Today, in reading the Wall Street Journal, I learned of the August 19th death of Vaughn Beals, former CEO and Chairman of Harley-Davidson, Inc. Reading his obituary reminded me that if it wasn’t for Beals and his executive team it’s highly likely that Harley-Davidson would have succumbed to bankruptcy in the 1980s. Instead, Beals famously turned Harley-Davidson around, fending off bankruptcy and creating the Harley-Davidson that we know today.
In the 1980s, Harley-Davidson was struggling with inefficient factories and poor quality. Sales suffered. Having examined and rejected external causes for their struggles, mainly foreign competition, Beals and his executive team decided to look inward, and in Beals own words, “Finally, we realized the problem was us, not them.”
Once Beals and his team recognized the problem was internal, they got to work on four key opportunities:
- Quality - defects were no longer tolerated. Rather than sampling for quality, now every motorcycle off the line received a thorough quality inspection.
- Efficiency - Examination of their Japanese competitors and tours of Japanese factories revealed cost and time-saving strategies. Harley Davidson began to implement lean manufacturing techniques such as just-in-time inventory and pull-based production.
- Focus on the customer - Harley-Davidson decided to target middle-aged baby boomers — a growing demographic representing a signifiant market opportunity.
- Know your product - Beals tapped into the baby boomers’ desire to feel young and rebellious. Harley-Davidson became more than a motorcycle — it became an experience. Like-minded individuals were welcomed in Harley-Davidson Owners Groups, or HOGs, reinforcing the experience and creating intense brand loyalty.
Beals recognition that Harley-Davidson’s problems were internal was empowering. By rejecting that their problems were caused by external forces, Beals and his team were able to target areas over which they had direct control. Harley-Davidson focused on crafting a product and marketing message that captured the interest and lasting loyalty of their customers that endures to this day.
The kudos belong to Beals and the whole team at Harley-Davidson. Harley-Davidson is an iconic brand, instantly recognizable world-wide. While improved quality and efficiency are important elements of its success, Harley-Davidson's keen understanding of its customer and its re-imagining of the product to meet that customer's needs are what makes it truly great.