Management of Technology and Innovation in Japan

The Japanese Know-Who Based Model of Innovation Management 103
Using Organizational Hierarchy to Transfer Further R&D Brainpower
to Production
As of late 1994, the FLCD group had grown to a 200-person operation. Ninety per
cent of all members were located directly in the Display Business Operation Centre.
Eight per cent of the engineers were still located in the R&D HQ, where they
did some interface development and coordinated these software development activities
that took place overseas. The remaining two per cent were researchers with
the Canon Research Centre, working on next-generation FLCD materials in collaboration
with external university-based creativity networks. Mr. Toru Takahashi's
powerful position at Canon further accelerated the transfer of relevant skills
to the project and supported the transfer of most people in the increasingly large
project directly to the factory floor.
Paying More Attention to Group-Wide Results than Individual Project
Performance
Although commercial production has been running for several years now, and the
size of the displays has kept increasing, Canon does still not enjoy any significant
sales volumes on FLC displays. The most significant barrier is the high sales
price. Still, this price may not cover even half of the actual costs, given the significant
investments that the project sponsor Mr. Toru Takahashi pushed through the
board to make commercial production possible.
With respect to the extraordinarily high costs of this project and the relatively
limited revenues from commercialized FLCDs, most Western organizations would
probably have fired the project sponsor, or ‘punished’ him or her with a lateral
move – as often practiced in many Western companies. At Canon, Mr. Toru Takahashi
was rewarded with a promotion to CTO not long after completion of this
project. Why? The answer seems to reside in the holistic network approach taken
both to K&I management and to performance evaluation. Although the FLCD project
investments may never be covered purely through sales of FLCDs, the unique
production technologies and skills that were acquired and created throughout the
project have already been networked and propagated across the company.
These skills and technologies also encouraged Canon to revitalize the TFT display
project that was put on ice as it competed against the FLCD project for resources
to proceed towards production. As a consequence, Canon is today the
worldwide leader in TFT display manufacturing equipment (i.e., of a competing
product). The patents 9 (now over 200) that were awarded during the project also
9 The President at the time, Dr. Keizo Yamaij, pursued a very powerful patenting strategy
requiring each engineer to submit twelve patent applications per year (Harryson, 2000).
In 1992, when I started my empirical research in Japan, Canon ranked first in patent
registrations in the US – with IBM ranking sixth that same year. Taking a timeperspective
of the decade from 1990 to 2000, Canon has had consecutive annual revenues
of approximately 10 billion yen from their patents, which is ten times their patent