is a possibility that the process of problem discovery itself becomes impossible, given the gap between the current state and the preferred state defines problems. - Collaborative
A single entity cannot achieve the impact-driven value creation model. In this model, collaboration is an indispensable part of creating value. Over the past few decades, Silicon Valley’s ‘winner-takes-all model’ with disruptive solutions fuelled by venture capital has been referred to as an ideal business strategy, and being a ‘platformer’ has been considered the perfect way for companies to build competitive advantage.
However, although those monopoly models are optimized for short-term exponential growth, there are better solutions for a long-term sustainable business environment. For instance, tech giants operating gig economy platforms, such as Uber, have achieved remarkable growth at the expense of workers’ rights. Moreover, big tech has perpetuated a new form of feudalism by capitalizing on user attention and data surveillance, undermining democratic principles. Yanis Varoufakis called it “Technofeudalism”. Pressing needs arise for a novel value creation model and visionary approach to business.
To generate long-term impact by tackling societal issues and cultivating a new market to mobilize customers, companies must adopt a systemic approach, engaging in multiple interventions in different places across the system. Furthermore, fostering meaningful collaboration entails transcending traditional business partnerships to embrace unconventional stakeholders across disparate industries and sectors. Creating an impact by shifting the broader system requires innovative business models and orchestrating regulatory frameworks, funding mechanisms, and cultural shifts among citizens. Design can amplify the new way of reframing complicated problems, nurturing collective imagination, and inspiring others. - Beyond customers’ issue
Although being “customer-centric” by responding to customer needs has been a crucial principle for companies to win, the ‘customer-centric approach’ entails a risk of falling into the complex trap. Although, along with approaches like “agile” or “lean”, they successfully keep up with the fast-moving customers’ demands by upgrading existing products and services, too much effort focusing on the needs of existing customers may jeopardize companies to overlook the critical issues in the entire ecosystem surrounding the problem, the new market and opportunities. By contrast, impact-driven businesses aim to generate innovations that open up new markets, turning non-customers into customers. A systemic perspective and approach are essential in the model.
Identifying issues from the ecosystem level, not just the existing customer, and creating a bigger pie of revenue and profits by addressing systemic issues would provide more benefit to the customer. Moving away from conventional models, such as the customer-centric or human-centered approach, is necessary to understand opportunities in a broader context, like relationships between actors and the environment. However, this doesn’t mean that impact-driven companies should neglect customers for the sake of impact. It cannot shift the ecosystem and create a new market without sense-making and meeting customers’ needs. The primary goal is to mobilize the ecosystem where customers can feel valuable and be willing to adopt.
Again, these efforts to take on impacts beyond the existing customers’ issues can be achieved only through collaboration with diverse actors. For companies, as a premise of collaborative approaches, finding their role and opportunities to shift the market becomes a crucial strategic decision.
"While failures may inevitably occur in pursuing these missions, creating an experimental environment that embraces failure as a positive learning opportunity is pivotal"
Dr. Chie Fukuoka
Deputy General Manager of Technology & Intelligence Integration, IHI
Four design-driven enablers of the new value creation model
- Mission-oriented strategy
The company must formulate a coherent strategy based on the mission and the societal impact (outcome) to ensure the transition from a customer-centric to an impact-driven model. When dealing with complex ecosystems, you can’t make plans and implement them exactly as planned. Instead, setting a North Star of the innovation path becomes more crucial – a star that shows employees and various stakeholders (actors in the supply chain, regulators, and consumers) a path to achieve the mission.
A mission-oriented strategy should be co-created with diverse actors from the ecosystem. The collective process of setting a mission opens up unimaginable opportunities and alternatives and makes it easier for a company to understand its role in mobilizing the ecosystem. In the process, designers can drive the transition by facilitating the inspirational dialogue and mapping the best intervention points for each actor.
In this context, a mission is utterly differentiated from the definition of mission in the current buzzwords like “mission, vision, and value.”
Our definition of a mission is that it:
– Sets concrete goals with a focus on a positive impact on society and citizens (”effect”)
– Is long-term and ambitious
– Is time-limited
– Is cross-sectoral and interdisciplinary
– Is both top-down and bottom-up
– Is realized and governed through a portfolio of innovative interventions. - Defining the desirable future
Yes, the central premise of formulating a mission-oriented strategy is to determine the societal issue that the business will tackle in the long term. However, impact or societal problems are not given a priori but are found and recaptured through observation and dialogue. We cannot generate an impact by looking for technical solutions. Defining a business’s societal impact and outcome requires us to imagine a desirable future as a guiding star for the impact.
The gap between the desirable and current states uncovers hidden new opportunities. That means that a desirable future shouldn’t be a mere extension of the current system but one that can challenge our assumptions and dominant logic in society today. In contrast to the traditional future forecast or market research driven by a linear and reductive approach, handling reality without complexity as if it would be controllable things, alternative futures help us uncover the logic and structures of the existing system and reframe the problem, which expands our perspectives free from anchoring us around narrow solutions.
At DDC – Danish Design Center, we have done much work addressing complex and wicked problems by developing and exploring radical alternative futures.
An example is Vorby – a free design resource co-created with +150 actors from Denmark’s child and youth sector as part of DDC’s mission to design a future with a thriving youth. Vorby represents a future city based on seven principles in which our youth thrive. The resource helps actors approach the systemic challenges of a youth dominated by stress, anxiety, and stress.
The approach of developing thought-provoking tangible artifacts and future scenarios to reveal plausible changes that may happen in the future informs foundational decisions for changes made in the past and present. Besides, you cannot underestimate the importance of sense-making if you want to achieve systemic change. Creating a new market by mobilizing the current ecosystem should entail regulation change and behavioral change in customers and suppliers. This can only be done with a new narrative, and a desired future that those key stakeholders can feel makes sense of your collective impact path. Read this article for more on the method. - Nimble capability
As a strategy thinker, Roger Martin stated that competitive advantage is not static, protected by permanent moats such as market positioning or specific technology. Instead, it is made by a dynamic process of iterative experimentation and learning, interacting with the strategic choices determined in the strategy. For this reason, companies must build a vibrant, nimble organizational model as a bottom-up driver for a strategy to work.
However, in addition to this principle, the impact-driven value-creation model necessitates the mechanism to promote collective learning among partners who share the same mission and impact goals. To encourage the new collective learning for a mission, we need a set of learning questions and indicators to measure the progress of impact.
Traditional measurements like measuring the percentage of CO2 emissions help calculate an impact by one single entity in a top-down way. Still, there is a limitation to expanding the responsibility in a broader context among various agencies and aiming to the future rather than anchoring in the current status quo.
A new scheme should ignite collective dialogue, giving unexpected tips to find new opportunities or pivot a business in a new direction. An example like the Cornerstone Indicators by Dark Matter Labs, Samhällskontraktet, and the people of Västerås is intuitively understandable and appealing to communities of place.
The bottom-up designed well-being indicators cover multiple factors. One of the indicators is the “Number of families who enjoy not owning a car.” This represents several factors: safety and security, infrastructure and social services, health and well-being, and dimensions: trust, social cohesion, climate awareness, sense of community, good public transport links, physical health, and good air quality. Those indicators are more holistic, cohesive, and collaborative than traditional models.
Dark Matter Labs grouped dimensions and factors in the following order:
– Factors are things that contribute to well-being, for example, good health and life satisfaction.
– Dimensions are elements that can be directly measured and contribute to the factors, e.g., levels of depression or mortality rates.
Besides, a new breed of leader would play a key role in promoting collective learning. Christian Bason, former CEO of DDC, called the role mission managers. A role focusing on achieving a long-term vision of change with a wide range of stakeholders. Mission managers set the direction, sustain the mission, and manage a strategic portfolio of interventions to address the impact rather than cater to the individual interests of companies or organizations. The role’s crucial responsibility is to drive learning across the ecosystem and to build and nurture legitimate, collaborative decision-making. The collective learning for long-term impact cannot be maintained without continual communication. A mission manager would work as a catalyst of communication among actors in the ecosystem and projects in the mission portfolio.
We cannot predict how our interventions will play out (i.e., we cannot assume transparent linear causal relationships) upfront. We must learn to cope with uncertainty by continuously experimenting, learning, iterating, and adapting. For designers, it would start with a critique of how some things we’ve valued about design, e.g., problem-solving tools, are no longer adequate to transition to a different world. - Social sector’s design tools
In the new public management era, the private sector’s solution was hailed as an effective panacea for societal problems, from education to health care. Those reformations made social welfare systems in some countries dysfunctional, and it is not valid when it comes to tackling complex societal issues like climate change, social inequity, or mental health issues. By contrast, over the last decades, the social sector has led innovation in tackling those complex social issues called wicked problems that simple solutions or interventions cannot solve. They have invented and implemented various innovation tools that have been looking for ways to tackle complex social issues at a systemic level.
Corporations have much potential to deliver holistic impact and values by engaging with the social sector. For companies aiming at societal impact, frameworks like the theory of change or logic models help us understand where we’re going and how we evaluate progress. Those tools can show a shared direction and accelerate open innovation and collaboration.Furthermore, systemic design tools in the social sector are powerful as alternative models to the traditional linear value creation model. An ecosystem map or casual loop diagram could clarify the effective intervention points for the impact and ensure the role of the companies in the ecosystem. The design field has expanded to cover wicked problems beyond the product or service — new design approaches like systems design and transition design open up new opportunities for connecting design and society.
Design beginnings, not endings
Large corporations are increasingly interested in leveraging their operations to create societal impact. With substantial resources and influence, these corporations can be pivotal in steering society confronting complex challenges toward a more sustainable future. They can serve as essential catalysts that set the path toward sustainability and foster collaboration among diverse stakeholders to generate value collectively. To achieve this vision, novel models and approaches for value creation are imperative to implement. When dealing with complex systems, we must move away from the notion of “controlling” the subject. To quote Brian Eno, “Design beginnings, not endings.”
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