July 25, 2014 5:03 pm

‘Driving Honda’ by Jeffrey Rothfeder

Why Honda, not Toyota, may be the Japanese company for multinationals to emulate

Asked to pick a Japanese carmaker that changed the way people work, many would choose Toyota. The Toyota production system’s “lean” precepts of continuous improvement, reduced waste and on-the-spot problem-solving have spread throughout manufacturing. When Eiji Toyoda died last year, commentators – including this reviewer – rushed to extol him.

But in Driving Honda, journalist Jeffrey Rothfeder makes a strong case that we were applauding the wrong Japanese company. Honda Motor has the more admirable culture, he suggests. What is more, for multinationals struggling with the far from flat world of globalisation, decentralised Honda’s lessons are more relevant than those taught at Toyota’s command-and-control headquarters.

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Andrew Hill

Happily, you do not have to be a petrolhead, supply chain expert or Nipponophile to enjoy Driving Honda. Rothfeder writes well and he mostly manages to steer round the pitfalls of getting too technical. The fact that Honda has never been a conventional company helps. Soichiro Honda himself was an extraordinary eccentric, supremely confident in his engineering skills, but still wise and generous enough to share leadership with born salesman Takeo Fujisawa.

Having taught himself how to make piston rings before the second world war, Honda sold his business – to Toyota – in 1945 and took a 12-month holiday during which he “learned to play the Japanese bamboo flute, drew designs for fantastical products, tinkered with engines in his shed, and built machines for making salt and Popsicles”. His wife, fed up with having him hanging around, chided him until he eventually designed a motorised bike that helped lay the foundations for Honda Motor.

 

The early stories are entertaining but also relevant. The elements that now set Honda apart from other carmakers were there in embryo in the 1940s and 1950s, including the group’s determination that research and innovation should be pursued independently from the rest of the profit-driven business. In 1951, the founder framed a corporate purpose known as the “Three Joys” – of Producing, Selling and Buying – that still motivates staff, albeit deftly adapted into a more modern, less materialistic mission to create quality products, inspire customers and enhance their lives.

The Joys sound either corny or cultish, but Rothfeder points out that, like all Honda’s working principles, they are firmly linked to the realities of the market and workplace. One example is the group’s emphasis that knowledge has to be acquired first hand – called sangen shugi. It is the reason why Honda engineers can still be found hanging around car parks watching people load and unload their vehicles as they look for hints about how to refine the company’s first North American truck.

Decentralised Honda’s lessons are more relevant than those taught at Toyota’s command-and-control headquarters

Another important practice is waigaya – a made-up word used to describe how problems are solved and business advanced through discussion. It must be a wearisome way of working. Even Rothfeder admits that the debates often appear petty and senseless. One back-and-forth waigaya about “weld-splatter” (shavings and dust that can mar the paintwork) at an Ohio plant lasted for months. But the system is designed to yield useful ideas and improvements, precisely because it is “the antithesis of the status quo”.

The underlying message of the book is that Honda’s time has come. The group’s longstanding love of individualism and its relatively flat hierarchy chime with more radical management experiments, including the “holacracy” (no titles, total transparency) that Zappos, the Amazon-owned shoe retailer, is trying to implement. Meanwhile, Rothfeder hopes multinationals will also realise that Honda’s successful “localisation” strategy – “home­grown workers, ideas, and innovation combining to produce the best products for domestic markets” – can serve them better than an approach to globalisation that simply involves relocating to the next low-cost manufacturing base.

Rothfeder is not impartial. One could almost imagine him dressed in the white uniform worn by all Honda employees, whatever their rank, with “Jeffrey” picked out in red inside a red-bordered oval above the pocket. But Driving Honda is a fascinating and insightful analysis of a company that outsiders too often assume must be stamped from the same die as its best-known Japanese rival.

Driving Honda: Inside the World’s Most Innovative Car Company, by Jeffrey Rothfeder, Portfolio, RRP £25/ $27.95, 320 pages

Andrew Hill is the FT’s management editor

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