Pursuit of Autonomy of Four Regional
Operations of Expanding Global Honda
While Japan Operations were achieving a remarkable success, Honda further pursued initiatives to achieve autonomy of four regions in the world, based on its management approach of “building products close to the customer.”
In the back of Kawamoto’s mind were bitter memories of Japan-U.S. trade frictions that had plagued Honda since shortly after he became the president. One after another, the Deputy Secretary of the U.S. Department of Commerce, the U.S. Ambassador to Japan, and the presidents of the Big Three automakers came to meet with Kawamoto, demanding the correction of Japan-U.S. trade friction.
The U.S. side insisted: “Japanese cars are inexpensive because Japanese automakers procure inexpensive parts while taking advantage of exclusive relationships with their keiretsu (interconnected group) suppliers. It is not acceptable for Japanese automakers to sell their cars in the U.S. as they are being produced unfairly based on unfair business practices.”
There was no way that Kawamoto could have been convinced by this argument. Honda had begun producing motorcycles and then automobiles locally in the U.S., including the local procurement of parts, ever since the time of the second president of the company, Kiyoshi Kawashima. In addition, Honda had adopted some U.S.-made parts in products produced in Japan. Finally, Honda did not even have an exclusive interconnected group system where it would purchase parts at unfairly low prices. In addition to building production factories in the U.S., Honda had been implementing a localization strategy to increase local content, conduct product R&D, and develop production technologies inside the U.S. amid rising trade frictions between the U.S. and Japan. Kawamoto took pride in the leadership from Honda in localization. However, despite his repeated attempts at explaining such facts, the U.S. side was also not convinced, and the arguments continued without ever being resolved.
The new model announcement and test drive event for the U.S. Accord series held in Cleveland, Ohio, U.S.A.(1997)
In 1994, Kawamoto announced plans to establish a four-region global operation structure, consisting of Japan, the Americas, Europe and Asia/Oceania regions, each region would pursue autonomous operation. The aim was to further increase local content and enable members of local Honda operations to think locally, build and sell products locally. With such an approach Honda strived to become a company that brings the joy to people and society of each region.
Kawamoto’s ultimate goal was to accelerate the globalization of Honda by realizing a substantial delegation of authority to each regional operation, which would become possible by transforming the company from a Japan-led centralized structure to a four-region global system by applying the track record and know-how of regional autonomy which Honda had gained in the U.S., where sales volume was larger than the Europe and Asia/Oceania regions. He knew that the true autonomy of regional operations was essential in order to understand the local market and customer needs, and to develop and offer products that would bring joy to local customers in a timely manner.
Based on his first-hand experience of being part of the fast and furious Honda during its founding period, Kawamoto placed emphasis on speed in the midst of this major paradigm shift. Under the leadership of Kawamoto, Honda made all of its business operations faster and more efficient through the TQM initiatives, developed and launched the Creative Mover series models in a short period of time, and pressed ahead with difficult challenges in Japan under the 800K Plan.
In global business expansion, Honda increased the speed of its decision-making by localizing operations in each region. Speed was and has been one of the key elements of the growth of Honda, and it is a management guideline that still holds true today, when the uncertainty about the future has further increased.
Making an Agonizing Decision to Withdraw from F1.
Passion for Motorsports Resulted in an Eventual Return to F1
Major changes were made to Honda motorsports activities as well. Shortly after joining Honda, Kawamoto worked together with Kume, who later became the third president of Honda, and successfully developed F2 engines in 1964. Kawamoto also was deeply involved in F1TM activities during the First Era of Honda participation in the Formula One World Championship (F1), which was concluded in 1968. Fifteen years later, Honda made a decision to start the Second Era, returning to F1 racing in 1983, and Kawamoto played a major role in this decision.
Nobuhiko Kawamoto participated in F2 not only as an engine designer but also as one of race mechanics (center).
The Brabham-Honda BT18 at the European F2 Championship Round 8, French GP, in 1966
Kawamoto had a strong passion for motorsports; however, on September 11, 1992, he made the formal announcement of the second Honda withdrawal from F1 racing. This announcement made headline news.
“The original significance of racing to Honda was gradually being lost,” said Kawamoto, explaining the reasons for the decision. “Honda had become so popular in F1, and our fans and customers always expected us to win. As a result, we stopped being technologically adventurous.”
Another reason Kawamoto explained was that Honda business in Europe, the homeland of F1 racing, was not making much progress despite the growing reputation of Honda as a perennial winning team. In short, continuing to invest huge amounts of money in F1 had not and would not generate more business for Honda. If the company’s business was doing great, there would have been no need to withdraw. However, Honda was undergoing a challenging time.
“The company as a whole was losing strength. The Japanese economic bubble had burst, and in light of the business environment surrounding Honda, I would say it was time to reassess our motorsports activities,” said Kawamoto, explaining it matter-of-factly as if he was trying to come to terms with his feelings of disappointment. It was an agonizing decision for Kawamoto, a true engineer and motorsports enthusiast at heart.
Kawamoto also talked about the significance of competing in F1: “Honda is not a company specialized in F1 racing. We take on challenges to compete at the pinnacle in our own way. It has been a fierce and tough challenge. Just like climbing up a vertical cliff, one small mistake can cause a fall. But achieving our goals in such severe circumstances is truly meaningful.”
He then called on the next generation of Honda associates with his expectation: “It would be ideal if someone comes up to me and expresses a desperate desire to compete in F1. Since Honda is a company driven by technologies and products, it will be extremely important for our long-term vision that Honda engineers, who create technologies and products, to build a tradition to maintain their racing spirit and to continue advancing themselves.”
Approximately six years later, it was proven that the racing spirit of Honda, which Kawamoto valued so deeply, continued to be alive, withstanding the test of time. On March 9, 1998, Honda announced that it had begun concrete discussions toward resuming its F1 racing activities. Young Honda engineers expressed their strong desire to compete in F1, which motivated the company to make the decision. The return to F1 was also a sign that Honda had restored its business and financial strength sufficient to compete.
Honda had overcome its first major management crisis since its founding and got back into a growth phase as a result of the pursuit of new initiatives such as TQM, the launch of the Creative Mover series, and the 800K Plan.
Nobuhiko Kawamoto in the cockpit of the McLaren Honda MP4/5
Making Revisions to the Company Principle and
Adding Deeper Explanations to the Honda Philosophy
In 1992, the year that Honda made its decision to conclude its Second Era of F1 participation, Kawamoto made minor revisions to the original Japanese wording of the Honda Company Principle and also added deeper explanation to the Honda Philosophy to be shared by all Honda operations around the world as a common corporate philosophy.
The original Company Principle written by Mr. Soichiro Honda appeared in the 23rd issue of the Honda company newsletter published in January 1956 and was formally translated into English in 1962 as follows:
“Maintaining an international viewpoint, we are dedicated to supplying products of the highest efficiency, yet at a reasonable price for worldwide customer satisfaction.”
Kawamoto revised the original Japanese wording of the Company Principle by incorporating the spirit of some wording used in the English version:
The English wording of “worldwide customer satisfaction” was adopted (replacing original Japanese wording of “responding to customer requests”) to reflect the commitment of Honda to be a truly “globalized” company.
Moreover, the English wording of “at a reasonable price” was also adopted (replacing original Japanese wording of “low prices”) to reflect the company’s intention to simultaneously realize both the “Joy of Buying” of the customers and the “Joy of Selling” of Honda and Honda dealers. Also, the “highest efficiency” was changed to “highest quality” in the Japanese version, which was later reflected to the English translation in 1998.
Kawamoto later said: “There was no need to make an any major changes to our Company Principle; however, I thought it was important for us to reaffirm and share the solid nature of the origin of Honda among everyone at Honda, so I made efforts to ensure discussions were carried out at each workplace.”
The Honda Philosophy is comprised of the Company Principle, the Fundamental Beliefs – Respect for the Individual and The Three Joys – and the Management Policies.
In the preface to the booklet titled “Honda Philosophy,” issued on January 1, 1992 (English translation was issued in July 1992) which was created to add deeper explanations to each element of the Honda Philosophy, Kawamoto stated:
“This Philosophy would be meaningless if it were to remain no more than words. Words are not important; what is important is for the intended meaning of the words to be fully understood and translated into action so that this philosophy takes root as the corporate culture in each country. It is Honda’s belief that accomplishing this will lead to growth in the future.”
Furthermore, at the end of his message, Kawamoto quoted the following words by the company founder, Mr. Soichiro Honda:
“Action without philosophy is a lethal weapon; philosophy without action is worthless.”
During the presidency of Kawamoto, Honda experienced a number of economic and societal upheavals including the bursting of Japan’s economic bubble, trade friction, the appreciation of the yen, the shrinking of the automobile market in Japan, and the end of the Cold War. What supported Honda and guided it to further growth during this unprecedented era of transformation was the strong leadership that ushered the company into the transformation by changing the mindset of each and every associate and pursuing reform in all areas with no sacred area, including the revision of the Company Principle.
Fundamental Beliefs
Respect for the Individual
Initiative: Initiative means not to be bound by preconceived ideas, but think creatively and act on your own initiative and judgment, while understanding that you must take responsibility for the results of those actions.
Equality: means to recognize and respect individual differences in one another and treat each other fairly. Our company is committed to this principle and to
creating equal opportunities for each individual. An individual’s race, sex, age,religion, national origin, educational background, and social or economic status have no bearing on the individual’s opportunities.
Trust: The relationship among associates at Honda should be based on mutual trust.
Trust is created by recognizing each other as individuals, helping out where others are deficient, accepting help where we are deficient, sharing our knowledge, and making a sincere effort to fulfill our responsibilities.
Company Principle
Maintaining a global viewpoint, we are dedicated to supplying products of the
highest quality yet at a reasonable price for worldwide customer satisfaction.
The Three Joys
The Joy of Buying: The joy of buying is achieved through providing products and services that exceed the needs and expectations of each customer.
The Joy of Selling: The joy of selling occurs when those who are engaged in selling and servicing Honda products develop relationships with a customer based on mutual trust. Through this relationship, Honda associates, dealers and distributors experience pride and joy in satisfying the customer and in representing Honda to the customer.
The Joy of Creating: The joy of creating occurs when Honda associates and suppliers
involved in the design, development, engineering and manufacturing of Honda products recognize a sense of joy in our customers and dealers. The joy of creating occurs when quality products exceed expectations and we experience pride in a job well done.
Management Policies
- ・Proceed always with ambition and youthfulness.
- ・Respect sound theory, develop fresh ideas and make the most effective use of time.
- ・Enjoy your work and encourage open communications.
- ・Strive constantly for a harmonious flow of work.
- ・Be ever mindful of the value of research and endeavor.
Believing in the Power of the Unique Work and People of
Honda: Starting Yoshino Presidency with the Celebration of
the 50th Anniversary
In 1986, the year Nobuhiko Kawamoto became the president of Honda R&D Co., Ltd., Honda began research and development of aircraft engines, fuel cell technology, and bipedal robots, which later led to the development of the HondaJet, fuel cell-electric vehicles and ASIMO humanoid robot, respectively. Ever since the founding, Honda has always been planting seeds of new technologies, which would eventually blossom and enable the company to offer joy to customers and society. Such technologies would be continuously refined and handed down from generation to generation, and Honda would continue to advance along with the times. To continue such advancement through difficult times, Kawamoto pushed ahead with reform, taking it upon himself to make revisions even to the Company Principle, which was established by Mr. Soichiro Honda, thus was considered untouchable.
In 1998, in its 50th anniversary year, Honda recorded its highest profits since the founding for both consolidated and non-consolidated results. In fact, the fiscal ordinary profit of Honda, which had declined to nearly 22.7 billion yen in 1993, increased eleven-fold to 259.8 billion yen in 1998. The 50th anniversary event was scheduled to be held at the Twin Ring Motegi racing circuit (currently known as Mobility Resort Motegi) which had only just opened the year before.
Having put Honda back on a trajectory of solid growth, Kawamoto decided to entrust Hiroyuki Yoshino, the Executive Vice President at the time, with the reins of the company at this timing.
Some years earlier, Kawamoto had clearly stated that he was willing to renounce the “Hondaism” if it was necessary to revive the company; however, the way he stepped down was the embodiment of the “Hondaism.” Mr. Soichiro Honda and Mr. Takeo Fujisawa had both retired shortly before the company’s 25th anniversary event, letting their successor play the lead role in the event.
At the General Meeting of Shareholders held in June 1998, Yoshino was officially appointed as the fifth president of Honda. With a college degree in aeronautical engineering, Hiroyuki Yoshino joined Honda in 1963, the same year as Kawamoto, being attracted to a Honda plan to develop light jets in the future.
The first job he was assigned to was the development of gas turbine engines for automobiles. Then he served various important positions, including the General Manager of Suzuka Factory and the President of Honda of America Mfg. in the U.S. After he returned to Japan, he was named Executive Vice President of Honda Motor in 1992 and pursued company-wide reform initiatives such as TQM, which included the PDCA process to achieve continuous improvement, while working closely with Kawamoto, the fourth president of Honda.
The 50th anniversary event, “Arigato Festa in Motegi” (1998)
In October 1998, the main event in the 50th anniversary celebration of Honda, the “Arigato Festa in Motegi,” was held with great fanfare under the leadership of the company’s new president, Hiroyuki Yoshino.
As Yoshino himself said, “I took on the role of president with understanding that my responsibility would be to inherit and continue implementing the major reform in progress, and then lay the groundwork after the reform,” he focused on further improving the company’s internal structure while inheriting the path of reform that he had worked on together with Kawamoto.
Furthermore, Yoshino described the image of the leader he envisioned to be: “Honda is a company that combines the strengths of all associates, so as long as we have our sights set on a direction we need to go, we can handle almost anything. I came to realize that believing in the power of the unique work and people of Honda would be the most important thing for anyone who would take on the role of president.”
In this year, on the occasion of the 50th anniversary, Honda made another revision to its Company Principle based on thorough discussions led mainly by Yoshino.
“Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality yet at a reasonable price for worldwide customer satisfaction.”
The “international viewpoint” was revised to “global viewpoint,” in order to better reflect Honda awareness of the importance of the view of a “finite earth” or the irreplaceable planet that needs to be protected globally.
As of 2023, in its 75th anniversary year, Honda continues to uphold the Company Principle updated in 1998.
Nobuhiko Kawamoto (left) and Hiroyuki Yoshino (right)
