2

3

Book Presentation
Honda Motor
Sakiya

by

Tetsuo

Important Note About This Ebook
This is a summary and not a critique or a review of the book.
It does not offer judgment or opinion on the content of the
book. This summary may not be organized chapter-wise but is
an overview of the main ideas, viewpoints and arguments
from the book as a whole. This means that the organization of
this summary is not a representation of the book.

4

Summary of Honda Motor
(Tetsuo Sakiya)
1. A Blueprint For The 1980s
As individuals, Japanese often lack dominant personalities but
they usually establish a very strong identity as part of a group
- whether that be a family, a corporation or a nation. While
most Western corporations are simply organizations seeking
profits, Japanese corporations tend to become communities
serving their employees. American corporations generally
follow a system of individual responsibility, while group
responsibility is more important to the Japanese.
Professor Raymond Vernon of Harvard University put
forward the product cycle model which states a corporation
goes through periods of new product integration, rapid
growth, maturity and decline. Multinationalisation is aimed at
maintaining an advantageous share of the market. When a
company launches a unique product and enjoys a competitive
edge over it’s competitors, it initially exports finished
products and will eventually expand on the strength of
cheaper capital to other countries.
The Western automobile manufacturing industry is a mature
industry, with less technological revolutions than newer
industries such as electronics and computers. As a result, the
industry managers are cautious about investing in new
facilities and greater stress is placed on short-term profits

5

rather than long-term strategies. The current plight of the
Western automobile manufacturers is not the result of the
poor quality of labor but the failure of management to
institute long-range strategies or to modernize production
facilities.
Japanese auto makers have always specialized in the
production of compact, fuel efficient cars. In the 1950s, the
Ministry of International Trade and Industry adopted a policy
of developing the automotive industry as a strategic industry
with guidelines to develop a mini-sized car for the masses.
Since then, Japanese auto makers have continued to
implement technology in the field of compact cars. When the
first oil crisis of 1973 struck the world, Japanese compact cars
were found to be exactly in line with the market and Japan’s
auto exports rose sharply.
The American auto industry’s woes were the simple result of
a miscalculation about the future demand and projected
returns for large-sized cars. Large corporations rarely admit to
errors in their financial projections and the Japanese auto
industry has proven to be a handy scapegoat.
In 1981, the Japanese automotive industry agreed to
voluntarily limit car exports to the United States. This in turn
led to the Japanese auto makers setting up organizations in
Europe, the United States and other countries in order to
become multinational corporations. All these events have led
to a reorganization of the automobile industry on a global
scale.
The strong competitive power of the Japanese has always
rested on two major achievements - technological superiority
6

(including innovations) and superiority in production. It is
particularly the second point, production superiority, that has
been a hallmark of Japanese commercial success. This
includes modern and streamlined production facilities, high
quality work force, up-to-date production tooling, close
relationships with suppliers and a workers sense of
participation in the company.
This leads to the question of whether Japan’s corporations can
establish overseas plants successfully. In the West,
corporations have multinationalized on the strength of
cheaper capital and a technological edge. Japanese
automotive companies have multinationalized on the strength
of their competitive edge in production techniques.
Honda Motor’s “Company Principle” reads,
“Maintaining an international viewpoint, we are dedicated to
supplying products of the highest efficiency at a reasonable
price for worldwide customer satisfaction.”
This principle was adopted in 1956 when the company was
quite small.
Honda Motor’s policy has never been one of simply trying to
export because the domestic market was saturated, nor of
investing or trying to build plants abroad because it was so
requested by foreign countries.
In 1982, Hideo Sugiura, executive vice president of Honda
Motor said the company’s fundamental management policy
can be stated in four parts;

7

• Create New Markets. We should not try to sell things
just because the market is there, but we should seek
to create a new market by understanding the potential
needs of customers and fully utilize our technology to
meet those needs.
• Employee Participation In Management. We believe
that good corporate management must be based on
trust. The management and employees should share a
common goal, so that each individual will play a
specific role.
• Internationalization and Local Community Relations.
A prerequisite to successfully establishing our
overseas operations is to make our products
acceptable as well as making ourselves accepted as
good corporate citizens in each community.
• Direct Approaches. In achieving goals and solving
problems, we have made it a cardinal rule to make
direct approaches with straight thinking - free from
precedents, customs or popular views. Thus we have
pursued methods different from those of other
companies, based on our own way of thinking, and
by reinforcing this difference, we have consolidated
our own corporate identity.
Honda Motor is now carrying out a wide-ranging program of
international strategies. This international outlook is
motivated by the company’s confidence in the future of it’s
technology. Kiyoshi Kawashima, president of Honda Motor
says,
“We did not mean to do anything particularly unique. It is
only that we thought about these problems from a serious,
broad and long-range viewpoint. We will not close our doors

8

to an opportunity for coexistence and coprosperity if that can
be achieved on a mutually beneficial basis with another
manufacturer of whatever country. Honda Motor will
continue to carry out independent corporate management on
the principle of equality, complementation and mutual respect
of identity.”
In the automobile industry, success is a matter of scale. The
more cars of the same type that are produced, the lower the
costs of production. The strong become even stronger while
the weak perish. Japan has had a saturated car market since
the early 1970s. Since then, Japanese manufacturers grew
through their exports. Today, however, the Japanese
automotive industry can expand only through the process of
multinationalisation, and by cooperating in the global
reorganization of the industry. Japanese
auto makers can offer technological advantages in the R&D
field and in the production processes of compact cars.
While the drama of the global reorganization continues, there
is little doubt that Japanese auto makers will be there for the
final curtain call. Honda Motor Company will certainly be a
part.

9

2. The Good Old Days
Takeo Fujisawa
Fujisawa was born in 1910 in Tokyo during a period of huge
social upheaval in Japan. The country had recently won a war
with Russia over disputed territory. The war had also proven
to be vastly more expensive than expected. The recession that
followed turned into a major depression with stock market
crashes, large-scale civil strikes, financial institutions closing
and economic collapse.
Two people played a large part in the formative years of
Fujisawa’s life - his father and Soseki Natsume, an author.
“My father was a proud man, like the ancient warriors. He
used to say that I should never think badly of myself, no
matter how poor I was. He also taught me that all men are
created equal, regardless of their social standing. What I
learned from Soseki was to put myself in other people’s shoes
when developing my thoughts. For example, if someone
makes me a business proposition, I have to judge whether this
proposition is sincere or two faced. And I can make that
judgment if I put myself into his shoes.”
Fujisawa wanted to attend Tokyo Higher Normal School on a
scholarship and become a teacher, but he failed the entrance
examination because he had spent too much time reading
novels instead of textbooks. When he graduated from school
in 1928, the depression was so severe he couldn’t find any
work, and he finally settled for a job writing addresses on

10

envelopes and postcards. He was totally humiliated with his
work and was determined that if ever he were to become a
success, he would take care that anyone working under him
should not have such feelings.
More than anything, Fujisawa hoped to become a merchant.
In 1934, he found a job with Mitsuwa Shokai, a small scale
steel merchant. His salary for the first month was only ¥15,
about one-third what he had been making addressing
envelopes. Within the first year, his monthly salary was
increased to ¥80 and by the end of the second year he was
earning ¥150 per month. When war broke out in China, the
owner of Mitsuwa Shokai was sent to the battlefields and
Fujisawa was left in charge at the age of 27.
The war boosted the demand for steel and Mitsuwa Shokai
were soon making a monthly profit of ¥200,000. The war
allowed the government to tighten it’s control over the
economy and Fujisawa diversified into manufacturing with a
¥10,000 investment in a new company, the Japan Machine
and Tool Research Institute. During this time, Fujisawa wrote
several letters to the owner of Mitsuwa Shokai seeking
permission to raise the wages of their workers but the owner
refused. Fujisawa was infuriated at the idea of freezing wages
when the company was making such huge profits, and he
made up his mind to become independent.
It was not until three years later that the Japan Machine and
Tool Research Institute was able to manufacture satisfactory
tools. At about the same time, the owner of Mitsuwa Shokai
returned from war. Fujisawa told him he wanted to be
independent and promised to repay all the money he had
borrowed from the company to establish the tool business.
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The owner, however, offered to let him keep the money as a
bonus. Applying his commercial talents, Fujisawa was able to
sell cutting tools to the military, and the enterprise made large
profits and he paid his employees generously. His employees
reciprocated by working hard, which in turn brought more
profits to the company.
In 1945, Fujisawa relocated his company from Tokyo to
Fukushima to escape the Allied bombing. Ironically, his
machinery arrived at his new base on August 15th, the day the
war ended. Always practical, Fujisawa bought a forest,
thinking that a great deal of lumber would be needed for the
reconstruction of Tokoyo.

Soichiro Honda
Honda was born in 1906. His father was known as an honest
man with the spirit of an entrepreneur. He had opened a
blacksmith shop where he also repaired bicycles which were
becoming very popular. The family was poor and Soichiro,
from the time he was a child, helped with his father’s
business. Even as a baby, he seemed fascinated with
machinery. Several miles from his home was a gasolinepowered engine in a mill, and his grandfather would carry
him there. The young Soichiro would watch the motor
operating for hours on end.
In 1922, following eight years of schooling, Honda went to
Tokyo and became an apprentice at Art Shokai, an auto repair
shop. The first task he was given was baby sitting the owners
son, but his job came to an unexpected yet welcome end when
Tokyo was devastated by an earthquake in 1923. Art Shokai
was destroyed and the owner was forced to cut back staff and
12

relocate. He kept only his most senior apprentice and his most
junior apprentice, Honda. Through this piece of good luck,
Honda received a thorough training in auto repairs.
It was also fortunate that the owner was an ardent car racing
fan, and at his suggestion Honda spent his spare time building
a race car. His first car was powered by a Curtis-Wright
8-liter V-8 aircraft engine developing nearly 100 horsepower
at 1,400 rpm. Other than the engine, Honda made everything
else on the car himself right down to the wooden wheel
spokes. The car was fast and Honda won a surprising number
of races.
After working for six years, Honda was given permission to
open his own business using the firm’s name. Thus began the
Hamamatsu Branch Office of Art Shokai. Honda continued to
devote his spare time to car racing, and came up with
innovations such as tilting the engine to the left making it
easier to run counterclockwise races and fitting the engine
with superchargers. Unfortunately the engine overheated, but
Honda solved this with his usual flair by adding an auxiliary
radiator to improve engine cooling and by making valve seats
from heat conducting materials so that excessive heat was
dissipated when the exhaust valve closed. The result was a
racer with tremendous performance and an engine that did not
blow up.
Honda not only built his car but drove it as well. In the AllJapan Speed Rally in 1936, he was leading the field and
moving at the incredible speed of 120 kph when a car that had
been undergoing repairs pulled out in front of him. In the
resulting crash, Honda crushed the left side of his face, broke
both wrists and dislocated his left shoulder. His younger
13

brother, who had been riding with him, was also seriously
injured.
In 1937, Honda embarked on a new business venture and
established a firm called Tokai Seiki Heavy Industry to
manufacture piston rings. The only problem was he could not
make them up to standard. He had already invested large
sums of money to buy the equipment, and had 50 workers
depending on him. Honda had been attracted to piston rings
for the simple fact that for such a small amount of raw
material they could be sold for very high prices. (At this time,
a piston ring was worth more than solid silver of the same
weight.)
Honda’s idea was to die cast the piston rings. He also
introduced cast iron wheel spokes to replace the commonly
used wooden spokes. However, the problem with both
products was their lack of elasticity - they would snap under
any pressure. Honda sought advice from the owners of nearby
foundries to overcome the problem, but was told that he
would not be taught the secret unless he became an
apprentice.
Honda, the president of his fledging company, and Miyamoto,
the senior managing director, stayed at the plant day and night
trying to discover the secret on their own. Life became harder
and harder and Honda had to pawn some of his wife’s
belongings. He finally realized he needed a better education,
and called on Professor Fujii of the Hamamatsu High School
Of Technology.
Professor Fujii and Professor Tashiro analyzed one of
Honda’s piston rings and discovered it did not contain enough
14

silicone. Honda later reflected, “I did not even know such a
simple thing.” So, he went to school part time. Honda would
absorb the theories in the classroom and put them to use in the
factory he owned. Within just a few months, he had learnt
enough to solve the problem with his piston rings and his
business started to flourish.
Soon Honda’s company was supplying parts and machines to
the Navy, Toyota Motor and the Nakajima Aircraft Company.
Honda invented automatic machinery to fabricate piston rings
to be operated by new workers. He also invented machine
tools for making aircraft propellers more efficiently which
earned him a reputation as an “industrial hero”.
Honda’s factory was bombed near the end of the war, and in
January 1945 the plant was almost completely destroyed in an
earthquake. Instead of rebuilding, he sold his stock in the
company to Toyota Motor for ¥450,000 (about $US800,000
today) and announced he was going to spend a leisurely year
while he waited to see what direction industry in Japan would
go. This he proceeded to do with his usual vigor and
unorthodox style. He bought a large drum of medicinal
alcohol and proceeded to make his own whiskey, spending an
entire year partying with his friends and relaxing.

15

3. Starting From A Dream
Honda’s first business venture after the war was to buy a pine
forest to produce turpentine oil to replace gasoline which was
almost unavailable. He was more experienced with engines
than explosives however, and when he set off dynamite at the
base of a tree to knock it down, he inadvertently set fire to the
entire forest. Eventually, he was able to make a working fuel
by combining turpentine oil with small amounts of gasoline
bought on the local black market.
In October 1946, Honda established the Honda Technical
Research Institute (the forerunner of what was later to
become the Honda Motor Company) in Hamamatsu. The
company’s first project was to recycle small engines used by
the Army by attaching them to bicycles. This concept proved
to be hugely successful for Honda as it ideally suited the
needs of the Japanese people at that time.
In August 1949, Honda was looking for the funding to expand
his operation and he met Takeo Fujisawa. Honda explained
his problem to Fujisawa. “I was looking for a financier in
Hamamatsu, but all the potential investors want to recover
their money quickly, and I didn’t like that”.
Fujisawa replied, “I don’t have the money now, but I will find
what you need to launch your technology”.
After only a short conversation, they agreed to work together
as a team; Honda was forty-two and Fujisawa thirty-eight.

16

Fujisawa told Honda, “I will work with you as a businessman.
But when we part, I am not going to end up with a loss. I’m
not only talking about money. What I mean is when we part, I
hope I will have gained a sense of satisfaction and
accomplishment.”
Both men were trying to outdo each other in painting large,
romantic pictures of the future - Honda in technology and
Fujisawa in business.
After forming a team, they often talked like two enthusiastic
youths. And the more they talked, the more excited they
became. Honda learned about Fujisawa’s outlook on life and
the knowledge he had gained from books, while Fujisawa
learned about Honda’s dominant personality and his
enthusiasm for technology.
Honda describes their early partnership as follows: “Both
Fujisawa and I had the same goals, but I took one route while
he took another because of his different philosophy and
personality. If we had both been taking the same route, we
might have been finished off by the first unexpected storm. We
were able to communicate with each other because we were
taking different routes.” In Honda, Fujisawa seemed to have
discovered a great untapped potential in himself, and he was
shocked and delighted.
Honda was trying to develop a motorcycle that would run
much faster than a bicycle fitted with a clip-on engine. In
1948, Honda Technical Research Institute was reorganized
into Honda Motor with Takeo Fujisawa as its managing
director and Soichiro Honda as president. Honda spent most
of his time at the factory and research laboratory while
17

Fujisawa devoted himself to sales and corporate management.
Honda felt his life to be most worth living when his hands
were covered in grease, but he realized he needed a corporate
organization. To him, the company was nothing more than a
“temporary building”. Fujisawa was doing his best to make
the “temporary building” more permanent.
At this time, Honda sold motors only which were then fitted
to a frame by the dealers. The problem with this arrangement
was that Honda could only sell as many motors as frames
were available. The frame manufacturer was unable to keep
up with the demand. Fujisawa was flabbergasted when Honda
went over to try to teach the frame manufacturer how to make
better and more frames. He considered this to be like helping
the enemy.
The first prototype Honda motorcycle was finished in August
1949 and was called Dream Type D. It was powered by a
98cc, 2-stroke engine with a maximum output of 3
horsepower. Fujisawa told the dealers that if they wanted to
sell the Dream, they had to stop doing business with any other
motorcycle manufacturer. This was an agonizing decision for
many of them, and confusion reigned. Some of the
distributors even threatened Fujisawa with knives.
This drastic requirement did result in some distributors
dropping out. However, Fujisawa promptly filled each open
territory with a new dealer loyal to Honda until a distribution
network of more than forty dealers was established.
In March 1950, the Tokyo sales office of Honda Motor was
established to serve as a controlling body for the dealers in
the greater Tokyo area. At the same time, Honda Motor
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bought a sewing machine plant in Tokyo and remodeled it
into a motorcycle factory producing Dream Type D machines.
However, initial sales were disappointing.
The Dream Type E was introduced in late 1951 featuring a
revolutionary 4-stroke overhead valve 146cc engine. This
model was so popular that the Tokyo plant became chaotic.
The planned production rate of 300 units per month was soon
boosted to 900 units per month. Honda Motor, without any
organizational structure whatsoever, ran help-wanted ads in
newspapers almost every day and hired nearly everyone who
applied. Most of the newcomers went straight onto the
production lines.
Honda himself often came down to the factory floor, wrench
in hand, to help tighten bolts. A bolt that had been tightened
by a young worker made two more turns when Honda
tightened it himself. “You damned fool. This is how you’re
supposed to tighten bolts’” shouted Honda as he hit his
employee over the head with the wrench. Shouting in public
was his way of education, and before long everyone became
quite nervous at the mere sight of Honda holding a wrench.
But his style of education seemed to have the desired effect.
Honda’s mind was the repository of drawings for all sorts of
components. As required, he would put the design on paper
and send a young employee to the suppliers with an order to
make the component. Even before the first messenger had
arrived at the suppliers, Honda would tell another employee,
“That first drawing was no good. Here’s a new one. Have
them follow this drawing instead.” The suppliers were
understandably upset, and when they asked the young
messengers when Honda Motor intended to pay, they were
19

told “Money is something else. Another man will come by to
discuss that with you.”
Fujisawa meanwhile kept working on the distribution
network. He came up with an innovative way to fund the
company’s growth. Fujisawa persuaded the distributors to
forward to Honda Motor any money they received as deposits
on future sales. This meant Honda was able to finance its own
growth. Fujisawa was still the only salesman, and the fact that
the company did not have a huge bureaucracy at the head
office seemed to stimulated growth.
By the end of 1951, Honda needed still more money to
expand and an approach was made to a bank. A line of credit
of 2 million yen was secured on the strength of the Dream
Type E sales. Meanwhile, Honda was thinking about how to
improve his product’s design constantly. When a good idea
would come to him in his sleep, he would wake up and take
notes in the middle of the night. To outsiders, he was
considered a strange person because he wore gaudy shirts
instead of the usual white shirt and dark business suit.
What emerged from these struggles was the Cub Type F
which was completed to prototype stage in March 1952. This
was a 50cc engine that clipped onto bicycles.
Fujisawa came up with the creative idea of offering this
engine directly to the nation’s 55,000 bicycle retail outlets
rather than through their motorcycle dealers. Honda was able
to establish a distribution network of some 13,000 dealers
virtually overnight. By April 1952, money was pouring into
the bank in the form of advance payments. This engine was
produced at Honda’s original plant and became an immediate
20

sales success. Some of the dealers came to Honda Motor with
huge sums of money - 2 or 3 million yen - asking to buy out
the remaining stock.
Fujisawa’s real aim was to develop separate dealer networks
for different models, a novel idea at that time. However, some
of the more powerful distributors of the Dream Type E soon
got together and demanded access to the Cub as well, and a
bitter confrontation ensued. Fujisawa stood firm and the
popularity of the Honda product meant the dealers had to
back down.
The money flowing from the parallel distribution networks in
the form of advance payments funded Honda Motor’s vast
expansion program during 1952 and 1953. Two new models a high performance bike, the Benley and a scooter, the Juno were introduced following the now familiar pattern of
separate distribution networks and advance payments. By this
time, the Honda name meant that guarantee money was
required from the new dealers to secure an exclusive sales
area.
By 1954, Fujisawa was aiming for a monthly turnover of 1
billion yen, roughly comparable to Nissan and Toyota. His
financial planning was still based on raising temporary
operating capital through advance payments for the products.
What he did’nt know was that a major crisis was about to
devastate the company, a crisis that would push Honda Motor
near bankruptcy.

21

4. The Union Cometh
Both Honda and Fujisawa were shocked when their workers
formed a union in mid-1953. Until that time, neither had ever
thought about labor problems, and the idea of confrontational
politics was deeply disturbing to both of them.
Honda said, “I then decided that the most important thing at
Honda Motor is for the company to seek to come as close to
the workers as possible, and thus to create a human
relationship of mutual trust.”
The greatest problem facing Honda was not the union but its
customers. Customers were complaining about all of the
Honda models and sales were way down. This was
particularly serious for Honda Motor as they had financed
their growth through temporary manipulation of their finances
- the early recovery of money for products sold combined
with a delay in making outstanding payments. In 1954, sales
were only half their projected volume and Fujisawa
considered declaring bankruptcy or having their bank appoint
a receiver.
Interestingly, the worst was averted when the managment met
with the union and made them aware of the company’s
situation. The union made a workers declaration of support
for the management, and a special effort was made to step up
production of the only model that was still selling well, the
200cc Dream. In fact, from April 20 to May 8, the workers
took no days off and sometimes worked all night. Meanwhile,
Honda had a dream that the problem with the 200cc motor

22

was the carburetor, and he visited Mikuni Kogyo, a carburetor
manufacturer. This soon resulted in a new carburetor which
solved all problems with the Dream Type E.
Fujisawa met with the company’s creditors and got them to
agree to give the company time to meet payments for the
materials
already supplied, and to continue to supply goods in the
meantime. Honda Motor Company was able to survive the
first downturn in its sales, but only just.

23

5. You Meet The Nicest People…
In 1954, Honda made a statement that the company intended
racing at the prestigious Isle Of Man Tourist Trophy. Honda
recalls the positive effect on company morale this had at the
time Honda Motor was going through a crisis. “Most of the
workers were so young that they were quite attracted to the
idea of winning races. Particularly since we had lost the war,
the idea of hoisting the Japanese flag at the Isle of Man gave
them much excitement. It really raised their blood.”
In June, Honda went to the Isle Of Man to study the race. He
discovered the British anti-Japanese sentiment for himself,
and especially disliked being called a “Jap.” Worse, however,
he found the motorcycles being raced had engines which were
three times more powerful than Honda’s using components
such as chains and tires that were far superior to those
produced in Japan. He said, “How little I know about the
outside world! I may have been too audacious in making that
declaration.”
The greatest problem facing him was how to increase engine
speed without destroying the motor. Honda left the drawing
of blueprints for his new engine to Tadashi Kume and Kimio
Shimmura, two young engineers. This was the opposite
approach to the typical Japanese company which assigns its
most important projects to its most senior engineers, but
Honda as usual paid no attention to such traditions.
The first racing engine encountered a number of problems
when running at high speed, especially with the rod

24

connecting the piston to the crankshaft. Honda suggested
lightening this rod whereas his young engineers had been
trying to make the rod heavier and stronger. They tested
Honda’s suggestion and realized a major technical
breakthrough. Meanwhile, Honda was working with a chain
manufacturer to produce a chain that was both light and could
withstand the rigors of racing.
Honda pushed the design team further still. “Even if we have
a machine with the same level of performance as those of our
competitors, we still couldn’t win a race without a top-notch
rider. We have to develop a racing machine with a superior
performance that would win even without a superior rider.”
A study was launched to determine whether the energy
generated by fuel combustion in the new engine was being
utilized to its fullest extent. Honda firmly believed there must
be ways of generating more power, and carried out research
into combustion. This was an innovative approach that no
other vehicle manufacturer in the world was studying at that
time. They discovered that the shape of the combustion
chamber influenced combustion more than any other factor,
and modified the engine design accordingly.
Honda said, “We should never imitate foreign technology. We
must win the Isle Of Man Tourist Trophy Race through our
own technology, however hard it is to develop.”
By the time Honda returned to the Isle of Man in 1959, his
racing machines had twice the power of the foreign bikes. In
1959, Honda Motor placed 6th, 7th and 8th, winning the
manufacturer team prize. In 1960, Honda placed 4th through
6th in the 250cc category and 6th through 10th in the 125cc
25

class. Victory was finally achieved in 1961 when Hondas won
the first five positions in both the 250cc and 125cc categories.
Honda was overjoyed, saying “Only by winning the Isle of
Man can we open the way to becoming a world enterprise
and selling our products internationally.” These races had
improved Honda’s engine technology and dramatically
elevated the technological standards of the Japanese
motorcycle industry as a whole.
Meanwhile, Fujisawa was trying to develop a long term
strategy for Honda Motor. The first priority he set was to
develop a lightweight, high-performance motorbike which no
other manufacturer could match. He kept reminding Honda of
this project, and finally in 1957 Honda showed him a full size
mock-up of a new motorbike. Fujisawa was very impressed,
and predicted it would sell in excess of 30,000 units per
month. This model came to be known as the Super Cub and it
had a 50cc engine, centrifugal clutch, electric starter and a
step through configuration. Fujisawa was so convinced of the
success of this machine that he began construction of a large
factory in Suzuka City. Even though the company’s best
selling current model was only selling 2,000 to 3,000 units
per month, this factory was designed to manufacture 30,000
motorcycles per month from the outset. Many outsiders
thought this plan was reckless - later events would prove that
Honda Motor was simply ahead of its time.
Many new procedures were adopted into the new plant. The
board of directors did not impose any restrictions on the cost
of the plant, but insisted the plant meet three criteria;
(1) the investment had to be recouped within a given period
of time;
26

(2) the plant had to be capable of serving as a model for other
production facilities; and
(3) harmony with the local communities had to be maintained.
All other details, including the plant layout, were left in the
hands of young employees who were greatly excited by the
ides of designing their own facility. The new plant was
completed in 1960.
With buoyant domestic sales in Japan, Fujisawa now turned
his attention to exporting these bikes. At that time, few
Japanese companies had the resources and know-how to
develop overseas markets. Fujisawa considered it absolutely
necessary to establish an overseas subsidiary under the direct
control of corporate headquarters rather than relying on an
overseas sales network. In his mind, it was important to
establish both a sales center and a service facility so their
products could be properly adapted to local conditions.
The question was which market to approach first.
Conventional thinking suggested South-East Asia would be
the most appropriate. Fujisawa disagreed, insisting that the
American market must be explored first, reasoning that the
world’s consumer market originated in the U.S.A., and goods
which were not accepted there would not find markets
elsewhere. The United States was the most affluent country in
the world, and automobiles were by far the most popular form
of transport. However, the U.S.A. motorcycle market was
only 60,000 units per year at that time.
In 1959, American Honda Motor Co Inc was established in
Los Angeles. At first, sales were dismal. Fujisawa noticed at

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sales conventions that most of their dealers wore soiled
overalls and had dirty, grease covered hands as they were
using existing motorcycle shops to sell their products. They
also discovered
most people associated motorbikes with juvenile delinquents.
Honda approached this problem with a two prong attack;
Firstly, they established new dealerships to sell the Super
Cubs through sporting goods stores and hobby shops; and
secondly, they launched a major advertising campaign built
around the theme “You meet the nicest people on a Honda!.”
This marked the beginning of a huge upsurge in motorcycle
sales in the U.S. as a smart means of transportation for the
general public.
In 1962, Honda established Honda Benelux N.V. in Belgium
manufacturing and marketing the Super Cub, but they failed
to appeal to European tastes and the company remained in the
red for ten years. Fujisawa refused to withdraw from
Belgium, reasoning that, “We shouldn’t depend on exporting
finished products alone. Accumulating overseas experience is
important for our future growth.” Meanwhile, American
Honda was Japan’s first successful American subsidiary of
the Japanese Motor Industry, and by 1963 was exporting
148,000 units to the U.S.A. Fujisawa thought, “In our
country, companies always seek protection from the
government and want to have the entry of foreign competitors
blocked. The Americans, on the other hand, are quite openminded about accepting foreign companies. What great selfconfidence they have.”

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6. Automobiles, Racers and Research
Honda Motor was by 1961 scoring one motorcycle success
after another, and Soichiro Honda now wanted to expand into
the automobile field. The first challenge to this idea came
from an unexpected quarter - Japan’s MITI had come up with
an auto industry plan which precluded any new vehicle
manufacturers from entering the marketplace. Hearing of this
scheme, Honda was enraged, “Are the bureaucrats trying to
block our plans to build cars? Democracy is meant to make
individuals happy. I have fostered my own business, made
profits and paid taxes, thus contributing to the nation. Why is
it that a private enterprise such as mine has to be sacrificed
for the sake of the nation?” Fujisawa was similarly angered
by this threat.
The practical effect of the proposed bill was to accelerate
Honda’s schedule for starting car production, with the hope
that the company’s entry into the automobile field would be
seen as a fait accompli. Thus, in 1962, Honda exhibited at the
Tokyo Motor Show a light-duty truck and a prototype sports
car. The company sponsored a contest in which the public
were invited to guess the price of the new car, and 5,730,000
postcards were received. By this means, the proposed bill was
finally dropped.
Fujisawa is said to be a contemplative businessman. In the
early days, he had assumed the role of a dictator. Later, his
methods changed and he would usually go no further than
dropping hints about his theories. He came to believe that a
true leader should stay away from specific decision making,

29

providing instead an environment where workers would take
their own initiative in making judgments and carrying out
specific actions. This strategy was not always easy on his
subordinates. To them, it was like being told the first half of a
poem, with instructions to complete the verse.
A good example of Fujisawa’s leadership occurred in 1966
when sales fell to an all time low at American Honda.
Fujisawa visited the U.S. and realized the problem was the
Super Cub’s styling had not changed in the first six years of
its product life. Returning to Tokyo, he took steps that were
completely contradictory to what common sense would
dictate. He suspended all exports to the U.S.A. until a new
model could be developed the following spring. He also
sought loans to finance the existing inventories of old models.
He had American Honda paint the old models in gaudy colors
intended to appeal to the 60s generation’s love of alternate
lifestyles. And then he went away on vacation leaving his
subordinates to work out the details. By mid 1967, American
Honda was right back on track with all loans repaid, the new
model selling well and the huge stockpile of old models
already cleared.
Meanwhile, Honda Motor’s R & D Center had announced
plans to compete in Formula 1 Grand Prix races. This project
began to take shape in 1963 when a prototype engine was
developed. The goal was to reach 270 kph so the project was
thus named RA-270. Winning a Formula 1 Grand Prix was,
and still is, the greatest honor that can be achieved in
automobile racing, and the company decided to begin it’s
racing program in the Monaco Grand Prix of 1964. This left
no time to design a chassis, and Lotus of Britain was
contracted to produce a chassis and body. However, just three
30

months before the event, Lotus announced they could not
provide any help at all and Honda Motor was forced to do
everything itself.
An American driver Ronnie Bucknam was enlisted to drive
the car which was dubbed the RA-271. It featured a
12-cylinder engine specifically developed for Formula 1. It
missed the 1964 Monaco Grand Prix, but made its debut at
the 1964 German Grand Prix in August, at which it crashed
after 12 laps. The initial straight line speeds of the car had,
however, been very encouraging to Honda. At the next race
that year, the car retired with a badly overheated engine after
thirteen laps. This problem was to persist with the team
throughout the rest of the 1964 season.
For the 1965 season, a second driver was added with Richie
Ginther joining the team. The new RA-272 was introduced
with very good power but continual mechanical problems
meant the cars had no endurance for the races. Honda Motor
had a reputation for having done better in motorcycles than in
racing cars. However, in the Mexican Grand Prix (the final
race of the year), the racing cars finally kept going and
Ginther won the race by 2.89 seconds.
From 1966 to 1968, Honda Motor continued to participate in
Formula 1 racing with a succession of new models. Almost
without exception, the engines were powerful but
inconsistent. The technical development of these engines was
spearheaded by Soichiro Honda himself, who insisted that an
air cooled engine was the only way to go. Every other
manufacturer had water cooled engines in use. 1968 ended on
a tragic note when a driver in one of the Honda team cars was

31

killed during the running of the French Grand Prix. Honda
withdrew from Formula 1 racing.

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7. The Great Engine Dispute
Honda’s road going motor vehicle design principles
embodied two principles - air cooled motors and front-wheeldrive. His first compact car, the N-360, was an immediate
success and soon became the top seller in Japan. Honda
continued his development role and in 1969 a new model was
introduced, the Honda 1300. This car featured an air cooled
engine, front wheel drive and front wheel disk brakes. Honda
wanted to come up with new, even higher-performance air
cooled engines. Many of his engineers did not agree with this
idea, and used to sneak off to design water-cooled engines.
Matters came to a head when new emission standards were
mooted by the American legislators. Honda thought they
could be met by an air-cooled engine. His engineers thought a
water-cooled engine was essential. The battle raged until the
engineers met with Fujisawa and explained their dilemma to
him. He then met with Honda, and finally persuaded him to
drop his development work on air-cooled engines. Since
1969, all Honda motorcars have been water cooled.
Even Honda’s outstanding technological instincts could not
overpower the organizational structure of the engineers at the
R & D center. He was secretly pleased the engineers he had
been educating were now grown up. “Naturally I was
chagrined many times, but oblivion is a wonderful thing. As I
liked machines more than anything else, every time I felt low,
I was able to forget things by tinkering with machines. That
has been a great blessing to me.”

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At Honda Motor, a great deal of authority is delegated to the
lower ranks, reflecting the corporate confidence in the
enthusiasm and abilities of the employees as well as the
company’s desire to encourage the hopes for the future. The
members of the board of directors take no role in the hiring
process, leaving that entirely to middle-management. Honda
often told his employees, “Don’t try to hire people just
because you like them. You often find outstanding people
among those you don’t particularly like.”
In 1970, Honda Motor faced its third major challenge - the
Ralph Nader inspired consumer movement for safer cars. A
Japan Automobile Users Union had been established which
demanded huge indemnities from manufacturers, claiming
that some of the accidents involving their vehicles were due
to defects. This caused severe disruption to Japanese car sales
volumes until late 1971 when two union leaders were arrested
for trying to blackmail Honda Motor for about 1.6 billion yen.
For this period, the car sales business of Honda Motor was
subsidized by the motorcycle sales divisions.
Fujisawa observed, “I thought the Company would be forced
into bankruptcy by some outside forces. The earlier crises
were all due to mistakes made within, and we were able to
rectify those situations through our own efforts because we
were at fault. But this time we could not do anything, because
the cause of the crisis did not exist in the company. We had no
choice but to wait and see. However, the collective leadership
functioned very well. Neither myself or Mr Honda said
anything to the four senior managing directors about their
handling of the crisis, because we thought they had to be
trained and to gain experience to prove themselves as being
capable of running the company in the future. They did a very
34

good job indeed and it was most gratifying for us to see that
they had now matured.”

35

8. The Legacy Of The Founders
Fujisawa’s underlying management philosophy was that
managing an enterprise is like weaving a cloth, in which the
corporate management philosophy must not move.
Acknowledging the old Japanese sayings that “All is flux”
and “Those who flourish are destined to fall into decline”,
Fujisawa began in 1954 to set up a modern organizational
structure. He always looked for the company’s “blind spots”
that prevented the fullest utilization of individual skills. He
was always driven by the belief that Honda Motor must
continue to flourish or it would start to decline.
The first concrete example of this philosophy was the
establishment of an expert system and the second was the
autonomous status given to the Honda R&D Center. “We
must not continue relying on Soichiro Honda forever. We
cannot be assured of continued corporate activity unless we
have not just one but many Soichiro Hondas. We must foster
experts in various fields. And we must establish an
organizational structure in which such experts can fully
exercise their skills.”
He realized that there were fundamental differences between
a research and development department, whose mission was
to study advance technologies and be prepared to face many
trials and failures, and a production department, whose
purpose was to mass produce goods, accumulate profits and
not make mistakes. These two departments cannot and should
not be operated under the same financial or organizational
structure.

36

Fujisawa described the structure of the R&D department as a
“paperweight” type, consisting of “lone wolf” engineers
devoted to their respective technological fields. “The driving
force behind corporate success is ideas. Priority must be
given to the ideas of those who work there, rather than to the
technology itself. True technology is the crystallization of
philosophy.”
Each R&D engineer is entitled to choose and register a
research theme, and after proper evaluation can pursue that
project alone if he prefers. Alternatively, he can form a
project team without any political restraints, allowing him to
get the right people in the right position. The general manager
of R&D is expected to act as a “lubricant”, making sure each
project team functions smoothly. Each project team is
encouraged to start more than one work along the same theme
at the outset, so that the results can be compared and the best
finally chosen. Technology is the driving force for the growth
of Honda Motor, and R&D is the vanguard.
In the production company, Fujisawa developed an expert
system, with an aim to make experts out of as many company
employees as possible. He tried to create an organizational
structure which was not pyramidal in nature, so that experts
were not bound to a single immediate superior. The
production company’s organizational chart ran sideways and
vertically, resembling a spiders web.
Fujisawa also introduced other innovative ideas. For example,
he streamlined production process paperwork to try to reduce
costs without increasing production. He also cut out all
paperwork wherever possible, preferring instead to carefully
record components and goods at the entrance and exit of the
37

factory. A filing system was introduced whereby anyone from
any department could understand the work flow. He
introduced graphs to replace numbers for better
understanding.
Fujisawa and Honda both retired together on the 25th
anniversary of the founding of the company in September
1973. Honda was sixty-six and Fujisawa sixty-two.
The secret of Honda Motor’s success lies in the fact that its
founders were fully aware of their own limitations. Honda
almost never attended the board of director’s meetings except
in the very early days. Fujisawa stopped attending them in
1964 after the establishment of the executive board system.
The entire corporate management was left in the hands of the
four senior managing directors. “Imagine what would have
happened if we had attended the meetings. The other
members would have simply listened to us and thought how to
please us. If they were left alone, on the other hand, they
would do their best to achieve the best management. If the
board came up with a wrong decision, all we had to do was
tell them to think it over,” said Honda.
Soichiro Honda opened a private office on his retirement in
Tokyo and now keeps himself busy tacking problems related
to technology and philosophy through the Honda foundation.
Technology has always been his love and his dream. “Life is
not worth living if one cannot do what one likes most” he
says. He also funds and runs the International Association of
Traffic and Safety Sciences holding symposiums on traffic
safety problems.

38

Fujisawa lives surrounded by the works of modern art of
which he is so fond. He seldom comes to the office and and
spends time taking care of his gardens.

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