The Harley-Davidson™ Turnaround Story
From the Verge of Bankruptcy to A Fortune 500 Success Story
The Harley-Davidson turnaround story is the story of how the last remaining motorcycle manufacturer in the United States repositioned itself to compete successfully in a changing marketplace against global giants including Honda, Suzuki, Kawasaki and Yamaha.
On the verge of bankruptcy in the early 1980’s, Harley-Davidson found itself facing severe domestic market conditions and heavy foreign competition. Addressing the challenge, a small team of creative, hands-on people met for four days of strategic planning and went through a process of analyzing the strengths and weaknesses of Harley-Davidson and its competition.
What came out of the meeting was a strategy to ‘turn left when the competition turns right’ and a plan to apply that strategy to the basic Four P’s of marketing: Product, Price, Place and Promotion. The Harley team added a fifth critical factor, People, which is the most important ingredient in any business turnaround.
The Harley team knew that it would be nearly impossible to compete against the competition on a head-on basis, so they decided to be the alternative and offer products, a culture and activities that the competition couldn’t. An early example: Organizing thousands of Harley owners to ride from LA to Milwaukee to raise more than $100,000 for Muscular Dystrophy.
A team of Harley-Davidson manufacturing and engineering personnel focused on improving product quality traveled to Japan to study how they made motorcycles. The knowledge they came back with compelled Harley to introduce just-in-time inventory, statistical operators control and employee involvement. Applying the strategy of ‘turning left when the competition turns right’ also encouraged the Styling Department to implement a classical, evolutionary design for its motorcycles, rather than imitating the competition’s practice of designing something radically new every year.
Pricing was also part of the strategy. Harley-Davidson promoted the fact that their motorcycles retained their residual value and, in some cases, increased in value over the years while the competition’s motorcycles depreciated 25 to 50 percent in the first two years.
Applying the strategy to place, Harley initiated a store redesign program with its dealer network to create an atmosphere where the customers would feel comfortable coming to a Harley dealership and use it as a meeting and gathering place. That award-winning program tripled instore revenues for many dealers and continues to this day.
When it came to promotion, Harley-Davidson wanted to get close to its customers by riding alongside them and by providing events where owners could use and show off their motorcycles. The Harley Owners Group (H.O.G.) was created in 1983 and now has more than a million members around the globe. From the start, H.O.G. members have supported the Muscular Dystrophy Association, raising more than $70 million to date.
People and promotion come together through anniversary celebrations and a full calendar of events. The 110th anniversary of the company in 2013 began and ended in Milwaukee, Wisconsin and included epic celebrations in 11 countries on six continents. Each year, the celebration and the number of participants grow larger.