"Honda's New CEO is Also Chief Innovator" is the recent Businessweek headline.  Think of the contrast with GM.  Both companies have seen their auto sales hurt this year.  Although the downdraft at GM is about 130% of that at Honda.  But the reactions to the weakness could not be different.

GM kept trying to sell more of its existing cars until it finally declared bankruptcy, dropping half its models and all its obligations. Then the same people that lead GM into bankruptcy remained in place.  While the Chairman was forced out of a job in order to obtain government loans to stay alive, he was replaced by his own #2 who is just as Locked-in as the old Chairman was.  Even worse, to me, was bringing back a 77 year old industry veteran to head marketing.  He may have been one of the more creative of the "old guard" but he was every bit as much "old guard" as anyone — to the point of belittling Tesla and those succeeding today with electric and hybrid vehicles. 

Honda reacted by replacing the CEO of Honda Motors.  But the person put into the job comes from a background in R&D.  Rather than trying to do more of the same, Honda's approach is to get product developers closer to customers — even at the very top job.  Honda isn't leaving the same people in charge, nor even people with the same backgrounds.  Honda is planning, from the outset, to use product innovation (rather than financial engineering) to get Honda Motors back on track.

And this aligns with Honda's approach to business.  Where GM was once a company with multiple businesses (IT in its ownership of EDS and aviation electronics in Hughes) GM leadership sold off those assets, using profits to subsidize the ailing auto businessComparatively, Honda has thriving businesses in robotics, factory automation, motorcycles, small yard equipment and new ventures in aircraft and elsewhere.  GM reacts to market shifts by ignoring them, and trying to do what it's always done better, faster and cheaper.  GM behaves as if its returns will do better if it can just do what it has always done – but more.  Honda reacts to market shifts by entering new markets, developing new products and getting itself aligned with market requirements.  Honda develops new solutions to changing market needs.

There is no doubt which approach is more sensible, and into which you might consider investing.  Honda uses its scenarios about the future to help it develop new products and solutions.  Honda obsesses about competition, offering new products for almost every niche opportunity and learning how to be profitable across the market spectrum.  Honda is very open to Disrupting its old Success Formula, getting into new businesses that will help it grow even when not "core" to the company's history or its current capabilities.  And Honda gives its new business leaders the White Space to succeed, with permission to do what the market requires even if different that the past and the resources to develop new solutions through ongoing market tests. 

If you have any doubts about who will grow share over the next 5 years, and who will lose share, check out the free new ebook "The Fall of GM:  What Went Wrong and How to Avoid Its Mistakes."  Pay attention to the results of America's "Cars for Clunkers" program to see who comes out a winner.  It will be important to see if this raises sales at the American companies – or elsewhere.