If there was ever an American icon of the highways it’s the Harley Davidson motorcycle. 2003 is the year the company celebrates its 100th anniversary to the series of motorcycling events around the world.
The company announced record revenue in earnings for the second quarter ending June 29, 2003. Revenue for the quarter was 1.22 billion dollars compared with 1 billion dollars the same quarter the previous year. The US dealer network sold more motorcycles this quarter than any other quarter in its 100 year history.
With its current success and market presence it’s hard to believe it was lying lifeless on the ash heap of American business not long ago. The story of how Harley Davidson went from being a loss making relic the American motorcycling past to a more profitable company to a profitable company than now holds it own against fierce competition from overseas manufacturers is both inspirational and educational.
In the early 1980’s Harley Davidson was selling every bike it could make but each bike was sold in a loss. Japanese motorcycles were taking over worldwide markets and setting better quality standards. Harley loyalists kept the factory alive but the market was really going elsewhere. Harley loyalists were also a diminishing crowd.
Harley responded by speeding up production volume to meet the Japanese challenge. As output went up, quality went down. The challenge soon became about technology and quality more than production volumes. A classic example of the manufacturing failings, the 1976 model Café Racer had so many faults it cost over $100,000 just to get the bikes ready to ship to dealers.
Existing Harley Davidson customers stuck with the brand despite its faults. Even if the antiquated production facilities could produce more bikes there would be little growth against Japanese makers until a new customer basis develops.
It took a Harley designer, the now legendary Willy G. to redefine Harley Davidson. He changed how the bikes looked, how they were made, and more importantly how they met the needs of Harleys’ customers particularly those who had never before owned a Harley.
William G. “Willy G.” Davidson was the grandson of one of the company’s founders. ____________understand the needs of the existing customers as well as potential new customers such as enabled him to design a new generation of red blooded American motorcycles it sold more units and more importantly sold units a profit.
Willy G. designed Harley’s that broke the mold and opened up whole new markets. As a talented designer he still managed to retain the Harley Davidson image in all his models.
Everything Willy G. did was based on his personal contact with Harley customers. As he puts it, “Our customers really know what they want our on their bikes…Harley riders see their bikes as art objects and they want them to look a certain way”.
Harley Davidson also initiated employee involvement and company planning, inventory control and ways of measuring output per employee. Given the customers both quality and the products they wanted became the primary corporate goals. They went after these goals ____________________the zealousness that’s rarely matched in American business.
Harley formed riders’ groups to establish closer bonds with its customers the company was able to transform the findings from riders’ groups into product improvements that found there way into the market in a remarkably short time.
One of the most important findings from mixing with their customers was that Harley riders put a lot of money into customizing their bikes. If Harley Davidson could build these customized attributes into there factory models they’d get a better price and greater customer satisfaction.
Throughout the early and mid 1980’s Harley Davidson went through many trials and tribulations, especially in the financial fields. In one stage in 1981 they were just one week from bankruptcy but by 1987 there restructuring paid off and they were back in the black this time to stay. The showroom of a typical Harley Davidson dealer will have many different models on display, each appealing to a different segment of the motorcycle buying market. Customers can range from executive types to hard core bikers.
What’s really important is that these models appeal to the customer, not the factory accountants or production planners. That’s why they sell. That’s also why they sell profitably. Harley Davidson got off track producing what they wanted to make and not what a world full of potential customers wanted to own. Now they are doing better than ever against the stiffest competition in the world because they found out what their customers wanted and gave it to them
How well aligned is your business with its customer base? Are you producing products or services that are received in a luke warm or cold fashion in the market? If so, you need to get in touch with your customers through a customer advisory board or other method of assessing their wants and needs and then redesign your product or service offering.
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