Honda’s new CEO outlines roadmap for the future

It is just about four months since Takahiro Hachigo took charge as President & Chief Executive Officer of Honda Motor Company from Takanobu Ito.

The new chief’s first interaction with the local media took place in July when he indicated that the company would focus on building its brand. This was in the aftermath of the airbags recall which took away quite a bit of Honda’s sheen. In the process, it prompted a new strategy reorientation in optimising existing capacity rather than mindlessly chasing volumes.

The latest annual report of Honda throws some light on Hachigo’s thinking for the road ahead. In his message to shareholders, he says he will promote two themes for creating the new Honda of the future. The first pertains to further advancement of the six-region global operation structure. The other is the “continuous development of challenging products” which is unique to Honda.

It is here that Hachigo believes that ‘Team Honda’ will be the operating credo moving forward. “Honda’s strength is demonstrated when associates ‘at the spot’ share high goals and work as ‘one team’ with all the members acting with strong aspirations,” he says.

As Hachigo recalls, he had amassed a broad range of experiences “at the spot” in North America, Japan, Europe and China through development of products like the Odyssey. It was during these stints that the CEO learnt how important it was for each associate to share a common goal and work together as “one team”. To ensure that such a team produces good results, Hachigo says it is important to create opportunities for each member to “voice his or her opinions” and to have enough time for in-depth discussions. “In short, it is essential to create a bottom-up environment where the team can take action on its own initiative based on new discoveries or ideas,” he adds. The idea is to foster an environment where associates can work enthusiastically to create ‘Team Honda’.

As for the six-region operation structure worldwide, Honda operates each of these as an autonomous organisation with production capacity and marketing/purchasing support in place. Yet, as Hachigo points out, there are some regions where sales volumes have not grown according to expectations even while investments were based on the original plans.

“As a result, our overall global production capacity has expanded in excess of demand and we recognise that it started to have a negative impact on our cost structure,” he explains. Hence, the time has now come to further expand the scope of this six-region structure.

In the new model, while maintaining a global vantage point on the status of regional production expansion, Honda will leverage its flexible production system to promote complementary relationships between regions. This will require enhancement of operational functions at its global headquarters while launching initiatives to promote this mutual inter-regional relationship.

The process has already kicked off in right earnest with the company supplying a portion of the North American Fit and European Jazz models from Japan. The next generation Civic 5-door, which will be made in Europe, will be supplied to other regions while the CR-V made in Canada will be retailed in Europe too.

“Advancing the six-region global operation structure means establishing a flexible production and supply system that features a mutually complementary function,” says Hachigo. Honda created an automobile assembly area within the area of its existing motorcycle plant in Nigeria.

Production of the Accord began in this plant a couple of months ago through the SKD (semi-knocked down) route where parts came in from Thailand. While Hachigo concedes 1,000 units annually is a small step, he adds that the company will continue “moving forward steadily” with customers in Africa. “I firmly believe that enabling our six-region structure to function as a team will be the key to future advancement,” he says.

As for “challenging products”, it is the CEO’s view that these are typically those that feature unprecedented technologies and provide customers with “joy and inspiration”. These can only become a reality when the “team works as one and thinks through each issue comprehensively”.

Testimony to this can be seen in the S660 launched in April which, according to Hachigo, is the embodiment of such a team effort. Interestingly, the team was newly formed after a young associate proposed the ideal sports car he wanted to build.

Going forward, Honda will soon begin deliveries of the HF120 jet engine and the HondaJet after pursuing the dream for nearly three decades. “These are good examples of where team members thoroughly conceived a plan and worked as one towards a common goal while pursuing unprecedented technologies,” declares Hachigo.

In automobile operations, the all-new global Civic kicks off its debut in North America. Built on a new platform and equipped with a new downsized turbo engine, Honda will expand application of these new technologies to other models. The CR-V and Accord will also see full model changes to enhance their appeal through new technologies and innovative designs.

As for motorcycles, Hachigo says the company will introduce the CRF1000L, a dual purpose model, to European markets by the end of this calendar. This bike will then head out to Japan and North America.

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