Posts Tagged Canon

smartKPIs.com Performance Architect update 33/2010

From Canon to HP: values, objectives and press releases

In my previous blog post I reviewed the approach Canon Inc. has to strategic planning and how its actions reflect the corporate strategic direction. While researching the topic I came across the Hewlett-Packard Company (HP) website. HP is considered today the world’s largest IT company, with 304,000 employees worldwide, 1 billion customers in 170 countries, revenue totaling $114.6 billion for fiscal 2009 (HP, 2010a) and a market capitalization of $86.81 billion (Google Finance).

For the last few weeks HP has been in a turmoil with the abrupt resignation of the CEO, so I started comparing the press releases of the two companies for the month of August 2010:

Canon, 2010 (4 releases for the period, I have selected 3 in the list below):

HP, 2010b (15 press releases for the period, I have selected 6 in the list below):

In the case of Canon, as my previous blog post “Canon – kyosei, humanity and excellence” illustrated, empirical observations of secondary data available on the company website suggest alignment between the corporate philosophy, actions and results.

The situation is different in the case of HP. The corporate philosophy lists the usual elements you would expect to find (HP, 2010c):

  • Passion for customers - We put our customers first in everything we do.
  • Trust and respect for individuals - We work together to create a culture of inclusion built on trust, respect and dignity for all.
  • Achievement and contribution - We strive for excellence in all we do; each person’s contribution is critical to our success.
  • Results through teamwork - We effectively collaborate, always looking for more efficient ways to serve our customers.
  • Speed and agility - We are resourceful and adaptable, and we achieve results faster than our competitors.
  • Meaningful innovation - We are the technology company that invents the useful and the significant.
  • Uncompromising integrity - We are open, honest and direct in our dealings.

Even the objectives of the organization have some similarities to the ones from Canon, such as leadership and global citizenship. However, according to HP, they were first written in 1957 by co-founders Bill Hewlett and Dave Packard:

  • Customer loyalty - We earn customer respect and loyalty by consistently providing the highest quality and value.
  • Profit - We achieve sufficient profit to finance growth, create value for our shareholders and achieve our corporate objectives.
  • Growth - We recognize and seize opportunities for growth that builds upon our strengths and competencies.
  • Market leadership - We lead in the marketplace by developing and delivering useful and innovative products, services and solutions.
  • Commitment to employees - We demonstrate our commitment to employees by promoting and rewarding based on performance and by creating a work environment that reflects our values.
  • Leadership capability - We develop leaders at all levels who achieve business results, exemplify our values and lead us to grow and win.
  • Global citizenship - We fulfill our responsibility to society by being an economic, intellectual and social asset to each country and community where we do business.

When it comes to how HP press releases reflect these statements, a mixed picture emerges. A settlement with the U.S. Department of Justice (regarding an award schedule contract investigation) and the resignation of the CEO (after a sexual harassment probe uncovered subterfuge with company expenses) are actions largely misaligned with the stated values and objectives. No doubt HP is a successful company. Its financial results, commercial performance and innovation capability all contribute to making it the number 1 IT company in the world.

However the question of how important is the alignment between the corporate philosophy (vision, values, objectives) and actions is a valid one. Further research would be useful to uncover these relationships. Or perhaps only time will tell.

Stay smart! Enjoy smartKPIs.com!

Aurel Brudan

Performance Architect,

www.smartKPIs.com


References

Canon, 2010, Canon News / Press Releases 2010, available at http://www.canon.com/news, accessed 21 August 2010.

Google Finance, 2010, HPQ Stock price graph, available at: http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1284363992211&chddm=24633&chls=IntervalBasedLine&cmpto=NYSE:CAJ&cmptdms=0&q=NYSE:HPQ&ntsp=0, accessed 21 August 2010.

HP, 2010a, Fast Facts about HP, available at http://www8.hp.com/us/en/hp-information/about-hp/index.html, accessed 21 August 2010.

HP, 2010b, HP 2010 news releases, available at http://www.gartner.com/technology/media-products/reprints/hpipg/article1/article1.html, accessed 21 August 2010.

HP, 2010c, HP corporate objectives and shared values, available at http://www8.hp.com/us/en/hp-information/about-hp/corporate-objectives.html, accessed 21 August 2010.

Walker, Rob 1992, “Rank Xerox – Management Revolution”, Long Range Planning, Vol. 25, No. 1, pp. 9 to 21

smartKPIs.com Performance Architect update 32/2010

Canon – kyosei, humanity and excellence

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.

The “Excellent Global Corporation Plan” was launched in 1996 and is now in the final year of its third phase. Five key strategies characterize this phase:

  • 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:

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”

Stay smart! Enjoy smartKPIs.com!

Aurel Brudan

Performance Architect,
www.smartKPIs.com

Walker, Rob 1992, “Rank Xerox – Management Revolution”, Long Range Planning, Vol. 25, No. 1, pp. 9 to 21

smartKPIs.com Performance Architect update 24/2010

Benchmarking, Rank Xerox and Canon

Benchmarking as a management concept is reported to have its roots in land surveying, where the altitude of objects is estimated based on a pre-established point of reference on an arbitrary landmark (McNary, 1994). Frederick Taylor is reported to be the first to use benchmarking along with other principles in a business enterprise to improve performance. Elements of benchmarking can be recognized in Taylor’s scientific management approach applied during his time at Bethlehem Steel Company (McNary, 1994), popularized in “The Principles of Scientific Management” .

Benchmarking as we know it today was first applied by the Xerox Corporation in later 70s, early 80s. Faced with increased competition from Japanese imports, Xerox set upon improve its order fulfillment process and other processes deemed unproductive. One of the first accounts of the “competitive benchmarking” approach at Xerox was given in 1992 by Rob Walker, the Director of Business Management Systems and Quality at Rank Xerox (U.K.) Ltd. at the time. In his article “Rank Xerox – Management Revolution”, he describes in detail the challenges, changes made and impact of the “competitive benchmarking” approach at the company. Under the “competitive benchmarking” initiative. Xerox compared itself to its Japanese competitors as well as large organizations operating outside of the industry: “American Express for billing and collections, American Hospital Supply for automated inventory control, LL Bean for distribution, warehousing and order-taking” (Walker, 1992).

The ascent of benchmarking in the 80s resulted in numerous books and articles published, reflected in the business environment by an increase in the use of benchmarking around the world. Comparing to others is natural to humans, so benchmarking was rather easy to understand in theory. Applying it in practice and generating value from it is a different story.

In sports and tennis in particular, performance metrics are monitored by players and coaches to track progress and how the game plan was executed. In terms of benchmarking KPIs between players, this needs to be explored with care. The playing style is different from one player to another. One player might have a very powerful serve, but generally inaccurate. Another might have a high percentage of net approaches, but ineffective. On top of this, in tennis the concentration power and determination is in many instances more important than game statistics. Similarly, in business, many companies zoom to a different tune. While benchmarking sounds good in theory, there are many practical issues relating to data accuracy and relevance of results. There are many questions organisations need to clarify before embarking on such a road:

a. Who may the beneficiaries of such an exercise be?

b. What is the added value?

c. Who has done this well?

The graph below raises another question:

Source: Google Finance, 2010

Did it ultimately work for Rank Xerox?

or even

What did Canon differently to generate such a gap between the stock price performance over the last 10 years?

Comparing performance across entities is even easier today. Availability of information technology and rich datasets facilitates benchmarking across multiple dimensions. However, embarking on benchmarking initiatives because “it seems to be a popular tool” or because it was recommended by a consultant can be risky. Same as if it is pursued “just because we can” or with unreliable data. Done properly, it might still be a good idea overall, but then another question needs to be asked:

Are there any other better ideas?

Yet again, Study puts initiatives management in a new light.

Stay smart! Enjoy smartKPIs.com!

Aurel Brudan

Performance Architect,
www.smartKPIs.com


References

McNary, Lisa D. 1994, “Thinking about excellence and benchmarking”, The Journal for Quality and Participation, July-August 1994, v17, n4, p90(1)

Walker, Rob 1992, “Rank Xerox – Management Revolution”, Long Range Planning, Vol. 25, No. 1, pp. 9 to 21