415-033-1 AMITY RESEARCH CENTERS HEADQUARTER BANGALORE Honda Motor Co Management through Waigaya Way Case Study This case was written by Meenu Bhatnagar, Amity Research Centers Headquarter, Bangalore. It is Purchased for use by Yos Sunitiyoso on 30-Jul-2020. Order ref F387414. You are permitted to view the material on-line and print a copy for your personal use until 30-Jul-2021. Please note that you are not permitted to reproduce or redistribute it for any other purpose. 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. Distributed by The Case Centre North America Rest of the world www.thecasecentre.org t +1 781 239 5884 t +44 (0) 1234 750903 case centre All rights reserved f +1 781 239 5885 +44 (0) 1234 751125 e info.usa@thecasecentre.org e info@thecasecentre.org415-033-1 Honda Motor Co: Management through Waigaya Way AMITY RESEARCH CENTERS HEADQUARTER BANGALORE Author: Meenu Bhatnagar Honda Motor Co: Management through Waigaya Way Abstract: Honda Motor Co. Ltd., (Honda) was established on September 24 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? Purchased for use by Yos Sunitiyoso on 30-Jul-2020. Order ref F387414. Please note that you are not permitted to reproduce or redistribute it for any other purpose. You are permitted to view the material on-line and print a copy for your personal use until 30-Jul-2021. 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." Michael Gordon "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 obstacles. If you are not afraid of them, success will come to you itself." Soichiro Honda* Mackay Harvey, "The power of 'we' is central to teamwork" http://archive.azcentral.com/arizonarepublic/business/articles/20120705mackay-power-we-central-teamwork.html, July 8 2012 2 An Australian professional rugby league footballer. "Soichiro Honda Biography: A Great History of Japanese Car Manufacturer", http://astrumpeople.com/soichiro-honda- biography-a-great-history-of-japanese-car-manufacturer/ Founder and President of Honda Motor Co. Ltd. '@ 2015, Amity Research Centers HQ, Bangalore. All rights reserved." Page - 1415-033-1 Honda Motor Co: Management through Waigaya Way 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 ssues. 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." In organisations, meetings featured regularly and were often a cause of frustration. Constant efforts were made for enhancing the effectiveness of these meetings. Often, You are permitted to view the material on-line and print a copy for your personal use until 30-Jul-2021. Purchased for use by Yos Sunitiyoso on 30-Jul-2020. Order ref F387414. Please note that you are not permitted to reproduce or redistribute it for any other purpose. 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. 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). ' 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. 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 1). It was necessary to Mackay Harvey, "Mackay: None of us is as good as all of us" http://www.startribune.com/business/233874111.html, December 1" 2013 Dr. Campbell Robert A., "Meetings, the Waigaya Way - F14.7", https://managementprofessor.wordpress.com/2014/11/05/meetings-the-Waigaya-way-f14-7/, November 5" 2014 Rothfeder Jeffrey, "For Honda, Waigaya Is the Way", http://www.strategy-business.com/article/00269?pg=all, August 1" 2014 Farnsworth Brian, "Do you have a "Waigaya" Process in your Company?", http://www.simplivative.com/do-you-have-a-Waigaya-process-in-your-company/, August 15 2014 Page - 2415-033-1 Honda Motor Co: Management through Waigaya Way distinguish whether to follow 'design by committee" 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 S. N Rules 1 Everybody is equal in Waigaya, and all can express their thoughts with impunity. 2 All ideas must be debated until they are either proven valid or rejected 3 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 4 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 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." Being a trademark of an 'inquisitive' organisation, it was a unique channel for innovation - anti-hierarchical, inclusive and result oriented." David Gebler, President, Skout Group LLC" 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 Purchased for use by Yos Sunitiyoso on 30-Jul-2020. Order ref F387414. You are permitted to view the material on-line and print a copy for your personal use until 30-Jul-2021. Please note that you are not permitted to reproduce or redistribute it for any other purpose. people with necessary skills and behaviours to successfully function in a team environment. (Exhibit 11). 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." '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. 1 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 2 Bhattacharya V.N., "Do you have Waigaya meetings?", http://www.businessgyan.com/b/do_you_have_waigaya_meetings, August 16" 2014 Is a company in the Business Services industry. "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-of- what-you%E2%80%99ve-got/, January 24 2011 Lewis Kern, "Honda Waigaya and Outward Bound - Lessons in Patient Leadership", http://www.bovo- tighe.com/meetings/honda-Waigaya-and-outward-bound-lessons-in-patient-leadership/1173/, September 29 2014 Page - 34150331 Honda Motor Co: Management through Waigaya Way Exhibit II Skills and Behaviours required in Team Formation Components of a team Particulars Look for people who are interested in the goals of the Why do you want to join team, not on achieving success on their own. Find out what this team? 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. What's most important in Find out what teamwork skills the candidate values working on a team? communication, reaching consensus, cooperative decision- making and discuss these in depth. No team functions without some disagreement. You'll find How have you handled out a lot about your potential teammate by exploring his or conflicts on previous her approach to, and experience with, conflict among team teams? members or between the team and other parts of the organization. What relevant teamwork experience do you have? Source: Compiled by the author from - Mackay Harvey, \"It takes teamwork to achieve individual, organizational success\4150331 Honda Motor Co: Management through Waigaya Way not by quartertoquarter 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 Honda employees came from diverse backgrounds and Soichiro realised the significance of people operating as a team. 'Respect for the Individual' was a basic fundamental belief at Honda 'that each associate can explore and create his or her own dreams.' The work environment at Honda motivated employees to be a part of Honda's dedication to build premier quality products. The success of teams at Honda was attributed to members with myriad experiences and ideas. Therefore, Honda hired qualified people who understood the importance of working as a team. The underlying one- team philosophy was steeped in the Company Principle. Honda was always ready to undertake all its projects with 'a Challenging Spirit, a passion for quality and the collaborative power of teamwork'. This required its associates to be motivated and be a part of its passion.21 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 Dentinger22 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 60plus 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 19805, 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\4150331 Honda Motor Co: Management through Waigaya Way outrun Toyota atleast by a decade. The decentralised operation system prevalent at Honda came to its aid. As each car could be built to zone specifications, plenty of flexibility was being exercised and with minimum automation at factories. Automation happened only when products became a commodity. Honda believed that by automating one was keeping improvements at bay. For Honda to go global, localisation was essential. It had established 'autonomous subsidiary operations' at Honda China, Honda of North America and Honda Europe which functioned independently. With adequate input from Japan, each subsidiary functioned on its own for developing cars and designs suitable to local markets. Honda thrived on different wavelengths with its suppliers working on the new ideas at all times.25 Waigaya did not achieve consensus through compromise but just the opposite. The central theme was to explore innovative views of multidisciplinary skilled team on issues of concept, manufacturing, design and budgetary allocations. One of the most interactive verbal outbursts in a series of Waigaya led to the launch of the third generation Acura TL, (originally launched in 1995) to become Acura's best selling model. It was not only second in the best selling automobile in its category in the U.S. but was right behind BMW 3 series. According to Jon Ikeda (Ikeda), Head Acura Design Studio, \"It's not design by committee. A good project leader will have a vision of where he wants to go with the car, and he will make sure that everybody's ideas that survived the Waigaya are considered for the final designbut then only some will make the final design; others won't because they're ill suited. After that, he sells the whole package back to us so we can call it our own and begin to think about the challenges of building the car now that we know its specifications." Rothfeder further Ikeda, \"The most intriguing moment of the Acura TL's Waigayaan instant in which a sudden burst of anger laid bare the full potential of the Waigaya as a laboratory for innovation occurred when Ikeda insisted on a radical concept for the car's wheels."26 Noteworthy Waigaya achievements at Honda included replacement of faulty Accord camshaft design and installation of iconic TL tires. These improvements had resulted from noisy and unfocussed discussions over potential ideas. Waigaya became Honda's way of working on a day to day basis throughout the company's worldwide manufacturing facilities, research labs, design centres as well as in offices. With the frequency and regularity at which Waigaya meetings took place, it was not possible to keep a record. Waigaya gradually became more unstructured, open, bold, and secure approach significant for cultivating realistic new ideas.27 Soichiro had been instrumental in following 'unstructured management and cultural style' and prevailed upon Honda employees to accept unorthodox path rather than imitating. Waigaya approach could be applied in myriad forms. From half an hour meeting with focus on particular issue needing immediate solution to a lengthy series of discussions running into weeks or months about 'a new factory under development or a vehicle model upgrade'. Waigaya was being practiced at Honda in all departments from sales and marketing to manufacturing and maintenance while the number of members attending these meetings could be three to 20 at any given time." In all organisations, managers worked hard to motivate their teams for regular enrichment and originality but at Honda this perception was well woven into its business fabric. Managers were 25 Johnson Kelly, "Honda's global strategy? Go local", http://www.washingtonpost.com/business/how-honda-makes- globa|ization-work/ZO14/08/07/b84f16be-1cd0-11e4ab7b696c295ddfd1_story.html, August 9th 2014 26 \"For Honda, Waigaya Is the Way\4150331 Honda Motor Co: Management through Waigaya Way evaluated on their ability to utilise 'dissention and discord' as well as 'contention and contradiction' i.e. the Waigaya way for driving creativity, raising employee morale, loyalty, engagement and output. It also paved way for achieving actual performance benefits unaffected by 'quarter to quarter sales', 'output and timed efficiency metrics'. According to a Honda Executive, \"Waigaya to me means generating improvements out of perpetual dissatisfaction. At our company, self- satisfaction is the enemy.\"29 The western world recognised that the Japanese culture was based on consensus while its management approach derived sustenance from conflict. At Honda, all employees irrespective of ranks could ask for a 'Waigaya' gathering. It was imperative that discussion be held openly and any issue ranging from deficiencies at factory floor to lack of support for design team could be discussed. To enable learning to happen, there was no pressure at Waigaya meetings. This stressed the importance of each member in the team and their functionality.30 According to Rothfeder, "Honda is a questioning, knowledge-rich organization, which demands that its workers at all levels continually poke holes in the status quo. They do that through daily, oftenspontaneous meetings known as "Waigaya" during which decisions, large and small, are reevaluated and turned on their head in hopes of finding a better strategic or tactical choice."31 Waigaya Will it Continue to Drive Honda? For all its significance, Waigaya required acceptance since it required managers to share the privileges of leadership with employees, to oversee and work on own reservations to encourage the team. Way back in 1987, Tadashi Kume (Kume), the then President of Honda, in collaboration with a team of engineers had devised a 'fuel efficient CVCC32 (Compound Vortex Controlled Combustion) - the first engine to qualify the stringent US exhaust emission standards'. This engine was the result of deviating from established Japanese traditional business norms bypassing strong willed founder's Soichiro strong beliefs. The incident epitomised Waigaya's essence which encouraged open dialogue amongjunior employees and management. Kume opined, "I want them to do what I did to oyajisan. lfjuniors don't rebel against their seniors, that means there is no progress."33 Honda had learned to find solutions to its problems through Waigaya a decisionmaking workers meeting which functioned democratically in groups with the members and supervisors providing direct feedback. It also meant freedom to speak and come up with ideas without fear of reprisal. This enriching experience supported by different rules and norms was very different from the usual teamwork. Rothfeder stated, \"Although Waigaya may seem too free-form to be productive and may appear to lack a leadership component strong enough to produce real results, these meetings actually have an organizing framework that, at least in theory, ensures their success...Honda has learned how to learn from its teams. Participants violate the rules from time to time...which means that team members have to continually re-learn how to learn...When you grow up in a strong hierarchy with deference to senior leaders at home and at work, it is not easy to change to a democratic process. However, if Honda wants to surface the best ideas and get buy-in to those ideas 2'9 "Is your team difficult to motivate? Try Waigaya", op.cit. 3 "Mackay: None of us is as good as all of us\415-033-1 Honda Motor Co: Management through Waigaya Way from stakeholders, they will have to continually work toward the ideal of an open exchange of ideas from everyone involved."34 Soichiro always believed that 'Success is 99 percent failure.' On the face of it, Honda's approach to unstructured open meetings could appear to be of minimum value and waste of resources yet over time, the organisation's practice of Waigaya led to significant development in process, systems, productivity and performance." The reason for organizations to adopt Waigaya was trust. It was essential for the company management to establish a culture where a feeling of security to employees pervaded at various levels in raising voices about issues and managers were also trained to lend an ear and not just convey their knowledge or what had always worked before. Aggression and innovation drove Honda to emerge as a big name amongst global multinational corporations. The organisation's manufacturing units were spread over Asia, Europe and United States manufacturing high quality products at reasonable price. Honda's designs were well appreciated and the after sales service by dealers had been par excellence. Many of its competitors followed Honda's innovative management practices. In 1986, Honda marched past its giant Japanese rival - Toyota Motor Corporation in car sales in the U.S. But in the changing global environment, Honda was faced with many challenges ranging from rising yen value, stiff competition among automakers as well as increasing 'new and low cost producers' from countries such as South Korea. Honda had not produced its first car until 1963, yet in 1982, it went onto become the first Japanese company to be a top seller of cars in U.S. outshining its competitors like Toyota and Nissan who did better than Honda in Japan. Though Honda had attracted youngsters with its 'sporty and low priced cars', it was yet to reach the increasing number of 'middle aged buyers'. The strong yen was eating into its profits and its rise since 1985, affecting the sales too. Honda was likely to face stiff competition in the small car market as U.S. car manufacturers were offering better quality as well as better features. South Korea was also pushing its cars in U.S. Apart from Toyota, Honda was the only You are permitted to view the material on-line and print a copy for your personal use until 30-Jul-2021. Purchased for use by Yos Sunitiyoso on 30-Jul-2020. Order ref F387414. Please note that you are not permitted to reproduce or redistribute it for any other purpose. other Japanese auto manufacturer, in a position to draw from its traditional innovations, commitment to advanced engineering and carefully developed 'esprit de corps' to meet the challenges of staying ahead. Honda had inculcated a management style exceptional in Japan - anti- hierarchical by giving responsibilities to young workers and all departments and levels in developing new products. 37 Towards the end of 20" century, Honda was performing well but it had problem areas to tackle. Known as one of the efficient global car companies, its strength lay in research and development, superior level of advancing technology and its far and wide geographic reach - Honda was doing very well overseas than its own home country. John Mendel, Executive Vice President, Sales at American Honda stated, "The Company already competes with small-car makers in Europe and plans to succeed in the U.S. by sticking to its strengths. We face those challenges globally now. That's not to diminish, certainly, the competition we see coming with a stronger, restructured GM or Chrysler or Ford . "139 34 "Learning How to Learn at Honda Motor",http://stephenjgill.typepad.com/performance_improvement_b/2014/08/learning-how-to-learn-at-honda- motor.html, August 8 2014 5 "For Honda, Waigaya Is the Way", op.cit. 36 Gebler David, "Waigaya is the Way", http://www.skoutgroup.com/2014/08/Waigaya-is-the-way/, August 8 2014 37 "Honda is Powered by Risks; In Tokyo, Giving Dissenters a Forum", op.cit. "Honda Motor Company Limited - Company Profile, Information, Business Description, History, Background Information on Honda Motor Company Limited", http://www.referenceforbusiness.com/history2/67/Honda-Motor- Company-Limited.html 39 "After 50 years, Honda confronts new challenges", http://www.nbcnews.com/id/31210955s/business- autos/t/after-years-honda-confronts-new-challenges/, June 12" 2009 Page - 8415-033-1 Honda Motor Co: Management through Waigaya Way However, it remained to be seen whether the spirited Waigaya attitude would be instrumental in managing and driving Honda. Brian Farnsworth, President, E.J. Bartells" stated, "...our people hold many untapped answers that could help our company grow even stronger than we are today. The key is how to get these out of their head and into operation. I believe this is true for most all businesses. The task of leaders then is to figure out the best way to get these ideas out. Honda's Waigaya seems to have made big strides in making this happen."41 You are permitted to view the material on-line and print a copy for your personal use until 30-Jul-2021. Purchased for use by Yos Sunitiyoso on 30-Jul-2020. Order ref F387414. Please note that you are not permitted to reproduce or redistribute it for any other purpose. 40 E.J. Bartells is the premier provider of insulation, low-to-high temperature refractory and HVAC products. 41 Brian Farnsworth, "Do you have a 'Waigaya' Process in your Company?", http://www.simplivative.com/do-you-have- a-Waigaya-process-in-your-company/, August15" 2014 Page - 9