The Management of Decline
Harley had a lot at stake on its first quarter financial performance announcement and , sad to say , it hasn ’ t lifted the weight of expectation from its shoulders . Worse in fact . Management has been gradually painting itself into a corner , and the big “ initiative ” that came out of Q1 appears simply to have been some “ new initiatives ” to announce this coming summer (“ a plan to have a plan ” as one Harley dealer put it to me a few months ago ) really puts a sell-by date on the faith that investors will continue to have in their ability to reverse the firm ’ s decline . They really have now painted themselves into that corner because if the announcements to come this summer aren ’ t compelling and convincing in equal measure , then they have simply set themselves up to fail in 2018 / 2019 , rather than by 2017 , when we ’ ll have seen the full fruits of the last great announcement – the one from January 2017 that rocked our world with the excitement of 100 new “ high impact ” motorcycles and two million new riders by 2026 . That plan and the subsequent announcements and financial performance of the following 15 months - even with the M-8 Softails being a part of that timeframe – has left Harley ’ s investor
“ if your marketing is so good , where ’ s the growth ?” community still in search of beef . To back up a tad , for me the critical and painfully disappointing remarks in the Q1 announcement ( see pages one and six of this edition of AMD Magazine ) were those that hinted at major “ feel good ” announcements to come this summer . Apparently , not being overburdened by the busy-ness of crafting new motorcycles or crafting new riders , the company is now “ crafting strategy accelerants ” that will be designed to “ deliver significant value through 2022 .” So from that we can deduce one of two things . Either that the announcements about the two million new riders , the 100 new models , the increased dealer network , the factory in Thailand , the desire to see 50 percent of sales achieved internationally , and the M-8 Softails were not designed or expected to “ accelerate ” market or balance sheet performance , or else , more likely , there is now the dawning realization that the existing strategies just aren ’ t going to deliver . Given that none of these previously planned “ accelerants ” address any of the core issues confronting the wider motorcycle industry or Harley in particular , ‘ quelle surprise ’. But it ’ s okay now , because the company says that it “ plans to leverage its core business more fully and expand in new directions to accelerate value creation as it pursues its long-term objectives .” Well that ’ s okay then , phew , I ’ m glad we got that cleared up . Levatich is quoted as saying that “ our view of the highly competitive global motorcycle market is grounded in a realistic assessment of risks , opportunities and capabilities needed to inspire ridership and grow our business ”. Now maybe I am just hopelessly out of touch with ‘ Corp-Speak ’ and too grounded in the realities of meeting the payroll to breathe the same air , but that sounds to me very much like an acceptance that the initiatives required to turn the company around are too risky , the opportunities available in the market too alien and , anyway , we just don ’ t have those kind of capabilities .
The statement issued under his name ( and personally I ’ d instantly fire whoever wrote this BS for him ) goes on to say that “ our data-driven insights compel us to enhance and accelerate our strategies to ensure we deliver on our long-term objectives as we build the next generation of Harley-Davidson riders .” Okay , so it ’ s really cool because they have now got some actual , you know , data – real knowledge and information about where they are going wrong , and they are reading it very , very carefully , and the conclusions are going to be really , really exciting - they don ’ t know what they are yet , but they think they ’ ll be really , really interesting . Well yes , they will be - namely that there are other kinds of bikes they could also be making for other kinds of customers . Wow . Gosh . Whodathunk . discussing just how “ adjacent ” Harley is prepared to go in search of its golden In tomorrow , one analyst totally stripped the King of his clothes . In various places the
company and its CEO have stated that they are prepared to be “ bold ”, “ creative ”, “ imaginative ”. However , rather than being intent on reinterpreting the meaning of its brand for new generations of consumers , it looks very much like the company is resigned to having it weigh on them like a bag of rocks - baggage rather than opportunity - stating that whatever it does will be “ in keeping with who we are as a brand .” In other words , we realize we are held back by our heritage , but are caught in the headlights by the prospects of actually being able to do anything about it . Which brings us back to Harley ’ s marketing deficit . Either Matt Levatich or John Olin ( I ’ m not quite sure whose voice it was in the conference call I was listening to ) said that they thought that no , the nature of their products wasn ’ t what was holding them back ( as they are so well received , so popular and doing so well for them !) and that no , it wasn ’ t a marketing problem either , because “ our marketing is fantastic .” Hello ? Well , no actually , I am sorry to say that you could not be more wrong . Your marketing is abysmal , woeful , toe-curlingly bad and so off-target and outmoded that it stands out as by far the poorest of the leading dozen or so motorcycle manufacturing majors . Believe me , as someone who sees the PR and marketing output of all of them all the time , and has done so for nearly 30 years , that includes some pretty low bars that Harley is failing to clear . If it was well conceived , well executed and well targeted , then where ’ s the growth ? So where managing to find customers and speak to those who could increase the number of products you are selling is concerned , just exactly how are these excellent platforms and “ fantastic ” marketing programs working out for you Harley ?
Robin Bradley Co-owner / Editor-in-Chief robin @ dealer-world . com