Reporting by Norihiko Shirouzu via autoblog.com Article
How Honda lost its mojo — and is on a mission to get it back
“In interviews, more than 20 current and former Honda executives and engineers at the company’s facilities in Japan, China and the United States recounted the missteps that they say contributed to Honda’s decline as an innovator. They also revealed new details of the firm’s efforts to rediscover its creative spark.
They said Honda had become trapped by Japan’s ‘monozukuri’ (literally, ‘making things’) approach to manufacturing. This culture of incremental improvement and production-line efficiency, called ‘kaizen,’ served the company well in the decades after World War II, they said, but today’s challenges — electrification, computerization, self-driving cars — demand a more nimble and flexible approach.
Most important, they said, over the past two decades company executives in Tokyo were given too much control over research and development. In their view, this led to shareholder value being prioritized over innovation. There was a reluctance to draw on talent from outside Japan. In its quest to deliver for shareholders, Honda sought to maximize volume and profit and match the product range of its main Japanese rival, Toyota.
‘The upshot was, as we obsessed about Toyota and beating it in the marketplace, we started to look like Toyota. We started to forget why we existed as a company to begin with,’ Honda R&D President and CEO Yoshiyuki Matsumoto told Reuters.
Honda’s revenues have grown strongly since 2000, and its operating margin stood at 6.0 percent in the financial year ended March 31, 2017, compared with 7.2 percent at Toyota. But Honda’s cars have slipped down quality rankings, from seventh in market research firm J.D. Power’s initial quality study in 2000 to 20th in 2017. …
Japan’s manufacturing sector, especially the auto industry, prospered in the post-war era by harnessing monozukuri principles of steady design improvement and lean manufacturing that encapsulate the Japanese reverence for craftsmanship in manufacturing. The aim was to produce vehicles with one-third of the defects of other mass-produced cars using half the factory space, half the capital, and half the engineering time. … Today the industry is facing new challenges, however. Artificial intelligence and self-driving cars are forcing carmakers to rethink the way they design and produce vehicles.”