Strategic planning at Canon with a cooperative corporate style (part 4)

At Canon, divisional manages come together to identify next-generation competencies. Together they decide how much investment needs to be made to build up each future competency and the contribution in capital and staff support that each division will need to make. There is also a sense of equitable exchange. One division may make a disproportionate contribution or may benefit less from the progress made, but such short-term inequalities will balance out over the long term.

The positive contribution of the SBU manager should be made visible across the company. An SBU manager is unlikely to surrender key people if only the other business (or the general manager of that business who may be a competitor for promotion) is going to benefit from the redeployment. Cooperative SBU managers should be celebrated as team players. Where priorities are clear, transfers are less likely to be seen as idiosyncratic and politically motivated.

2. Debate whether companies outside this industry sector can draw any useful lessons from the strategies used by Canon in this industry.

Competencies are the key to competitive advantage. This conclusion is based on two lines of argument. First, several authors argue that past experience of the successful companies should be utilized by organizations striving to improve their operations (Printz, 2003). The second line of argument is the increasingly persuasive case examples of successful organizations, such as Canon, that appear to have developed strategy around their existing and future competencies rather than simply market and competitor analysis (Prahalad & Hamel, 1990).

Typically, a core competence is defined in relation to the competitive impact of its output; that is, a core competence provides the firm with (sustainable) competitive advantage via the way it is executed (Prahalad & Hamel, 1990), or via its attributes; for example, a core competence is firm-specific and hence difficult to imitate (Printz, 2003). However useful these definitions are in terms of competition and strategy; they are not operational, which creates some serious difficulties in identifying and developing the core competencies of a firm (Drejer & Riis, 2000).

It is reasonable to expect a business that has surrendered core skills on behalf of corporate opportunities in other areas to lose, for a time, some of its competitiveness. If these losses in performance bring immediate censure, SBUs will be unlikely to agree to skills transfers next time.

Furthermore, Canon’s experience shows that there are ways to persuade key employees that they do not belong to merely one business division. Early in their careers, people may be exposed to a variety of businesses through a carefully planned rotation program. At Canon, critical people move regularly between the camera business and the copier business and between the copier business and the professional optical-products business. In mid-career, periodic assignments to cross-divisional project teams may be necessary, both for diffusing core competencies and for loosening the bonds that might tie an individual to one business even when brighter opportunities beckon elsewhere. Those who embody critical core competencies should know that their careers are tracked and guided by corporate human resource professionals. In the early 1980s at Canon, all engineers under 30 were invited to apply for membership on a seven-person committee that was to spend two years plotting Canon’s future direction, including its strategic design.

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