Fujio Mitarai
1935–

President and chief executive officer, Canon

Nationality: Japanese.

Born: September 23, 1935, in Kamae, Oita (Kyushu), Japan.

Education: Chuo University, BA, 1961.

Family: Married Chizuko (deceased 2002); children: at least two.

Career: Canon Inc., 1961–1979?, accountant; 1979–1989, president and chief executive officer of Canon USA; 1989–1995, managing director; 1995–, president; 1997–, chief executive officer.

Awards: Named Person of the Year by PhotoImaging Manufacturers & Distributors Association, 1998; named one of the world's top 25 managers by BusinessWeek, 2001.

Address: Canon, 30-2, Shimomaruko 3-chome, Ohta-ku, Tokyo 146-8501, Japan; http://www.canon.com.

■ As chief executive officer of Canon, the Japanese camera and office technology manufacturer, Fujio Mitarai introduced his unique blend of Western and Japanese management styles. When the company was struggling to remain profitable, he overhauled the corporate structure, cutting costs, streamlining production, and improving profits substantially. Mitarai's inimitable management style inspired the phrase "the Mitarai way."

ENTERING THE FAMILY BUSINESS

Growing up, Mitarai watched his three brothers follow in their father's footsteps and embark on careers in medicine, but he had different dreams. Though he could speak only Japanese, Mitarai yearned to travel overseas. In 1961 he joined Canon, the company cofounded by his uncle Takeshi Mitarai. Five years later Mitarai's uncle transferred him to the United States. The move was an attempt to compete with Nikon and

Pentax, which then dominated the U.S. camera market. Mitarai was one of just seven employees working in the Canon headquarters in Manhattan.

The company's first earnings report, which Mitarai put together, suggested that Canon had made a mere $6,000 on $3 million in sales. The IRS became suspicious and visited the Canon office. After a close inspection, the auditors suggested that Canon close its unprofitable U.S. headquarters and put the money in the bank, where it would at least earn interest. For Mitarai the advice was a wake-up call. He knew his uncle's company could be profitable if it cut costs and improved sales. A few years later he was promoted to the head of North American camera sales. He traveled around the country promoting Canon's cameras, staying in cheap hotels to save money.

Mitarai spent 23 years in the United States, eventually becoming president of Canon USA. Under his leadership Canon successfully launched several new products. For example, the Canon AE-1, introduced in 1976, was the first affordable 35 mm camera with automatic exposure. The AE-1 made it easy for amateur photographers to take professional-looking pictures, and it helped propel Canon to the head of the single-lens-reflex camera market. In 1987 Canon released its EOS (Electronic Operating System) automatic-focusing camera. With a focusing motor inside its lens, the EOS focused faster and with less light than did other cameras.

Mitarai also expanded Canon's printer and copier businesses, introducing cheaper, faster, smaller machines. In 1984 Canon joined forces with Hewlett-Packard, with Canon designing the laser printer and Hewlett-Packard supplying the software, packaging, and marketing. By 2001 the collaborative effort had secured 70 percent of its market. In 2000 Canon released a line of faster and more reliable digital copiers. Canon effectively ran Xerox out of the low-cost copier market and increased its share of the high-end corporate copier market to become the leading producer of copy machines in the world.

While in America, Mitarai often sought advice from top CEOs, including Jack Welch of General Electric, with whom he regularly played golf. Mitarai carried their advice with him when he returned to Japan in 1989.

LEADERSHIP AT CANON JAPAN

What Mitarai found on his return home alarmed him. In the late 1980s Canon comprised a dozen individually run divisions, many operating in the red. As senior managing director, Mitarai tried to push American-style cost-cutting measures, but Canon executives were not paying attention. In 1995 Mitarai's cousin Hajime Mitarai, then the president of Canon, suddenly died. The company's board passed over six other executives to place Mitarai in the position.

Finally able to put his ideas into action, Mitarai overhauled Canon's financial structure. Instead of focusing on sales (as Japanese executives typically do), he focused on profits. To reduce debt, he eliminated divisions selling unsuccessful products, such as PCs, electric typewriters, and liquid crystal displays. He merged the remaining divisions into four: copiers, printers, cameras, and optical equipment. To increase coordination among the divisions, he directed Canon's managers to adopt consolidated balance sheets, enabling them to see instantly which divisions were successful and which were struggling. He also started having daily lunch meetings with senior managers and monthly meetings with middle managers, in which he personally explained his vision and outlined what needed to be done. He relentlessly pushed his staff to cut costs and increase profits. "I changed the mindset at Canon by getting people to realize that profits come first," he told BusinessWeek International (February 11, 2002). In 1997 Mitarai was named the company's CEO.

Within five years of taking over, Matarai had tripled both the company's net profits and its stock value, even as Japan floundered in a recession and the world financial outlook remained shaky. He introduced new budget-planning methods and reduced inventory to improve cash flow management. Moreover, unlike most companies, Canon used its own funds for capital investment rather than borrowing money.

MANAGEMENT STYLE

Some of his colleagues dubbed Mitarai's unyielding obsession with the bottom line the "Mitarai way." His way blends the Western focus on profit with traditional Japanese values. Like American corporations, Canon offers monetary incentives to boost sales and encourage ingenuity. Workers undergo a series of "tests" beginning at age 25; those who do well can make as much as 80 percent more money than their peers. However, the company also promises lifetime employment—a common practice in Japan. Mitarai's blended approach made for loyal, yet driven, employees.

Mitarai long held the belief that Canon's employees are more important than its investors, but some analysts complained that his investor relations left much to be desired. The company's financial reports were often confusing, offering stockholders little insight into Canon's products and strategies. In fact, the Japan Financial Analysts Association placed Canonat the bottom of its rating of 20 companies in terms of open ness, information, and overall performance.

In a country where most CEOs are merely figureheads, Mitarai stood out. "He's active in leading the company. He's pretty driven," Steve Appleton, head of semiconductor maker Micron Technology, told Fortune (October 14, 2002). Despite being firmly in charge, however, Mitarai relied heavily on input from his executives before making any move. For example, when he wanted to introduce a new production technique, he first spent weeks trying to convince senior executives. He finally won them over. The new system, called cell production, turned out to be one of the best cost-cutting measures in the company's history. Mitarai replaced expensive assembly lines with more efficient groups, or cells, of people who work on one product to completion. The cell production system en ables a dozen workers to match the output of 30 workers on the old assembly lines. Streamlining allowed the company to save an estimated $300 million, increase productivity by 30 percent, and to save thousands of feet in factory space. "Many company managers now look up to Mitarai as a role model," Yoshio Nakamura, senior managing director of the Japanese business organization Keidanren told BusinessWeek (September 16, 2002).

LOOKING TO THE FUTURE

By the early 2000s Mitarai was focusing on Canon's future. He announced in 2001 that he was investing $810 million in research and development over the next three years. Instead of simply building stand-alone copiers and printers, he wanted to design machines that could communicate with one another and integrate into an office network. In 2004 he announced that Canon was preparing to roll out a new technology called the surface-conduction electron-emitter display, which would be used in large-screen televisions and other devices. Mitarai also expanded his business into the consulting arena, helping corporations plan their business equipment needs.

As part of his continuing effort to cut costs, Mitarai began to move some of the company's operations overseas. In 2002 Canon opened a laser-printing plant and three copier factories in China to take over the production of low- and mid-range copiers that were previously produced in Japan. Canon was expected to have moved 40 percent of its production out of Japan by 2005. Mitarai was also looking at potential acquisitions in the United States and Europe, specifically in the biotechnology and information technology sectors.

Unlike many corporate CEOs, Mitarai was less concerned with his salary than with the success of his company. "I'm motivated by my ambition of turning Canon into a truly excellent company," he told BusinessWeek Online (September 13, 2002). His goal was to make Canon number one in cameras, ink-jet printers, and semiconductor manufacturing equipment over the next few years.

See also entry on Canon Inc. in International Directory of Company Histories.

sources for further information

Holstein, William J., "Canon Takes Aim at Xerox," Fortune, October 14, 2002, p. 215.

Kunii, Irene M., "How East Meets West at Canon," BusinessWeek Online, September 13, 2002, http://www.businessweek.com/bwdaily/dnflash/sep2002/nf20020913_4948.htm.

——, "International Business: Japan: He Put the Flash Back in Canon," BusinessWeek, September 16, 2002, p. 40.

——, "The Pain, the Pain: Canon's Cutting Edge," BusinessWeek International, February 11, 2002, p. 16.

—Stephanie Watson