Dialogue between Inside and Outside Directors

Expectations for Group-Wide Business Transformation, Profit Growth in IT Solutions Business, and the Development of Integrated Solutions with Canon Products

Director Hirukawa and Outside Director Hasebe held a discussion on the Canon MJ Group’s business transformation, key strengths, and initiatives to achieve sustainable growth.

Hirukawa : 2024 was a year of significant change; and that is also true for our Group. Since Mr. Hasebe joined us as an outside director in 2022, he has offered valuable insights from a broad, high-level perspective on group-wide growth strategies, investment in human resources, and the importance of execution speed. His advice has always been timely and spot-on.

Hasebe : In the fiscal year 2024, what stood out most to me was the increased speed of our execution in both management initiatives and business development, especially in the face of a rapidly changing business environment. For example, in January 2024, the Group launched a dedicated R&B (Research & Business Development) organization to drive new business creation. Since then, we've seen a pace of initiatives and M&A activities unlike anything weʼve experienced before. The articulation of our Purpose and the clear vision it presents for the Groupʼs medium- to long-term future also carry great significance. It allows us to move forward with a sense of unity alongside employees of newly joined Group companies and our partner companies.
I also highly commend the Group for steadily advancing its business transformation initiatives while progressing toward the targets in its Medium-Term Management Plan. From my own experience, I know that in transformation efforts, the front-runners often charge ahead enthusiastically. However, there are always some who hesitate, bound by existing structures, and this can prevent momentum from spreading company-wide. That is why it is essential to ensure that employees who have played central roles in existing businesses, as well as partner companies, fully understand and align with the Groupʼs policies. I will continue to closely monitor progress in this area.

Hirukawa : To realize transformation, it is vital to set a clear direction and strategy and enhance execution capabilities of members at the front lines. At the same time, those leading the way must stay attuned to others and help every employee move toward a shared vision. Under our Purpose, I recognize that one of our key challenges is to unite with new members and generate synergies as one team. We will continue to move forward at speed until the seeds we’ve sown for growth can blossom and bear fruit—and we will keep planting new seeds for the future.

Hasebe : Even before I assumed the role of outside director at Canon MJ, I held in high regard the Groupʼs strong sales capabilities and the technical capabilities of its systems engineers, particularly in serving a wide range of clients, from large corporations to quasi-major and upper medium-sized enterprises, as well as small and medium-sized enterprises. Leveraging these strengths as a foundation for business operations while combining them with efforts in new business development and M&A is essential to securing sustainable medium- to long-term growth.

Hirukawa : Our robust sales capabilities and unique technological expertise—these two strengths have been refined since the Group’s founding. Building on them, we have established a broad customer base, which I would consider our third major strength. Looking ahead, we aim to further deepen our capabilities in both “people” and “technology,” including through the active recruitment of external talent. Taking on new business development requires a willingness to challenge the unknown, which naturally involves the possibility of unexpected outcomes due to lack of prior experience. Rather than avoiding risks for fear of failure, it is vital to treat failure as a learning opportunity and move forward. President Adachi often conveys to employees that “there is value in the process of learning from failure and taking the next step.”

Hasebe : I am also paying close attention to the Group’s initiatives for mindset reform to strengthen its human resources and organization, particularly its training programs in the IT solutions business. In particular, measures to enhance service quality and the implementation of “failure learning” workshops are commendable. These efforts are vital for reinforcing the responses to emerging risks and the management of operational processes as the Group expands into new business domains.

Hasebe : The environment surrounding our Canon products business remains challenging. However, through the dedicated efforts of our sales divisions and partners, we have been able to improve profitability by increasing the profit margin on Canon products. While our IT solutions business continues to grow, there is still room for improvement on the profitability front. Enhancing operational processes is a key factor in driving profit gains.

Hirukawa : In Japan, with some exceptions, Canon products operate in a mature market. That is why we place the highest priority on value-added proposals that emphasize profitability. That said, even in a mature market, there are still areas with growth potential when segmented in finer detail. We intend to focus on expanding in those areas.
As for the IT solutions business, we will continue to focus on segments for which we can leverage the Group’s unique strengths, categorizing them by customer segments to guide our expansion strategy. To improve profit margins, we are working to enhance productivity not only among our systems engineers, but also across staff supporting the operations of operations divisions and maintenance support divisions. Our goal is to raise the profit margin of the IT solutions business to a level comparable to that of the Canon products business in the near future.

Hasebe : By improving operational processes and enhancing service quality in the Canon products business, we can reduce maintenance costs. Furthermore, by leveraging AI to boost efficiency, we can expect sustained improvements in profit margins and profit growth. I look forward to the initiatives and outcomes of the next Medium-Term Management Plan.
Additionally, the growth of the IT solutions business is a major advantage, not only in its own right, but also because it enables us to provide comprehensive solutions in combination with the Canon products business. This contributes significantly to our competitiveness. For example, promotion of DX is enhanced in document solutions by integrating office equipment with IT solutions business, and similarly, by combining Canon’s optical device with IT solutions business in image solutions. I believe they will lead to increases in market appeal. I have high hopes for this kind of market-driven new business development.

Hirukawa : Given the growing complexity and sophistication of our customers’ and society’s challenges, those in only limited areas can be resolved through functions of standalone devices alone. As you noted, combining Canon technologies with our Group’s proprietary technologies greatly expands what we can offer. There are few competitors capable of delivering integrated proposals across domains such as imaging solutions, digital document services, and cybersecurity—and that is one of our Group’s core strengths. By integrating high-performance devices—such as input/output equipment for documents and network cameras, with the system integration capabilities we specialize in, we are able to differentiate ourselves from competitors. This is an area we plan to strengthen further going forward.

Hasebe : As a listed subsidiary with Canon as our parent company, we are focused on initiatives to prevent conflicts of interests between the parent company and general shareholders. In the fiscal year ended December 31, 2024, all outside directors verified the transparency and fairness of Canon products transactions.
As an independent outside director, I will fulfill my supervisory responsibility and, based on my own experience and insights, provide advice on Canon MJ Group's business transformation and IT solutions business development to contribute to its medium- to long-term growth.

Hirukawa : When resolutions are made by the Board of Directors, the outside directors carefully assess whether the interests of minority shareholders are not compromised.
Over the past few years, the number of meetings with investors has also steadily increased. We have received valuable proposals, both regarding expectations for our sustainable growth and toward the enhancement of our governance. These proposals are reported back to the Board of Directors and serve as the basis for ongoing discussions. Going forward, we will continue to invest in growth with an eye on the future while taking into account recommendations and suggestions to achieve sustainable growth for the Canon MJ Group.