How Fujio Mitarai's East-West Style Revived the Company
In the early 1990s, Fujio Mitarai was one frustrated executive. He had recently returned to Canon Inc.'s Tokyo headquarters after a 23-year stint in the U.S., where he built Canon's camera and copier businesses into market leaders and befriended top execs of companies from General Electric Co. to American Express Co. His goal was to push U.S.-style practices through the entire Japanese conglomerate in order to cut costs and clean up its finances. Otherwise, Mitarai argued, Canon was headed for serious trouble.
Few colleagues heeded his call. Although he was a senior managing director, Mitarai says, "I wasn't senior enough to get the top executives to listen to me." Then, a stroke of fate forced them to pay attention. In August, 1995, Mitarai's cousin, Canon President Hajime Mitarai, died suddenly of pneumonia. Passing over six more senior executives, Canon's board gave him the job.
That marked the beginning of Canon's transformation. In seven years, Mitarai has turned an unwieldy conglomerate burdened with money-losing subsidiaries into a streamlined organization. During the tenure of Mitarai, who became CEO in 1997, Canon's net profits have tripled, to $1.4 billion, on sales of $24.3 billion. Market capitalization has swelled, from $11 billion to $34 billion, despite the steady decline of Japanese stocks. A big reason: Mitarai relentlessly drives his staff to cut costs and boost profits. Nor has he been shy about closing weak divisions.
There is more to Mitarai's success than aping the U.S. obsession with the bottom line. What some observers dub the "Mitarai Way" also incorporates Japanese practices. He rejects the U.S. belief in appointing outside board members, contending they contribute little. Instead, he has given more power to auditors to oversee executive actions. He bases pay on merit to encourage staff to increase sales and improve products. But Mitarai still promises lifetime employment to inspire loyalty.
While Mitarai is demanding and
Few colleagues heeded his call. Although he was a senior managing director, Mitarai says, "I wasn't senior enough to get the top executives to listen to me." Then, a stroke of fate forced them to pay attention. In August, 1995, Mitarai's cousin, Canon President Hajime Mitarai, died suddenly of pneumonia. Passing over six more senior executives, Canon's board gave him the job.
That marked the beginning of Canon's transformation. In seven years, Mitarai has turned an unwieldy conglomerate burdened with money-losing subsidiaries into a streamlined organization. During the tenure of Mitarai, who became CEO in 1997, Canon's net profits have tripled, to $1.4 billion, on sales of $24.3 billion. Market capitalization has swelled, from $11 billion to $34 billion, despite the steady decline of Japanese stocks. A big reason: Mitarai relentlessly drives his staff to cut costs and boost profits. Nor has he been shy about closing weak divisions.
There is more to Mitarai's success than aping the U.S. obsession with the bottom line. What some observers dub the "Mitarai Way" also incorporates Japanese practices. He rejects the U.S. belief in appointing outside board members, contending they contribute little. Instead, he has given more power to auditors to oversee executive actions. He bases pay on merit to encourage staff to increase sales and improve products. But Mitarai still promises lifetime employment to inspire loyalty.
While Mitarai is demanding and