Global Scale
FUJIO MITARAI
Chairman and CEO
Canon Inc.
For a dozen years, Fujio Mitarai, the energetic chairman and CEO of Canon Inc., has used his boundless energy to help his company become the same kind of overachiever as its leader, with impressive results.
Shortly after taking over as president and CEO, Mitarai instituted what he called the Global Excellent Company Plan, a strategy to make Canon one of the strongest, most respected companies in the world. In 2006, the firm entered Phase III of that Plan.
“We are only in the second year of Phase III,” he says proudly, “but we are already well ahead of our growth targets. The Plan aims for annual net sales growth of 8%, resulting in consolidated sales of 5.5 trillion yen [$47.8 billion] in fiscal 2010. In fact, net sales grew by 10.7% in 2006 and by roughly 11% in the first half of 2007. At this pace, we should average better than 8% per year, and total sales in 2010 will be around 6 trillion yen [$52.2 billion].” Canon’s growth figures would be impressive for a smaller or younger company, but for a 70-year-old firm of its size, sustained double-digit profit growth is just short of miraculous. Asked why Canon’s numbers are so good, Mitarai offers several reasons. Constant attention to quality control, combined with innovations in both products and sales, results in more satisfied customers, which in turn leads to healthy growth. Rationalization and automation of manufacturing processes are also contributing factors, and the global economy itself has played a hand. World markets have been generally strong, with China and India showing robust growth. For a company that derives about 80% of its sales from outside Japan, a healthy world economy is essential.
“Companies that can’t constantly reinvent
themselves will disappear. R&D is the key to
our survival as well as our success.”
Yet the key factor is the one Mitarai saves for last: “Our products are more competitive than ever before. Most of them are the market leaders in their respective fields, and they’re getting stronger all the time.”
In other words, Canon is boosting both market share and profits at the same time. What kind of magic makes that possible? The chairman smiles and answers without a pause: “A company like Canon is only as strong as its R&D. We aim to be seen as one of the world’s best companies in every respect, but the key to that is to begin with world-class research.”
When Mitarai took over as president in 1995, Canon’s R&D budget was roughly equivalent to 5% of net sales. In the past few years, that number has climbed to the 8% level. But Mitarai is not satisfied. “I want to raise it to 10% by 2010,” he says.
Why the pressure? Recent international rankings already place Canon among the world’s best-known brands and most admired companies. Why keep pouring profits into research?
“Competition is going to get tougher,” says Mitarai philosophically. “Our products have to stay on the cutting edge or the company will fail. Companies that can’t constantly reinvent themselves will disappear. R&D is the key to our survival as well as our success.”
Mitarai spent 23 years in the U.S., and he is proud to say how much he learned from American management style. “I believe in a kind of ‘hybrid management,’” he says. “I try to combine the best of American and Japanese approaches to running a business.”
However he does it, Mitarai is helping Canon to become a leader in every field where it competes. If this is the result of “hybrid management,” companies on both sides of the Pacific should be paying attention.
