Mark Faust: What We Can Learn From The Honda Way
Have you ever rented a Honda at an airport? No one has, and why do you think that is? Ironically, it’s for the same reason Honda is one of the world’s biggest soybean buyers and sellers.
Too few companies live out the definition of marketing I put forth in Growth or Bust: “Marketing is the management process of profitably identifying, anticipating and satisfying what the customer values. Seeing the business from the customer’s point of view. This focus on what the customer values must permeate all areas of the enterprise.”
One of the highest priority goals at American Honda Motor is to create the highest value vehicles at the lowest price while maintaining the highest resale value throughout a vehicle’s life and minimizing the total overall cost of ownership. Although you’ll hear most car companies prioritize profit and growth objectives, Honda’s customer-
focused goal is transformational to both the product and the team who builds it.
It’s unique how Honda translates this philosophy into innovation. The decision to not sell fleet cars is tied to the goal to maintain a higher lifetime resale value. We all know how some people treat cars from airports: “Hey, it’s a rental!” When the value of those cars plummets, so does the value of cars whose owners took great care of their versions.
Honda gives up a great deal of market share and profits to not go after those large-fleet customers, but it helps them to reach a more important goal—a lifetime relationship with families who buy Honda products over and over.
Soon after opening the Marysville, Ohio, plant where all Accords are built, leadership saw two reasons to get into the soybean business. One, to use the empty crates being sent back to Japan, and two, to invest in the local area. More than 250 growers are paid premiums of about a $1 per bushel for their soybeans in what has become a multibillion-dollar division for the carmaker.
Unlike businesses that use typical hierarchical structures, Honda holds true to a philosophy that all individuals in the organization deserve equal respect. Ideas are expected from every individual. The plant shuts down for an hour every month so every team can form one new idea to implement for the month. There is a great cost to do this, yet management never looks at the return on investment because increasing profits is not why the company does it.
Automation is eschewed at Honda, except when safety can be significantly improved. This is because of the belief that when you remove the individual, you remove the opportunity to innovate. Too much automation kills innovation—at least, that’s how Honda sees it.
The question for you and your team is how can you bring more value to your customer? How can you lower cost through more innovation, and how much more power can you give your employees to innovate for improving quality and lowering costs for you and your customers? Set the right goal of delivering the most value while respecting all of your teammates’ ideas, and your opportunities will abound.
