Canon: In a New York minute

In the city that never sleeps, it is down right remarkable that a Japanese company such as Canon has been able to be in operation for 50 years.

In a New York minute – that’s how much time this market offers startup companies. But in 1955 Canon took that chance and started a small sales office on 45th street.

At the time, Canon was in competition with 72 other camera manufacturers. There was also a market place bias against Japanese products to contend with. People in Canada and the U.S. believed Japanese products were sub-standard.Fifty years later you can call it a survivor because today you can count the number of camera manufacturers on your hand.

The reason Canon survived, according to its president and CEO, Fujio Mitarai, is the decision the company made back in the early days to be more than a camera manufacturer. In the late fifties and early sixties, Canon built business machines, calculators and as the years passed printers and other consumer and professional equipment.

The diversification continues today. At last week’s Canon Expo 2005 here, the company announced its entry into the incredibly crowded flat-panel display market.

As it grew the strategy proved to be successful. By 1966 its small sales office with only 13 employees managed to do more than $3 million in revenue. Now, back then $3 million was nothing to sneeze at.

The U.S. Internal Revenue Service (IRS) did not think $3 million was insignificant. Mitarai was paid a visit by the local IRS auditor in New York. The auditor could not believe Canon was earning miniscule profits from such a large sum of revenue. A young Mitarai knew that the IRS was no one to mess with so he opened up his books and Canon’s entire Americas operation to this auditor.

The audit turned up nothing, but the auditor gave Mitarai a little piece of advice that would turn the company fortunes.

The auditor said: It would be a lot easier and more profitable for Canon to simply open a bank account and earn the five per cent interest than continue operating on such little profits.

Mitarai changed the mindset of the company to profit over sales. He developed a profit-first policy.

He also scrapped the conveyor belt manufacturing process to a cell system. The first cell system plant was opened in the Toronto suburb of Mississauga. Cell system manufacturing is based on small teams producing products and just-in-time processing. This method lowered Canon’s cost-to-sales ratio from 61.3 to 50.6 and drastically reduced inventory. It also sped up its time to market from 80 days to 49.

In 1976, Mitarai made another bold move. He hired tennis champion John Newcombe to promote Canon in TV commercials. Camera vendors at the time weren’t doing TV commercials, and his competitors and colleagues thought Mitarai was crazy to be spending $1.5 million on an ad campaign, he said.

But, again the strategy worked and helped out the company’s growing dealer base in Canada and the U.S.

Also during this time, Mitarai met his business mentor Jack Welch, the former CEO of GE. Welch instilled in him a western business style. Something that back home in Japan was considered to be radical.

Then during the PC boom, Mitarai again shocked the market by dumping Canon’s PC division simply because it wasn’t profitable.

Today Canon may be making its boldest move yet by getting into the overcrowded flat panel display space. The company will be releasing a 50-inch TV display based on surface conduction electron-emitted display (SED) technology, which is supposed to be brighter and consume less power than plasma and LCD displays.

Whether Canon is successful in this latest venture at this point in the company’s history is irrelevant. Canon’s New York minute isn’t up yet.

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Jim Love, Chief Content Officer, IT World Canada

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Paolo Del Nibletto
Paolo Del Nibletto
Former editor of Computer Dealer News, covering Canada's IT channel community.

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