Soichiro Honda – He made the best of being different (and succeeded for it)(P2)

 

This is the 2nd and last part of the series on Soichiro Honda. In the 1st part [link], we left him in 1949. He had just founded the Honda Motor Company so he could bring to the market his first motorcycle; the “Dream”.

Although Soichiro’s new motorcycle sold very well, the company’s finances didn’t go accordingly. Most of Honda Motor’s sales were done through small motorcycles shops. Because of their size, when it was time for Honda’s staff to collect the money from the sales, many shops had gone out of business. Their owners nowhere to be found. As Sol Sanders writes, it was a period of “confusion in the society and the economy. It was an unstable market.” [1]

FROM A SHAKY COMPANY TO A THRIVING ONE

Things couldn’t improve for the “Dream” if sales and collection weren’t better structured and secured. It required a better distribution network. Setting up such wasn’t Soichiro’s forte. He knew it. It was one of Takeo Fujisawa’s strong skills though. Because of his part work experiences, the man “was well acquainted with the kind of juggling that characterizes most Japanese small enterprise, always undercapitalized by Western standards, but particularly so for small and medium­sized companies such as Honda operated during the early years.” [2] As Fujisawa said it, what prepared him the most for working with Soichiro was his own upbringing. “Fujisawa’s father was a talented man who never quite made it in the tens of occupations and businesses he went into.” [3] So he was used to be around an entrepreneur – as in a person who likes to create, tinker and take on new ventures.

After a quick meeting with Soichiro in 1949, Takeo was hired as the new Honda Motor’s sales manager.

One of the first things Fujisawa did was to assess Honda’s products distribution situation. Out of about 18 000 motorcycle shops in Japan, Honda’s network only counted less than 200. If the company wanted to get out of its shaky business position, changes had to be made. In what will become a classic sales pitch, Takeo sent a letter to all 18 000 shops that will read like this: “Less than a hundred years ago, your father saw the first bicycle brought in from the Western countries. He knew little about it, nor how to ride it, how to make it, how to deal with the simplest problem – even how to repair a puncture. But he learned to do all those things, and he learned to do them well. Because of that spirit of Japanese resourcefulness, he was able to make a comfortable living and left you with a bicycle shop and a way to earn your living. Now we are launching a new product. It will be a motor­driven bicycle. You have hardly seen one, and you do not know how to sell it or how to repair it. But we intend to help you learn to do both.” [4]

The move was bold, innovative and it had a disruptive outcome. As Fujisawa’ sales team got a 5000 motorcycle shops’ network out of it. Which was to be – for about ten years – the largest distribution network in Japan. [5]

It sure helped improve the company’s sales potential but the “Dream” had its own selling-arguments problems. It was somehow expensive and not that good on fuel efficiency. Even with the new type of engine Soichiro’s engineering team had designed; the E-Type, that gave more horsepower to the “Dream”. Overall, the “Dream” was an improvement compared to the engine-motored bicycle, but the Japanese weren’t out of the fuel shortage yet.

Part of the problem was in the “Dream’s engine design” itself and the manufacturing tools available at the time in Japan.

THE RIGHT TOOLS FOR HIS IDEAS

In the early 1950s, while the United States experienced an economic boom, Japan was still going through a post-war economic instability. By adopting different regulations and strategies, The Japanese Ministry of International Trade and Industry (MITI) tried to have a very controlling hand over the country’s own boom in the manufacturing sector. With the American occupation’s own set of regulations, it somehow led to a situation where Japan imported much more goods that it exported. How a company could then expect to survive on the long run if the local market advantage was somehow given to foreign products or companies, and exporting your own goods was limited by your government; the Japanese one in this case?

In Soichiro’s opinion, it wasn’t much a government problem than one of technical achievements and products’ quality. [6] The solution implied having access to quality (manufacturing) tools. At the time, these were available only in Europe or North America.

That is in part why Soichiro Honda and Takeo Fujisawa went to Europe in the summer of 1954; to scout for possible solution paths to the “Dream” problems, as well as to find new machinery. As Sanders writes in his book, “(In 1954) European developments in life­styles and design were a decade or less ahead of Japan. (And) what they (Honda and Fujisawa) should manufacture in Japan would be dictated at least in part by the changes they saw in Europe.” [7]

DETERMINED TO LOOK AT PROBLEMS DIFFERENTLY

A few weeks before, in March actually, Soichiro had promised his employees that the company would take part in major motorcycle races and win all the championships. Even though it was a bold promise for a company that had no previous experience in racing, Soichiro was motivated by two reasons. The first one was to open new markets to Honda Motor’s products. Since there were already motorcycle manufacturers established in Italy, Great Britain and Germany, entering these markets would be hard. Soichiro thought that by winning races, it would somehow make a statement that Honda too had the expertise and products to please even the most demanding motorcyclists; racers. The second reason had to do with wanting to instill a new sense of pride to his employees and fellow Japanese. [8] The pride of still being able to achieve great things, even after what they had gone through these past years (with the Sino-Japanese war, WWII and now the American occupation).

In June, Soichiro was in for a reality-check when he attended Isle of Man for the T.T. motorcycle race. “I could not help feeling that I had made a preposterous declaration. I felt half­discouraged and half­flabbergasted in thinking that it would be a long time before my dream of winning the T.T. would be realized. But it did not take me too much time for my inborn unyielding spirit to reassert itself. There is no reason why, I thought, something which could be done by foreigners could not be done by Japanese. And what I had to do was to concentrate on research ­ to find out why it was that the motorcycles I had seen on the Isle of Man which had the same number of cylinders as ours had three times the horsepower.” [9]

That question went on to be in Soichiro’s mind for a while. Another one, which had nothing to do with racing, popped up during that European tour; how to solve the “Dream” problem? Takeo has idea about it; building a completely new motorcycle. Soichiro didn’t spontaneously agree with him. A few arguments played in favor of a new product though. If WWI and WWII had improved the design and production of European motorcycles, the cost of a driver’s license and of a gallon of fuel made it very expensive for someone to own and drive one. With some areas not completely rebuilt yet, maneuverability was an expected but not always a standard feature on the motorcycles sold at the time. By the end of their European tour, Soichiro had made his mind.

Once back in Japan, “Honda worked over the idea, helped by a unique work pattern that he had launched early in his career in manufacturing. He set up task forces which drew men from different parts of his operations to undertake the solution of particular problems or to come up with a particular design.” [10] He had an idea and now could count on the right people and tools to make it happen. At the same time, another task-team would work on a sport motorcycle.

Honda C-100 motorcycle (aka "Super Cub")(1958)
Honda C-100 motorcycle (aka “Super Cub”)(1958)

It took both teams about three years to come up with their finished product. When introduced to the market in 1958, the C-100 (aka “Super Cub”); a non-racing motorcycle, became a milestone in Honda Motor’s history. Soichiro’s team had tackled redundant problems on other motorcycles in the same category; engine over eating, limited maneuverability, lack of comfort on bumpy roads, poor fuel efficiency, etc.. What really made the C-100 stand out from its competition was the fact that anyone could ride it. Literarily. Men and women, young and old. So people from different walks of life bought one. The demand for the “Super Cub” grew so strong that within two years, Honda Motor built in Japan the largest motorcycle factory plant in the World. [11] Honda’s introduction of this 50cc machine; the C-100, tapped in an unfulfilled need for an affordable and innovative transport solution. First in Japan but elsewhere too, as it turned out.

Again, Soichiro’s way to look at a problem and work-it-out was paying off, leaving naysayers behind.

Mike Hailwood, winner of the 1961 Isle of Man TT race (on a 125cc Honda motorcycle)
Mike Hailwood, winner of the 1961 Isle of Man TT race (on a 125cc Honda motorcycle)

Yet, the challenge of “doing as well as foreigners” on motorcycle race tracks wasn’t overcame. As in its first participation to the T.T. race, in 1959, Honda’s racing motorcycle placed sixth in its class. [12] Two years later, in 1961, Honda Motor would be the first manufacturer to win the three major races; the Italian Grand Prix, the Japanese one and more importantly, the T.T. race. [13]

Would it be enough for the Americans to adopt the “Super Cub”? Soichiro and Takeo wanted to take on the challenge.

WHEN BEING DIFFERENT BECAME AN ASSET FOR HONDA

From as far as Soichiro could remember, “Being different” often came along with a set of bad connotations and limitations (in what others would allow him to do or even give him credit for). Things weren’t going to change because his team was able to help Japanese families or delivery boys “go from A to B” in the most timely-fashion and efficient way possible – with the “Super Cub” – or racers to be the fastest on race tracks.

Soichiro was then in known territory when his team found out that motorcycles weren’t “socially accepted” in the U.S..

There were strong stereotypes surrounding motorcycles there; something associated to juvenile delinquents or criminal gangs. Movies like “The Wild One” with Marlon Brando in 1953 [trailer], and the later “Hells Angels on Wheels” with Jack Nicholson in 1967 [trailer] somehow reinforced such stereotypes. [14]

After having set up a subsidiary in Los Angeles, in 1959; the American Honda Motor Company (AHMC), Soichiro and Takeo’s new team went on to learn as much as possible about the perceptions, needs and transportation habits of Americans. With the help of an advertising agency, AHMC’s team found out that “more Americans in those days were using motorcycles for different reasons, (mostly) to enjoy their leisure, not as a practical means of transportation” [15] That in mind, Soichiro and Fujisawa thought that playing the “leisure mean of transportation” card would be their best bet to enter the U.S. motorcycle market. It paid off.

BlogPost 052 - Soichiro HONDA _ You Meet NicestPeople On Honda #1To really stand out from the competition, AHMC went on to set up its own distribution network – instead of existing ones as other motorcycles company used – and advertise in popular magazines like Life and Time – which had never been done before for motorcycles. [16] The product shown in the ads? The “Super Cub”. Because “You meet the nicest people on a Honda” – which was the actual slogan Soichiro’s team used for its first U.S. campaign, in 1963. [17] Interestingly, the intent was to highlight the positive experience people got out from riding a motorcycle; enjoying themselves while meeting nice people. Using illustrations instead of real pictures, ads featured people from different respectable walks of life; students, businessmen, housewives, etc. [18]

The campaign proved to be so successful that in 1968, as Sol Sanders mentions in his book, Soichiro and AHMC were able to celebrate their millionth motorcycle sold in the U.S.. Five years later, in 1973, AHMC had 46% percent of the U.S. market shares. [19] Which was huge, considering the important post-WWII anti-Japanese feeling that prevailed among Americans during the 1960s, more importantly in California.

Being different” now meant “trendy”.

The “Super Cub” success changed the image American had of motorcycles. It also changed the market as well, as other Japanese manufacturers now wanted their share of the American pie. When this happened, by the end of the 1960’s, Soichiro had already been working on a new venture for a while. One somehow imposed on him.

A BOY’S DREAM

In 1961, the MITI (Japanese’s Ministry of International Trade and Industry) wanted to limit the number of possible car and special-purpose (read “trucks”) makers to only three. [20] It enraged Soichiro, literarily. In itself, wanting to impose such limitation was illegal – according to Japanese laws – and more importantly, contrary to free enterprise. The latter having allowed other Japanese companies like Toyota, Nissan and Suzuki to exist in the first place. MITI’s actions were motivated by fear mostly. Fear that “a large number of competing auto firms could only result in disaster”, as described in Tetsuo Sakiya’s book “Honda: The Men. The Management. The Machines” [21]

Honda T-360 multi-purpose truck (1962)
Honda T-360 lightweight multi-purpose truck (1962)

It had always been a boy’s dream for Soichiro to build cars, one day. The government was somehow taking that possibility away. In trying to avoid being prevented to do so, Soichiro asked his engineering team to work on a car engine. They weren’t starting from scratch though. Two things will actually turn out to be “key” in the design and making process: the knowledge Honda’s engineers had acquired and the skills they developed in making racing motorcycle engines. In about a year they came up with their first car engine. It would not power one but two vehicles: the S-360; a tiny sport-car prototype, and the T-360; a lightweight multi-purpose truck. Both presented to the public and the press in 1962, at the Tokyo Motor Show. [22]

In itself, coming up with a new engine in about a year time was an achievement. How Soichiro had built his team of designers, engineers, mechanics and production-line staff over time played a big part. What stands out more than anything though is his vision of R&D (e.g. Research & Development). As Soichiro will describe it, “the quality of development is not solely dependent on the amount of money you devote to R&D and the number of people you have working in R&D. If that were true, our R&D company would have been dissolved long ago.” [23] The quality of the people brains he worked with made the difference. Not just in the offices, but in the company’s shops themselves. Where he actually spent most of his time, helping with the design and tinkering processes. Every time, “he (Honda) would put on the spotless white uniforms that are worn by everyone in the Honda plants – and which give a feeling of egalitarianism typical of Honda’s view that modern industry should be also appealing to a deep feeling for equity in Japan’s otherwise caste bound society.” [24]

Soichiro’s inclusive management approach wasn’t enough to stop the Japanese government and the MITI in their efforts to exclude Honda Motors of the automotives makers’ trio they wanted to protect from competition. Even though Honda’s own total export earnings surpassed both Toyota’s and Nissan’s in 1963 [25]

COMING BACK TO WHAT HAD LIT UP HIS IMAGINATION

As mentioned in the 1st part of this series [link], the first car Soichiro saw speeding through Kyomo’s narrow streets made a deep impression on him. Still, when put in perspective, it’s his apprenticeship at Arto Shokai that seemed to have lit up his imagination. More precisely the tinkering, building and driving racing cars made out of abandoned parts. As actually winning races afterward, atop of overcoming the design and mechanical challenges that building cars from scratch implied, somehow gave the proof he needed to root what became his most profound belief: anything really becomes possible when someone takes the time to get to the root of a problem and then puts his (or her) imagination at overcoming it.

The problem Honda and his team had to deal with this time was the MITI’s ambitions. In an effort to outsmart the Ministry, Soichiro announced in 1963 that Honda Motor would take part in the Formula 1 races in 1964. The move was smart for many reasons. First, in car racing, winning a F1 Grand Prix, even more a constructor’s championship, was and still is a great honor for any car maker. Second, Honda Motor had already began to market the second version of its tiny sport-car; the S-500, but the production facilities and processes weren’t ready yet for making cars in large numbers. It had actually been possible for making motorcycles since the late 1950s. Soichiro himself said what the third reason was. “We are not just out to win a (F1) race. We want to apply the knowledge we gain in the race to production (assembly line). By improving the technical qualities of our engines for racing, we are able to improve our standard cars.” [26] Again, using racing as a springboard to gain advantage over his competitors or prove his naysayers wrong – would prove to be a very effective strategy for Soichiro.

Honda tiny family-sedan N360 (1967)
Honda tiny family-sedan N360 (1967)

By 1967, Honda’s F1 racing cars had won 11 straight races in a row. According to Soichiro, the engine designed and developed for these cars; the S800, had reached its full potential. [27] It was now ready to go from the small-production sport-car that bore its name to a new one; the N360. It was tiny family-sedan car, introduced to the market that same year (1967) and officially marked Honda Motor’s entry in the car industry. As it was the first car the company made of large scale. Two months after its entry, the company was already selling about 5 500 units of the N360 per month, and representing 31% of the market shares in its class. [28] By the end of the year, it increased to 20 000 units per month. [29] In 1968, Honda started to export N360’s big brother; the N600, to Europe through one of its subsidiaries.

The years ahead weren’t going to be bumpless. However, Fujisawa’s friendship and business skills, as well as the innovations the engine team would come up with – like the 1st automatic transmission (1968) and the 1st low polluting emissions engine (1972) – helped Soichiro getting recognition for one thing. The right to make cars, to succeed at something.

In 1974, a year after retiring from Honda Motor, as the company’s president, Soichiro received an honorary doctorate by Michigan Technological University. In his acceptance speech, he spoke about his vision of success. “To me, success can be achieved only through repeated failure and introspection. In fact, success represents one percent of your work which results only from ninety-nine percent that is called failure.” [30]

For a boy who was surrounded by many limitations (either imposed on him by life or others) as a kid, he grew up learning to bet on what he had plenty of: imagination. He actually became successful for it. Not for having find a way to “fit in” but for having made the best out of “being different”, while inspiring others to do the same.

Reflecting on his apprenticeship, Soichiro once said “Whatever I did in those years, no matter how trivial, profited me. For on the long run there is not waste in life.” [31] It seems to have applied to his life very well.

Soichiro used race tracks as a lab to gain knowledge and develop skills that would help him overcome different challenges. What would you say you like to use as your own lab?

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_ _ _ Sources _ _ _ _ _

[1] “Honda. Then man and his machines” by Sol SANDERS (Little, Brown & Company, 1975)

[2] “Honda Motor _ The Men. The Management. The Machines” by Tetsuo SAKIYA (Kodansha International, 1982)