Hondaism and the art of motorcycle sales: Sam Eilon separates truth from myth in the making of yet another Japanese success story
Sunday 06 December 1992
Although much about the tale is banal or obvious, the Honda success story - as chronicled by Setsuo Mito in The Honda Book of Management, now available in the UK - is perhaps more compelling than most.
This is partly because the company's experience has withstood the test of time and partly because Western commentators continue to be intrigued by the effect of the cultural gap between Japan and the West on their relative industrial performance.
Much is made of the novelty of the so-called management principles adopted by Honda, but if there is anything noteworthy about the company's practices, it concerns the role of research and development, the joint boardroom, the low break-even point (aimed at about half capacity) and the strategy for market penetration.
Honda's attitude to R & D is based on the founders' belief that a significant effort in this area is essential if the company is to strengthen its competitive position.
In Soichiro Honda's view, 'To put short-term results before creative, original effort . . . was to court ultimate downfall.' But it is also drawn from the company's commitment to trial and error. The aim is a relentless series of improvements to products and processes and the ability to respond quickly to threats in the market. The company set up parallel teams competing to find innovative solutions in the areas of design and production.
Honda's ability to be flexible, and to ensure that the top executives not only fully understand each other but act in unison, is attributed to the novel idea of the joint boardroom, which was conceived as 'a forum where Honda executives pit their differences in a constructive way'. This is where top managers - only the most senior have their own desks - work together on all the big problems facing the company.
In reality, the joint boardroom constitutes a perpetual executive committee with an open-ended agenda, and it proved its effectiveness in times of crisis, when swift reactions by the company were called for.
The company's strategy for market penetration is particularly fascinating. Time and again, Honda started at the lower end of the market: with small motorcycles in Britain and the United States and later with small cars, where initially the competitors dismissed Honda as a weak entrant not worthy of much attention.
As its position consolidated and sales grew, cash was generated to develop more expensive products. Honda could use its immense know-how in motorcycles to penetrate the market for mini-compact cars and small vans.
Then attention was concentrated on quality and the range was expanded, to include larger and more luxurious cars with higher added values. The strategy was simply to exploit both economies of scale, where higher volumes generated very healthy profit margins, and economies of scope, where the technical expertise gained in motorcycles could be extended to the design and manufacture of cars.
Honda has undoubtedly been successful. The fact remains, though, that the company was on the brink of total collapse at least once in the past 25 years, and that it was probably more luck than the Honda 'principles' or foresight and planning that saved it from disaster.
'The Honda Book of Management - a Leadership Philosophy for High Industrial Success' is published by The Athlone Press and also by the Kogan Press of London. Professor Sam Eilon is a senior research fellow at Imperial College, London.
- 1 Howard Jacobson: Let's see the 'criticism' of Israel for what it really is
- 2 Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
- 3 Belgium fan Axelle Despiegelaere lands L'Oreal campaign after World Cup viral photo
- 4 Britney Spears sings 'Alien' without Auto-Tune in embarrassing leaked audio clip
- 5 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
Instagram of US airport security chiefs: Lipstick knives and IED training kits among items seized
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Mick Jagger denies being World Cup curse and reason for Brazil’s embarrassing defeat
Israel-Gaza crisis: ‘We just want it to end… We don’t deserve to live like this’
Israel-Gaza crisis: Eight killed in Gaza Strip cafe while watching World Cup semi-final
Sustained immigration has not harmed Britons' employment, say government advisers
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
There’s a nasty smell in the political air – and it’s coming from the Tories
iJobs Money & Business
Negotiable: Randstad Education Birmingham: Randstad Education are seeking a Fi...
£12 - £15 per hour: Cameron Kennedy Recruitment: Excellent opportunity to join...
£400 per hour: Orgtel: Technical Business Analyst - Banking - Bristol - £400pd...
£38000 - £42000 per annum + competitive: Real Staffing: Required skills:Previo...