The new issues of Automobile Magazine just showed up, and in it is an article about the 50th anniversary of Honda arriving in the USA. Honda had a presence as a motorbike company in the US long before it was a car company. How it was able to create a toehold that blossomed into an industry-changing dominance - essentially killing the British motorbike industry in the process - is the stuff of business school legend.
I wrote up a version of this story for my book (which is coming along nicely, by the way), but it didn’t make the cut. I was going to use it as an example of how companies which are adaptive to the changing environment, and their unfolding understanding of the market context, will be able to jump on opportunities as they arise, rather than sticking doggedly to a pre-ordained strategic plan. Here it is below.
In the late 1950’s Honda contemplated a bold move: entering the motorbike market in the United States. We all know how this story turns out — today Honda is a dominant player in the US, selling a wide range of models in large numbers. But its start could not have been more improbable or less likely to succeed. It was only by staying flexible to an emerging understanding of what the problem — and the opportunities — were, that Honda succeeded in its long shot.
Honda had done well in its native Japan, leaping in a short amount of time to the number one position largely on the strength of its Super Cub model, which was based around a new lightweight, 50cc engine that Honda had developed. The engine was inexpensive which allowed the bike to be sold for a low price, an important factor in Japan’s struggling post-war economy. The Super Cub had also been designed with close attention to customers’ needs such as the ability to drive it one-handed to facilitate carrying a package in the other arm.
At face value, the Super Cub had little appeal for the American buyer. The motorbike market in the US at the time was quite small and dominated by entrenched players such as Harley Davidson, Indian, and imports like Triumph and Moto Guzzi. There were only 1,000 full-time motorbike dealers in the entire country (compared to some 10,000 today), and most bikes were either in the mold of Harley-Davidson — large, heavy, and built for noisy cruising, or were sportbikes made for performance, exemplified by Triumph. Motorbike riders were generally seen as nefarious outsiders, clad in leather jackets and riding in packs to terrorize small towns and cause trouble at funfairs, an image played up by Hollywood — think James Dean, Marlon Brando in The Wild One, and Easy Rider. Furthermore, Japanese products with funny names were looked upon suspiciously by American consumers.
In 1958 Honda dispatched Kihachiro Kawashima (who went on to become president of American Honda) and his assistant, to spend time in the US and scope out the market for Honda’s bikes. Honda had no market research of any kind, and in fact knew very little about America at all. Kawashima’s reaction upon arriving in the US was, “How could we have been so stupid as to start a war with such a vast and wealthy country?”