Honda is now facing significant changes in its business environment. Customer values, technologies, and the competitive environment are all changing at unprecedented speeds. In response to this challenging reality, Honda itself must also change, but how do we change our corporate structures and work processes to transform Honda? Chief Executive Officer Toshihiro Mibe, Culture Transformation Officer Noriya Kaihara, and Chief Transformation Officer Mahito Shikama discussed what needs to be done to transform Honda.
Updating Our Work Processes to Keep Delivering Value to Customers
Mibe: What Honda now faces is not merely a temporary problem with its financial results. Rather, our business environment itself is undergoing significant changes. Due to the policies and regulations of different countries, geopolitical risk, and changes in the competitive environment, there are an increasing number of situations in which business will not move forward based solely on conventional premises. The boundaries between the automotive industry and the IT industry are also diminishing, and efforts are accelerating to increase product value using software and data. Amid this trend, to keep customers choosing Honda, we need to revise our existing work processes and decision-making style to match the current business environment. To continue delivering even better products and services to our customers even more quickly, we will fundamentally review how we work, and as a result, will achieve business growth and enhance corporate value. I believe that it’s essential that we get this order correct in implementing Honda’s corporate transformation.
Shikama: I feel strongly about the importance of speed. How quickly can we deliver the value required by our customers in a tangible form? To answer this question, we must change how we conduct development and operations, use data, and collaborate across departments. Honda has invested time in building extremely careful processes in support of both quality and reliability. This is an invaluable strength of our company. However, amid a dramatically changing competitive environment, those processes alone are insufficient as our guiding premises. An important role of our corporate transformation is to build a system that can capture changes in our customers and society, quickly make necessary decisions, and translate those decisions into front-line execution.
Mahito Shikama Director, Executive Officer Chief Transformation Officer
Changing What Needs to Change to Protect Honda’s Uniqueness
Mibe: There are certain things that Honda should never change. These include the Honda Philosophy, deciding to take on new challenges based on people’s dreams, expanding the possibilities for people through technology and ideas, and continuing to provide the joy and freedom of mobility in a sustainable format. While these things don’t need to be changed, the method through which we continue to deliver to our customers the joy and freedom of mobility must change to adapt to the times. Our previous successes and established rules represent valuable assets for Honda. However, if they prevent us from changing and achieving the next stage of growth, they must be revisited. To create products and services that exceed our customers’ expectations, we must rethink things, with value as the starting point, and without being limited by existing assumptions.
Kaihara: We need to be careful with the phrase “Honda’s uniqueness.” If we see our past methods and rules themselves as Honda’s uniqueness, that can become a reason not to change what needs changing. True Honda uniqueness is an approach that looks at our customers and works to deliver even better value to them by holding real discussions, tackling challenges, and seeing things through to completion with our colleagues. To do so, it’s essential that we voice objections and speak up when something doesn’t feel right. Rather than saying, “This is always how we’ve done things,” we need to reframe the question as, “Is this really meaningful for our current customers?” Only by having these types of discussions will we be able to identify what should be changed and what should be preserved.
Noriya Kaihara Director, Executive Vice President and Representative Executive Officer Culture Transformation Officer
Corporate Transformation (CX) Connects Top Management with the Front Lines and Changes the Systems That Deliver Value
Shikama: Honda’s corporate transformation is an initiative to reconnect our top management, front lines, talent, data, and operations from the starting point of what kind of value we deliver to our customers. In our corporate transformation initiative, we are clarifying our targets and roadmap and linking them to the initiatives of each of our Operations and projects. Various transformation projects are already underway on the front lines, and we are visualizing the progress and results of each project as well as providing the necessary support. Additionally, there are certain issues that cannot be resolved solely at the individual operational level. These include issues that span different departments, Honda’s data infrastructure, and shortages of talent and resources. Resolving these kinds of company-wide structural issues and connecting front-line activities to company-wide results will lead to faster and higher quality decision-making by top management.
Mibe: Top management expects corporate transformation to improve the quality and speed of decision-making. When information is siloed within certain departments, it delays our response to change. We need to create conditions through which the necessary people can access the necessary data and leverage it as company-wide knowledge. That will allow us to deliver tangible value to our customers more quickly. However, the Company will not change just because we use AI or data. What kind of decisions are we using it for? Which processes will we change? Where do people add value? It’s important that we include these considerations in our AI and data use design.
Toshihiro Mibe Director, President and Representative Executive Officer Chief Executive Officer
Corporate Culture Reform Provides the Power to Execute Strategy
Kaihara: Transformation of our corporate culture is an important theme in terms of our ability to implement strategy. No matter how good the strategy or process we create, we will be unable to implement it if people’s actions don’t change. The Honda Philosophy includes the three principles of “Initiative, Equality, and Trust.” This entails that every person should think for themselves, share opinions regardless of their position, and hold discussions based on trust. It’s important that we create conditions in which we can experience this more fully in our everyday work. Waigaya is essentially an initiative aimed at leveraging diverse opinions. Opinions may not align at first; however, as different viewpoints clash, eventually our directions align. I believe that process is what creates new value.
Mibe: The nature of top management itself must also change. We need a structure and culture in which realizations and any sense of unease from the front lines are translated more quickly into management decisions. So that communication from top management does not become one-sided, we need to change both how we ask questions and how we receive feedback. If top management doesn’t change, the Company won’t change. This is precisely why we as the top management must lead from the front in advancing corporate transformation through dialogue with the front lines. Transformation isn’t something that’s assigned to others. We must first change ourselves and then work together with the front lines to achieve transformation.
Shikama: “Corporate transformation” and “corporate culture transformation” are not separate activities. Even if we change our processes and data flow, the changes will not last if our people’s actions don’t also change. Conversely, even with a culture that embraces challenge, without structure we can’t produce results. That’s exactly why we must pursue both simultaneously. The front lines must think, decide, and then act to produce tangible results. If we can produce this kind of cycle, our transformation will be long-lasting.
Small Actions Add up to a Company That Society Looks to
Mibe: We don’t want Honda to be a company that struggles to keep up with change. We want to be a company that anticipates change and not only meets, but also exceeds our customers’ expectations. Our environmental and safety initiatives form the basis of our future initiatives. With that in mind, it’s important that our customers desire and want to choose Honda. Since our founding, both our customers and society have always expected something different from Honda than from other companies. Honda’s uniqueness has always been our ability not only to meet but also to exceed those expectations. We must change what needs to be changed and refine our founding principles, whose essence must remain unchanged. To deliver the value that keeps customers choosing Honda, we are reconnecting our top management, front lines, talent, and data. Top management will lead the way while working hand-in-hand with our front lines to transform Honda into a company more capable of executing.
