Honda is not in the Boston Consulting Group’s World’s 50 Most Innovative Companies of 2014, having reached #12 in previous years. Other Japanese companies include Toyota at #8, Sony, Softbank, Hitachi and Fast Retailing (Uniqlo). Other automotive companies in the Top 50 are Tesla, BMW, Ford, Volkswagen, Daimler, Audi and Fiat. “It’s becoming a mini Toyota” says Nikkei Business Magazine, “consumers will soon be saying ‘we don’t need a Honda like this'”.
Takanobu Ito became President of Honda in June 2009 and is stepping down in June 2015. This has been portrayed in the Western media as being a consequence of the Takata airbag scandal, but this was not mentioned by Honda as a reason, and 6 years is a standard stint for many Japanese company presidents.
Ito does apologise, however, in a Nikkei Business Magazine interview, for setting the numerical target of 6 million vehicle sales by 2016. “It was just a dream” he says now. Honda had fallen into the trap which many Japanese companies find themselves in, of stretch goals and visions being taken at face value by employees, particularly outside Japan. Honda was selling around 2.5 million vehicles a year when the “dream” was announced in 2012, as part of the 2016 Mid Term Plan. Honda in the US decided to boost sales of the Accord and Civic by offering even better incentives than Hyundai.
Previously, Honda’s brand had been so strong, it had not had to discount at all. And then followed the recalls of the Fit hybrid and the Takata airbag problems.
Ito had also restructured the company away from its previous bipolar Japan and North America organisations into 6 regions – Japan, North America, Latin America, China, Asia, Europe. He has reorganised the R&D side, cutting the number of new models in development by 20%. Honda used to sell itself as a pioneer, but is now behind Toyota in hybrid car and fuel cell vehicle development.
Ito believes Honda must learn from smaller manufacturers like Subaru and Mazda and focus on its brand image. “We have structured the company to be global, but now we need the system to make sure this bears fruit”. The relatively young (55) Takahiro Hachigo (former VP and Director of Honda Motor Europe) will become the 8th President of Honda, with four out of the 6 board directors also changing.
Honda is still making profits, but Nikkei Business concludes that it may be facing the same issues as Sony, another formerly innovative Japanese company, if it does not “rip up the unwritten rules”, and stop relying on past successes. Both Honda and Sony had become too focused on playing it safe and lost the ability to respond to customer needs. Honda is harshly judged because it was so innovative in the past. But it should not look to the past, says the Nikkei, but to the future, and not just to innovative products but innovative management.
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