Lecture traces fall and rise of Harley-Davidson
By BOB KERR
While major corporations were handing out candy bars and jelly beans to prospective recruits during career day Friday, marketing executive Ken Schmidt greeted a crowd in the Jordan Auditorium with the roar of a Harley-Davidson motorcycle.
Schmidt described Harley-Davidson as a "phenomenally successful company that wasn't always so," in his lecture, "The Rise and Fall and Rise of Harley-Davidson: The Power of Employee Empowerment."
He addressed the company's failures and success in direct relationship with drastic changes in management.
When 13 members of the company's management team bought it out from AMF in 1981, they sought to restore Harley-Davidson's reputation for quality, he said, which had fallen during the previous management. The new owners modeled their production lines after Japanese competitors and reengineered the legendary engine. However, record-low market shares and employee cutbacks continued through the mid-1980's, according to Schmidt.
In 1985, Harley-Davidson entered a new era, he said, when management devoted its entire marketing budget to customer demonstration rides. Engineers, manufacturers, and financial analysts personally interacted with one customer at a time, and as a result, the product became better suited to the clients.
"Seat heights began to change, mirror heights began to change, customization began to change," Schmidt said.
The company has seen results. Since 1989, Harley-Davidson has been sold out in advance of production.
As the former director of communications and primary spokesman for Harley-Davidson, Inc., Schmidt attributes the company's success to the strength of its personal relationships with customers.
"Harley-Davidson understands what motorcycling is all about," Schmidt said. "We actually go out and ride and use the product."
To leverage this advantage, the Harley Owner's Group (HOG) was formed to provide a social outlet for owners and strengthen relationships between employees and owners. Today, more than 400,000 dues-paying members are sponsored by their dealers, Schmidt said, and this fosters what he describes as "feeling of family" or "spirit of camaraderie."
HOG gives owners a reason to ride together, both advertising the "Harley-Davidson sensory experience" and creating a need for replacement parts and accessories, he said.
While competitors fly to major motorcycle events in business suits, Harley-Davidson employees ride in leather and jeans. These events facilitate product loyalty among customers and increase company morale among employees, resulting in what Schmidt describes as an "ether buzz."
"It doesn't matter if you are selling machine tools or widgets, you can create these experiences by being friendly and open with customers," Schmidt said.
He told the history of the legendary motorcycle company, and showed how a reputation for quality had helped it grow in its early days.
Begun in 1903, Harley Davidson achieved a reputation for quality, surviving both the Great Depression and World War II on police and military contracts, Schmidt said.
After the war, Harley-Davidson could not compete with foreign competition. In 1969, AMF acquired Harley-Davidson and provided the manufacturer the needed capital to expand.
The rule of the day was "build and ship," according to Schmidt, and due to poor management, AMF's ownership soon became known as the "dark era." At Harley-Davidson, production increased and quality plummeted.
Schmidt described Harley-Davidson of the late 1970s, just before the employee buyout, as a company with a "reputation for pandering to outlaw bikers, a very well-deserved reputation for poor quality in a declining industry with bad union management relationships."
Schmidt is now a principal executive with VSA Partners, Inc., a marketing firm that serves Harley-Davidson.
, General Motors, Coca-Cola, Compaq Computer, Campbell's Soup.
He is the 1999 Donnelly Lecturer in Participatory Management.
All News Stories for Monday, September 13, 1999