Mr. Iacocca, Meet Mr, Honda

Chrysler's famous chairman may be the best of America's auto men, but as a manager and an industrialist, he doesn't hold a candle to Japan's most successful entrepreneur.

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Lee Iacocca and Soichiro Honda are, arguably, the two most famous auto men of our time. But that's where the similarity ends.

One is a grease monkey in the grand American tradition of Henry Ford, William C. Durant, and Walter P. Chrysler. An innovator with a common touch, his loathing for government and government bureaucrats is exceeded only by his fascination for motorized travel. He understands not just what consumers want, but also what they need.

The other is a veteran corporate manager, an obedient underling whose career has been a succession of well-calculated steps up the ladder. His passion for authority even extends to government, whose power and bureaucracy he would turn loose for the greater glory of the nation's industry.

If you thought the first was Lee Iacocca, you're wrong. For it is Soichiro Honda who is the genuine article, the spiritual descendant of the founding giants of the Motor City. Here is the Japanese businessman who built what has grown to a $5-billion business by bucking Japan's famous government planners and establishing a corporate culture based on creativity, not obedience. Although it would probably never occur to Honda to write a best-selling autobiography trumpeting these qualities, he spoke volumes recently in a rare interview with INC. His subject: the differing cultures of the American and Japanese auto industries.

It is one of Lee Iacocca's favorite conceits that the basis for Japan's industrial ascendancy was the manipulative planning of Japan's Ministry of International Trade and Industry (MITI). "Japanese industry is not playing by itself," he explained in his autobiography. "It's backed to the hilt in its close relationship to the Japanese government in the form of MITI."

Soichiro Honda's cheeks flush when he hears such accusations. MITI, which has always been the pure expression of Japan's in-bred Tokyo University elite, has never had much use for rough-hewn Honda or his company. When he started revving up motorcycle production after World War II, MITI officials were uncooperative, claiming, as he remembers it, that his fast-growth strategy "bordered on insanity." Then 15 years later, MITI again tried to block his forays into the auto business, claiming that Japan needed fewer, not more, automakers. "Probably I would have been even more successful had we not had MITI," explains Honda, who was forced to wage a bitter struggle against MITI in the Japanese parliament in order to launch his car division. "MITI was incapable of making automobiles, but I was."

Now Honda has done more than simply make cars. The business he started, Honda Motor Co., has created a succession of products, from the tiny, low-end Civic to the tony, highly advanced Acura line. Did his infant company benefit years ago from Japan's tariffs and trade barriers? Sure. But these protections have since been significantly reduced, and can hardly explain away Honda's brilliant assault on the huge U.S. auto market.

In reality, Japan's success in America is a product not of a highly managed Japanese car market, but one that is intensely competitive, a free-for-all crammed with companies such as Honda, which rejected MITI's call for cartelization. And as often happens, competition has generated a tremendous amount of innovation. Toyota, for example, has developed a worldwide reputation for the best manufacturing technology. Mazda, like Honda slated for automotive oblivion by MITI, seized upon the rotary engine and, despite massive engineering and marketing problems, developed one of the most exciting sports cars on the market. Another upstart, Subaru, pioneered the mass-marketing of four-wheel-drive automobiles.

Does the American auto executive draw any lessons from the competitive Japanese domestic marketplace? Apparently not. Lee Iacocca opines that the American auto industry probably needs still further consolidation. He has stated, for instance, that a merger between Chrysler Corp. and his old employer, Ford Motor Co., would make "a lot of sense." And at another time, one of his pet projects was to link up with Volkswagen in a scheme he called the Grand Design. This is the kind of oligopolistic logic for which MITI is famous.

Of course, Iacocca, the father of the Chrysler bailout, is hardly one to talk about too much government interference in the marketplace, although he does it all the time. More recently, Chrysler has chalked up millions of dollars in profits, which Robert B. Reich and John D. Donahue, who have written a book on the Chrysler bailout, attribute directly to "voluntary" import restraints negotiated by those dreaded government bureaucrats. Actually, voluntary restraints were merely a compromise -- what Iacocca really wanted was import quotas.

By contrast, Soichiro Honda has made his way in the auto world by mastering the marketplace, not the political system. His is the entrepreneur's classic faith that a small firm, acting decisively, can outmaneuver larger players in government or in industry, American or Japanese. "We feel that strength is weakness, and weakness turns out to be strength," Honda explained sitting in his modest office in downtown Tokyo. "If they are human, so am I."

It is unlikely Honda would ever become, like Iacocca, the darling of Wall Street -- certainly not with views like: "I always had a stronger desire for work itself than for money -- the desire to explore something new that other people haven't done. I don't want to walk on the path that is already created by other people."

Actually, Honda's preference for the path not taken was more than simply a corporate philosophy. Early on, it became a marketing strategy as well. "Our maketing people were told that Americans would never buy motorcycles," he recalls with an impish grin. "Then we started thinking: 'How can we modify a motorcycle in such a way that the Americans would like to buy them?' Then our thinking pattern went to: 'Well, let's make some kind of motorcycle that can be carried in a car.' If you want to go fishing, you don't expect to find many fish in areas that are accessible by car. So you want to get off from the car and ride on a motorcycle to where you expect to catch many fish.

"I didn't even have money to conduct market research," Honda continues. "I had to rely on intuition, believing that what I like must be liked by other people." And Honda's intuition told him that humans have a "natural desire" to get to remote places quickly, where fish are biting or the wildlife is plentiful -- and it told him that this was especially true of Americans, whose country is so spacious and whose national identity is so caught up with the idea of the wilderness.

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