If you are uncomfortable with the thought that strategies are more than plans, indeed, sometimes the violation of plans, consider this striking example of Honda, whose greatly successful strategy in the motorcycle industry in the United States was described by a consulting form as brilliantly deliberate until a researcher sat down with the Honda managers to investigate what really happened. This story became a turning point in the field of strategic management, hitherto fixated on deliberate strategy.
After World War II, with their economy devastated, the people of Japan could not afford to buy automobiles. So Honda developed small motorcycles, to sell alongside their established big ones—with great success. Subsequently, in 1959, the company entered the American motorcycles market, and by 1966 captured 63% of it, at the expense of the established American companies and British importers, especially with their small motorcycles. [MY REF? R&F?]
The BCG Consulting Group wrote a report for the British government to explain this remarkable success. Essentially, it came down to this:
The Japanese motorcycle industry, and in particular Honda, the market leader, present a [consistent] picture. The basic philosophy of the Japanese manufacturers is that high volumes per model provide the potential for high productivity as a result of using capital intensive and highly automated techniques. Their marketing strategies are, therefore, directed towards developing these high model volumes, hence the careful attention that we l1ave observed them giving to growth and market share. {EN1975: 59 BCG Report, or else, maybe better, from Pascale]
Richard Pascale of the Stanford Business School, who had written a prominent book about Japanese management [REF1981], was suspicious, and so he interviewed the Honda managers who had managed this success, to get their side of the story:
In truth, we had no strategy other than the idea of seeing if we could sell something in the United States. … our focus was to compete with the European exports. We knew our products at the time were good but not far superior. …..after some discussion and with no compelling criteria for selection, we configured our startup inventory with 25% of each of our four products¾[in dollar value terms] heavily weighted toward the larger bikes….
We were entirely in the dark the first year. We were not aware that the motorcycle business in the United States occurs during a seasonal April-to-August window¾and our timing coincided with the closing of the 1959 season… By spring of 1960, we had 40 dealers and some of our inventory in their stores¾mostly larger bikes. A few … began to sell. Then disaster struck.
By the first week of April 1960, reports we’re coming in that our machines more leaking oil and encountering clutch failure. …we had to dig deeply into our precious cash reserves to airfreight our motorcycles to the Honda testing lab in Japan… But in the meantime, events had taken a surprising turn.
Throughout our first eight months, following Mr. Honda’s and our own instincts, we had not attempted to move the 50cc bikes. While they were a smash success in Japan… they seemed wholly unsuitable for the US market where everything was bigger and more luxurious. As a clincher, we had our sights on the import market¾and the Europeans, like the American manufacturers, emphasize the larger machines.
We used the Honda 50s ourselves to ride around Los Angeles on errands. They attracted a lot of attention… But we still hesitated to push the 50cc bikes out of fear they might harm our image in a heavily macho market. But when the larger bike started breaking, we had no choice. We let the 50cc bikes move.
The rest as they say, is history, but not just about Honda. Pascale’s story became a turning point in the field of strategic management that was so fixated on deliberate planning. While BCG saw what it believed, the vivid example of Honda legitimized efforts to recognize emergent strategy as a learning process.
Now, imagine yourself the manager of a British motorcycle company being handed the BCG report. Read it, and you had better go straight back into your office and do ever better competitive analysis. But what if you were handed the Honda manager’s account, instead? You might sell your Rolls-Royce, move to Milwaukee, and start driving motorcycles around.