Harley-Davidson story revs up the crowd

|  March 04, 2009 |

Trimble Dimensions 2009

If ever there was a story that needed telling to a crowd facing a daunting economic challenge, it’s the Harley-Davidson story. So Trimble lined up Richard Teerlink, former chairman and CEO of Harley-Davidson to tell the attendees at its Dimensions 2009 conference Tuesday morning opening session how to bring a company back from the brink of disaster.

If you know motorcycles you know the story. In 1981 Harley was barely alive, a victim of decades of bad decisions, and owned by AMF—better known for its expertise in volleyballs rather than motorcycles. Teerlink and a small band of true believers bought the company and over time built it back into a huge success, going from 15 percent market share in 1982 to 49 percent in 2007.

When facing a challenge the size of the one Harley-Davidson faced, you have to understand that there is no silver bullet, Teerlink said. The problems were many and multi-dimensional and would require decades of hard work, creativity, trial and error and most important—the ability to learn. Teerlink quoted Eric Hoffer, the longshoreman turned philosopher-psychologist in saying: “In a time of drastic change it is the learners who will inherit the earth. The learned usually find themselves equipped to deal with a world that no longer exists.”

The first lesson Harley-Davidson’s new owners learned was brutal—they had to lay off 40 percent of the workforce and cut the compensation of the remainder. The job for the executives after that, said Teerlink, had a moral dimension, “to make sure that we bring that 40 percent back.” Harley also went to its suppliers and asked for discounts and extended terms. They also told suppliers they would not forget the favor when the company got back in the black and promised a 10 percent premium for components made in the United States.

The strategy after that was to get back to the basics, “to know our business—large displacement motorcycles—and to know our customer,” Teerlink said. The customers wasted no time telling them their motorcycles were junk. The company responded by adapting the Japanese model of quality control and continuous improvement teams, revamping everything to create a world class manufacturing operation.

Then there was some brilliant marketing, including two tongue-in-cheek advertising campaigns with the slogans:

“Thank God, they don’t leak oil anymore.”

and:

“Would you sell an unreliable motorcycle to these guys,” printed below a black and white photograph of a surly looking bunch of tattooed bikers.

Harley executives also got very tight with their customers. The design for the Harley soft tail motorcycle, for example, was a custom creation by a Harley rider and discovered by one of the company’s engineers at a motorcycle rally in California. The company flew the rider to Milwaukee and bought the idea from him, which lead to one of the most successful product innovations in its history.

The next big boost came when the company realized it wasn’t just making machines, it was creating what Teerlink called “an emotional lifestyle experience.”  Through its dealers the company vigorously promoted motorcycle rallies at the city, state and national. It also extended its brand into clothing and accessories, eventually creating the most profitable dealer network in the world, says Teerlink.

“The customers built the brand,” Teerlink said. Love your customers and they will build your brand.”

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