The Honda Effect

4 02 2010

This article by Richard T. Pascale gives a very clear example of how Honda has formed their strategy. The process that Honda had to go through to get where they are today could be compared to the learning school’s process. They are adaptive in their decisions, and are willing to be flexible to change their original ‘plans’ to that of a better one. The top executives learn from their mistakes, and continue to improve on both their products and processes as a company. However, Honda’s innovations and ideas did not all come from their executives, they encourage ideas from every worker in the company.

Honda has not always been the large, successful company that it is today. They experienced several disappointments in the beginning, such as major problems and malfunctions with the head gaskets and clutch springs on their motorcycles. The entire next month after this problem occurred was spent researching and developing new designs for these components. The error with these parts was that Honda did not account for the increase in mileage and speed that bikes are driven in the U.S. compared to Japan. However, learning from these mistakes and working to fix the problem quickly proved how Honda is willing to continually improve and not be set back as the result of disappointment.

Honda also “’redefined’ the U.S. motorcycle industry from the Harley Davidson stigma that motorcyclists were rowdy, wild, “Hells Angel’s” type people, and instead had the slogan, “You meet the nicest people on a Honda.” This re-positioning broadened the target market for Honda and helped to increase their market share.

Honda has been flexible in their process of strategy, allowing for innovation and change. Honda understands that the “Ability of an organization to move information and ideas from the bottom to the top and back again in continuous dialogue” (90) is important to its success.

"You meet the nicest people on a Honda"

“In sum,” Honda’s ““strategy” is defined as “all the things necessary for the successful functioning of organization as an adaptive mechanism” (90).

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