Sumitomo applies founders’ spirit to keep on changing
August 26, 2022
Sumitomo Corporation, one of Japan’s top five general trading houses, seeks to take advantage of a wide range of expertise and business know-how gained over its long corporate history and create new business models to further develop competitiveness in the rapidly changing business world.
“What we aim to do is to become a company that can reinvent society as a disruptive innovator by creating new business models,” said Masaki Nakajima, general manager for the media and digital business unit. “We have transformed ourselves, responding to the changes in the business world. If we stop changing, we stop growing.”
Sumitomo Group has its business roots in copper smelting, starting in 1590. Throughout its 430 years of history, Sumitomo has maintained the business spirit created by its founders. As global society increasingly focuses on the importance of sustainability, the trading firm places more emphasis on the group’s credos.
One of the credos states, “Benefit for self and others, private and public interests are one and the same.” This means that Sumitomo’s business activities should benefit not only Sumitomo but also society as a whole in order to achieve sustainable growth.
The credo affects Sumitomo’s business strategy. When company executives decide which projects to invest in, they first discuss if the business contributes to society. They do so because if it doesn’t, it will not be sustainable, Nakajima said. Sumitomo’s corporate vision also has roots in the group’s credo, he said. The vision says, “We aim to be a global organization that constantly stays a step ahead in dealing with changes, creates new value and contributes broadly to society.”
In 2017, Sumitomo Corporation identified six material issues to address: “achieving harmony with the global environment,” “establishing a foundation for comfortable and enriching lifestyles,” “contributing to the development of local communities and industries,” “providing diverse ‘accessibility,’” “enhancing governance,” and “developing human resources and promoting diversity”.
To accelerate addressing the first material issue, the environment, the company in 2021 set up the Energy Innovation Initiative, a decision-making body in the field of carbon-free energy development, new energy utilization and CO2 absorption or usage.
As trading firms shift more of their business resources to diverse investment businesses from traditional export and import businesses, portfolio management becomes more important. In this situation, an important criterion for Sumitomo Corporation is whether a business has an environmental value. “Since how to respond to global warming is being highlighted in the world, we’re focusing more on business where environmental value can transform into economic value, including business involving carbon credits and carbon pricing,” Nakajima said.
As to the last material issue, “developing human resources and promoting diversity,” Sumitomo Corporation is aware of the importance of stepping up diversity in human resources in terms of genders, generations, nationalities, etc., to be responsive to changing business trends, as Japan’s conventional seniority system persists at Sumitomo Corporation, as at many other Japanese companies.
In the fast-changing business world, Sumitomo Corporation expects the quantum transformation — the next social and business paradigm shift, beyond the digital transformation — to have big potential in the future.
Last year, Sumitomo Corporation launched quantum transformation projects, investing in an Israeli startup through one of its corporate venture capital arms, IN Venture, and tying up with Tohoku University for research in this area. Earlier this year, another venture capital arm invested in Nord Quantique, which is developing superconducting quantum computing.
“The future is so unpredictable in the rapidly changing society that we can’t see what the business world will be like in several years, or even one year. We wouldn’t be able to survive and succeed if we stayed a company with only one way of thinking,” Nakajima said.
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Throughout its history of more than 400 years, Sumitomo Group has been responsive to changes in the business world and built a number of industries from scratch.
During the interview Nakajima said, “The history of Sumitomo Corporation is the history of postwar Japan,” and that is very understandable. To respond to social changes, it is not sustainable to have a one-thing-at-a-time way of thinking and culture. That is why Sumitomo Corporation has encouraged diverse perspectives in important parts of its corporate culture. In particular, it is valuable that the company develops diverse human resources and has a strong belief that “the diversity of company members is a source of organizational resilience.” As societal changes in the future will be more unpredictable than ever before, Sumitomo Corporation will run its business with the motto “creating the future with diverse human resources and technology,” have business dealings in the field of quantum transformation and be a front-runner in the society created over the next 10 to 20 years.