Two subjects that I’m passionate about are excellence in business and excellence in life. Interestingly the more I learn about business and the more case studies I read, the more I see an intersection. I believe there’s a life lesson to be learnt from each business success or failure story. Today, let’s learn from Honda!
Case 1: The beginning of Honda in the USA
It was the 1950s, Soichiro Honda decided it was time to explore the US market, so he sent his trusted ally, Kihachiro Kawashima to make Honda great by competing against established motorcycle manufacturers such as Harley Davidson. After all, the Americans rode long distances and the fuel-saving capabilities of his motorbike would be a welcome bonus.
Well, not so! At the time, motorbike riders were seen as outsiders or what many of us will refer to as “bad boys” thanks to Hollywood’s portrayal on the screens and they liked their brand names as much as the benefits they offered. Besides, Honda had under estimated the effect of long distances on its new invention and there were several reports of engine failures.
There came the dilemma – with losses piling up and no sign of a turnaround, should Honda have cut its losses and folded up its US operations? Should it have persisted with its initial plan and keep developing its big bikes until they were accepted? The Honda team continued in their development work and ran errands around town with the lightweight “50cc Super Cubs”. It was great for intercity commute – inexpensive to maintain and a great way to avoid the busy traffic. It was so good that it caught the attention of locals who wanted to purchase them.
Before long, Sears, one of the leading US retailers came along. It offered Honda the opportunity to supply them large quantities of the super cub and of course Kawashima refused. He was adamant on pursuing the initial goal of selling the big bikes and taking the market share off companies such as Harley Davidsons and the likes. Eventually, when Honda realised its purpose was not just big bikes, but wealth creation, it yielded to Sears demands to sell these Super Cubs in their sports section and open motorbikes to a new market. The offer worked… Sears achieved its aim and Honda came out of the red. By 1959, Honda went from no presence to 63% market dominance. Today Honda is not only successful with small motorbikes, it sells high capacity too. More interestingly, it managed to change the perception of bike riders with its campaign slogan “you meet the nicest people on a Honda”
Honda’s success came as a result of their flexibility with the initial strategy and an understanding of their underlining purpose. I get it because I have been in this situation many times and you probably have been too – goals don’t line up, and you end up frustrated with the outcome of your decisions and a step you made to advance in reality translates to a more disastrous position than the point from which you started. Can I encourage you to ask this question: “What was the end goal in the first place?” For Honda, it was wealth creation through expansion to a new market. No, it wasn’t to sell the big bikes, it was to gain market share and make money. It was only by deferring back to this starting point instead of insisting on the latter that success came.
In conclusion, I want to remind you to be true to your core purpose and be flexible with strategy. Remember, strategy can change as long as it delivers on the underlining purpose.