>Honda and Enterprise Architecture

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Enterprise architecture helps to define, structure, and govern the business processes and enabling technologies of the organization. It packages this into an identification of the as-is, to-be, and transition strategy. EA is a methodology for planning and governing.

Some companies though, such as Honda, function more by a seat-of-the-pants approach than by EA.

Fortune Magazine, 17 March 2008, reports that “the automaker’s habit of poking into odd technical corners sets it apart—and gives it a big edge on the competition.”

Honda is a huge, highly successful company. “Since 202 its revenues have grown nearly 40% to $94.8 billion. Its operating profits with margins ranging from 7.3% to 9.1% are among the best in the industry. Propelled by such perennial bestsellers as the Accord, the Civic, and the CR-V crossover, and spiced with new models like the fuel-sipping Fit, Honda’s U.S. market share has risen from 6.7% in 2000 to 9.6% in 2007.”

What is Honda’s secret to success?

The wellspring of Honda’s creative juices is Honda R&D, a wholly owned subsidiary of Honda Motor.”

“Honda R&D is almost the antithesis of EA’s planning and governance.”

Honda R&D “lets its engineers, well dabble,” so much so that even the president and CEO of Honda says “I’m not in a position to give direct orders to the engineers in R&D.” Honda gives a lot of latitude to its engineers to “interpret its corporate mission” to the extent that their engineers have been known “to study the movement of cockroaches and bumblebees to better understand mobility.” R&D pretty much has free rein to tinker and figure out how things work, and any application to business problems is almost an afterthought.

This “more entrepreneurial, even quirky” culture has helped Honda find innovative solutions like fuel cells for cars that are “literally years ahead of the competition”. Or developing a new plane design “with engines mounted above the wings; this has made for a roomier cabin and greater fuel efficiency.”

At the same time, not having a more structured EA governance approach has hurt Honda. “When Honda launched the hybrid Insight in 1999 for example, it beat all manufacturers to the U.S. market (the Toyota Prius came six months later). But while the Prius looked like a conventional car, the Insight resembled a science project; it didn’t even have a back seat. Honda halted production in September 2006 after sales dropped to embarrassing levels. Toyota sold more than 180,000 Priuses last year.”

Honda is learning its lesson about the importance of planning and good governance, and now, they “tie [R&D] more closely to specific business functions” and “as a project approaches the market, the company is asserting more supervision.”

R&D and innovation is critical, especially in a highly technical environment, to a company’s success; however even R&D must be tempered with sound enterprise architecture, so that business is driving technology and innovation, rather than completely doing technology for technology’s sake.

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