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Innovation Management in Honda Report

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Updated: Jul 30th, 2021

Introduction

Innovation is change and for any change to be effective, it must be built on the previously existing systems and confer better results. Managers have to be keen on the innovation network for it to yield the desired results. There is also a need to involve other firms with the same vision as innovation is continuously being brought forward through collaboration.

If innovation is successful, then it serves the parent company as well as the industry at large. For this to happen, there has to be a lot of interdisciplinary networking, a seamless chain of operations that minimizes wastage in terms of both resources and time.

Innovation management is thus, the coordination of management and engineers with a view to the realization of set company goals through a laid out process. With a stable management process, opportunities arising both internally and outside of the company can be seized and new ideas presented and in the end, new innovative products.

Innovation management is not only a management or engineer issue but also a process that is inclusive of all staff regardless of where they work.

It is an evolutionary process and not a one off thing and hence, management must develop the culture of innovation by building the channels that encourage it in the company. A series of activities that include search, select, implement and capture must (Trott 2005) be instigated for there to be good innovation management.

Innovation can either be pulled or pushed, with the push coming from already invented or existing technologies that the company aims at cashing in on whereas the pull process comes from the realization that a vacuum exists where customer needs are not being adequately met. The company thus focuses its efforts in trying to close that vacuum by innovating new products for that set of market.

Both processes can only be achieved if enough information is acquired and teams that are versatile invested in. Due to the stiff competition in the market, product lifetimes have been greatly reduced and hence, innovation managers have to be faster in coming up with better products that improve on the quality of existing ones.

In this paper, we are going to critically analyze the process of innovation management in Honda using the tools of search, select, implement and eventually capture. Finally, we are going to make recommendations that are aimed at improving the management of innovations.

The reason we focus on Honda is that it has been a market leader in the motorcycle industry since 1959. Additionally, there was sufficient information on the company available for this research.

Honda is also the leading manufacturer of internal combustion engines by volume in addition to it being the largest producer of motorcycles globally. In 2001 it became the second largest vehicle manufacture in the Japanese market only exceeded by their perennial rivals, Toyota, the fourth largest automobile manufacturer in the US and sixth largest globally (Taylor 2008).

They were the first to manufacture a luxury vehicle in Japan and have since diversified their products to include generators, gardening machinery, marine engines and aircrafts. The company spends about 5 percent of its revenue on R&D (research and development).

Honda released the first hybrid electric vehicle one month before Toyota’s release of the prius, touted to be the best hybrid. The EPA had it as the most fuel efficient vehicle commercially produced in the US. The problem arose from the failure of a follow up market plan to raise necessary awareness for the products to be well received in the market and also the release of the prius which was an improvement on the Honda model.

Honda thus shows sustainability where it comes to innovation and industry change. It has produced products that continually seek to change the dynamics of the market. In this research, I shall discuss various steps of innovation management namely; search, selection, implementation and capture.

Finally, I shall make recommendations as to the best practices on the same. Through this format, it shall be easy to see how successful innovation management is done.

The 21st century is one that is characterized by many challenges. Traditionally, a company solely focused on delivering high quality products to their customers incurring the least costs while increasing efficiency. In this century however, the green movement has taken the forefront in advocating environmental responsibility.

Global warming and dumping of wastes pose a challenge for environmentalists globally and the world at large unanimously accepts that the time for action is now, if the future of generations to come is to be secured.

It is in the backdrop of these challenges that companies are working round the clock to come up with innovative ways of reducing emissions that are touted as the leading causes of ozone layer damage and consequently global warming. The companies that will manage these innovations most effectively are the ones that are likely to come out on top. In this chapter, we will focus on searching for opportunities for innovation.

As carbon emissions are the leading pollutants of the environment, automobile companies and other manufacturing firms need to take the lead in looking for ways of building alternatives to carbon.

The reduction in emissions alone is not the greatest motivator of innovation but also the total process of bringing positive impacts into the environment as a whole including reduction of other wastes used in the manufacturing process, recycling water and land reclamation.

This thus poses an opportunity for Honda to capitalize on and lead the way into the future of manufacturing without pollution. Honda can handle these issues by utilizing manufacturing methods that emit less carbon dioxide e.g. by using renewable energy instead of coal.

Human life is very valuable. Therefore, automobiles need not be ambassadors of death but rather helpful gadgets with a multiple of useful ways.

There is hence a need to make automobiles with increased safety features that reduce the risk of accidents and whose major priority is the reduction of fatalities resulting from automobile crashes. An opportunity thus arises that challenges automobile manufacturers like Honda to develop cars that prevent crashes a break from the crashing cars of today.

With technology dictating nearly all aspects of our lives nowadays, the future can only present opportunities for better technological innovations that improve our lives further.

Honda is not solely a vehicle and motorbike manufacturer, but rather a company with a wide range of products aimed at improving the lives of people. The future, with good management insight, will offer the company better opportunities to grow their range of products.

Another avenue that presents an opportunity for innovation is the discovery of new markets. Infrastructure varies from country to country depending on a wide range of factors including the income levels of the residents and the natural conditions like the geography, topography or the climatic conditions of those areas.

To build efficient machinery, a company must be able to face the challenges new markets pose and in so doing, remarkable innovations may arise. For example, vehicles that are primarily built with cold areas in mind cannot be expected to utilize the same cooling mechanism as those adorning the desert. Therefore, entry into new markets can challenge a company to be more innovative.

In the meantime, as the world is tirelessly searching for an alternative source of energy and move away from petroleum, companies are choosing to take baby steps towards this goal by producing gadgets that are fuel-efficient. The company that develops the most efficient vehicle with no emissions detrimental to the environment is going to be the market leader in technological advancement.

A multinational company looking to be the best in the market must also develop ways of producing its parts efficiently. This poses a challenge for the management in deciding where they source their raw materials centrally or individually. Innovative ways of managing this money-saving venture, can be developed and may be adopted by other companies in the future.

In addition, Honda managers should encourage competition amongst staff. This could be through the setting up of bonus schemes and performance based benefits. This could act as a trigger for innovation.

Finally, Honda should outsource those parts of its manufacturing processes that are bulky and unprofitable. This should enable the firm to focus more on issues such as research and development that require innovation but have higher returns.

Select

To choose what opportunities to capitalize on, management has to be on toes to ensure that priority is given only to those it deems most profitable and also those which champion the course of the company best and have the best interest of the wider society at heart including the environment. Strategies must therefore be crafted, which actions are going to be taken and why they are the best from the choices available.

Since every company in the world is adopting the green concept, Honda has also joined the fray with a number of noteworthy interventions.

The management has developed several plans over time aimed at the maximization of the available raw materials with minimum wastage and in line with the set international standards. It is important for the company to examine this option critically as it may be the difference between future success and failure.

A company should venture into aggressive marketing (Tidd and Bessant, 2009) to communicate to its customers its products, philosophies and other information that may give it the cutting edge it requires to make headway into the future and win customer loyalty.

Honda does market its products on different media, but rather than have a central point, their marketing techniques are disjointed and are not reflective of the collective outlook the company would like to project but rather reflect the company branches individually. To develop a successful product, regardless of where it is being marketed, there is need to set a common ground that the customers can identify with.

Investment is the driving force behind the most innovative teams because it gives engineers the confidence to experiment without any financial constraints. The fear of failure usually caused by lean budgets and rigid company policies can stall innovation and in turn retard company growth (Arnold et al 2009), missing opportunities to make headways and in the long run loosing business.

It is therefore important for a company to push for innovative thinking by encouraging failure as long as they learn from it. It is said that success only amounts to 1 percent of the effort made; otherwise, the other 99 percent is failure which preceded the success. Honda encourages its engineers and designers to challenge themselves and develop new ideas.

This concept may sometimes backfire as usually the best way to correct a mistake is to go back to the beginning and examine the basics once more rather than persisting on the same path leading to inevitable failure, ruing wasted company funds.

A lot of research work is needed to ascertain what the customer desires are. If the company products are parallel to the expectations of the customer, then the company is doomed to fail. Therefore, there is need for investment in market research and also in technology research as new materials are being developed, which may improve designs and systems tremendously.

Honda has been successful in the development of products that are widely accepted by clients e.g. the minivans and courier motorbikes, albeit against the backdrop of immense failure. For example, the first type of motorcycles that were successful in Japan was not as nearly successful in the United States due to the differences in roads structures.

In summary, Honda seems to be focused on the four areas of fuel, process, design and end-use when it comes to selecting what to capitalize on. However, Honda should not lose focus of innovation outside what is considered conventional.

Even within the four areas, Honda can still come up with ideas that can lead to a new competitive edge such as recycling of old motor vehicles which can be much cheaper than direct production. Other ideas could include designing electric bikes or those that can utilize hydrogen and other commonly found elements to fuel them.

Implement

This is the part that deals with the actions taken in order to meet the set goals and with the recommended methods. Implementation can be relatively easy depending on the information provided or it can be difficult if the information is insufficient or looks good on paper but unattainable.

Honda has over time developed a number of machines. From their initial identity as motorcycle manufacturers, they have diversified to other kinds of machinery and are even the largest manufacturers of engines. This growth can obviously been attributed to the size of investment in money, labor and technology.

The company developed its first jet which has 35 percent more efficiency in fuel consumption in comparison to jets of similar make. This was achieved by the utilization of superior materials, developed by the company, compounded by better aerodynamics, more efficient engine and body designs.

This can be considered as a landmark achievement for the company worthy of commendation. However, poor marketing has led to the low sales of this particular product.

In order to achieve the goal of achieving the car that protects against crashing, Honda developed a CRW model that featured improved systems that informed the driver if he was too near to the next car and would retract the safety belt if the driver moved forward.

This navigation breaking system, albeit with wonderful designs, has not been largely accepted by the customers as it is not easily controllable and demands too much of the driver. Many people prefer their own judgments while driving and this has contributed to the low reception that has greeted this model.

Honda has developed a pioneer humanoid robot which has intelligent capabilities after over 20years of experiments. This is a fast for the company on its many innovative fronts.

More research is needed for this model known as ASIMO as it has received massive criticism from the humanists who claim that the company is aiming at substituting the human functions, however, the company claims that the development of this robot is meant to be of assistance to humans but cannot substitute the human basic senses which we heavily rely on.

The only natural gas vehicle, which is sold in the US, is the Honda Civic GX (Gable 2008). This car has been in the market and it is the ‘most green’. With the emphasis on being green, you would expect this car to be the most sought.

On the contrary, it has received a very low reception from dealerships and consumers alike although this has been coupled by the lack of a marketing strategy from the company for this invention. Consumers sight the hefty amount of money required to buy the car and the lack of natural gas fueling stations as the reason they have not considered the car.

In an attempt to be green, Honda has outsourced its services having nothing to do with the actual manufacture of cars. The company has further set procedures it says are meant to reduce distractions in the manufacturing plants by having all staff in white laboratory coats. This they say, being a standard in all their plants worldwide, is aimed at making their operations uniform around the world (Dogson 2008).

Their plants are also very well attended to and have well-trimmed gardens, and other aesthetics not typical of manufacturing plants. In furthering their green course, they do not expend any waste as all their material are recycled or converted into sources of energy.

They have adopted a clean and green mantra and assert that what is produced under unclean circumstances cannot be expected to be of high quality. However, going green is yet to rake in actual profits for Honda, in fact it seems to be more of an obsession rather than an upgrade of operations.

Capture

This part involves getting the benefits from the actions taken during the implementation stage. It involves a coordinated efforts aimed at quantifying the monetary and the other benefits that accrue from the implementation of the innovations.

Companies mostly apply the tactic of aggressive marketing to inform customers of their products. This is also a coordinated effort that requires extensive research, planning and budgetary allocation to be successful (Wang 2009).

All innovation would be in vain if the products developed do not get the required attention in the market. In order to capture the markets attention and reap the benefits, there needs to be a relentless campaign that focuses on getting vehicles off the factory and onto the roads where they are required.

Honda has outsourced its maintenance department that deals with the upkeep of their plants in a bid to eradicating distractions that may arise from these activities.

This is a laudable maneuver, as engineers are not expected to fully concentrate on their innovative obligations and simultaneously undertake the maintenance of the facilities. The benefit of having an expert in plant maintenance is that hazards that may arise from otherwise trivial occurrences are minimized.

Innovation leads to the discovery of better materials that reduce environmental pollution. In order to attain the required levels of emission, Honda has endeavored into the production of lighter materials for their jets, which are recyclable with minimal wastages. The environmental benefits can be immense not only for the company presently but for even the future undertakings.

Honda has the best concept in the world for a vehicle that solely relies on natural gas and therefore very environmental friendly. In order for the obvious benefits to be realized from the sale of this model, the company needs to adopt a strategy that aims at reducing the purchase price of the vehicle and also availing the necessary ingredients needed for the model to run properly.

This maneuver can ensure that people invest their money on this model. Considering that the model has been in the market since 1998 and has neither been embraced by the customers nor the dealerships, there is a need to refocus on the part of the company.

Recommendations

Employees are undoubtedly a valuable resource in any company whichever level they serve at. Therefore, for Honda to make great strides towards a better future, employee involvement in matters of management is paramount. Lack of a coordinated effort that aims at giving a voice to employees can spell ultimate loss of the innovative edge. It is not the engineers who have the greatest view of what vacuum exists in the market!

It might be the staff member who is not involved in the manufacture of the vehicles but uses them on a daily basis as he commutes to work. In the past, when Honda was introduced into the US, the company was marketing motorcycles with large engine capacities.

However, the company staff used scooters to commute to and from work. It is the scooters, rather than the big engine motorcycles that elicited interest fro the local folk. The company thus endeavored into the manufacture of the Supercub which was very well received by the US consumers.

Honda’s management should venture into aggressive marketing of their products so that the customers are aware of the range of products they have. They have too many inventions that the low-key reception of some of their products point towards poor marketing strategies rather than the lack of a market.

The company, in this respect should be in a position to determine what their competitors are working on and have times when they release their products into the market. Clogging the market with many new products simultaneously may be counter productive and forces customers to adopt a wait and see attitude, in anticipation for a better design of the product from the same company.

Honda sources most of the parts they use in their assembly plants from Japan. This move is both laudable and regrettable. It is laudable in the sense that there is standardization in the manufacture of the parts and hence uniformity is possible for all models.

The move is however, a miscalculation on the part of the company as shipments from Japan into other countries are subject to delays and other unforeseen occurrences (Yoshio 2011).

Most recently, there was an earthquake in Japan that caused massive destruction and logistical nightmares and the company was inevitably affected. There should therefore be decentralization of production factors in a bid to spread risks and shelter the company from unnecessary losses.

The natural gas driven car was a good concept for this era. It has however gone against the grain of expectation and while this may point towards the lack of a marketing strategy, it also points towards the lack of adequate investment in the support facilities required to run this car.

Japanese models usually have a reputation for being affordable to customers and this is largely due to the adaptation of the concept of scale economies, where massive numbers of a product are manufactured attracting investments for support facilities, making the spare parts for these models available and affordable and consequently eliciting interest from customers.

Honda should have implemented the concept of scale economies in order to realize more sales from a better reception of this model.

Conclusion

From the above, we can draw the following conclusions:

  • Honda is one of the most innovative companies in the market today and this reputation has been built over a long period of time
  • Its success can be attributed to visionary leaders who relentlessly continued to push for better products and more involvement.
  • The company is just beginning to compete on a scale with other market leaders.
  • The firm lacks a solid innovation management plan

As initially stated, innovation management is not just the production of new technologies or products but rather the whole process including manufacturing and marketing (Burns et al 1991). It encompasses broadly all factors leading to the successful use of a product domestically or commercially without it posing a risk to either the consumer or the environment.

With the shift of the market towards the reduction of over-reliance on petroleum, there is need to have a solid innovative plan that seeks to eradicate all sources of energy tied to petroleum. For example, when constructing a hydrogen-run car, there is need to ensure that the hydrogen used is not sourced from fossil fuels (Fackler 2008).

This requires critical thinking and a total shift from the current way of thinking. To maintain sustainability, Honda should look into more long-term measures since their current policies do not seem to appreciate future challenges such as the insecurity of relying on petroleum products.

If the company was to implement the recommendations outlined in this report, then it could be on the verge of a brighter and more productive future.

References

Arnold, H. et al. (2009) Applied Technology and Innovation management. London: Springer Heidelberg Dordrecht

Burns, T. and Stalker, G. (1991) The management of innovation. New York: Oxford University Press.

Dogson, M et al. (2008) The Management of technological innovation: strategy and practice. New York: Oxford University Press

Fackler, M. (2008) Latest Honda Runs on Hydrogen, Not Petroleum. New York Times

Gable, C and Gable, S. (2008) Natural Gas Vehicles (NGVs) Available. About.com: Hybrid Cars & Alt Fuels. Web. Web.

Taylor, A. (2008) America’s Most Admired Companies: Honda. Web.

Tidd, J. and Bessant, J. (2009) Managing Innovation: Integrating Technological, Market and Organizational Change (4.ed). Chichester: Wiley.

Trott, P. (2005) Innovation Management and New Product Development. Prentice Hall.

Wang, W. (2009) Guangzhou Honda adopts new brand strategy to grab market share. Web.

Yoshio, T. (2011) Honda Exports from Japan Unlikely To Decline Soon. Dow Jones newswire. Web.

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