Krafcik on customers & competitors: Hyundai is rapidly ascending the rankings of consumer quality lists—lists that it once bumped along the bottoms of. So what is the strategy that has transformed something of an also-ran to a strong competitor?

Automotive Design & Production, August, 2006 by Gary S. Vasilash

Everyone knows that the customer is important. But some companies think that the customer is more important than others do. And some think that the customer is more important than the engineers with the cool/clever ideas.

The key success factors at Hyundai, says John Krafcik, Hyundai Motor America vice president of Product Development and Strategic Planning, are quality and reliability, excellent ergonomics and "being obsessively focused on the customer." He cites the position of BMW, one reflected in a recent series of print ads in which the company proclaims that it will now compromise its engineering prowess, as one that is "challenging. They choose to lead on the technological edge. We would never take that approach," he says, adding, "We're not shy about doing market research and validating that what we've done is good." This checking with the market could lead some to believe that Hyundai's products would be comparatively behind times, as people may have a tendency to ask for what they already have, but Krafcik denies this, saying "We don't buy into the notion that we're getting yesterday's products," and he actually counters the position by saying, "We have the confidence to put the product up for review," implying, perhaps, that making this check is actually bolder than not. He calls this "consumer-driven product development." He adds, "This doesn't mean that we're not being unique. We want to be unique--and appealing." But he thinks that there are some engineering-driven products that just don't make a whole lot of sense. He cites, for example, the Honda Ridgeline, which he describes as being a remarkable bit of engineering that's "oh so Honda," adding, "It's amazing, but who wanted a $32,000 vehicle like that?" Another engineering-driven vehicle that he cites is the Porsche 911--and then acknowledges that he recently bought one.

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Maybe they really aren't obsessed with beating Toyota. Maybe it just so happens that Toyota makes vehicles that serve as benchmarks--that they'd like to better.

When describing vehicles that are competitive with those of Hyundai, there is a tendency--a frequent tendency--for Toyota products to come up. Like the Camry with the Sonata and the Highlander and the RAV4 (and even mention of the Lexus RX 330) for the Santa Fe. Which leads to a question as to whether there are "Beat Toyota" signs affixed to the walls throughout the Hyundai product development organization. Krafcik denies that this is the case and simply states that it just so happens that Toyota has competitive products. "A year from now," he remarks, "we might be talking about the Ford Edge." Whatever the case is, it is clear that they're doing some intensive spreadsheet analyses at Hyundai and working hard to make sure that when they fill in the cells, their data is comparable or better than the best. Which often leads them to Toyota products.

How he rates the four big functions. (Yes, yes, they're all important, but c'mon ...)

Design. Engineering. Production. Management. How does Krafcik rate their relative importance?--and yes, he says that they're all important, but that pat answer doesn't get to play. "Design is number one with a bullet," he says, explaining that in the company's product development matrix having "standout" exterior design is a top priority--"especially for a brand like ours," as he notes that they're still at 3% market share, so it is important that they achieve positive visibility in the market via design. Certainly among vehicle manufacturers Nissan has taken a strong position as regards design, and Krafcik says that so far as he's concerned they will work to make design as integral to the Hyundai brand as Nissan has accomplished.

"Engineering is so key," he insists. He explains that they work at HyundaiSpeed (yes, spelled like that) in product development and engineering, so they perform engineering tasks fully recognizing that change will occur, so "we might as well do it with minimal fuss." Krafcik says that there is "an overarching, unique philosophy at Hyundai, which is getting things done quickly." A word that he uses is "impatience." He quips, "Frugality is in the company credo."

The importance of production can be seen not only in the fact that they've established the plant in Alabama for vehicle build and engine production, but they've done so fully anticipating they'll be making varied products (to wit: the Sonata and the Santa Fe, which have different platforms, are produced in one consolidated body shop). What's more, he points out that when the various J. D. Power and AutoPacific surveys are consulted, the Sonata ranks at or near the top of the charts. This is a new product being built at a new plant with a new workforce. "You're not supposed to be able to do that," he says, adding that so far as he knows, the launch of the Sonata in Montgomery may be the best-ever in automotive history.

Which leaves management. "We think lean is a virtue," he says, explaining that comparatively speaking (remember: Krafcik came to Hyundai from Ford, so he has direct experience as regards how things are done elsewhere) they have a small staff. He says that in his area there are just 20 people. But rather than taking this as being a deficiency, he thinks that it allows them to make better decisions because there aren't a multitude of layers, to say nothing of seemingly endless meetings. Management makes decisions. Fast. Presumably at HyundaiSpeed.