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Business Lessons from Harley-Davidson

Business Lessons from
Harley-Davidson

By Brent Wilhite

From offstage in Westminster's Jewett Center Auditorium, a packed house hears the unmistakable rumbling of a Harley-Davidson motorcycle. Seconds later, a tall, dark-haired stranger rides into view wearing sunglasses, leather boots, and a black-and-orange Harley-Davidson jacket. The bike's blinding chrome, combined with a friendly "honk, honk," assures the audience that the next hour will be an entertaining, wild ride. And just to be sure everyone has a good time, Ken Schmidt, former director of communication for the Harley-Davidson Motor Company, begins his lecture with rides for everyone in the room.

"I want everybody to lean as far forward as you can, and if your back doesn't hurt, you're not doing it right," said Schmidt. He told the group they were going to ride one of those "imported bikes" seen zipping around the streets.

"Now, everybody make the imported-motorcycle sound, and we're gonna take these things for a ride." The audience chimed in with loud, high-pitched "WEEENNNN" sounds as they envisioned themselves racing through the streets.

Following the imaginary motorcycle ride, Schmidt posed an interesting question: "What manufacturer's name was on the fuel tank of the motorcycle you just rode? I'll bet that 99 percent of you never even thought about that when you got on that bike. All you knew was that you were riding a motorcycle."

Contrasting that imaginary experience, Schmidt began talking about Harley-Davidson motorcycles and the notorious, distinct sound they make. "That sound is so uniquely associated with these American-made motorcycles that before you even see it, you know what it is. You know what's coming."

For the next hour, Schmidt captivated the audience, describing the remarkable rise from the ashes of the Harley-Davidson Motor Company, which celebrates its 100-year anniversary next year. Schmidt outlined how the company built a very strong name over time and then nearly killed it. Through trial and error, Harley-Davidson restored its name, brand, and respect, eventually claiming the FORBES Company of the Year for 2001.

The lecture on Harley-Davidson's unique history was a part of the Weldon J. Taylor Lecture Series at Westminster. In this setting, business students, faculty members, and motorcycle enthusiasts had the opportunity to hear from Schmidt, who played a key role in one of the most renowned corporate turnarounds in history.

Harley-Davidson's story is a case study for success, which came about without a real strategy. "It was done out of desperation," said Schmidt. "There was no money. The product wasn't selling. We had to do things differently. We looked at doing things the way they had always been done and said, 'None of that stuff is working. Let's start doing things differently and see what happens.'"

In its early days, a diverse group embraced these bikes, from racing enthusiasts and outlaw biker gangs to police officers and the military. But, eventually, through negative news stories, magazines, and movies like Easy Rider, the brand gained a "bad-boy" image and stereotype.

During the 1960s, Harley-Davidson teetered on the brink of bankruptcy due to the influx of cheaper, imported bikes such as Honda, Suzuki, and Yamaha. American Machine and Foundry Company (AMF) purchased Harley-Davidson in 1969, rescuing it from the ashes.

In the 1980s, the company took a drastically different approach than the business model of the time: Employees went to bike rallies and talked with their customers face-to-face. "What do we have to do to this motorcycle to make you like it more and give you a better ownership experience?" they asked. This was a radical and dangerous tactic, keeping in mind that Harley owners were not happy with the product at the time. The engineers took a tremendous amount of verbal abuse by volunteering their weekends to meet with furious Harley owners-but it made a difference.

After incorporating the feedback Harley engineers gained from the bike rallies, people took notice. The redesigned Harleys graced the covers of the top motorcycle magazines on newsstands across the country. But reading about a bike and riding a bike are two very different experiences. The company needed people to throw a leg over the bikes and ride 'em.

At that time, there was no such thing as a "test ride." Your test ride came after you handed the dealer your check for the total purchase price. So the company loaded up trailers full of motorcycles and took them to bike rallies. Anyone wishing to ride one of these American-made bikes could take it for a 15-mile ride just by flashing a motorcycle license.

The company also completely changed its messaging. It went from focusing on how the products were made-the quality workmanship and materials-to the dream and passion of the bikes. "It's not about what the motorcycle does. It's what it will do for you."

All of the company's sales literature up through the '80s referenced the quality workmanship and materials that went into these bikes. However, when Harley owners were asked why they purchased their bikes, the company got a
completely different reaction than anticipated. The responses were all based on emotions. "I've always wanted to do this. It allows me to do things, to go places, to have experiences that I would never be able to do otherwise," they said. The company learned that
the bikes filled some kind of
emotional need.

The philosophy seemed simple: Listen to the customers, and give them what they want, both mechanically and psychologically. After modifying the bikes based on their customers' feedback, Harley-Davidson began gaining a stronghold on the motorcycle industry and inspiring a passion in motorcycle enthusiasts. The strategy created an enduring love of this American motorcycle that is so strong, it crosses a host of boundaries, including age, gender, income, education, and ethnic background. The target audience for Harley-Davidson motorcycles became every person striving for freedom and individuality.

"The freedom people are talking about when they associate with Harley-Davidson is the freedom to become somebody else for a while. And you know who that somebody else is? Me. The person I always wanted to be," said Schmidt.

Every weekend, from Main Street to Wall Street, an interesting transformation happens. Monday through Friday, he's the clean-cut dentist, lawyer, corporate executive, or white-collar worker. When Saturday morning rolls around, he's escaping reality for a while, out on the road with black leather boots, chaps, the wind in his hair, and gritty stubble on his face-he's a different person.

Just as a Harley makes a different noise than the imported bikes, we all have an opportunity to start doing things our own way to stand out and be different, Schmidt noted. "What happens if you do things the way everybody else does? Guess what?-you become them. When everybody's doing things the same way, we become invisible."

"What kind of noise are you making? It's time to make a different one."