Honda by the numbers

Honda superbike world championship

(Courtesy of Guest Blogger Ned Hill, A One-Handed Economist and professor of public administration and city & regional planning at The Ohio State University’s John Glenn College of Public Ned HillAffairs, powered by The MPI Group)

Honda has always been known for its precise management style; in fact, you could say they literally do everything by the numbers:  The 3 Joys, the 3 Fundamental Beliefs, the 5 Management Policies, and the 5 Components of Racing Spirit, to mention just a few. Let’s see how Honda’s obsession with metrics is reflected in an effective mission statement and how superior performance is the result.

Honda’s official name is Honda Motor Car Company, which honors its roots and largest product group. But that moniker doesn’t really describe the company; Honda is a global manufacturing organization that produces and sells far more than automobiles:

  • The company’s motorcycles and scooters are globally competitive, with more than a quarter billion sold since 1948.
  • Honda Jet in North Carolina delivered its first plane in late 2015 using an engine developed with GE Aviation.
  • The power-equipment group produces general-purpose engines, generators, boat engines, lawnmowers, and yard equipment. This division also is moving into household natural-gas-powered cogeneration, and the company as a whole is a leader in fuel cells.
  • Honda also is developing a presence in industrial and mobility robotics.

All in all, it’s worth asking, as we consider mission and values: Is there something that ties this company together, or is it just another industrial conglomerate linked by shared financials?  More philosophically: How does Honda identify value propositions for customers and owners across its broad platform of products? What is the firm’s corporate connective tissue and source of competitive advantage?

I’d suggest that two competencies unite Honda:

  • The first competency is technical and product-oriented: Common to all of Honda’s products and divisions are engines and propulsion systems.  These are present in each of its product lines and serve as technical sources of competitive advantage.
  • The second competency and source of competitive advantage is the company’s culture.

The Seven Tests of Mission Relevance and Effectiveness

For any company, seven statements provide guiderails to its current operations and a path to its future:

  1. Statement of purpose explaining why a company exists.
  2. Statement of the company’s competitive advantage and core competencies.
  3. Value proposition for customers.
  4. Value proposition for owners.
  5. Vision statement that frames the company’s future direction.
  6. Values and ethics statement that defines the company’s culture, describes the organization as a place to work, and is directed at employees.
  7. Strategy proposition, founded upon the value propositions, which ties together the vision of the future with sources of competitive advantage and the values of the workplace.

I’ll rate each component of Honda’s culture-setting statements with a ranking from 1 (low) to 5 (high) of the company’s white coveralls (all associates wear them, for anti-utilitarian (dirt shows easily, emphasizing a clean work environment) and egalitarian (everybody looks equal) purposes).

Let’s go through them step by step.

Test One: The Statement of Purpose

The statement of purpose should explain the reason why a company exists. To find Honda’s statement of purpose, we have to draw from three of its cultural documents.

First of all, the foundation of Honda’s culture is its statement of philosophy:

“Driven by its dreams and reflecting its values, Honda will continue taking on challenges to share joys and excitement with customers and communities around the world to strive to become a company society wants to exist.”

Honda’s overarching philosophy recognizes that its survival depends on customers who value its products and communities that value its locations and associated jobs. The philosophy is not tactical, was not developed by marketing, and is timeless. As such, it is partially a statement of purpose.

The company’s mission statement is global, reflecting the realities of the company’s footprint, and focuses on providing value to its customers:

“Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality, yet at a reasonable price for worldwide customer satisfaction.”

APPLAUSE!  This mission statement is a value proposition for customers.

Last, the outward-facing messages of Honda’s philosophy and mission are implemented by The Three Joys. The Three Joys of buying, selling, and creating are corporate norms; all are part of the company’s value proposition to its customers.

  1. The joy of buying is “achieved through providing products and services that exceed the needs and expectations of each customer.”
  2. The joy of selling is the reward from selling and servicing products and from developing “relationships with a customer based on mutual trust.” In Honda’s vision, selling links the company’s employees, dealers, and distributors together with their shared customers.
  3. The joy of creating occurs when Honda’s associates and suppliers are involved in the design, development, engineering and manufacturing of Honda products that “exceed expectations [of the customer].” Then “we experience pride in a job well done.”

APPLAUSE again! The Three Joys provide a set of norms that implement Honda’s mission statement and recognize that the corporation’s future is rooted in business practices. No social workers or frustrated marketers were involved in the mission’s creation.

Honda’s philosophy — combined with its mission statement and operationalized by the Three Joys — satisfies the first and third of the seven statements of purpose and value propositions. Give them four pairs of Honda white coveralls for my first criterion on the purpose of the company.

Test Two: The Statement of Competitive Advantage

My second criterion is a statement of competitive advantage, and you cannot find an explicit statement. Perhaps making such a statement is too bold and boastful for the company. Instead, the company’s source of competitive advantage is evident in its product lines and dependence on applied research. Honda’s competitive advantage rests in its research expertise in engine and propulsion systems and the development of products around its research.

An example comes from one of the company’s newest product lines, Honda Aircraft Company. This business unit is the outcome of a 30-year effort to create a disruptive light passenger jet, and it demonstrates the connection between the company’s guiding philosophy and its product development. Michimasa Fujino, an engineer who was part of the original research team in the mid-1980s, is now the president and CEO of the business unit. He helped the investment survive technical and economic setbacks by tying the project to the company’s efforts to rekindle innovation, or to dream. The division exists because of the initiative and skill of Fujino, and it survives because of the strategic support of the company, especially through the Great Recession and the crash of the private aircraft market. “A company has to have longevity,” he says of his strategic mandate. “We look at 20 years or even 50 years of Honda’s growth in the long term. In order to have that kind of longevity, we have to invest [in] our future.”

Honda earns five coveralls for meeting the second criterion through its actions and investments, not through its words.

Test Three: The Value Proposition for Customers

Couple the mission statement with the Three Joys and a clear value proposition is made to customers:  Providing products and services that exceed the needs and expectations of each customer at reasonable prices that generate worldwide customer satisfaction.

Five white coveralls on Honda’s ability to present a value proposition to its customers, which is the third test.

Test Four: The Value Proposition for Owners

There is no explicit statement about the value proposition that Honda offers to its owners. This is left to its direct communications with shareholders. However, the awarding of coveralls comes later because Honda hints at that value proposition in its statements.

What is the company’s vision for its future? It is not a specific list of products, technologies or investments. Instead, it is timeless guidance for management and investors in its five Management Policies, which are a mix of Eastern and Western value statements:

  1. Proceed always with ambition and youthfulness.
  2. Respect sound theory, develop fresh ideas, and make the most effective use of time.
  3. Enjoy work and encourage open communications.
  4. Strive constantly for a harmonious flow of work.
  5. Be mindful of the value of research and endeavor.

The management policies are a mixture of guidance on how to perform today’s job by supporting open communications and promoting a harmonious flow of work, and of paying attention to tomorrow’s job. Tomorrow’s job is to be approached with “ambition and youthfulness” and based on research, development, and risk-taking: “Respect sound theory, develop fresh ideas” and “Be mindful of the value of research and endeavor.” The emphasis on tomorrow’s job is reinforced by the joy of creating.

While the Management Policies’ language is not familiar to a North American, its intent is pitch-perfect. It addresses the accomplishment of today’s job in the third and fourth precepts—encouraging a harmonious workplace based on open communications. This is part of a values and ethics promise to Honda’s employees.

The other management policies are about tomorrow’s job: Be ambitious and develop new ideas that rest on research and risk-taking. Honda expects itself to be an innovation company.  I award three coveralls on the fourth criterion of making a value proposition to ownership because Honda only hints that it is a company built for the long run; it is not solely focused on next quarter’s return.

Test Five: The Vision Statement

The fifth test is explicitly about the future orientation of a company. In Honda’s case, the foundation comes from three of the Management Policies and the tactics come from a set of principles closely associated what the company’s founder, Mr. Soichiro Honda, called The Racing Spirit.

The Racing Spirit is directly connected to Mr. Honda’s early experience in motorcycle racing. He observed that passion is part of every competitive racing team, and he wanted that same passion to be at the heart of his company. There are five components to the Racing Spirit:

  1. Seek the challenge: Seeking competition improves the performance of both individuals and the company.
  2. Be ready on time: All races have a starting time—be ready before the gun goes off.
  3. Teamwork: Races are won by teams, not just the driver. Honda defines this as togetherness: the driver, staff, and machine are all vitally important.
  4. Quick response: Be ready to solve unpredictable problems at all times.
  5. Winner takes all: The only goal is winning.

The future orientation of the company begins with seeking the Racing Spirit’s challenge, followed by the Management Policies of ambition, respecting sound theory and fresh ideas, coupled with respect for research. All of this is powered by the dreams that are mentioned in the company’s overarching philosophy.  Five overalls for the fifth criterion.

Test Six: The Values and Ethics Statement

The sixth test focuses on the company’s workplace values and business ethics. Honda’s Fundamental Beliefs add to the company’s Management Policies that relate to its workforce. The Beliefs are a trinity of statements about the company’s relationships with its employees. Honda states that these three norms sum to respect for individuals:

  • Initiative to act is encouraged, along with taking responsibility for the results of those actions.
  • Equality is defined as recognizing and respecting individual differences and rights to opportunity.
  • Trust is action-based: “helping out where others are deficient, accepting help where we are deficient, sharing our knowledge, and making a sincere effort to fulfill our responsibilities.”

Honda values initiative, ambition, equality, and trust in a harmonious workplace built around open communications. Five coveralls awarded for meeting the sixth criterion on values and ethics.

Test Seven: The Strategy Proposition

A cornerstone of Honda’s corporate culture is a commitment to continuous improvement and lean operations. Yet, this is not directly reflected in the company’s philosophical statements.  The Management Policy supports a “harmonious flow of work,” making effective use of time, along with a fundamental belief in each associate taking responsibility for their actions. These are all elements of lean production.

How well does Honda do in building a useful strategy proposition that is supported by a strong set of management values? Honda’s Philosophy, The Three Joys, the Fundamental Beliefs and The Racing Spirit are guiding principles that are closely associated with Mr. Honda. They are critical components of what could be called the company’s origin story or foundation myth and have been used when the company appeared to have lost its way. Mr. Honda built his company around an enduring strategy proposition—the racing spirit. It is only fitting to drape this criterion with four and a half pairs of Honda’s enduring white coveralls. After all, there is always room for improvement.

OK, But Why the White Coveralls?

Why the white coveralls? They are part of the company’s culture and derive from its fundamental beliefs about equality. Honda does not have reserved parking, its employees are called associates, and all workers — even its CEO, research and development associates, and its accountants — wear white coveralls with covered buttons. This was a shock to U.S. workers when Honda Americas Manufacturing started production.

Honda offers three explanations for the tradition:

  • White jumpsuits make physical statements about the work environment, modern manufacturing, and the quality of the finished product. White uniforms stain and easily show dirt. They serve as a check on Honda’s belief that “good products come from clean workplaces.”
  • They are symbols about the manufacturing work environment at Honda. The covered buttons prevent scratches on the finish of the products — and highlight the importance of detail in quality.
  • Finally, the uniform is a statement about equality and team. Honda states that the white outfit symbolizes the equality of all at Honda in pursuit of the company’s goals.

When Honda opened its U.S. manufacturing operations in Marysville, Ohio, in the 1980s, the jumpsuit and lack of managerial perks made one other statement to potential workers: Honda was not the same as a U.S.-headquartered car company. At the time, this was a very good thing — though others have since learned from Honda’s example.

HGR hosts MAGNET’s annual State of Manufacturing event

MAGNET State of Manufacturing at HGR

(Courtesy of Guest Blogger Dale Kiefer, freelance journalist)

On Nov. 10, HGR welcomed members of the public to its headquarters to gain insights about important trends that are likely to affect Northeast Ohio manufacturers in the coming year. The third-annual State of Manufacturing event was organized by MAGNET: The Manufacturing Advocacy and Growth Network whose mission is to help area companies grow and thereby contribute to the manufacturing renaissance in Northeast Ohio.

MAGNET State of Manufacturing breakfast at HGRThe morning event began with a networking breakfast that gave attendees a chance to connect with other industry professionals, including HGR associates and expert consultants from MAGNET. Ethan Karp, president and CEO of MAGNET, launched the formal part of the program with opening remarks. This was followed by an expression of thanks to HGR and all of the participants from Euclid Mayor Kirsten Holzheimer Gail.

The first presenter was Joseph N. Gross, an OSBA certified specialist in labor and employment law who is also a partner at Benesch Attorneys at Law. He spoke about changes at OSHA and what manufacturers can expect when dealing with the agency in the coming year.

He was followed by Mark Wolk, the central region manager for Bank of America Leasing & Capital, who gave an overview of the equipment finance market. This included a lease versus loan benefit comparison for capital equipment.MAGNET State of Manufacturing guest speaker at HGR

The third and final speaker for the morning was Dr. Ned Hill who teaches economic development policy, public policy, and public finance at the John Glenn College of Public Affairs at The Ohio State University. The focus of his presentation was Manufacturing 5.0, or the Fifth Industrial Revolution, which describes the most recent major shift in the economy’s structure. Under Manufacturing 5.0, all aspects of enterprises will see full digital integration. In this new economy, soft skills will be just as valuable and essential among the workforce as harder technical skills.

Following the presentations, the speakers opened the floor to questions. Thereafter, attendees were given a chance to take guided tours of HGR’s facility and learn more about the history of the company and the value that HGR itself provides to manufacturers. More than 40 attendees toured HGR’s 500,000-square-foot showroom and newly renovated offices.

The State of Manufacturing 2017 event was sponsored by MAGNET, The Ohio Manufacturing Extension Partnership, Benesch Attorneys at Law, and Bank of America Merrill Lynch.

 

HGR Industrial Surplus to host MAGNET’s The State of Manufacturing 2017 on Nov. 10

MAGNET: Manufacturing Advocacy & Growth Network

Last year, MAGNET: The Manufacturing Advocacy and Growth Network hosted The State of Manufacturing 2016 at Jergens. Click here for a recap of that event so that you can get an idea of what to expect. This year, HGR Industrial Surplus, 20001 Euclid Avenue, Euclid, Ohio, is hosting from 8 a.m. to 10 a.m. on Nov. 10, 2017. Tickets are required and can be purchased here for $10. You also can view the full agenda on that page.

Join us for a morning devoted to economic and environmental trends affecting Northeast Ohio manufacturers led by Dr. Ned Hill, professor of public administration and city and regional planning at The Ohio State University’s John Glenn College of Public Affairs and member of the College of Engineering’s Ohio Manufacturing Institute.

A new, full-circle media vehicle for Euclid, Ohio, launches with inaugural edition

staff of Act3
Lily (shown seated in the photo) heads off to Ohio State University in late August where she’ll enter a rigorous graphic arts program and focuses on user experience in media design. Act 3 is always looking for interns (that could lead to a paid opportunity) to work with the Act 3 team – to grow, to create, and to “look around” at all that is on our horizon. Contact info at Act3creative.com.

(Courtesy of Guest Blogger Jim O’Hare, managing partner, Act 3)

A new communication vehicle has launched to inform businesses, residents and those with an interest in Euclid, Ohio – and HGR Industrial Surplus is a sponsor of the Spring/Summer 2017 inaugural edition in its native city. The venture is called Euclid360, and it challenges current and prospective residents and businesses to “Look Around” at what “The Lakefront City” offers. Euclid360 is a print publication, a mobile-optimized website, and a growing collection of three types of interactive videos – aerial, time lapse and virtual reality (360 degrees).

“The goal is to provide new ways of looking at the city,” says James O’Hare, publisher of Euclid360. “In our daily lives, we can get stuck by the same perspective. We hope that the stories and images in Euclid360 provide new vantage points that inform what’s working and suggest options when opportunities for growth are presented.”

The print edition of Euclid360 hits the street twice per year with spring/summer and fall/winter issues. A bright, young contributor to the inaugural issue was Lily Li, a senior in Euclid High School’s visual communications career-tech program. Lily’s digital illustrations graced several pages of the print issue and appear online at Euclid360.com.

Act 3 LLC, the publishing company that produces multiple media products, including Euclid360, was pleased to host Lily as an intern. “Lily represents the present and future of creative talent,” says Act 3’s Managing Partner Ron Hill, who mentored Li during her internship. “Creativity is all about seeing the same objects in new ways, but creativity doesn’t get out into the world unless the details are taken care of. Lily’s attention to detail is superb.”

An update on HGR’s 2015 manufacturing scholarship recipient

Jon Berkel Elyria Foundry
(photo courtesy of Elyria Foundry)

(Courtesy of Guest Blogger Jonathan Berkel, 2015 HGR Industrial Surplus Manufacturing Scholarship recipient)

Ever since I received the manufacturing scholarship from HGR Industrial Surplus in 2015 and graduated from Elyria High School and Lorain County JVS where I studied welding and fabrication, I have been furthering my education at Lorain County Community College to earn an associate of science degree. In fall 2017, I will be transferring to The Ohio State University to earn my bachelor’s degree in welding engineering.

For the past year and half at Lorain County Community College I have been taking classes in math, science, English and general education that will transfer to The Ohio State University. These courses will prepare me for future courses that I will take in order to pursue my degree.

While attending classes, I work part-time, and I work full-time when classes are not in session at Elyria Pattern Co., since I graduated high school as a welder and a pattern maker. I do a little bit of everything. I am working on some projects for Elyria Foundry. I also have been working on frames for the base of the patterns. These frames go on the base of the pattern to give the base stronger support.

I would like wish all the 2017 scholarship nominees good luck.

Jon Berkel welding
(Jonathan welding)

MAGNET’s 2016 State of Manufacturing address took place at Jergens, Inc.

MAGNET state of manufacturing symposium at Jergens

On Nov. 16, 2016, MAGNET: The Manufacturing Advocacy and Growth Network, in conjunction with PNC Bank, presented its 2016 State of Manufacturing: Important Trends Affecting Northeast Ohio Manufacturers at Jergens Inc., 15700 S. Waterloo Road, Cleveland. There was standing room only as manufacturers and service-industry representatives arrived to hear presentations by Rich Wetzel, Youngstown Business Incubator, on the state of additive manufacturing and Dr. Ned Hill, The Ohio State University’s John Glenn College of Public Affairs and Ohio Manufacturing Institute, on manufacturing, the economy and the future.

In opening remarks, Paul Clark, regional president, PNC Bank, noted that “Thirty percent of PNC’s loan commitments in Northeast Ohio have been in manufacturing for the past 20 of 40 years.” These loans help manufacturers with new product development, new markets and acquisitions.

Wetzel, in his presentation on additive manufacturing, aka 3D printing, shared the seven main processes of additive manufacturing, with material extrusion being the most common, and says, “Northeast Ohio is becoming the capital of additive manufacturing and putting the area on the map.” He also shared that low-volume tooling is the low-hanging fruit and the easiest to implement for near-term opportunities but that the market tends to be risk averse.

Last, Dr. Hill (if I had an economics professor like this in college, I might have liked economics and learned something) talked about the current uncertainty in the market due to the election but the positive increase in interest rates. He says, “Manufacturing is looked at nostalgically by the public since it’s gone overseas, and they believe we aren’t making things.” In 2014, although China was the top nation for manufacturing, the U.S. was a close second. He shared that the largest market opportunity in the world lies in the NAFTA nations. He did a retrospective and shared that manufacturers were always in the top 10 employers in Ohio but now the reality is that part-time, low-wage jobs in healthcare, retail and food service have become the mainstay. In that reality, he says, “Midsized companies will be driving this state.”

Another trend he discussed in depth was automation. Since 1979, we lost almost 5-million factory jobs but at the same time more than doubled the value due to productivity. In addition, he shared statistics that we have lost 13 percent of factory jobs to trade and 88 percent to automation and continuous improvement, and that robotics is expected to reduce labor by another 22 percent in the U.S. He asked the audience to consider how many jobs technology has saved rather than lost. The U.S., for the first time in recent years, is a threat to China due to its quality, efficiency and improved internal supply chain. He says that when manufacturing can 3D print a die, it will save 20-30 percent and can compete with China. And, as much as we would like to believe that manufacturing powers the economy, it’s actually powered by consumers who do 70 percent of the spending. They are buying the products we manufacture!

Finally, he acknowledged the present problem of aging-out workers and the lack of a skilled workforce to replace them. He says manufacturing’s greatest enemies are parents, school counselors and OSHA, which limits workers under 20 from being on the manufacturing floor. We are losing talent to other industries. Let’s make these people our allies and work toward STEM education and a resurgence of interest in a field has evolved and shed its former stereotypical image.