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Amazing Business Story: Soichiro Honda

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The name Soichiro is not so common. Many people would frown, showing their ignorance, if the name is mentioned. But immediately Honda is called, a look of recognition crosses many people’s faces. The name Honda has become a brand, a well respected one, very much like Coca cola. But it was never always so. The story of Soichiro Honda is one of passion, love and determination for creativity.

Honda was born on November 17, 1906, in rural Iwata-gun, Japan. His father, Gihei Honda, was a blacksmith and a bicycle repair man. His mother, Mika Honda, was a weaver.

Honda had little interest for formal education; he had a great affinity for machines and loved anything that involves him working with his hands. The fundamentals about machines that little Honda knew was taught to him by his father.

At 15, when he was about to leave elementary school, Honda saw an advert in a magazine for an automobile servicing company. The company, Art Shokai, was one of the most popular and successful automobile servicing company in the country. Without thinking, Honda left for Tokyo to become an apprentice at Art Shokai. But things didn’t go so smoothly, for the first few years Yuzo Sakakibara, the owner of Art Shokai, did not allow Honda anywhere near the cars, his tasks were restricted to menial jobs at the workshop which included sweeping and preparing meals.

This situation depressed Honda greatly, but he was determined not to be deterred. Rather than give up, he worked harder at the menial tasks he was given, doing it with so much vigor and energy. Soon, he was noticed, and gradually he was been trusted with more important jobs and allowed to do real repair work.

Honda put in great effort into his apprenticeship program, soaking up as much information as he could and learning everything he had the opportunity to learn. After six years, in 1928, Honda left Tokyo to return home to set up a branch of Art Shokai auto repair shop.

In a few years, the number of staff of his Hamamatsu branch had grown to 30. Honda’s wife, Sachi, a former schoolteacher, was the bookkeeper as well as the cook for the team.

In 1936, Honda became dissatisfied with repair work and considered switching to manufacturing. He was strongly opposed by his investors, who thought it was a stupid choice considering the fact that he was making good money at the repair shop.

But once again, Honda was not deterred. He went ahead and set up another company, Tokai Seiki, and put an old acquaintance as president. During the day he worked at the repair shop but at night he manufactured piston rings at Tokai Seiki. He was practically sleeping at the factory.

Challenges once again presented themselves; Honda could not seem to understand how to make perfect piston rings. Majority of the rings he produced did not pass the quality test and were rejected by potential buyers, particularly Toyota. Hence, Honda enrolled as a part time student at Hamamatsu Industrial Institute so as to improve his understanding of Metallurgy. He spent nearly two years learning the intricate art of Metallurgy.

Soon he began producing quality piston rings. He eventually left Art Shokai in the hands of his workers to concentrate on production. At the height of the company’s success, Tokai Seiki employed more than 2000 people.

In 1938, Japan rushed into the Second World War. They lost and Japan was badly destroyed. During the severe air raids, Honda’s factories were destroyed. At the end of the war Honda sold the salvageable remains of his factory to Toyota and went back to repairing cars.

Due to the high cost of gas he had to use the train every day to work. The trains were usually very crowded and uncomfortable. He could not use his bicycle because it would be too slow. This predicament acted as catalyst for the conception of a generation-changing idea. Honda conceived that he could combine the bicycle structure with a car’s engine to create a low cost mini motorcycle. And he did. Honda’s aim was to create a reliable and powerful motorcycle that could get more mileage with lesser gasoline.

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Honda’s creation got the attention of Takeo Fujisawa, a local businessman, and together, in 1948, they founded the Honda Motor Company. The relationship between Honda and Fujisawa could be likened to that between Steve Jobs and Steve Wozniack. While Honda focused on the engineering aspect of the business, tapping the wealth of experience he had accumulated over the years, Fujisawa handled the financial angle of their business, and saw to it that the company expanded into new regions. They complemented each other perfectly.

The first product of the duo was the 98cc two-stroke motorcycle named ‘Dream D’. They were confronted by huge financial challenges but the duo were big believers in what they were doing, and they were big gamblers, too. Many times they sailed precariously close to bankruptcy. Honda improved the quality of his bikes and changed marketing and manufacturing methods.

The Honda Cub was the first international success for the company. Honda strategy’s was; recognize a need, create a unique way to satisfy it, incorporate unusual performance, quality and reliability, then build from an expanding reputation into yet other areas. It was called the Honda way.

After the astounding success of the Cub, Honda sought to expand into other countries. He opened his first dealership in Los Angeles in 1959 with six employees. By 1963, Honda was the top selling brand of motorcycle in the United States. In 1961, the company produced 100000 motorcycles in a month, and in 1968, Honda sold its millionth bike.

In the mid 1960s Honda joined Toyota and Nissan in the league of automobile manufacturing despite countless opposition by the Ministry of Trade and Industry (MITI). As a child, Honda had been captivated by the first car that came to his village. His writes in his biography “Forgetting about everything in the world, I was running after the car… I was deeply moved… I think it was then, although I was very young, I had the idea that someday I will construct a car myself” The first car he produced was a low-priced small sports car, the S500, which was very much different from those produced by the other companies. At inception Honda produced only 3000 cars yearly, which was half of what Toyota was producing weekly.

In 1972, Honda introduced the Civic to the market; it was a very unique car and got huge sales. It was remarkably efficient in gasoline consumption and had a catalytic converter, which helped reduce the level of pollution. The popularity of the Civic rose during the 1970s and 1980s, and Honda sold 375,000 cars in the American market alone.

The Honda Motor Company kept growing year after year with the introduction of newer brands that sold even more than their predecessors. Currently, people in over 140 countries buy Honda cars, motorcycles, boats motors and mini tractors.

Throughout his years in the company Honda never admitted his relatives, he believed that “no matter how outstanding could be the company’s founder, there is no guarantee that his son would be capable of the same. The company’s management should be given to a person who has the distinctive qualities of a leader”.

Honda resigned from the company in 1973, and died of liver failure on August 5, 1991. He had three children. At the end of his life he had 470 inventions and 150 patents; he also received the highest honor in Japan, the “Japan Blue Ribbon. The Honda Motor Company has annual revenue of over $30 billion.

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LESSONS FROM SOICHIRO HONDA

Boldness, Courage, Determination:

The first lesson we can learn from Honda is that of boldness, courage and unflinching determination; and the best person to explain it is Honda himself, “Many people dream of success. I believe that success can be achieved only through repeated failure and self-analysis. Success is only one percent of your work, and the rest-bold overcoming of obstacles. If you are not afraid of them, success will come to you itself.”

The number of times Honda confronted challenges and failed during the building of his company cannot be fully elaborated in any write up; repeatedly he fell, and repeatedly he rose, like an adamant boxer who has refused to be knocked down.

Firm but fair leadership:

In the broad classification of management there are four styles of leadership; Autocratic, Democratic, Laissez-faire and Task-oriented/people-oriented leadership. Some bosses are autocratic, thunderous, their decisions are final, they are gods and they believe they know it all. Some are Laissez-faire, they are too gentle and too lenient, they assume the best method of leadership is camaraderie with their workers.

The disadvantage of the autocratic way is that it breeds contempt and hate. If a situation arises and the survival of your company is in the hands of your staff they would rather watch it fail than offer a needed hand. For the Laissez-faire, everyone does what he wants anytime he wants. And by nature, people will take advantage of such leniency and in the end ruin your company.

Honda was nicknamed Mr. Thunder, for his occasional emotional outburst which sometimes included throwing of tools. He was feared for his wrath, but yet, he was fair, and loved. He included his workers in the generation and implementation of new ideas and let them keep the money they made with their new inventions.

The best form of leadership is one that successfully creates a balance between firmness and fairness. Be strict about the accomplishment of company’s objectives, particularly the ones that have pivotal impact on your company’s success. But be fair in the allocation of tasks to your workers, rate their strength before you give them tasks and give them a reasonable time frame to achieve it. Let them in on your plans for the company. You are not God, you don’t know it all, encourage them to have their say about the company, and try to effect some of their contributions that you may find wise.

Your child is not you:

I once worked in a company where my boss always boasted that his son would soon take over the company and revolutionize the entire operation. This is one mistake most CEOs and company founders make, passing their companies to their wards and thinking their lads would make something better of it. They forget that business acumen is not genetic. Your son is not you.

Honda and Takeo Fujisawa recognized this fact and made a pact never to force their children into the company. Promotions and remunerations in Honda Motor Company were done on the basis of achievements, not age or nepotism.

The fact that Honda did not plan to transfer the ownership of the company to an heir played an important role in the company receiving long term bank loans; the investors were confident that the company would be transferred to highly skilled professionals and not an unskilled family member.

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