Harley-Davidson: Being Bad Can Be So, So Good
Harley-Davidson doesn't sell you a bike, they sell you freedom.
Delivering dreams of personal freedom.
What is it like to fulfill dreams of personal freedom? Try asking Harley-Davidson. Their mission statement isn’t to sell you a motorcycle, it’s to sell you the purest form a freedom. That higher calling has led to some remarkable success. With over a century of history, Harley has been the dominant player in the heavy cruiser market globally, and it’s no surprise why when you open the engine cover for a closer look.
It’s not transportation. It’s a lifestyle.
Harley’s success is primarily due to an extreme, fanatical loyalty to the brand. Unfortunately there isn’t a statistic of the most commonly tattooed corporate logo, but a quick Google search will show the smart money is on Harley.
Harley has completely captured the spirit of the biker and created a beacon for its customers. They revel in their counterculture status. Think they’re the black sheep? Good. Look no further than Harley’s current holiday marketing: they want you to be on the naughty list; let the nice list get a tie, we’ll take our leather and chrome.
Harley’s loyalty is driven through a quality product, continual innovation, classic design, and a complete integration of the riding experience in brand. From the bikes, to parts, to dealers, to apparel and branded gear, to the community, Harley provides you the complete biker experience.
Product first. Everything else is secondary.
Harley has an iconic look. Being over a century old gives them heritage and tradition, and you see it when you look at their cruisers. But underneath that classic style are some of most technologically advanced bikes on the road. Modern Harleys can come equipped with Bluetooth, heated seats and grips, touch-screen navigation, LED headlights, and adjustable suspensions. These are some of the modern bikes on the road, and Harley maintains extremely high quality standards.
To illustrate the impact of Harley’s success through quality, let’s take a brief history lesson. An infamous era of Harley history is during the 70s when they were acquired by AMF, who promptly went on a cost-cutting spree. Labor relations and material quality suffered, and Harley almost went bankrupt. Only after company management bought Harley back they could turn their attention to repairing the damage done by AMF. Today Harley production is characterized by production-on-demand and exemplary quality standards.
Beyond quality, they focus significant attention on innovation. Contrary to popular belief, Harley doesn’t just make heavy cruiser touring bikes. They introduced the V-Rod, which features an engine developed in coordination with Porsche – no strangers themselves to high-performance engine design.
And they recently introduced their new Street line of bikes. These are the first light cruisers (less than 700cc’s) and serve two valuable missions. The first is to provide a more accessible entry point for new riders. A 900 lb. Electra Glide can be intimidating for a newbie, but a Street 500 might be the perfect starter bike to get a customer hooked.
The second is to help Harley in its mission to become a global brand. Emerging markets like India and China are no strangers to bikes, but large Harleys are still somewhat rare. The Street gives them a presence that is more compatible with current riding lifestyles. Harley took extra care to maintain their quality standards here as well; the Street isn’t just a small bike, it’s a small Harley that fits perfectly in the image of the broader lineup and maintains a premium price relative to competitors. They even took special care to maintain the classic exhaust rumble.
And lest we forget project Livewire, potentially the most innovative motorcycle ever made. Still in development, Livewire is the first all-electric bike from Harley. Livewire shattered the perception of what a Harley can be, but still stays true to the brand. It’s also been a powerful promotional tool, making a broad debut in the recent Avengers: Age of Ultron.
Lean manufacturing
Because of their dominance in the cruiser market, Harley enjoys premium pricing for its bikes (and parts and apparel). But they still take a very focused approach to costs, and their factories employ Just-In-Time (JIT) processes very similar to the Toyota model. This allows them to produce with lower working capital throughout the process while ensuring quality. Harley takes a fanatic approach to eliminating waste; they’ve even reengineered their packaging with suppliers to eliminate excess packing and creating returnable shipping containers. This is only possible through the tight relationships they’ve built with an extensive supplier network. Further benefiting Harley is surge manufacturing, allowing them to more quickly respond to customer needs, when and where they occur.
For an inside look at Harley-Davidson production, check out the video:
Personalization through customization
A motorcycle is a highly personalized purchase. After all, there is no logical reason to buy one, it’s all emotion. That personalization manifests itself in customization. Rarely will you find a stock bike still as it was from the factory; every rider seeks to make their ride their own. There are nearly endless ways to customize your motorcycle, and Harley supports this by offering a massive parts catalog and the ability to install right at the dealer. By taking over the aftermarket, Harley increases its sales, protects against aftermarket competitors.
An extension is their apparel business. Harley invests extensively in what you wear as well as what you ride, whether casual t-shirts or heavy-duty riding gear. Walk into any dealer and you’ll see a distinctive design and apparel – many Harley customers stop in at dealers and collect t-shirts. This keeps customers loyal by having them brand themselves. Speaking from experience, it’s possible to make an entire wardrobe out of Harley gear.
Enable the end-to-end ownership experience
Finally, Harley has positioned itself to maximize the end-to-end experience of motorcycle ownership. Since 2000 the Harley Davidson Riding Academy has trained over 400,000 new riders, which means new customers. And in 2014 Harley launched the academy internationally to continue developing the Street line. From education through offering financing and insurance through their own Harley Davidson Financial Service, they make sure they are the first choice when a customer is ready to get in the saddle.
Staying on the throttle
Harley doesn’t seem content to rest on their laurels. Through their end-to-end ownership experience and emphasis on new, smaller bikes, they’ve been expanding into key demographics. This includes strong sales with young adults as well as women – both rapidly growing motorcycle markets. As the market grows, Harley is well positioned to capture that value. Let freedom ring.
Sources:
Harley Davidson Company website: http://www.harley-davidson.com/content/h-d/en_US/company.html
2014 H-D Annual Review: http://ar.harley-davidson.com/
Kelleher, J 2014, ‘Not your old man’s Hog: Harley bets big on a small bike’, Reuters 8 April. Available from: Factiva
Holoway, H 2015, ‘Big Wheel: Anoop Prakash is leading Harley-Davidson’s new northern subsidiary and it’s expecting growth from some unlikely sources’, Financial Post Business 1 November. Available from: Factiva
2003, ‘Harley-Davidson Revs up Just-in-Time Manufacturing Performance with Sterling Commerce Web Forms and Bar Code Technology’, Business Wire 8 December. Available from: Factiva
2000, ‘Returnables smooth Harley’s JIT flow’, Modern Materials Handling 15 October. Available from: Factiva
I can think of very few examples where a brand is synonymous for its product, but Harley has clearly captured market recognition for not only enthusiasts but also those who are outside of the market of potential buyers. With a focus on eliminating waste and lean manufacturing, one can have an extremely optimistic outlook for the company. Recent advertising has included younger actors and actors of different races, trying to reach out to a broader population. With an observable focus toward the future generation of Harley owners, is the company’s model sustainable in terms of expected production, or could it decline as safety becomes more of an issue and people spend more times as passengers rather than owners of personal modes of transportation?
*Safety note is not indicative of the Harley/motorcycle owners’ capabilities, but rather general traffic conditions.
The safety question is an important one, though one really out of control of Harley and bikers themselves. But I think Harley does a great job with their Riding Academy to train new (and experienced) riders in the best and safest ways to ride. I think really reaching their customers through the whole lifecycle is their edge – from training, to purchase, to ongoing lifestyle, through gear and branding. So I think they are best positioned to address that.
The broader implication here is what happens as cars start and then continue to go autonomous. Maybe that makes it safer or more dangerous for bikers. Since motorcycles exist purely for driving enjoyment, the autonomous movement shouldn’t directly take away sales, but it’s going to be an integration between driven and autonomous. I honestly don’t know how it will play out with bikes, but I think because of their lean production and ability to respond quickly to demand they’re well positioned to ramp up and down to control costs. I think the next extension of this is if they can more accurately adapt particular models to trends in the marketplace…I could see certain bikes become less favorable as infrastructure changes and they’ll need to produce accordingly.
H-D has hit spot on on what will drive growth for the future with the Street line motorcycles. The typical Harley Davidson is meant for the open road, where there are few cars around, wide turns, and riders can go fast and free. However, the Harley enthusiast has his freedom taken away in the big city, where traffic moves slowly, lane filtering might be allowed, and curves are generally tighter. Matt cannot be more correct than saying that H-D sells you freedom, and the Street gives exactly that to the urban road warrior. First, it features a liquid cooled engine. There is nothing worse than standing on traffic with your bike heating up in between your legs. Second, it offers a considerably taller bike at a 5.7 in ground clearance compared to other entry bikes like the Sportster SuperLow at 3.9 in or the Iron 883 at 4.7 in. This is critical in places where there are significant potholes and speed bumps, it also allows the rider to incline the bike more during turns where the foot rest will clear the road easier. Third, the bike has a narrower frame which allows the rider to go in between cars easier, of course, only if the law permits so. I’m completely sure that H-D will be successful at delivering freedom to the road, and now more than ever to the urban jungle.
Do they make Harley’s for people as short as me?? Thanks for this great post, Matt; while I am not at all surprised that you chose this topic, I have learned a tremendous amount about H-D through your note. I didn’t realize they use our beloved Toyota JIT model, which makes a lot of sense for a product that is so customized. I was also really pleased to read that being leather-clad and tattoo-ridden does not preclude environmental consciousness; from the electric LiveWire project to the waste reduction in production/packaging, it seems like Harley is really thinking about it’s environmental footprint, which is great to see from such an industry leader. Paired with their new rider training and with the apparel side of the business, it sounds like H-D is well-positioned to continue its upward trajectory moving forward. I would echo the safety concerns mentioned in a prior comment, but to your point in your response, I think that goes beyond the scope of what H-D can control and becomes a broader transportation consumption issue. I also wonder what efforts are being implemented to retain more global customers outside of the Street line of bikes. Since Harley positions itself as being so much more than just the bike, how are they selling the culture/raison d’etre in regions where potential consumers may be less familiar with the brand? That said, expansion is a good problem to have, and I look forward to seeing what’s next for H-D!
I have seen women shorter than you riding bikes. So yes, you can/should get one. And remember the customization – it’s a relatively easy update to lower the bike. My first bike was actually lowered a couple inches…not because I needed it, but because it looked cool.
Incredibly informative article, Matt. Thank you for sharing. What stuck out to me the most was how much H-D’s employees embrace the culture of quality, innovation and American manufacturing excellence. From the videos, it is evident that designers, engineers and assembly workers alike strive to reflect these principles to the utmost degree in every bike produced. This pride and integrity of work in its work force is what has contributed to building (and growing) H-D’s brand equity over the years. That said, I would be interested to learn more about H-D’s (1) new talent assessment (2) hiring process, (3) review process, and (4) means of driving the culture. After reading the article, I would imagine that H-D’s hiring process is somewhat similar to that of Facebook, which we learned from reading the case that they focus on hiring incredibly smart people, without knowing in which functional they will work or if there is even a need for their skill set, and find the best place for them in the company once they are on board. Are you aware of a similar practice at H-D, where they prioritize hiring candidates that will, above all else, embody both the culture and core operating principles to the fullest, despite perhaps needing a specific skill set?
Considering I’m currently in the process of finding employment there, I will be sure to let you know as I discover. One would hope that a deep understanding and appreciation for the brand would be priority one.