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September 4th, 2010 admin No comments

Honda Fly

Lessons from Japan - Honda's approach to developing managers

In 1978 my company was invited to create a management development programme for one of Honda’s overseas subsidiaries, so I set out to learn about the Honda culture. My job was to embed the core culture of Honda into a training and development programme that fitted into the local culture. I found it a fascinating learning experience.

I found I was working in a management structure totally different from anything I had previously experienced. The local Managing Director was an expatriate Japanese, presiding over a group of divisional managers who were all local staff. The divisions were essentially organized around product groups, a mirror image of the structure in Japan. Each division manager had a young Japanese assistant whose role was to provide the communication connection with Japan, and to facilitate access into the Japanese systems. These assistants were essentially high-flying management cadets on their first overseas assignments, and they had no executive roles.
The local Honda organization had a permanent queue of people who wanted to join Honda, and would take any job that became available. When they proved themselves capable and motivated to take on more responsibility, they would be promoted to a supervisor role.

At this point they had to make a life changing career choice. They needed to choose between a technical career and a management career.

Those who chose a technical career would embark on a lifetime pursuit of excellence in their chosen discipline. They would move between divisions to broaden their experience of Honda technologies before they chose their specialist field. They would be encouraged to pursue academic study and research in Honda’s development and production divisions. They would enjoy a similar status to that of their management counterparts, and exercise great influence over strategic decisions. The greatest accolade for a lifetime of contribution to Honda’s engineering excellence was likely to be the endowment of a personal professorial chair in a prestigious university to ensure them a comfortable retirement and the opportunity to guide the careers of the succeeding generations.

The choice of a management career led to a series of managerial appointments that would last for around 9 years. They could expect to move between divisions, and into functional areas of which they had no knowledge or skill. They could expect to move typically from marketing to accounts, then to retail management or distribution. Their job was to manage. There would be no promotion before they had learned to manage the whole company through this management apprenticeship.

They could not be successful in their management role without the active support of their staff, and depended on the technical skills and experience of the specialists. I believe that this interdependence led to a very different management style based on mutual respect rather than the command and control attitude that was so prevalent in those times. This was management as a set of disciplines; one that required a broad understanding of the inter-relationships between business functions. After 9 years of gaining broad experience, managers had an overview of the whole business, and could manage any function. The best of them were ready for the only promotion available, a divisional manager role.

For the whole nine years, all departmental managers enjoyed equal status and pay rates. Then they were considered ready to do a really important job, with the responsibility for leadership and direction at the highest level available in their own country. They had served a long apprenticeship.

As an outsider, I observed and reflected on the culture that this management system and structure generated. It was distinctively and uniquely Honda. Everyone I met in the company was in love with the product, and took enormous pride in the quality of everything they did. There was only one place to join the company, on the shop floor, and talent was rewarded quickly, but there were only three steps to the top. I have never seen an organization with less tension between divisions, departments and functions. There was no competition between functional silos for resources, because there were no silos. The goal appeared to be optimization rather than maximization. This culture created a breadth and depth of capability that enabled Honda to achieve great things.

Two examples.

In 1988 the whole global company celebrated the achievement of Honda USA when it delivered the first ever shipload of Honda Accord cars from an overseas plant to Japan. After years of striving Honda USA had matched the Japanese quality standard.

The personal rewards for talented staff were good too.
I worked with a marketing manager who had joined Honda just three years earlier. He had worked as a cleaner in the store as a university holiday job, and took his turn on the waiting list. He had progressed from storeman to manager in three years, and was soon to move on to manage the finance division. He knew nothing about accounting, but as he explained to me, the accounting specialists were outstanding. His job would be to help them do their jobs. He fully expected to be appointed to a divisional manager role in 4 or 5 years.
The Honda system was built on trust.

Honda treated trusted suppliers as partners, and judged them to by the way they trusted Honda. The story of how we won the management development contract shows how deep this goes.

At the time my business partner and I had created from scratch a successful boutique training consultancy. We were invited to a meeting with the Honda divisional management team, to discuss a training project. They indicated that we had strong competition. The meeting concluded with an invitation to prepare a presentation to the business that would demonstrate our understanding and approach to supplying what they needed.

I said that the research would take three months and require them to open up the company to us so we could understand their business. It would cost us several thousand dollars and was beyond our ability to fund it. I argued that we would be doing essential preliminary work, and asked that they advance the funds to us. We were met with a flat refusal. I suggested that we would do the work at our risk if they agreed to pay us a fixed fee for the research and programme design as soon as we were awarded the contract. We shook hands on the deal and started work.

The presentation was a roaring success; it was a celebration of Honda product excellence with cars, bikes, pumps and generators and loud music. We showed how we had become personally committed to the Honda way. They loved it. We presented our first invoice and they handed over a cheque.
A week later we were astounded to be asked how much we would discount our first year’s fee if they pre-paid us. All our working capital problems were resolved and we had acquired an obligation to do outstanding work in partnership with Honda.
This was the real meaning of trust in business. We had to trust ourselves to do great work, then trust them to make a good decision. Then they trusted us with hundreds of thousands of prepaid fees for a major project.

It is hardly surprising that, to this day, I have a huge admiration for the late Soichiro Honda, the founder of a great global company, with a unique culture.

About the Author

Michael started www.bizlearn.biz to bring really useful business ideas to the small business sector worldwide. Bizlearn is about how to do new things rather than about what to do.