Driving through the spin on Honda’s big success

1612

Honda’s triumphant entry into the US motorcycle market is one of the most famous and widely debated cases in business strategy. But, as John illustrates this week, most academics and consultants tend to get lost in personal preconceptions in the search for an ultimate truth.

Honda and the Supercub is probably the best-known and most debated case in business strategy. In the 1950s, motor cycles were sold through specialist outlets welcoming only testosterone-loaded young men. Bikes were powerful and noisy and the riders’ leather clothes smelt of leaking oil. Honda entered the US market in 1959 and changed everything.

Five years later the company made one in two bikes sold in the US. Their best selling machine was the 50cc Super Cub. The company’s advertising slogan was “you meet the nicest people on a Honda”.

The story benefits from deconstruction. One school of explanation derives from the original Harvard Business School case study. That case is based on a 1975 report by the Boston Consulting Group for the British government that described these events as the archetype of an orchestrated attack on western markets by Japanese manufacturers of consumer goods. Having established large economies of scale in the domestic market, Honda was able to exploit its cost advantage globally.

A quite different history was given by Richard Pascale, who went to Tokyo to interview the elderly Japanese who had managed Honda’s first steps in the US. These executives explained that Honda had never imagined that small bikes, popular in Japan, would find a market in the wide open spaces of the US. They had focused on large machines, planning to compete with US manufacturers. Mr Honda, they said, was especially confident of success with these products because the shape of the handlebars looked like the eyebrows of Buddha.

But the eyebrows of Buddha were not appealing in the world of Marlon Brando and James Dean. The Japanese hawked their wares around the western US, to dealers “who treated us discourteously and gave the impression of being motorcycle enthusiasts who, secondarily, were in business”. The few machines they sold, ridden more aggressively than was possible in Japan, leaked even more oil than their US counterparts.

Dispirited and short of foreign currency, the Honda executives imported some Super Cubs to ease their own progress around the asphalt jungle of Los Angeles. Passers by expressed interest, and eventually a Sears buyer approached them. And the “nicest people” slogan? That was invented by a University of California undergraduate on summer assignment.

Only the naive will believe either account.

Successful business strategy is a mixture of luck and judgment, opportunism and design, and even with hindsight the relative contributions of each cannot be disentangled. Mr Honda was an irascible genius who made inspired, intuitive decisions – with assistance from the meticulous market analysis of his colleagues and the intense discipline of Honda’s production line operations.

It is a mistake to believe the ultimate truth about Honda can be established through diligent research and debate. The Harvard account, although paranoid, is right to emphasise Honda’s operational capabilities. Mr Pascale correctly stresses the human factors but his interviewees must have laughed as he wrote down the story of the eyebrows of Buddha.

Andrew Mair’s survey illustrates how, as Jacques Derrida would have anticipated, every academic and consultant – including me – interpreted the Honda story in the light of his own preconceptions.

The Boston Consulting Group naturally saw the experience curve at work and later, when peddling a different panacea, realised it was an example of time-based competition.

Gary Hamel and C.K. Prahalad perceived the development of Honda’s “core competence” in engine manufacture. Henry Mintzberg seized on Mr Pascale’s account as an instance of emergent strategy. But there is no true story and no point in debating what it might be.

The lesson of Honda is that a business with a distinctive capability that develops innovative products to exploit that capability and recognises the appropriate distribution channels for such innovations can take the world by storm. And that lesson is valid whether Honda’s achievement was the result of careful planning or serendipity.

Andrew Mair, ‘Learning from Honda’, Journal of Management Studies, 1999

Print Friendly, PDF & Email