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Honda Motor Co Management through Waigaya Way

Case Study This case was written by Meenu Bhatnagar, Amity Research Centers Headquarter, Bangalore. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. © 2015, Amity Research Centers Headquarter, Bangalore. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

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415-033-1 Honda Motor Co: Management through Waigaya Way

Author: Meenu Bhatnagar

Abstract: Honda Motor Co. Ltd., (Honda) was established on September 24th 1948 by Soichiro Honda (Soichiro). A year later, Takeo Fujisawa joined the company as a lifetime Partner and Managing Director. Honda had maintained its position and reputation since 1964 and had moved on to become a global superpower in the automobile industry. Acclaimed as Japan’s second largest auto manufacturer, Honda had an inimitable corporate culture of ‘fixing problems and spurring innovation’. The word ‘Waigaya’ was an intrinsic part of Honda’s work environment. In Honda’s jargon, it was a Japanese term for ‘blah, blah, blah or hubbub’. The concept involved spontaneous, unstructured meetings where everyone could air their views on issues such as design flaw, assembly, performance, implementation of new strategies, ideas etc. Discussions under Waigaya approach took place across different organisational levels to arrive at decisions. The work environment at Honda promoted team work and motivated its employees to align with company’s dedication to build premier products. Honda had succeeded in finding critical solutions for problems which helped in increasing its overall performance. Would Honda continue to sustain its global leadership position through its Waigaya approach in the highly competitive and changing automobile business environment?

Case Study “There are plenty of teams in every sport that have great players and never win titles. Most of the time, those players aren't willing to sacrifice for the greater good of the team. The funny thing is, in the end, their unwillingness to sacrifice only makes individual goals more difficult to achieve. One thing I believe to the fullest is that if you think and achieve as a team, the individual accolades will take care of themselves. Talent wins games, but teamwork and intelligence win championships."1 -

Michael Gordon 2

“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 3 obstacles. If you are not afraid of them, success will come to you itself.” -

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Soichiro Honda 4

Mackay Harvey, “The power of 'we' is central to teamwork”, http://archive.azcentral.com/arizonarepublic/business/articles/20120705mackay-power-we-central-teamwork.html, th July 8 2012 2 An Australian professional rugby league footballer. 3 “Soichiro Honda Biography: A Great History of Japanese Car Manufacturer”, http://astrumpeople.com/soichiro-hondabiography-a-great-history-of-japanese-car-manufacturer/ 4 Founder and President of Honda Motor Co. Ltd. “© 2015, Amity Research Centers HQ, Bangalore. All rights reserved.”

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Honda Motor Co: Management through Waigaya Way

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Spontaneous unstructured meetings - a new management mantra was the underlying feature of Honda’s Waigaya concept – a name given by Takeo Fujisawa, the business partner of Honda. It was best described as ‘the noise of heated discussion and the free flow of ideas; it represents a battleground of facts and opinions—of chaotic communication, open disagreement, and inharmonious decision making’. According to this concept, paradoxes and disagreements were essential for continuous improvement. Managing organisations by adopting Waigaya was not an alternative to other forms of traditional meetings since many occasions called for formal and scheduled meetings. Yet Waigaya’s approach at various levels contributed towards effective employee management. The balancing interactive experience among the teams endowed the members with overall satisfaction and productive participation under all circumstances. At Honda, the joint discussions among team members displayed inclusive mindset adding long-term value for the company. Every team member felt valued and their work reflected positive control on productivity. Under Waigaya, arguments were significant in understanding every aspect of the issues. Waigaya was being practised at Honda in all departments from sales to marketing to manufacturing as well as maintenance. Aggression and innovation had driven Honda to emerge as a big name among global multinational corporations and many competitors were following Honda’s innovative management practices. In such a scenario, it remained to be seen whether Honda’s innovative Waigaya attitude would help the company to stay ahead of the stiff competition from other ‘new and low cost producers’.

Waigaya Approach: The New Employee Management Mantra Teamwork was full of complexities for some, yet for others it came naturally for survival with minimum effort. 5 In organisations, meetings featured regularly and were often a cause of frustration. Constant efforts were made for enhancing the effectiveness of these meetings. Often, ways were found to avoid meetings as far as possible or follow a ‘systematic, consistent and collaborative approach’ if unavoidable. Meanwhile, Honda was a trendsetter in following Waigaya, a unique management concept which was deeply ingrained in its work culture. Adopting Waigaya was not an alternative to other forms of meetings as many occasions required formal, scheduled meetings. Yet Waigaya contributed towards employee management by balancing the interactive experience so as to provide overall satisfaction and productive participation amongst individuals in all circumstances. 6 Spontaneous unstructured meetings were the feature of Honda’s Waigaya concept – a name given by Takeo Fujisawa (Fujisawa), business partner of HondaMotor Co. founded by Soichiro Honda (Soichiro). 7 According to Fujisawa, Waigaya was also best described as, ‘the noise of heated discussion and the free flow of ideas; it represents a battleground of facts and opinions—of chaotic communication, open disagreement, and inharmonious decision making’. This process resulted in identification of suitable solutions to problems. 8 Central to Waigaya was only one concept – ‘Paradoxes and disagreements are the essence of continuous improvement’. For the success of Waigaya similar to any process, it was significant to abide by rules. (Exhibit I). It was necessary to 5

Mackay Harvey, “Mackay: None of us is as good as all of us”, http://www.startribune.com/business/233874111.html, December 1st 2013 6 Dr. Campbell Robert A., “Meetings, the Waigaya Way – F14.7”, th https://managementprofessor.wordpress.com/2014/11/05/meetings-the-Waigaya-way-f14-7/, November 5 2014 7 Rothfeder Jeffrey, “For Honda, Waigaya Is the Way”, http://www.strategy-business.com/article/00269?pg=all, August 1st 2014 8 Farnsworth Brian, “Do you have a “Waigaya” Process in your Company?”, th http://www.simplivative.com/do-you-have-a-Waigaya-process-in-your-company/, August 15 2014

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Honda Motor Co: Management through Waigaya Way

415-033-1 Honda Motor Co: Management through Waigaya Way

distinguish whether to follow ‘design by committee’ 9 method or ‘innovative thinking (Waigaya way) to solve a problem.’ The Waigaya way entailed ‘real time brainstorming’ to come up with the best solution to an issue or finding a better way of doing something. 10 Exhibit I Guidelines to Waigaya Process Rules

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Everybody is equal in Waigaya, and all can express their thoughts with impunity.

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All ideas must be debated until they are either proven valid or rejected

3 4

Once a person shares an idea, he or she doesn’t own it anymore—it belongs to Honda, and the group can do with the idea what it will At the end of Waigaya, decisions and responsibilities are generated—a precise list of who is to do what, and by when.

Source: Compiled by the author from - Farnsworth Brian, “Do you have a “Waigaya” Process in your th Company?”, http://www.simplivative.com/do-you-have-a-Waigaya-process-in-your-company/, August 15 2014

WAIGAYA was officially a way of encouraging employees for learning to occur. 11 Being a trademark of an ‘inquisitive’ organisation, it was a unique channel for innovation - anti-hierarchical, inclusive and result oriented. 12 David Gebler, President, Skout Group LLC 13 emphasised the importance of innovative culture and uninhibited brainstorming among the team members for overall productivity. There were three components on which the culture of innovation was built - right people, balance among the team members as well as willing to change. The team building process began from hiring people with necessary skills and behaviours to successfully function in a team environment. (Exhibit II). Forming of teams within the organisation and available resources could also work. Team members looked upto their peers on how an organisation could survive and thrive. Employees were motivated and performed better, if plans were in place and understood for successful implementation. 14 At Honda, the team members had inclusive mindset, desisted from blame game and saying no. There was an eagerness to let ideas flow through joint discussions which had long-term value for the company. These processes facilitated continuous improvements while saving cost over a period of time. Every team member felt valued and showcased improved engagement in work reflecting positive impact on productivity. The employees were encouraged to work ahead of time by inculcating the habit of self-regulation through their contributions by forward-thinking rather than backward-dwelling. Further, each comment was to be contributory for maintaining transparency of thought, or desist from recapitulating the discussions so as to move on. 15 9

Design by committee is usually about getting everyone to agree on something before it is executed. “Do you have a “Waigaya” Process in your Company?”, op.cit. 11 Mackey Harvey, “The power of 'we' is central to teamwork”, http://archive.azcentral.com/arizonarepublic/business/articles/20120705mackay-power-we-central-teamwork.html, July 8th, 2012 12 Bhattacharya V.N., “Do you have Waigaya meetings?”, http://www.businessgyan.com/b/do_you_have_waigaya_meetings, August 16th 2014 13 Is a company in the Business Services industry. 14 Gebler David, “Creating a Culture of Innovation in Tough Times: How to Make the Most of What You’ve Got”, http://www.skoutgroup.com/2011/01/creating-a-culture-of-innovation-in-tough-times-how-to-make-the-most-ofwhat-you%E2%80%99ve-got/, January 24th 2011 15 Lewis Kern, “Honda Waigaya and Outward Bound – Lessons in Patient Leadership”, http://www.bovoth tighe.com/meetings/honda-Waigaya-and-outward-bound-lessons-in-patient-leadership/1173/, September 29 2014

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415-033-1 Honda Motor Co: Management through Waigaya Way

Exhibit II Skills and Behaviours required in Team Formation Components of a team

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Why do you want to join this team?

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What relevant teamwork experience do you have?

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What’s most important in working on a team?

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How have you handled conflicts on previous teams?

Particulars Look for people who are interested in the goals of the team, not on achieving success on their own. Find out what the candidate has done in the past and what other work options he or she has considered. Teamwork skills usually carry over throughout departments or industries. Probe to find out how the person has worked cooperatively with others in pursuit of group goals. Teamwork means different things to different workers. Find out what teamwork skills the candidate values — communication, reaching consensus, cooperative decisionmaking — and discuss these in depth. No team functions without some disagreement. You’ll find out a lot about your potential teammate by exploring his or her approach to, and experience with, conflict among team members or between the team and other parts of the organization.

Source: Compiled by the author from - Mackay Harvey, “It takes teamwork to achieve individual, organizational success”, http://www.bizjournals.com/dayton/how-to/growth-strategies/2012/10/it-takesth teamwork-to-achieve.html?page=all, August 29 2013

Honda Motor Co. – Incorporating the Essence of Waigaya Honda Motor Co. Ltd., (Honda) was established on September 24th 1948 by Soichiro Honda (Soichiro) and one year later Takeo Fujisawa joined the company as Managing Director. 16 In 2012, Honda was ranked as 8th largest automobile manufacturer of the world though being a late entrant. In the same year, Honda accounted for over $99 billion in revenues including $3 billion annual profit with approximately more than 175,000 employees worldwide. By 2013, it had more than thirty models of cars in its kitty excelling in performance with each year. It started as a producer of noisy scooters and evolved as the best makers of cars on this earth. Honda made an impressive comeback as a significant player in the global automobile industry overcoming several stumbling blocks and worst periods. It had maintained its position and reputation since 1964 and had moved on to become a global superpower in the automobile industry. 17 Honda, acclaimed as the second-largest auto manufacturer of Japan had an inimitable corporate culture based on the idea of ‘fixing problems and spurring innovation’. All company associates wore similar uniforms to ensure an interactive atmosphere irrespective of individual status. 18 All CEOs of Honda had been engineers, veterans of Honda’s valuable autonomous research and development unit. According to Jeffrey Rothfeder 19, “Reared in R&D, Honda CEOs' strengths lie in product and process innovation, primarily in designing new vehicle models and features and in conceiving fresh techniques for building them faster and better. Consequently, their success as managers is measured 16

“Limitless Dreams – An Outpouring of Passion”, http://world.honda.com/history/limitlessdreams/index.html “Honda Motor Co. Ltd – Success Story”, http://successstory.com/companies/honda-motor-co-ltd 18 “Waigaya: Honda’s Secret To Sustained Success”, http://insigniamquarterly.com/strategy/Waigaya-hondas-secretsustained-success/, September 2014 19 Jeffrey Rothfeder is a veteran business journalist, formerly Editor-in-Chief at International Business Times and National News Editor at Bloomberg News. 17

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415-033-1 Honda Motor Co: Management through Waigaya Way

not by quarter-to-quarter results but instead by how well they cultivate individual creativity throughout the organization and how well they disburse Honda's unique corporate culture to its decentralized localization strategy to produce continuous innovation.” 20

In order to motivate its staff, Honda followed the unique Waigaya approach. The roots of the word ‘Waigaya’ which was frequently doing rounds at Honda could be traced back to the late 80’s. It reflected the management philosophy of the company, which was rightly attributed by Paul Dentinger 22 as, “If we had the old style of management at Honda that says do it this way, that there is no other way, follow the blueprint we created without your input, we would be literally and figuratively sliding engines in and out of cars every day, not knowing that there might be a better way that, given the chance one of our associates would think of. If we don’t include our associates in the decision making, we’re ignoring potentially our most valuable asset.” 23 In Honda’s jargon, Waigaya was a Japanese term for ‘blah, blah, blah or hubbub’. Despite an occasional discomfort, it was particularly effective at managerial level deriving team innovation and productivity. These meetings were spontaneous, unstructured or without ranks. Everyone was welcome to air their views on issues of ‘an assembly problem, a design flaw, implementation of a new strategy, performance issues and a new idea’ which could improve the performance of individuals, teams or the organisations. The duration of these meetings varied from five minutes to an hour, postponed and again recommenced lasting for over months until a solution was arrived. Though unconventional, Waigaya was not a concept that was taught in business institutions but significantly highlighted Honda’s record of ‘continuous creativity and sky-high productivity’. Honda’s R&D had marched past its competitors in the auto industry by a lead of 10 to one and maintained diversity in products compared to many industrial companies. Further it enjoyed profit margins of 5%. The operations at Honda were most efficient, which helped the company to march ahead with an enviable ‘no loss’ record in its 60-plus year history. 24 Under Waigaya, arguments were important to understand every aspect of each issue. These discussions took place at each level of operation from assembly floor to CEO’s room and no final decision took place in the absence of such arguments. A notable instance was when Honda wanted to setup automobile manufacturing in the United States. Against all commonsense prevailing in early 1980s, when even Volkswagen had failed, it was a tough decision for Honda to move into the U.S. But the management culture of risk-taking and the culture of paradox enabled Honda to take the step and become the first Japanese organisation to successfully manufacture cars in the U.S. and 20

Phillips Abigail, “How Honda Became One of the Worlds Most Innovative Car Companies”, http://www.manufacturingglobal.com/leadership/122/How-Honda-Became-One-of-the-Worlds-Most-Innovative-Carth Companies, July 29 2014 21 “Be a part of the team”, http://www.indiana.honda.com/job-opportunities 22 Supervisor, Anna Plant, Ohio. 23 “For Honda, Waigaya Is the...