Honda Insight (vehicular and managerial)
The new Honda Insight — which it clearly hopes will be the mongoose to the cobra of Toyota’s Prius — is coming. Globe & Mail articles such as this seem to go behind subscriberwall, so here’s an alternate if lighterweight article.
This is the kind of competition that consumers love. Or at least, the remaining consumers — with North American auto sales rates dropping 40% (from 18 million per annum to 10 million per annum, according to the December Sprott commentary, which was posted on their website temporarily but seems to’ve re-disappeared) that should really put the “deal” in dealerships!
To me, though, Honda’s response to the slowing sales environment offers a glimpse of something deeper, perhaps even cultural. From the article:
“…[Honda] announced that managers would take a 10 percent pay cut next year.”
To me, that is responsible leadership, and the biggest reason why Japanese automakers have clobbered their American counterparts for decades. Instead of pillaging their companies for personal enrichment — Japanese senior management put the company’s benefit above their own. This earlier post covers similar ground. By taking the first hit, Honda’s management has acquired the moral authority to perform layoffs, because they took it upon themselves to take the first blow.
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The putting of companies above themselves may seem alien to people who’ve grown up in the paradigm that “economics is driven by personal self-interest”. But there’s an evolutionary analogue in some animals where there’s only one reproducing couple, and the rest of the group acts as support, without themselves reproducing. (The breeding pair get first dibs on food, for example.) Wolves are probably the most familiar example, but aren’t really a great fit since most packs are apparently nuclear families.
In these scenarios, the individuals forgo propagation of their own genes in favour of the propagation of the group’s genes. To link back to automakers, Japanese leadership elected not to enrich themselves for personal benefit, meaning the capital was available to the company for its benefit. Top American leadership in the bigger companies has sometimes fallen into the trap of enriching themselves at the expense of the company. It’s almost an economic case of biting the hand that feeds you…