RAD-led Minivan Development Leads to Significant Results
In the late 1980s, the SED development system was beginning to show results, as production and sales of Honda automobiles steadily increased and localization in each region progressed. However, the environment surrounding the automotive industry became more complex, such as diversification of people’s values and global environmental issues, in addition to exchange rate fluctuations, trade friction, and intensifying competition. A comprehensive SED strategy was needed, based on an accurate analysis of the latest information on needs, and to gauge the future from a global perspective based on this analysis. SED needed to become even more integrated, speedy, and powerful.
In 1989, the automobile promotion team, which had been organized across SED, was strengthened and made responsible for formulating and executing strategies for the entire automobile business, and the Representatives of Automotive Development (RAD), which oversees commercialization, and the Honda Automotive Strategy Team (HAST), a strategic advisory body, were established. This was expected to facilitate quick linkage and decision-making among SED divisions.
Soon after, in the 1990s, the bubble economy burst and the automobile market shrank dramatically. At the same time, the popularity of leisure-oriented vehicles such as recreational vehicles (RVs) and one-box cars increased. These vehicles used truck-based or cab-over*3 platforms. Honda, however, did not have such a platform or production line for anything other than k-cars. Honda then developed the front wheel-drive Odyssey, based on the concept of a “creative mover,” that was designed from the customer’s perspective, comfortable and easy to handle for multiple passengers, and could be manufactured at existing plants, while taking advantage of the sedan-making technology that Honda had been cultivating over the years. The Odyssey became a huge hit and ignited the minivan boom, the result of integrated development through SED collaboration.
The effectiveness of the RAD-led SED system was demonstrated in the development of the Step Wgn, which was launched in 1996. The development was carried out under a team structure that combined SED into a one-pack project room, with RAD taking the lead over all SED functions, taking an integrated view of the product, and implementing a strategy of collaborating with each department from development to production and sales. The Step Wgn was a hit with many families, especially those of child-rearing age, and established the utility minivan category.
- Car structure where the driver’s seat is positioned above the engine.
The Step Wgn was developed through the RAD-led SED system.
A 1/1 scale model was produced and verified from the sketch stage.
Regional Expansion Led to SED Independence and
New Problems
As the economic environment and people’s needs changed dramatically in each region of the world, Honda aimed to strengthen its corporate structure. In 1992, it introduced an automobile four-region headquarters system to strengthen locally based market-focused development in the Americas, Europe, Asia and Oceania, and Japan. In 1994, Honda adopted a matrix management system consisting of regional operations, business operations, and functional operations with emphasis on operations at the regional headquarters to ensure market-oriented development.
City, developed in Thailand as an Asia-exclusive model under the
region-independent SED system.
Based on the idea that vehicles demanded by Asian customers should be manufactured in Asia, Honda launched the City, an Asia-exclusive model, in 1996 through the newly independent Asian SED, led by Thailand. From a global perspective, Honda developed products based on the independence of each region, including the launch of region-specific Accord models that reflected the needs of each of the four regions. This management system evolved into a six-region development system with the addition of the Regional Operations(South America) in 2000 and the Regional Operations(China) in 2003, in response to the expansion of global demand, and further promoted business operations tailored to the market needs of each region.
This tailored approach, however, had created new challenges. The number of region-specific models better suited to local lifestyles increased, and the number of derivatives of global models based on local needs also increased. This required an increase of development man-hours and speed that exceeded was beyond Honda’s capacity, resulting in a decline in business efficiency. Furthermore, by establishing development and production systems in each of the six regions, each region became partially optimized, and cooperation among the regions began to fade.
SKI Project Launched with Development of
N-BOX at Suzuka Satellite
Once the 2010s arrived, the motorcycle business incorporated data-driven decision-making of specifications and performance into its development process, and as an initiative for mass-production preparation along with the production division, established the Motorcycle R&D Center Kumamoto (HGA-K) within the Kumamoto Factory in October, 2010. In April the following year, the Kumamoto Factory Purchasing Department was established. This marked the beginning of DEB (Development, Engineering, and Buying) collaboration.
At the time, the automobile business was aiming for a revival in the stagnant Japanese market and had begun development of the N-BOX, a k-car based on an innovative platform that met the needs of customers.
Then, on March 11, 2011, the Great East Japan Earthquake struck. The Automobile R&D Tochigi R&D Center (HGT), the center of Honda’s automobile research and development, was severely damaged by the disaster, and satellite offices were temporarily set up to transfer development functions to three of Honda’s sites in Japan. HGT’s N-BOX development team was moved to the Suzuka Satellite Office, which was established within the Suzuka Factory.
Unlike the large organization at Tochigi, which was divided by design department, the development team faced the challenge of how to proceed with development efficiently with the small number of associates in the satellite organization. They decided to gradually share information from each department. The team uploaded to a database everything including meeting minutes, creating an environment in which all members could share information. Since factory associates were also nearby, the people involved in development and production could gather immediately to make quick decisions, and work proceeded quickly. As a result, the N-BOX was developed in a very short period, and was a big hit immediately after its launch in December 2011.
In April 2012, the Automobile R&D Suzuka Branch (HGT-S) was formally established within the Suzuka Factory as one of HGT’s organizations, and the k-car chassis development*4 function, production, and purchasing functions were integrated (on one floor) to create the “K-QCDD Deployment” system to promote the entire process from the planning stage to mass production.
This system, known as the “SKI (Suzuka K-Innovation) Project,” aimed to develop a system for speedy product development and production of k-cars through the co-creation of QCD (Quality, Cost, and Procurement) and D (Development) in the production area. The SKI project was introduced in stages for the N-ONE, N-WGN, and N-BOX SLASH, which followed the N-BOX, and was highly effective in increasing development efficiency throughout the series. It shortened the schedule compared to conventional development and contributed to a reduction in development costs.
- Development of chassis excluding platform and power plant
K-QCDD associates at the Suzuka Factory
In the development of the N-BOX, HGT development associates moved to a satellite office
in the Suzuka Factory, establishing an integrated development and production system.
Major Organizational Reforms to Revamp SED System
In the motorcycle business, the Motorcycle R&D Center, in charge of development, and the motorcycle development functions of Honda Engineering (EG), responsible for production technology, were moved to Motorcycle Operations, while the Operations’ Kumamoto Factory, and new motorcycle development within production planning and purchasing planning were merged into the newly established Monozukuri Center.
Similarly, with the automobile business, the company-wide structure was reformed to further enhance SEDB collaboration. First, for Honda R&D’s organizational management, the Automobile Center was established in April 2019 to pursue optimal operations to strengthen both research and development functions, aiming to achieve highly competitive product and technology development capabilities with the highest efficiency. While maintaining the existing structure based on products and businesses, it was a structure that allowed accelerated efforts to develop advanced technologies. A Monozukuri Center, responsible for realizing competitive products and cost reductions based on integrated planning in the development of new models, was also established in Automobile Operations. The new structure aims to improve development capabilities and achieve stable production through integrated operations from planning to development and mass production.
In addition, the “Honda Architecture” was introduced to improve development efficiency and parts sharing for mass-produced vehicles. The basic framework that makes up the car is divided into three areas: the engine compartment, cabin, and rear area, and models share major specifications, structures, and parts to reduce development costs. The production line also reduced the amount of jig reconfiguration work required for each change in parts and equipment, enabling speedy and flexible production complementation between regions.
This new development flow was phased in for the Civic (launched in 2021) and Accord (launched in the U.S. in 2023), which were under development at the time.
Accord (U.S. model)
SED Development System Continues to Evolve with the Times
But A00, its Basis, Remains Unchanged
Honda’s SED development system has been in operation for half a century, and is still evolving. What kind of development system will Honda adopt in the coming era of major changes in the global automotive industry, which is said to be a once-in-a-century period of transformation?
Hisao Takahashi, Honda Senior Managing Officer for Automobile Operations Monozukuri Center (as of March 2023), had the following to say:
“The SED development system is a mechanism whereby the sales, production, and development divisions thoroughly discuss and develop products with the customer first in mind. Rather than leaving product specifications to D-development, we bring together the knowledge of S-sales and E-engineering to determine specifications. As a result, the unchanging essence of the system is that all associates involved are responsible for the product, and its form has evolved over time.
“Today, the environment surrounding us is changing dramatically. We are faced with a mountain of major challenges, including addressing social issues such as global warming, creating value from electrified products that will expand in tandem with this, and establishing business feasibility that reflects these efforts. However, without resolving these issues, there is no future for Honda.
“To this end, we must continue to discuss what is ‘A00,’ the value for customers transcending divisions, set clear objectives and difficult goals, and take on challenges with free thinking, unrestrained by existing rules and systems. I believe that our thoughts and actions will shape the new SED development system.”
The term “A00” was created during the development of the first generation Civic in the early 1970s. This Honda term was used to set objectives and goals in product development, and one day became the source of all Honda’s activities, as it came to be used in all Honda projects.
In the words of Takanobu Ito, Honda’s seventh president in his address to all Honda associates:
“Whenever various businesses and projects are launched at Honda, the first question asked is, ‘What is A00?’ A00 is a term that expresses the ultimate objective, and essence, that should be shared by everyone on the team. It is not the requirements to achieve lightweight car, or low fuel consumption and high output, or to sell a million cars a year. ‘A00’ goes beyond individual businesses and relates to Honda's philosophy itself, which is the foundation of the company.
“For Honda, the completion of technology and products is merely a process, and the real goal is for customers to use the products and for their lifestyles and the world to change for the better as a result. In other words, it is not the completion of ‘products,’ but the fulfillment of ideals, dreams, and social justice. ... The reason why ‘A00’ has spread so widely is because there is something in Honda’s original philosophy that is compatible with it. In this light, the idea of expanding the purpose of work from manufacturing and sales to the happiness of customers and society overlaps perfectly with the ‘Three Joys’ that the founder, Soichiro Honda, set as his corporate philosophy. When customers are happy with their purchases, sales and marketing personnel experience the joy of selling, and the development and production departments experience the joy of creating. This is the true ‘A00’ of Honda.
“The times have changed so much since the company was founded, when Soichiro developed an auxiliary engine for bicycles to make people’s lives more convenient, that it may be difficult to talk about dreams and ideals on the same footing as back then. That is why we are now required to think desperately about what we can do for our customers and the world. Now is the time for each and every one of us to rethink ‘A00,’ what we should be and what Honda should do.”
