Honda’s Transformation Into One Of The World’s Most Innovative Automakers

Honda’s Transformation Into One Of The World’s Most Innovative Automakers

Honda is a leading Japanese automaker for the world market. Headquartered in Tokyo, the company was founded in 1946, beginning their production of automobiles in 1963. To date, Honda remains one of the most successful automotive manufacturers on a global scale. 

In the age of globalization, automotive makers were still struggling to make money outside of their home markets. The idea of successful business models for a multinational company operating in a globalized commercial environment was to innovate, behave in socially responsible ways, and be strategically creative in a way that could benefit the global market. 

However, Honda did not fit that bill. 

For one, Honda has looked outward from its home shores well before other manufacturers considered making or even selling products overseas. The company has always believed in global expansion and famously bemoaned the limited growth opportunities in “little Japan”. With a global outlook to “maintain an international footprint”, Honda began to perceive the rest of the world as its potential customer base.

By 1959, Honda was selling motorcycles in the United States, and soon began their production of automotives. In 1974, Honda launched the Honda Civic in the US. Among its lightweight, fuel-efficient passenger cars have been the popular Civic and Accord models.

An Aggressive Global Outlook

The company’s aggressive early globalization strategy was followed by similar successful pushes into other parts of the world. Among some of its most notable achievements include being the first Japanese company to produce cars in China, as well as marking profitable earnings in Southeast Asia and India. It was during this time that Honda became the envy of the rest of the automotive industry. 

Due to its global outlook, Honda has achieved a great deal during its lifespan. Honda is the leading engine maker in the world with an output of more than 20 million internal combustion motors annually. The company also holds the record of never having to post a loss in its history, and its automobile operating profit ratios of about five percent consistently top the industry. 

So, what is it that has made Honda excel so well in the global market? There are 5 things that distinguish the company from other auto manufacturers around the world. 

1. Localizing Globally

Unlike many of the automakers in the world, Honda isn’t controlled by a centralized headquarters. Instead, the company allows each of its subsidiaries to operate as autonomous companies. By avoiding a top-down approach, Honda allows each of its local subsidiaries to design and build vehicles based on local demands.

For example, Honda has its engineering, design and manufacturing functions at every facility around the world. They share R&D and other technical functions across their different markets, which allows each plant to take control so it can react to local preferences and consumer behavior. Not only does this help to scale production according to local preferences, it helps them to save on production costs and improve overall sales as well. 

2. Encourage Your Employees to Questions the Status Quo

Honda encourages its staff to question the status quo. As a knowledge-rich organization, they take overall feedback on decisions like design and sales into consideration, in hopes of finding a better strategic or tactical choice to improve themselves. At the company, self-satisfaction is seen as the enemy. It is this sense of critical thinking and constant self-improvement which has driven the company forward. 

3. No Reliance on Automation

Automation is one of the ways that global automakers have used as a way to boost efficiency and reduce costs. However, Honda has opted for the road less taken. Honda’s factories are purposefully the most labor intensive in the auto industry, employing robots only in areas that are dangerous or otherwise obviously less fit for humans than machines.

This is because as far as Honda is concerned, the introduction of automation to every stage of the design and build process will quickly make their employees disengaged, which leads to loss of innovation and creativity. 

4. Putting Engineers First

Since the company was founded in 1949, all of its CEOs have been engineers; veterans of Honda’s prized autonomous research and development unit. 

With an intensive background in R&D, Honda’s CEOs have strength in product and process innovation, primarily in designing new vehicle models and features and in conceiving fresh techniques for building them faster and better. Their success is measured not by quarter-to-quarter results but instead by how well they cultivate individual creativity throughout the organization. The main goal is to be able to build upon Honda’s unique corporate culture to its decentralized localization strategy to produce continuous innovation.

5. Focus on Flexibility

Honda’s focus on flexibility is achieved through a thorough in-house engineering process located at each major production facility, which also serves as an independent operation. The main focus is on local needs, so that each team is able to address any problems that arise in the production line immediately.

For example, Honda can seamlessly produce multiple autos on a single assembly line and switch a line over to a newly designed vehicle within hours. By contrast, it can take months for most other automakers to retool a factory for a new vehicle.

This efficiency and flexibility helps Honda to alter production and capacity of individual models at a moment’s notice, depending on local sales trends. This is what has led the company to deftly navigate through the globalized world today. 

Conclusion

Following their tagline, The Power of Dreams, Honda has managed to reinvent, innovate and build on its products to adapt and survive in the globalized world today. The company’s sole focus on its mission and vision has led to the advancement of mobility, as well as providing comfort and convenience to people all over the world. Their enthusiasm in innovating technology and challenging boundaries of mobility advancement have definitely brought them success in today’s world.