Why Harley Rocks

Sometimes the best analysis comes from a spontaneous response to a question. Last week I was interviewed for a magazine story, and the interviewer asked me about Harley Davidson. He remembered that right up to the 1970’s, Harley motorcycles were bought primarily by a small niche of Hells Angels-types and aficionados who had the time to spend hours a day tinkering with their beasts. How, he asked, did Harley turn into one of the most popular and profitable brands in the world? Off the top of my head, I rattled off five major reasons, and now that I review them, I don’t think I need to edit or reinvent my response. Here are the reasons for Harley’s continued success, why shareholders have been delighted with its performance, and what you and your organization can learn from it: 1. First and foremost, Harley cleaned up its lousy quality. Yeah, I said lousy--like back in the 1960’s when new bikes sat in the dealer showroom with cardboard under them to catch the leaks. A fanatic and disciplined organization-wide quality commitment had to happen, and it did. The lesson for you: Nowadays, defect free product is expected. You won’t thrive by only achieving zero defects, but without it, you probably won’t survive. 2. Harley transformed its organization from one marked by hierarchical control and assembly-line structures to one that is flatter, more egalitarian, and much more self-managed team-based. Well trained and merit-rewarded employee teams became involved in the process of improving quality, boosting speed, and reducing costs. The lesson for you: In a global knowledge economy, you need everyone’s active input, and you need to train and reward people not simply for “doing their jobs” (that’s a given), but for using their brains and contributing to the organization’s success. 3. Harley expanded its niche by building community with its customers. The Harley Owners Groups (HOGS) coupled with numerous events and rallies in places around the country got customers to feel connected to something special—and to each other. Lately, Harley’s community efforts have reached out more to women, not only with female-friendly bikes but also with “how-to-ride-a-Harley” classes. The lesson for you: Customers don’t just buy a brand; they join it. Create a special community that provides distinct benefits to customers and is a privilege to join. Especially with the new social power of Web 2.0, community ought to be towards the top of the list when it comes to customer relations. 4. Harley began to market the “intangibles” like the special experience and image of owning and riding a Harley Davidson bike. It was not uncommon for Harley executives to talk about building the brand around adventure, rebellion, and making the middle-aged accountant feel like a “bad-ass” (their words). In that spirit, even the familiar “potato-potato-potato” rumble sound of the Harley was patented. The lesson for you: concentrate on building intangibles like the unique customer experience you offer, the feelings that using the product evokes for customers, the coolness and excitement of the product’s design, and the distinctive customer service that precedes and follows a sale. 5. Even as the brand became more popular and demand shot up, Harley controlled supply and production, thus controlling its growth and keeping the products fresh, compelling, and desirable. Too many companies get so caught up with growth at any cost that they wind up overextending themselves financially and diluting the brand. Harley insists on disciplined growth that keeps both its allure and its profit margins large. The lesson for you: Don’t lose your cool, or your sense of financial discipline, by plunging ahead towards unbridled growth just because the short-term opportunities exist. Think longer term, think disciplined controlled growth, and think about the value of not overexposing and overleveraging your brand.\Notice there’s one thing I didn’t cite: the “fact” that Harley is “American-made” (which is not completely true anyway). Even if it was, in a global economy appeals to patriotic protectionism won’t get you very far. American customers will buy great product from anywhere, witness the success of Toyota, Virgin, Honda, and Samsung. The fact that Harley-Davidson is considered synonymous with the U.S. of A. might be a nice icing on the cake, but it’s the 5 reasons listed above that are the secret of the company’s success.