Business

"The ultimate goal of any Japanese firm is to ensure the group's long-term survival. Unlike capital risk firms and the big US corporations, our first objective is not to ensure maximum short-term profits. Rather, it is vital that we generate consistent, stable profit levels that guarantee our survival. To implement this vision we have to diversify."

Thus CEO Kaku summed up the vision for Canon in 1975. From this starting point, author Mary Ackenhusen, under the supervision of Insead's Sumantra Ghoshal, examines the strategy underpinning the Canon success story. By 1981 the company was ranked No. 1 in the photocopier market in Japan and was beginning to challenge the American giant Xerox. According to Professor Masaru Yoshimori of the University of Yokohama, if the Japanese firm was able to outperform its US rival, it was due to its company values, culture and strategy.

Evidently CEO Kaku had a clear idea of the direction a company should take. He compared it to the challenge of mountaineering: always a higher, more dangerous peak to scale. Hence, in order to get into the market for personal copiers it was imperative to produce a small, cheap machine - only half the price of a classic photocopier.

One of Canon's main strategy thrusts was to decentralise R&D - a move that was to ensure a high volume of patents. Canon was quick to see what worked in the Japanese market and to export it elsewhere, cutting the gap between a product launch in Japan and its counterpart overseas launch to a matter of a few months.

By the end of the 70s Canon had put in place a major distribution network in the US to take care of sales and after-sales of its photocopiers. Seeking to avoid the friction involved in transferring its manufacturing base abroad, the company was quick to re-invest profits in overseas operations and transferring technology.

Another key success factor was its advertising strategy, designed to simultaneously create awareness as well as to promote the brand aggressively. This approach meant it