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D. Murali

WOULD you believe that the red-letter Canon logo was first designed in 1955 and has remained unchanged? Or that the name's origin is `Kwanon,' the goddess of mercy in the Buddhist faith? Do you know that Canon launched the world's first 10-key electronic calculator in 1964, a year before it entered the copier field?

For these and a lot more, here is How Canon got its Flash Back from Nikkei, published by Wiley (www.wiley.com) . The book is about "the innovative turnaround tactics of Fujio Mitarai," currently the President and CEO of Canon Inc. In the 1960s, Mitarai learnt an important lesson from the Internal Revenue Service (IRS) when he was in charge of accounting in the US and showed a paper profit of $6,000 though sales were $3 million. "Because our profits had been so small in relation to sales, we were under suspicion of having evaded taxes," he says. "Upon further inspection, however, it was discovered we had failed to even turn a profit."

Then came the advice: "In the light of the situation, the tax officer told me I should collect all of my accounts receivable, put the money in a fixed-deposit account and go back home." Why? "He explained that by doing so, I could earn 5 per cent interest without having to work." Moral: "If we were not able to achieve a profit that exceeded the interest rate, there was no reason to be in business." But there was no going back!

So, on to success and diversification, but some pruning too happened in the course of Canon's growth. It had to withdraw from unprofitable lines, "starting with the shutting down of the personal computer division in California." A shock-therapy of sorts, followed, with orders "to stop making and selling PCs, Ferroelectric Liquid Crystal Displays (FLCDs), electric typewriters, optical cards for data storage, and photovoltaic batteries." There was no other option, because they didn't make money.

Assembly-line production gave way to cell production, "involving small teams of workers who produced the entire product in multiple steps, with the conveyor belt (running to more than 16 km!) completely eliminated." Then came the ma-jime campaign, `to close the gap' and "eliminate the unnecessary operations." A major component of laser printers, the laser scanners, were shifted to cells, and production was smooth. But the cells "encountered an unexpected initial setback: productivity did not increase even slightly." It was even lower than on assembly lines!

"Then a miracle appeared, in the form of women on the job who took the initiative, forming all-women teams composed of 10 members. Acting entirely on their own, they organised meetings and began to mull over ways to improve operations." What was the finding? "Previously, factory workers did their tasks in sync with the speed of the conveyor belt. With cells, assembly work proceeded at each worker's individual pace."

Now, Canon deals with 157 sales companies around the world, handling as many as two lakh product codes. A system called Mercury standardises inventory, using codes assigned from the headquarters. The aim of supply chain management (SCM) is to relieve the sales companies "of the authority to determine their own inventories."

Sales Force Automation (SFA) is another reform that the book talks about. "When salespeople return from their sales calls, they go straight to their computer terminal and enter a record of the call, inputting such data as the customer's name, type of business, progress in negotiations, the salesperson's remarks, and so on." What's interesting is that this sales log can be reviewed not only by managers but by other salespersons too. "Entering successes and failures into a database format shared by the entire staff is conducive to improving sales activities." Is that a take-home idea you can try out?

Canon holds 8,000 patents related to digital cameras and 12,000 patents related to Bubble Jet printers. But there has been no blockbuster product equal to the Bubble Jet printer to come out of Canon since the '90s, notes the book. "From now on, our strengths are going to be in images, in telecommunications, in electronics and in chemicals," is a Mitarai quote. What are the candidates for the future? Three Ss: Surface-conduction electron-emitter display (SED), system on a chip, and silicon-on-insulator (SOI) for making semiconductors.

A book of business history of a company with a powerful brand.

BookMark@thehindu.co.in

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