Canon – kyosei, humanity and excellence
smartKPIs.com Performance Architect update 32/2010
Canon Inc. is today one of the largest electronics manufacturers in the world. They produce paper copying machines, printers, projectors, binoculars and calculators and cameras among others. While their products are widely appreciated for their quality and demonstrated craftsmanship, the business philosophy of the organization is truly intriguing. It is characterized by simplicity, long term thinking, humanism and harmony. It is also well communicated and most importantly, it works.
Discovering this philosophy is easy: it is two clicks away from the homepage: “Corporate info” and “About Canon”. The emphasis on people and dialogue starts with a message from top management. It shows that the company is made of people and thrives on the relationship with people. Messages from both Fujio Mitarai (Chairman and CEO) and Tsuneji Uchida (President and COO) conclude with the same phrase “…look forward to your continued understanding and support.” Both messages are brief and the key themes are illustrated by several keywords: Excellent Global Corporation Plan, total optimization and profit, Improved management quality, corporate philosophy of kyosei, overwhelming No.1 market position in all current business areas, “cross-media imaging”, joining the ranks of the world’s top 100 companies in terms of all key business performance indicators, spirit of “Speed and Quality”.
A unique characteristic of Canon’s corporate profile is having a declared corporate philosophy – kyosei. This was announced in 1988 and now used in Japan to express a range of meanings. Canon’s interpretation of the term is stated as: “All people, regardless of race, religion or culture, harmoniously living and working together into the future.” While a big ask coming from an electronics manufacturer, it outlines a commitment to cut across traditional boundaries of corporate priorities and operate using an integrative approach. This desiderate is more than corporate discourse, as it is supported by a long term plan to get closer to it.
- Achieve the overwhelming No.1 position worldwide in all current core businesses
- Expand business operations through diversification
- Identify new business domains and accumulate required technologies
- Establish new production systems to sustain international competitiveness
- Nurture truly autonomous individuals and promote effective corporate reforms
Of these, the most intriguing one is the inclusion of a people oriented strategy along with strategies that fall in the traditional business domain. This latter strategy is described as aiming at nurturing future global leaders and cultivating individuals society can rely on. It may sound surprising coming from an electronics manufacturer, as such aims are generally in the realm of educational institutions. It is however a type of thinking that should perhaps be embraced by more organizations committed to improving the quality of life in the 21st century.
Canon’s corporate DNA is simply illustrated by three elements: respect for humanity, emphasis on technology and enterprising spirit.
At an individual level, three guiding principles form the “San-ji spirit”, which dates back to the establishment of the company:
- Self-motivation – Take the initiative and be proactive in all things;
- Self-management – Conduct oneself with responsibility and accountability;
- Self-awareness – Understand one’s situation and role in all situations.
The Key Performance Indicators used by Canon in managing its growth are illustrated in a separate section of the Annual Report:
- Net sales
- Gross profit to net sales ratio
- R&D expense to net sales ratio
- Operating profit to net sales ratio
- Inventory turnover measured in days
- Debt to total assets ratio
- Canon Inc. stockholders’ equity to total assets ratio
While they are dominated by financial ratios, they reflect the same approach as with the corporate strategy – simple and informative. Each KPI is explained in detail in the 2009 Annual Report (p.44-45), outlining the reasons for selecting them, the value they add and the way they are calculated.
Illustrating how Canon’s business philosophy goes beyond discourse to making a difference, the latest press releases featured on the homepage this month, represent a sincere combination of humanity and excellence:
- August 16, 2010: Canon products selected for prestigious EISA awards in Europe
- August 13, 2010: Canon Aids Rain-Disaster Relief Efforts in China
- August 6, 2010: Canon Aids Flooding Relief Efforts in Pakistan
All part of a forward looking corporate philosophy:
“…the presence of imbalances in the world in such areas as trade, income levels and the environment hinders the achievement of kyosei. Addressing these imbalances is an ongoing mission, and Canon is doing its part by actively pursuing kyosei. True global companies must foster good relations, not only with their customers and the communities in which they operate, but also with nations and the environment. They must also bear the responsibility for the impact of their activities on society. For this reason, Canon’s goal is to contribute to global prosperity and people’s well-being, which will lead to continuing growth and bring the world closer to achieving kyosei”
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