The impact of technology on society is increasing and the pace of evolution is accelerating. Canon is committed to contributing to mankind and society by responding to the changing times and continually generating cutting-edge innovations.

Both Canon and the world at large are undergoing massive transformations. With the continued contraction in markets for cameras, home printers and other products that once constituted our core businesses, we are attempting to make bold changes aimed at further growth. Even on a global scale, technology is in a period of change, with companies shifting away from invention-focused R&D to innovations focused on solving social issues. This is a complete paradigm shift.
Looking back at history, R&D in ages of industrial society and information society has involved finding the "seeds" of technology and bringing forth a proliferation of carefully-nurtured inventions. Groundbreaking products have been launched one after the other, enriching our lives, improving convenience and changing the world. Yet now, continued globalization is gradually revealing a number of social issues, but at the same time, facilitating a rise of technologies that can address them. Indeed, we live in an age when social issues are necessitating technologies, when efficient R&D requires more than just cultivating seeds through "invention-focused" R&D. For its part, Canon is engaging in M&A and other endeavors to create innovations with immediate effectiveness and speeding up innovation-focused R&D that speedily addresses social problems.
On the other hand, invention-focused R&D of the kind necessary for humankind's advancement is large-scale, the national level, over the long-term in areas such as space, the oceans, and the life sciences. Canon is engaged in this kind of R&D through alliances with other companies, industry-academia coordination, and open innovation.

Since its founding, Canon has been distinguishing between its highly versatile "fundamental technologies," which form the foundation of its businesses, and its "core competence technologies," which directly support those businesses, providing a diverse range of products and services by combining these technologies in a variety of ways. And our five-pillar portfolio of existing businesses — cameras, office multifunction devices, inkjet printers, laser printers, and optical equipment — is no exception. At the same time, for our four-pillar portfolio of new businesses consisting of medical systems, network cameras, commercial printing, and industrial equipment, we have been strengthening competitiveness by incorporating our long-held fundamental technologies into the core competence technologies that have recently been introduced into the Canon group. We have transformed several of these core competence technologies into fundamental technologies through repeated R&D efforts. Toners and other functional materials, for example, were once core competence technologies used in copying machines. Now they serve a role in fundamental technologies, such as powder synthesis technologies and chemical reaction analysis technologies, which are proving useful in developing competitive products for other businesses.
In our imaging businesses, one of Canon's major strengths, our high-resolution image processing technologies and our lens, sensor and other imaging technologies — our overwhelmingly superior core competence technologies — are making Canon cameras more competitive. These technologies are used in other businesses as fundamental technologies for our optical, electronic, and information processing technologies.
One of our new businesses, network cameras, has made advances using core Canon technologies to enable solutions that couldn't be made solely through the efforts of the specialized Canon group company Axis alone. But creating a business involves more than just research and development. One of Canon's greatest strengths is its robust value creation technologies, which focuses on intellectual property, quality, design, value engineering, project management and virtual prototyping, creating the kind of value that the world needs.

To achieve efficient R&D, Canon's current R&D structure has the head office's R&D division in charge of advancing fundamental technologies and R&D for technologies needed for future businesses, while each business' development department focuses on core competence technologies. These organizations are working together and working hard to create groundbreaking innovations.
To invent is to discover, methodize, and systemize something no one has ever done, while to innovate is to create solutions to problems and contribute to society. The world of the future will be marked by a sophisticated combination of cyber space and physical space. Some theorize that we will use AI to analyze, in virtual space, massive volumes of big data acquired from the real world, and then use the findings to control automated robots in actual society. Since every aspect of that involves innovation-focused initiatives, Canon must not fall behind. Although we, too, are engaged in developing AI and deep learning solutions, some enterprises and research institutes specializing in these areas have had a head start on us. With such strength in physical technologies, what we must do now is leverage our alliances and open innovation to utilize sophisticated cyber technologies and provide solutions that go one step beyond, all the while keeping front and center the individual technologies we have developed from fundamental and core competence technologies.

Canon is a company in which people can always leverage the company's fundamental and core competence technologies freely and to the fullest extent possible, no matter what business they are in. Those with a mind for innovation can quickly give shape to products or services.
What makes this possible are advances in full simulation technologies — such as zero-prototype simulations that transform strengths and expertise into something tangible. By fully leveraging these Canon strengths and bringing talent together, we are confident that we can cultivate entirely new businesses that combine wide-ranging fundamental and core competence technologies.
It's because of people that good products and services get made. We will keep cultivating the kind of people that can make Canon's strengths ever stronger while building great businesses.