Channelizing thoughts

Canon India, established in 1997, started off as a company focusing on the copier business, with only the corporate segment as its customers, and adopted the culture of B2B direct selling. They now have their presence in 10 categories, with seven customer segments and eight to nine channels of distribution. Starting off with merely in seven cities, the company has now expanded its base to over 300 cities in the country. Alok Bharadwaj, Senior Vice-president, Canon India shares his values and vision.

Alok Bharadwaj, Senior Vice-president, Canon India (left) responds to a question by Prashant L Rao, Editor, Express Computer

How has the company expanded in the last decade?

We have added new layers to our foundation; these being additional products, expanding the size of the organization, finance, creating new processes and systems, and creating mass opportunity. Laser printer, projector, digital camera, photo printer, digital copier, color copier, video conferencing camera, digital camcorder, and scanner, are the products we currently deal in. Image capturing, image creating and image managing are the three steps in going digital. The core of any organization is its engines. In Canon, they comprise ink-jet technology, laser printer, optics, copier technology and display engine. Till last year, we had five business divisions, and this year we added three sub-divisions. Camera, IT peripherals, enterprise solutions, copier, fax, i.e. business machine division, and consumer products corporate division were the earlier five divisions. The three additions viz. have been government, graphic arts and system integrator division.

Overall, our business is $38 billion, out of which the Indian market contributed Rs 510 crore. This year, our growth is already 30% coming from all the businesses.

What is the consumer product corporate division?

It is a common belief that consumer products are bought by consumers, and corporate products by corporates. But these perceptions no longer hold true and have opened up a host of new opportunities. Requirement of digital camera by companies to propagate their work culture, companies using cameras to promote their products and employers wanting to leverage their initiatives and staff welfare programs by showcasing their initiatives by using digital camera.

In 2003-04, you had spoken about these promotions. Aren’t these promotions thin margin business? Where are your profit margins coming from?

In business, it is a choice to make and a balance to maintain between where your growth is and where your profit margins come from. Promotions are a low margin business, but we need to create a portfolio of high, medium and low margin products. We need to churn them and increase our market share. The major driver is still the life-style camera, digital SLR, etc. We need to grow faster than the industry, and tap and create new markets.

With government as one of your markets, what is the penetration and what are your future plans?

There is a tectonic shift happening in the government sector. There has been growing realization that to provide services to citizens, the government has to go digital and build the infrastructure. There are two complications—infrastructure which is a problem of scaling, because before infrastructure is created, it is over-utilized. And the next would be creating content. In every Citizen Service Center (CSE), there is need for information which has to be digitized, then made accessible and later printed.

There is a need to connect the state and central governments. Decentralization of government leading to a balance in power, complicated price discovery, and more and more people engagement, etc., has led to e-governance.

What are your current revenues and how do you plan to capture the market?

10% business comes from government (B2G), 50% from consumers (B2C), 30% from business customers (B2B) and the rest 10% from photo shops, professionals, commercial customers, etc. In B2G, we target to capture 20% in two years.

Can you elaborate on the system integration division?

Most organizations have started using electronic workflow. The challenge is to make paper a part of the electronic workflow. The document management solution starts with scanning and ends with printing. The middle levels consist of storing, searching, securing, integration and publishing. Computing, networking, broadband, hardware, document management solution are all a part of the system integration. E-governance projects and the BFSI sector have increasingly seen adopting it. We are now working with tier 1 system integrators like Wipro, TCS, IBM, HCL, Tulip, UTI and CMC.

Do you foresee anything revolutionary in the document management space?

It is still in its infancy. The challenge will be in educating customers. Paper document should become a part of IT infrastructure. We need software solutions for paper management. With fast responses and quick customer service becoming imperative, customers will be the driving force behind it. While in the western countries, 20% of the machines are sold with solutions, in India it is a mere 3%-4%.

You mentioned that Nokia is the most agile marketing company in India, what strategies have you adopted and learnt from Nokia? 

Nokia is a good product developer, but they are better brand managers. Their affinity to people’s emotions, their media and message approach make them a warm brand. They invest ahead of times. Even before the market is created, Nokia creates the brand.

Why have you chosen Sachin Tendulkar as your brand ambassador?

The medium and carrier are as important as the message. He is humble, a family man, soft spoke, good performer and non-controversial. He has great vibes with children and he is an icon, an idol.

Tendulkar endorses many other brands; doesn’t it dilute the value? Isn’t it better if a celebrity isn’t associated with many other products?

Every product has a fixed product lifecycle, and a very short peak period. So there is this compulsion of leveraging it. Tendulkar is very selective and does not associate himself with each and every brand. So we think he is the perfect fit for representing Canon.

What is your strategy for the SMB market?

SMB is a demanding customer. We need stronger service centers to penetrate deeper into this market. There is a deep rooted belief to be exposed to some brand, whilst the SMB segment is not very brand conscious. While HP is looked at as a business brand, Canon is perceived to be a consumer brand. We have a stronger penetration first in the large business. A stronger penetration in the mid-market is expected to happen in the near future. There is already a 30% increase seen in this segment.

What inspires and motivates you?

The kick of creating something new like an architecture, giving new directions, coaching people, visualizing, etc., gives me the push and drive to excel.

With the increase in Internet clout, what is the future of paper?

Hard copies are required in almost every sphere—for designing training manuals or making contracts; so the application is going to make sure that the consumption of paper doesn’t come down.

Can you give us a breakdown of revenues in divisions and sub-divisions?

Camera-35%, printer-20%, enterprise solution-15%, copier and fax-20% and software and survillence-10%. We have adopted direct sales strategy to target enterprise market.

Can you tell us more about your hobbies and interests?

I like wine collection and have collected it from 21 countries. I used to do scuba diving but not anymore. I play golf every Saturday; I am just a beginner and have a handicap of 24. I play the piano but my son learns faster than me and is a better player. I am very fond of the sea beaches. The sound of sea waves is destressing and I spend time in the backwaters of Kerala.

I love cooking with my wife, and whenever I am at home, the morning tea is my job. I also make salads and serve desserts whenever I am at home.

What is the value system you uphold?

I strongly believe in honesty. I have never found a reason to tell lies. I may choose not to say anything but I think credibility is the function of honesty. Also, one can’t maintain a different exterior than an interior. Commitment level is the work, taking ownership and believing that the work is yours and you work for yourself is yet another important value that I maintain. Also, respect for individuals and not losing temper and raising voice on others is what I truly believe in. It kills the working relationship. You have to dive deep to soar high.

You have considered JRD Tata as your role model, so what qualities of him have you inculcated in yourself? 

He stands an inspiration to a lot of young entrepreneurs. I follow his principles in my professional life.

You are good at packaging your thoughts. Do you consider anyone as your management guru?

Communication is the most important step to get work done from people. It begins from understanding other’s perspective and articulating differently. One can learn in four forms—conceptualization, reflection, visualization, and experience.

What is your success mantra in the journey with channels?

Consistency of cost and actions reinforce a long-term relationship and enhance credibility of the brand. Channels lack the opportunity and a paradigm of learning new things. They need an initial input to channelize their thoughts and concepts.

(The transcript was prepared by Renuka Vembu)