[Mark Fields, President, Mazda Motor Corporation]

Good afternoon everyone! It's a pleasure to be back at the FCCJ. It's great to see some familiar faces. It's even better to see new faces, because I have been looking forward to meeting those of you who don't ordinarily cover the auto industry.

While I'm on the subject of this club and its members, let me take the opportunity to tell you that my respect for the work you do continues to grow.

From my own efforts to explain Japan to colleagues in the US I have come to understand how difficult - and how vital - your work is.

This is a very complex society - and a society that continues to change rapidly. So that by the time you arrive at a satisfactory description of Japan - much less an explanation - it is probably ten years out of date.

That's not to say Japan is beyond comprehension - not at all. But I appreciate the daily challenge you face in explaining all this, usually in a thousand words or less, to readers around the world - and even editors - who are essentially unfamiliar with Japan.

And because I'm sure you rarely get the praise you deserve for the pivotal role you play, I just wanted to say how much I respect what you do for a living.

With that in mind, in the short time we have today I will try to go beyond what we could send you in a press release to look at Mazda's recent experience in the context of wider issues facing Japan and other 'big-picture' questions.

Whether or not you write about Mazda specifically, I believe our experience offers some useful insights, so feel free to contact me for input as you go to write features on any of these wider topics.

If there is one word that dominates Japan news copy today is it surely.... 'reform.'

Although everyone has different ideas as to what form reform should take, there is near universal agreement that Japan needs it.... but can't quite seem to achieve it.

What is 'reform'? Let me define it as a slightly more dignified synonym for 'change.' And that brings us straight to the heart of the matter.

The key question for Japan, I would submit, is not "what change should we make?" It is "how do we learn to change."

That was also the central question we faced at Mazda. Where the two cases diverge is that, at Mazda change could not be denied.

In today's volatile business world the ability to change course and change gear with lightning speed and accuracy is imperative. And there is nothing that builds that ability like the adrenaline that comes from looking over the edge.

As I took on my current role.... that adrenaline was beginning to flow. And once we explained the urgent realities, everyone at Mazda soon realized we had to change - and change quickly - or die.

At the same time it was evident to me - and this view was and is still strongly shared by Ford senior management - that the solution was NOT simply to overwrite Mazda's culture.

Obviously, there is something inherently powerful in the way work is organized in this country. And something equally powerful in the heritage of a company that could rise within a generation - literally from the ashes of the atomic bomb in Hiroshima - to build cars admired in more than 130 countries around the world.

Mazda has always had an amazing ability to get behind a plan and execute with lightning speed and accuracy. We have tremendous dedication to quality and continuous improvement.

And Mazda at its best has stood out in the Japanese auto industry as a far-sighted, visionary company - a company with the courage to innovate. The result has been uniquely appealing products like the Mazda Roadster - the world's best-selling sports car - and the timeless RX-7, powered by our unique rotary engine.

We were determined to build on the strengths of Mazda's heritage, and to grow change from within. And to do that we had to recognize and tackle some inherent contradictions.

Mazda's strengths - and Japan's - are closely intertwined with its limitations. And this is why the process of reform is such a perplexing challenge.

We went through a very tough, time-consuming process that required a tremendous amount of learning - for Japanese and non-Japanese members of our team alike.

And as we worked, we faced two key questions:

1. What aspects of Mazda's business culture were powerful, successful, valuable and vital to our future?

2. What needed replacing with best practices adapted from outside?

The first question, I've already answered. The strengths of Mazda's culture, and Japan's business culture, include teamwork, employee loyalty, dedication to continuous improvement, sense of community, high levels of education and extraordinary technical capability.

But what needed to be replaced? The more I learned about Mazda and Japan, the clearer it became that the key questions centered on 'change' and 'leadership.'

It is not that Japanese are averse to change - this society continues to change faster than most.

The problem lies in setting the direction of change - in other words, providing strong, clear direction and motivating people to change. That is where leadership comes in.

The question of leadership does not arise when you are following a straight line. That is management; that's keeping the wheel steady.

But what happens when you need to turn, and turn sharply? To execute what we call a 'non-incremental change.'

This is where Mazda - and organizations throughout Japan - ran into trouble.

I believe the key problem is that leadership - the ability to alter course decisively - is overridden by what you could call the 'consensus mechanism' - the remarkable tracking ability that has allowed Japan to follow a straight-line with incredible power and precision.

In other words, Japan's collective instinct for consensus too often overrides the impetus to change. It also:

discourages delegation of authority

• dampens individual initiative
• hinders brainstorming
• substitutes endless analysis for action; and
• breeds rampant bureaucracy

In short, it shackles and blindfolds leaders and serves to entrench the status quo.

And yet, paradoxically, the consensus mechanism is one of the great strengths of Japanese organization. It is THE key factor that delivers lightning-fast and flawless execution, exacting quality and a commitment to excellence.

By contrast, American organizations excel at what Joseph Schumpeter called 'creative destruction' - constantly and often powerfully reinventing themselves. But all too often we fall short when it comes to consensus and cohesion - the abilities that allow you to powerfully execute brilliant ideas.

In practical terms, the difference is that Westerners emphasize deciding quickly, in order not to "waste" time up front. But what often happens is that a month - or sometimes even a day - later you have to revisit the decision, shoring up the consensus you thought you had achieved. In Japan, the nemawashi process, while sometimes slow and frustrating, has shown me the value of taking the time to get issues aired out and to bring everybody on board. The challenge - when urgent issues are at stake - is to do it without wasting time.

Our goal at Mazda is to build a new hybrid culture that incorporates the best of both approaches. A corporate culture that builds on Mazda's outstanding heritage and the genius of the Japanese auto industry. And that embraces the creativity, flexibility and speed of other cultures.

This is not something that will be achieved overnight. But throughout the company over the past two years we have "Rekindled the Spark." And we have developed powerful new abilities to set and execute change with speed and precision.

There is a lot more to the story - and I would be happy to tell you more in the context of an interview. But given time constraints, let me refer you to recent speeches you will find on our website, and summarize by saying....

The key point is that we are cultivating a new generation of leaders who I expect to fill increasingly crucial roles within Mazda and throughout the entire Ford group.

Just as Europeans now routinely hold many of the most important roles at Ford headquarters in Dearborn, I can foresee a day when Japanese executives who have come up through the ranks at Mazda hold senior positions in Detroit.

But preparing our people to make that contribution involves much more than simply building English skills. The decision-making system within a Japanese company like Mazda is so different from Ford or the other group brands that it is tough to make the jump from one to the other. I can tell you that having moved in the other direction.

This is part of the careful balance we have to achieve in responding to the challenge of globalization.

Any company rooted in a single national culture that aspires to be a global player must enhance its abilities to operate globally - and for many companies that does make developing widespread English-language skills a high priority.

That should not excuse us English speakers from learning other languages - but the fact is that English is essential.

Global players must also open themselves to diversity - eliminating barriers of gender and race for example.

The critical counterchallenge is to maintain the national flavor and spirit that built these companies.

The world's most powerful expressions of automotive culture - European, Japanese and American - should not and will not be homogenized out of existence. Because their distinctiveness is exactly what our industry needs - and what customers want.

Just as Volvo is quintessentially Swedish and Jaguar epitomizes a certain British sophistication, so Mazda must retain a spirit that is essentially Japanese.

It springs from values you find in people throughout our company - from the design studio through the assembly line to the dealerships: a design sense that links beauty with practicality, an exceptional dedication to quality and a passion for technological development.

But the ultimate manifestation of Mazda's spirit is in our cars.

And 'spirit' is more vital in a car than in any other consumer product. Because the cars people aspire to own, the cars that remain timeless classics.・all embody a style and spirit that add up to something more than the sum of their parts.

For Mazda, as a mid-sized automaker, a truly distinctive spirit is especially important - because we cannot be all things to all people. In fact, trying to do just that nearly killed Mazda.

In today's global auto market it is essential to partner in order to enjoy the economies of scale needed to develop technologies, architectures and power trains over ever-shorter product cycles and to benefit from efficiencies in purchasing and logistics.

In that regard, Ford makes an ideal partner for Mazda - because our natural competitors are other Japanese automakers. There is a natural niche - both at home and abroad - that we can serve much better than the other Ford group brands.

Our challenge is to add distinctive "brand-engineering" value to elements of the vehicle that are shared among members of the Ford Group - and there is much more to this than just body styling. There are infinite ways to adjust engines and steering and interiors to create a very different car - even where many components are shared among various Ford brands.

That distinctive value is something we call 'Mazda Design and Product DNA' - and our mission is to focus on a point where this distinctive quality meets the aspirations of a like-minded group of customers.

You might imagine that point is very difficult to define when you are dealing with people in 130 different nations who might buy anything from a subcompact Demio to our soon-to-come RX-8 sports car.

But if you look at our three key markets - Japan, North America and Europe - and focus on our target customers and their aspirations, a remarkably clear picture emerges: a coherent set of global values.

And those values are the basis of a new, closely targeted brand identity that now drives everything we do at Mazda.

Our mission is to meet our customers' aspirations in cars that, as we term it, are "Stylish, Insightful and Spirited."

Mazda buyers have a sense of style. They are active, young-at-heart, thoughtful and they know what they like. Above all, they love to drive - the feeling, the response and handling of a well-designed and engineered car.

We discovered that the essence of this is a childlike love of motion.... a feeling best expressed in the phrase children use to describe it.... 'Zoom-Zoom.'

'Zoom-Zoom' is our brand message. It represents what we are all about - the spirit of Mazda. It has gradually been introduced around the world as the keynote to Mazda's advertising and marketing efforts - and it has met with great response. It's upbeat and unforgettable.... and it cuts through clutter with amazing clarity.

If we haven't got the Zoom-Zoom music in your head already - get ready. We launched Zoom-Zoom in Japan just last week.

But Zoom-Zoom is just the beginning.... the fanfare for exciting things to come from Mazda.

Over the past two years we have made great strides.

We have completely retooled our corporate culture - creating powerful capabilities for change that will serve Mazda well in the future.

We have built important global synergies with Ford.

We have transformed our brand identity.

Paralleling the external communications you would expect with rebranding, we have put great effort into permeating this new identity throughout our organization - to ensure that we live our brand values.

We continue to improve our distribution system - particularly in Europe, where we have reassumed direct control of several national sales affiliates. This greater hands-on involvement will allow us to create a pan-European sales and marketing effort that reinforces our global brand identity and supports the growth of our European business.

We have also taken the difficult measures needed to bring our costs and production capacity in line with revenues.

We were the first major company in Japan to undertake a major workforce reduction - and we weathered a lot of criticism for that. But just look how many others have followed our lead.

We have also made great headway in generating internal awareness of our overall business structure, goals and imperatives. And we have improved our business planning capabilities.

The result of all these measures is a significantly stronger-than-forecast return to profitability in the fiscal year just ended.

As we announced last week, our earnings revision for FY2001 represents the largest turnaround in profitability.... ever.... in Mazda's 82-year history.

Final numbers will not be released for another four weeks, but note that this has been achieved in a period defined by a harsh external business environment in which our results were not supported by new product.

Our next mission is to grow the business....

And we are ready to go. We will soon begin rolling out a wave of new products - 16 new models in Japan alone over the next couple of years - that fully embody our new brand identity - cars that are 'Stylish, Insightful and Spirited.'

Mazda is back in top gear.... as a much stronger global competitor with a distinctive position in the market.

Expect more good news from Mazda in months to come.

We want to share the energy and the resurgence of quiet confidence that comes with overcoming seemingly insurmountable challenges.

And we particularly want to share that feeling with our friends and neighbors in Japan, because we regard Mazda's comeback as a hopeful sign for this country.

Our success in tackling fundamental problems head-on is evidence that Japan can indeed overcome its continuing economic malaise.

And in the belief that restoring confidence is an important element of the required remedy, I plan to stand up and remind the Japanese people just how much they can achieve if they put their minds to it.

But that's a mission for another day!