Find tips for SDG initiatives in Japanese companies' businesses to solve societal issuesTokutaro Hiramoto (Associate Professor, Department of Management Systems, College of Informatics and Human Communication, Kanazawa Institute of Technology)
<Series 3(Total 4 series)>
In what ways are Japanese companies that have succeeded with businesses that solve societal issues taking action? In the third installment of the series, the expert Mr. Tokutaro Hiramoto talked about the best way for Japanese small and medium-sized enterprises to be involved in businesses that solve societal issues, based on these success stories.
◆What are SDGs?
SDGs or the Sustainable Development Goals are a collection of global goals adopted by the United Nations General Assembly in September 2015 for the years 2016 through 2030 under the "2030 Agenda for sustainable development." The agenda consists of 17 goals such as "poverty," "hunger," "climate change," "energy," and "education" and 169 targets laid down for specific targets under these 17 goals for achieving a sustainable society. They were adopted with the participation of more than 150 member state leaders to succeed the Millennium Development Goals (MDGs) formulated in 2001. At the July 2017 session of the United Nations General Assembly, 232 indicators were adopted for measuring the progress of each of the targets.
17 goals of the SDGs (from the United Nations Information Centres website)
What are the patterns of SME success with SDGs?
"A Base of the Pyramid (BoP) business model is primarily for low-income people in developing countries. It's also called an "Inclusive Business," and this leads to a key point of the SDGs that we touched on in the previous part, "Leaving no one behind.""
Mr. Hiramoto explained to us the BoP business model he has been intimately involved in for many years. Reflecting the changing times, in recent years the BoP business model has expanded its horizons to not only solving poverty but also to sustainable development, meeting the various goals of the SDGs.
"A lot of people end up working on projects that can solve current problems and help others. Then, companies can provide distinctive high-value-added products and services, so they break out of cost competition and change to a structure with upward trending profits. Of course, reliability also increases. As I previously said, the business can then be expanded on a broad basis in Japan and overseas."
Nationwide rollout of a paving business that recycles roof tiles
This kind of business model is spreading in Japan as well. The first example was Eco System Inc., which is conducting joint research with the Kanazawa Institute of Technology. The company's efforts to recycle roof tiles, which are discharged as industrial waste, on environmentally friendly paved roads have contributed to preventing urban disasters during heavy rains and reducing the heat island effect. It has also created a network of companies that implement this initiative and provide know-how for it.
"Even if there are similar issues in remote areas, it is not feasible for individual SMEs to cover all areas. Therefore, by organically linking small and medium-sized enterprises in each region, the same capabilities as large companies are achieved. I think this is a mechanism for making use of the advantages of Japanese small and medium-sized enterprises."
At present, the company's activities are centered in Japan, but research has revealed high demand in South America. It is preparing a network that includes the BoP layer and preparing for further research.
An example of a road paved with recycled roof tiles from Eco System
Sharing business expertise and training with other companies by applying them to similar circumstances
Mr. Hiramoto cited another example, a car recycling company called Kaiho Industry Co., Ltd.
"The company used to dismantle end-of-life vehicles. It established quality indication standards for used parts, and built an auction system based on those standards. It has established an alliance with more than 60 domestic competitors to create a nationwide automobile recycling network, sharing its business expertise in the process."
The company set up a joint venture in India to advance its business, and also established a training center in Brazil in cooperation with a national university. It is also preparing for launch in Kenya.
"Moreover, when the company applies its solutions to similar circumstances in each region, it goes beyond just providing the product and leaving clients at the mercy of the manual. It learns about the local circumstances and establishes its own way. I think that focusing on education in this way is a unique strength of Japanese companies."
Japanese SMEs will be able to compete globally if they can successfully incorporate regionally rooted approaches into products, and provide them to the world. Mr. Hiramoto is confident in their prospects.
Series Leverage open innovation to drive SDGs as a catalyst for growth
Series 1 SDGs are leading the world onward and are great opportunities to grow your
Series 2 Broad business expansion based on the “three keywords” of the SDGs
Series 3 Find tips for SDG initiatives in Japanese companies' businesses to solve societal issues
Series 4 Leverage open innovation to drive SDGs as a catalyst for growth
Mr. Tokutaro Hiramoto
Associate Professor, Department of Management Systems, College of Informatics and Human Communication, Kanazawa Institute of Technology / Director of the SDGs Promotion Center, Institute for Regional Revitalization and Innovation, Kanazawa Institute of Technology
After completing a master's program at Keio University Graduate School of Media and Governance and a doctoral program at the Graduate School of Media Design, he joined Nomura Research Institute, Ltd. As a management consultant at the research institute, he was involved with BoP businesses to solve global issues such as poverty, with support for African business promotion, and with management reform support until the end of FY2016. Japan president of BoP Global Network, founder and president of BoP Global Network Japan. Since 2008, he has been a part-time lecturer at the School of Project Design of Miyagi University, and since 2012 he has been a special visiting professor at the School of Business Administration of Meiji University. In 2016 he became a lecturer at this university. He has been in the current position since 2019.
◇Main authored and edited works
・Afurika Shinsyutsu Senryaku Handobukku (Business Strategy Handbook in Africa) (Toyo Keizai Inc. / Co-author) 2015
・BoP Bijinesu Senryaku (BoP Business Strategy) (Toyo Keizai Inc. / Co-author) 2010
Coverage date November 18, 2019
BreakThrough Study IdeaStudy Idea
"Approach" that decides the outcome of surviving companies.
Yoshio Tanaka＜Series 1 / complete＞
BreakThrough Study IdeaStudy Idea
Autonomous Driving and Telematics will Transform the Automotive Industry
BreakThrough Study Idea<Series 2 (Total 4 series)>
What technologies are required to solve societal challenges in the SDGs era?
Junichi Sone (Principal Fellow, Center for Research and Development Strategy, Japan Science and Technology Agency)