American Motorcycle Dealer AMD 251 June 2020 | Page 10

opportunity to re-evaluate every
aspect of our business and
strategic plan. We have determined
that we need to make significant
changes to the company, to our
priorities, to our operating model and
to our strategy to drive more
consistent performance as we emerge
from this crisis.
"We will reduce complexity,
sharpen focus and increase the
speed of decision-making. These
efforts will pave the way for a new
strategic plan that incorporates
some key products and initiatives from
the current plan, but focuses on
improved profitability and long-term
growth. As a result, we will emerge as
a stronger and more efficient company
and reignite the Harley-Davidson
Jochen Zeitz -
"Significant
Changes to the
Company…"
soul."
The conference call with
analysts that always follows
release of Harley's results each
quarter is usually a pretty bland
affair. But after evidence of
investor disquiet emerged in
January, the Q1 call in April
provided the first opportunity
for acting President/CEO Jochen
Zeitz to go public with his
observations about where he
thinks Harley has been going
wrong, and some of the changes
that he thinks need to be
introduced - and he did not hold
back, neither did he deny that
he could take the CEO job
permanently…
"From my observations over the last
two months, it is clear we are at a
critical time in our history. COVID-19
has dramatically changed our reality
for the foreseeable future and the crisis
has added to an already challenging
environment.
After a significant number of
conversations with our management,
employees and other stakeholders,
several other things have also become
clear to me. First, we are providing
dealer support, but we do expect the
dealer network to contract through the
crisis. As a consequence, we will work
to optimize the network and improve
dealer profitability going forward.
We have tremendous strength in our
product, our riders and our dealers.
However, we have challenges to
address that have become more
apparent in this crisis, including
the high level of complexity
across the organization that
needs to be minimized.
Leadership has become isolated
and overly centralized and, as a
result, slow to respond. The speed of
decision-making needs to
increase. I've observed that after
multiple rounds of cost cuts and
reorganizations over the past years,
morale has suffered. There is
frustration as some cost-cutting
initiatives have tried to improve
efficiency of things that are
fundamentally inefficient. As a result,
we need to reignite our Harley-
Davidson soul and culture.
Additionally, our organization has
become accustomed to overcommitting
and under-delivering. We
need to set achievable plans and
realistic goals. As I reviewed our
strategy, I know that elements of the
'More Roads' plan are good in
principle, but it is clear that our
strategy needs to be refocused to
better align with our capacity
and capabilities and to be updated
given our new reality.
We’ll continue to expand beyond
traditional products and markets,
however, we have over-indexed on
new riders and new market growth
and lost focus on critical profit
sources. We made progress with our
product line and to some degree our
'reignite our soul
and culture'
customer base, but profit is lagging
and our expectations are
unreasonable, especially given the
economic environment that we are
likely to encounter as the COVID-19
ripple effect will likely be with us for
some time.
We’ve continued to move forward
with the highest potential elements of
'More Roads', but our strategy must be
reassessed. As a result of my
observations and assessment, I’ve
concluded that we need to take
significant actions and rewire the
company now in terms of
priorities, execution, operating
model and strategy to drive
sustained profit and long-term
growth. We're calling it The Rewire
and is our playbook for the next few
months, leading to a new five-year
strategic plan, which we’ll share when
visibility to the future returns.
I'll highlight some of the key elements
of The Rewire. First, we’ll enhance
our core strength and better
balance expansion into new
spaces. It's more important than ever
to return focus and strength of our
brand and company, starting with our
dealers, customers and our stronghold
product and committed employees
around the world. HDFS has also a
strategic advantage with a track
record that will help us navigate
through this crisis. We re-evaluate our
'we have overindexed
on new
riders and new
market growth'
strategies to reach new riders and
build ridership.
Second, we prioritize the markets
that matter; we’ll invest in the
markets, products and customers that
offer the most profit and potential. This
includes building on our strong
position in the U.S.
We’ll narrow our focus, time and
energy in the most critical countries
and market segment that can move
the needle for us today. We’ll also
diligently play the long game by
identifying select strategic markets
that may not contribute to enterprise
profitability in the near term but are
critical for our future. We will also
simplify the market coverage
model and take costs out of the
process.
Third, we’ll reset our product
launches and line-up for simplicity
and maximum impact. Launches six to
twelve months out will reflect our new
reality and allow our launch calendar
for the first time in our recent history
to align with the start of the riding
season.
We’ll simplify launches over time to
better suit the capacity of our dealers
and company resources to support
them. From here, we’ll expand our
profitable iconic heritage bikes to
excite our existing customers. We also
remain committed to Adventure
Touring, Streetfighter and advancing
our efforts in electric. We will continue
to be guided by the voice of our
customers and dealers as we bring
new focus to our offerings to optimize
value and profit delivery.
Next, we’ll build our Parts &
Accessories and General Merchandise
businesses to full potential. We are
developing a comprehensive strategy
across these businesses that focuses
>
Lawrence Hund
Management
Changes
Zeitz spoke about the need to
"elevate the role of
Motorcycle Management
within the organization",
"sharpen marketing strategy
and execution" and to reset
the "organizational
superstructure with three new
senior management members
appointed to key roles."
The changes and
simplifications in management
structures revolve around a
tranche of internal promotions
after Michelle Kumbier was
invited to relinquish her post
as Chief Operations Officer.
Larry Hund has moved from
his role as President and COO
of Harley's Financial Services
business to be Chief
Commercial Officer at the
Motor Co., focused on
Motorcycle, P&A, General
Merchandise sales and the
Milwaukee Museum (with Bill
Davidson still running the
museum).
Reporting to Larry Hund will
be a streamlined rebuild of
Harley's existing and
notoriously inefficient global
region motorcycle sales
management structure, with
Dave Cotteleer as VP and
Managing Director for North
America, Nigel Keough as VP
and Managing Director for
Asia Pacific and Latin America
and Andy Benka as VP and
Managing Director for EMEA.
Jonathan Root succeeds Hund
as the leader of HDFS.
Jonathan Root
10 AMERICAN MOTORCYCLE DEALER - JUNE 2020
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