Driving Honda: Inside the World's Most Innovative Car Company

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9780670920563: Driving Honda: Inside the World's Most Innovative Car Company

For decades there have been two iconic Japanese auto companies. One has been endlessly studied and written about. The other has been generally underappreciated and misunderstood. Until now.

Since its birth as a motorcycle company in 1949, Honda has steadily grown into the world’s fifth largest automaker and top engine manufacturer, as well as one of the most beloved, most profitable, and most consistently innovative multinational corporations. What drives the company that keeps creating and improving award-winning and bestselling models like the Civic, Accord, Odyssey, CR-V, and Pilot?

According to Jeffrey Rothfeder, what truly distinguishes Honda from its competitors, especially archrival Toyota, is a deep commitment to a set of unorthodox management tenets. The Honda Way, as insiders call it, is notable for decentralization over corporate control, simplicity over complexity, experimentation over Six Sigma–driven efficiency, and unyielding cynicism toward the status quo and whatever is assumed to be the truth. Honda believes in freely borrowing from the past as a bridge to “innovative discontinuity” in the present. And those are just a few of the ideas that the company’s colorful founder, Soichiro Honda, embedded in the DNA of his start-up sixty-five years ago.

As the first journalist allowed behind Honda’s infamously private doors, Rothfeder interviewed dozens of executives, engineers, and frontline employees about its management practices and global strategy. He shows how the company has developed and maintained its unmatched culture of innovation, resilience, and flexibility—and how it exported that culture to other countries that are strikingly different from Japan, establishing locally controlled operations in each region where it lays down roots.

For instance, Rothfeder reports on life at a Honda factory in the tiny town of Lincoln, Alabama, and what happened when American workers were trained to follow the Honda Way, as a self-sufficient outpost of the global company. Could they master Honda’s three core principles:

  • Embrace Paradox: Honda encourages respectful disagreement and debate between opposing viewpoints, on matters large and small. New ideas often emerge from conflict.
  • Real Place, Real Part, Real Knowledge: Honda teaches people to argue using facts, not assumptions. One must go to the factory floor, the showroom, the parking lot, the driver’s seat, or the truck bed—whatever it takes—to get the facts and make a decision that can be supported with data.
  • Respect Individualism: Honda often hires people with unusual backgrounds and independent streaks. It promotes those who question the status quo and who would probably struggle in organizations that focus on rigid rules and systems.

Rothfeder shows how the Alabama plant became a new model for manufacturing in America. It can turn out several different types of cars on any given day and up to 300,000 vehicles and engines a year. Its flexible model enables unparalleled responsiveness to market changes and recovery from mistakes.

As Soichiro Honda himself liked to say, “Success can be achieved only through repeated failure and introspection. In fact, success represents one percent of your work, which results only from the ninety-nine percent that is called failure.”

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About the Author:

JEFFREY ROTHFEDER is a veteran, award-winning journalist and former editor-in-chief at International Business Times. He has written numerous critically acclaimed books, including McIlhenny’s Gold, Every Drop for Sale, and Privacy for Sale. He was previously national news editor at Bloomberg News, editor-in-chief at PC Magazine, executive editor at Time Inc., and an editor at Businessweek. He lives in Cortlandt Manor, New York.

Excerpt. © Reprinted by permission. All rights reserved.:

1

The Honda Difference

Some of the people in attendance observed offhandedly that Soichiro Honda must have been spinning in his grave—or at least letting loose with one of his well-crafted profane tirades.

It was April 2000 when a ground breaking was held for a factory on a 1,300-acre site in Lincoln, an eastern Alabama town of fewer than 4,500 people at the time. A year earlier, Honda Motor Company had announced that it would construct its inaugural southern U.S. plant in this tiny hamlet. Because Honda had already made history in 1982 as the first Japanese carmaker in the United States by opening a manufacturing facility in Marysville, Ohio, the news that it was expanding into Alabama captured headlines around the world.

And raised its share of questions. For one thing, what and where was Lincoln? Other automakers that had already set up shop in southern cities—among them Mercedes, Toyota, Nissan, and Hyundai—chose large towns like Smyrna, Tennessee; and in Alabama, Huntsville, Montgomery, and Tuscaloosa. The companies wanted to be in cosmopolitan areas where the pool of potential workers who had experience with new manufacturing technologies and skill sets was sufficiently large. Moreover, they liked being able to offer visiting executives access to high-quality restaurants and hotels.

Honda, on the other hand, picked Lincoln precisely because it offered what the company wanted most: anonymity and no big-city spotlights or distractions. Indeed, during the search process for a property in Alabama, Honda executives rejected Birmingham, the first option presented to them, saying it was too big and crowded and, well, messy. And they told the state’s industrial development officials that they wanted a site at which they could work unobserved and inconspicuously.

By those criteria, Lincoln was perfect. Before Honda arrived it was a sleepy flatland, left behind years earlier by farmers and defense factories, barely a pit stop on east–west I-20 between Birmingham and Atlanta. Even now, with a world-class automobile factory in its midst, Lincoln is easy to pass by without noticing; it has a few fast-food places to get a bite—Waffle House, Taco Bell, and Burger King—and a couple of franchise motels, like Days Inn and Econo Lodge. But no signs trumpet the Honda factory on the highway or anywhere in town.

Considering the depth of Honda’s reticence—a single-minded self-preoccupation that manifests in the automaker’s almost religious regard for internal innovation and individualism and a concomitant ineptness about promoting its accomplishments—the public ground breaking at Lincoln for Honda’s new 1.7-million-square-foot plant was bound to be perilous. At least the weather cooperated; temperatures reached near eighty that day and the sky was a milky blue. A crowd of a few hundred town residents and invited guests were on hand to watch.

They heard short speeches welcoming Honda from Governor Don Siegelman, three-decade Lincoln mayor Carroll “Lew” Watson, and local congressman Bob Riley, as well as convocations given by the ministers of the area’s primary black and white churches and gospel songs sung by a choir that combined the best talent from the two. The speakers mainly touted the jobs, tax receipts, influx of supplier factories, and population growth—all of it adding up to millions and ultimately billions of dollars in economic gains that would be drawn into the area by what would be built on this one unlikely spot of land. As Mayor Watson said later, with an impish grin and a syrupy drawl, “It was as if we won the lottery; in our wildest dreams, no one ever expected Lincoln to be in newspapers as far away as California or Tokyo.” (That was the same conversation in which he pointedly took pains to erase any misconceptions I had about the origin of his town’s name: virtually all southern cities named Lincoln, he said, are honoring Benjamin, the aide-de-camp to George Washington who accepted British general Charles Cornwallis’s surrender at Yorktown, and not Abraham.)

Honda was represented by its leading global executive, CEO Hiroyuki Yoshino, and lesser officials from Honda of America and the Lincoln plant brain trust. Like every CEO in Honda’s history, Yoshino rose through the ranks of engineering and research and development—an unspoken but unchallenged prerequisite for those following in the footsteps of Soichiro Honda, who was among Japan’s most creative engineers when he founded the company. Other automakers, like other outfits in any industry, tend to fill top jobs with MBAs whose expertise lies in marketing, sales, or finance.

Having engineers in charge of the business fits Honda’s personality perfectly—particularly, the company’s bias toward an indispensable aspect of the engineer’s craft. Namely, the necessity to tear apart design, development, strategic, or manufacturing decisions by trying out alternate solutions arrived at with the same analytical probing and intellectual fervor that produced the original option. Criticizing and rejecting ideas and knowledge deemed to be true—inverting conventional wisdom—is more valuable at Honda than repeated success using the same concepts. “No one will blame you for making a mistake if you tried something new; in fact you may be promoted for that,” said Chuck Ernst, who conceived and oversaw the building of the Honda factory in Lincoln, an unconventional facility that resembled and performed like no other auto plant in the world when it was constructed. Before that assignment, Ernst had never built a factory from scratch. “However, you could fall out of favor if you’re afraid to stray from what worked before—no matter how well it worked.”

Or, as Satoshi Okubo, one of Yoshino’s predecessors in the CEO’s office, put it: “At Honda, it’s sink or swim. They don’t teach you step-by-step; they just throw you into the pool and let you figure it out on your own. If you don’t know how to swim at first, you need to be aggressive to survive. We are to try out whatever we think is necessary to take ourselves to the next level.”

The tradition of engineers at the helm has also suffused Honda’s culture with the concept of sangen shugi, which some people translate as the three realities. In Honda’s interpretation, sangen shugi means see it with your own eyes, go to the spot before making a decision. In other words, find out, say, what the customer wants or how a part should be designed so it can be assembled efficiently on the factory floor by asking the people who can show you—not just tell you—the answers face-to-face.

There’s almost nothing about Honda’s unorthodox DNA that hasn’t been informed by the skepticism and curiosity—by the unpacking and then reassembling of knowledge and information—that characterizes the best of the engineering discipline. However, there is a downside to this: engineer CEOs are not, generally, inspiring or motivating public speakers. That’s where having a more traditional sales or marketing background, in which communication skills are necessarily honed to try to persuade people to buy your product, is a distinct advantage.

And in this respect, in Lincoln, Honda CEO Yoshino did not deviate from the norm. Although gregarious and animated in small groups, at the ground breaking he appeared shy and halting; the speech itself was somewhat ham-fisted.

Some in the crowd couldn’t hear him over the sound of the wind blowing across the open field in which they stood. But those who did pick up what he said heard a repeated theme: Honda has been successful because it is, above all, a company that focuses on doing one thing well—making engines that last a long time for cars, motorcycles, and so-called power products like lawn mowers, generators, snowblowers, and weed or garden trimmers. And Honda continually works to perfect this core skill to improve as a company. Yoshino pointed out that the Lincoln plant would be uncommon because Honda would build both cars and engines there; most other automakers don’t even manufacture many of their engines and virtually none of them interweaves engine development and manufacturing processes as closely as Honda does to ensure that automobile design decisions are explored holistically.

And he added: “We earn more than ten million customers for these [engine] products every year. That makes us the largest engine maker in the world. The V6 engines we build here in Lincoln will give yet another meaning to the words ‘Powered by Honda.’ In this way, a phrase so important to our past will have even more power in the future.”

With that and a few more words, the breaking of the ground was about to begin. A Honda public relations person took to the microphone to tell the luminaries on the stage to step down and pick up a shovel.

“Now, you may have noticed that everyone isn’t using a shovel,” he continued. “Well, Mr. Yoshino spoke earlier about the concept of ‘Powered by Honda.’ The tiller that he and Mayor Watson are using to break ground is one of those ‘Powered by Honda’ products. I want you to count down with me to the ground breaking. . . . Count down to this start-up of construction for Honda’s new facility in Alabama.

“Five-four-three-two-one. Gentlemen—start your engine . . . and shovels.”

The shovels were not the problem. The tiller, however, was. It wouldn’t kick over. Yoshino first pulled the starter string smoothly and confidently, no response. Again, with a smile, dead. Then he yanked on it hard—there was sweat appearing on his brow and upper lip—just a cough from the machine. Now getting more nervous, Yoshino jerked on the rope with force, so hard that someone said it looked like he was going to strain a muscle. It didn’t help. People in the audience were growing more and more embarrassed for the CEO and by the obvious irony of a dead Honda engine dedicating the company’s crown jewel greenfield factory; they wanted to look away or whispered to their neighbor about how they wished they were anyplace else but here.

Then, something unexpected happened. Rather than give up or call for help from the Honda maintenance crew in the crowd, Yoshino tackled the balky tiller himself. More comfortable with technical complications than audiences anyway, he bent down and peered into the engine, casually playing with the spark plugs, the carburetor, the gas line. He flipped the choke. It took less than two minutes; then he stood up and pulled the cord. The engine came alive.

¦

Those who believed that Soichiro Honda would have disapproved of what unfolded that spring afternoon on a nameless plot of land in the Deep South couldn’t have been more wrong. Quite to the contrary, Honda-san would have been proud for this reason: though unfortunate, the mishap with the tiller revealed yet again that Honda Motor, the company Soichiro founded some fifty years earlier, is an awkward outfit built on paradox and contradiction, full of enthusiasm and warts, yet wholly original, influential, creative, enterprising, resourceful, and successful—just as he was. More than anything, that public faux pas in central Alabama reflected how well his company echoes his uniqueness as an engineer and a businessman and how his unconventional management style and improvised, even intuitive, organizational genius has permanently infected the corporation that bears his name.

Any number of Honda aphorisms would appropriately frame that Alabama misstep, sayings embedded deeply in the company’s culture, but one maxim oft repeated by Soichiro Honda, who was fond of mistakes like these, fits best of all.

“Success,” Honda said, “can be achieved only through repeated failure and introspection. In fact, success represents one percent of your work, which results only from the ninety-nine percent that is called failure.”

To Soichiro, slip-ups were a sign of progress to come, a motivator to improve.

Soichiro Honda’s business partner, Takeo Fujisawa, the management consulting genius whose personal style and temperament stood in sharp contrast to the founder’s but who nonetheless forged a common bond with Soichiro that united the pair for more than two decades, had a more nuanced way of looking at mistakes. To him, it was the fear of failure that drove people to achieve the most, rather than failure itself.

Fujisawa was adept at shogi, a Japanese version of chess with at least one substantial variation: when you captured an opposing player’s piece, it could be redeployed on your side. To Fujisawa that was an apt metaphor for business strategy. As he saw it, by outsmarting the competition, you not only vanquish a rival, you are enhanced by his losses. And the only way to avoid being beaten yourself is by constantly being on alert and ready to respond to the errors in judgment and in practice that could give your competitors an opening.

To make this point, Fujisawa quoted Kozo Masuda, a champion shogi player in the 1950s whom he idolized. Paraphrasing Masuda, Fujisawa would say, “I’m at my best in a match when I’m on the edge of victory or defeat. I’ve made many careless mistakes in my day and every one of them happened when I had some slack. . . . It’s better for me to feel like my opponent’s closing in on me.”

But beyond the positive effects of failure, Honda CEO Yoshino’s embarrassing moment and the way he recovered from it in Lincoln is still remembered today—still mentioned in the auto industry more than a decade later—because it exemplifies in miniature the odd traits, the slightly askew culture, that have made Honda one of the most successful multinational companies in the world, profitable every year of its existence.

As an auto company consultant who helped implement many of Toyota Motor’s operational strategies described it: “When I first heard about what happened in Lincoln—everyone in the industry talked about it—I laughed and said, ‘There goes that motorcycle company again trying to play in the big leagues of the auto industry.’ And then a couple of days later I was driving to work and it hit me: Crap, Honda can make a mistake and rebound quickly, turn a negative into a positive; a few days after Lincoln and now everyone is asking, ‘Could my CEO get the engine going?’ Probably not—and he wouldn’t even try. They’re nimble and smart. To use a basketball term, they can go small or go big with equal skill.”

That dexterity, he added, explains why Honda’s product development, production, and management methods have been quietly studied by most of the other auto companies as well as other industrial firms, seeking to emulate its personality and manufacturing prowess.

What they’ve found is that the Honda Way is unorthodox and in most cases the opposite of the approach chosen by large manufacturers, including all of Honda’s chief rivals in the auto industry, which generally are top-down, command-and-control businesses. You don’t have to scratch the surface too deeply to see that Honda, instead, is driven by a series of grassroots, Eastern-derived principles that emphasize:

  • individual responsibility over corporate mandates;
  • simplicity over complexity;
  • decision making based on observed and verifiable facts, not theories or assumptions;
  • minimalism over waste;
  • a flat organization over an exploding flow chart;
  • autonomous and ad hoc design, development, and manufacturing teams that are nonetheless continuously accountable to one another;
  • perpetual change;
  • unyielding cynicism about what is believed to be the truth;
  • unambiguous goals for employees and suppliers, and the company’s active participation in helping them reach those metrics; and
  • freely borrowing from the past as a bridge to what Honda calls innovative discontinuity...

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Descripción Penguin Books Ltd, United Kingdom, 2014. Hardback. Estado de conservación: New. Language: English . Brand New Book. Fascinating and insightful Financial Times For decades there have been two iconic Japanese auto companies. One has been endlessly studied and written about. The other has been generally underappreciated and misunderstood. Until now. Since its birth as a motorcycle company in 1949, Honda has steadily grown into the world s fifth largest automaker and top engine manufacturer, as well as one of the most beloved, most profitable, and most consistently innovative multinational corporations. What drives the company that keeps creating and improving award-winning and bestselling models like the Civic, Accord, Odyssey, CR-V, and Pilot? According to Jeffrey Rothfeder - the first journalist allowed behind Honda s infamously private doors - what truly distinguishes Honda from its competitors, especially archrival Toyota, is a deep commitment to a set of unorthodox management tenets. The Honda Way, as insiders call it, is notable for decentralization over corporate control, simplicity over complexity and unyielding cynicism toward the status quo and whatever is assumed to be the truth - ideas embedded in the DNA of the company by its colourful founder Soichiro Honda, sixty-five years ago.With dozens of interviews of Honda executives, engineers,and frontline employees, Rothfeder in Driving Honda shows how the company has developed and maintained its unmatched culture of innovation, resilience, and flexibility - and how it exported that culture to other countries that are strikingly different from Japan, establishing locally controlled operations in each region where it lays down roots. For instance, Rothfeder reports on life at a Honda factory in the tiny town of Lincoln, Alabama. When the American workers were trained to follow the Honda Way as a self-sufficient outpost of the global company, their plant pioneered a new model for manufacturing in America. As Soichiro Honda himself liked to say, Success can be achieved only through repeated failure and introspection. In fact, success represents one percent of your work, which results only from the ninety-nine percent that is called failure. Nº de ref. de la librería APG9780670920563

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