Financial geniuses on Wall Street appear to be happy that there is new leadership at Harley-Davidson, Artie Starrs as CEO. As with the appointment of the previous CEO, Jochen Zeitz, analysts and those with significant monetary Harley-Davidson stakes are thrilled with the recent CEO Starrs change in HOG leadership. In 2020, when Jochen Zeitz, a longtime member of Harley-Davidson’s Board, became CEO, the business press wrote that “Wall Street was elated by the news of Harley-Davidson’s ‘course correction’ under a new leader. Harley-Davidson stock rose 17%. There is new elation now that Mr. Zeitz has relinquished his cycle.
Wall Street appears to have a memory problem. The incoming strategies for this iconic brand are quite similar to the failed strategies of Mr. Zeitz’s predecessor.
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Regardless of the actual strategies Mr. Starrs is implementing, here are two major brand issues at Harley-Davidson of which no one seems to take notice or remark upon. Both of these brand issues are brand-detrimental.
First, Harley-Davidson has turned over its CEO position about every 5-6 years. It seems that every 5-6 years, both those inside and outside the brand lose faith in the C-suite’s strategic direction. The roster has been Jochen Zeits, 2020 to 2026; Matthew Levatich, 2015 to 2020; Keith Wandell, 2009 to 2015. Prior to Mr. Wandell, there was Jim Ziemer, from 2005 to 2009, and Jeffrey Bleustein, from 1997 to 2005, one of the 13 executives who purchased the company from AMF in 1981.
Brands suffer when there is constant organizational change. This is because brands need both short-term and long-term strategies. When the CEO changes, the long-term strategies go off the beaten path, as it were, leading to the second seriously troubling tendency at Harley-Davidson.
Second, each CEO brings a new set of “winning” strategies. Except that Harley-Davidson seems to be repeating the past in a weird Groundhog Day sort of way. There is a sort of doom-loop mindset at Harley-Davidson that overlooks basic brand principles. The strategy that Mr. Starrs brings to Harley-Davidson bears a remarkable resemblance to the strategy of Matthew Levatich, who preceded Jochen Zietz. Yes, there are some differences. But, in general, Mr. Starrs’ plans are “back to the future.”
1. Constant Organizational Change
Constant organizational change affects employees, leading to reduced engagement, burnout, turnover, erosion of trust, and cynicism. This is often cited in textbooks as ‘change fatigue.’ Every leadership change brings new strategies, tactics, internal presentations, and three-ring binders with laminated pages. The internal sense is “here we go again.”
With organizational change, employees are asked to be enthusiastic about the new direction, even when it is the third new direction employees remember. Internal change fatigue affects the brand across all functions. Short-term, in-the-year-for-the-year activities become the priorities. After all, the first priority is always financial. Brand building or brand rebuilding takes more time.
Constant CEO change affects productivity. At KFC, when we worked with both corporate and franchisees, KFC’s leadership changed every 3 years. This was unfortunate not just for the employees but also for the franchisees. With a franchisee or dealership organization, most owner-operators have been around a long time. There is a sense of anxiety about just what changes this CEO will ask of us. Haven’t we been through this before? At KFC, many franchisees had worked with the Colonel. These franchisees had experienced multiple leadership changes and were rather jaded.
With YUM!, we learned that constant C-suite change created a dysfunctional organization. There was no organizational alignment. An aligned organization reflects a results culture, which is essential for building a brand mindset. A results culture is both functional and psychological.
There is a huge difference between constantly changing the C-suite and institutionalizing change within the organization. A brand must be innovative and flexible. A brand must be flexible to deal with unforeseen events and customer trends. At the same time, a brand must steadfastly stay on course. Brands must have strategic dexterity: to create and implement prearranged, deliberate strategies while being open to and able to evolve when disruptions happen, or business, environmental, political, and geographic circumstances alter the landscape. Change at the top disrupts strategic dexterity. Stakeholders must start over with new approaches to support with gusto.
2. As For Reliving A Past Failure, It Is Worth Noting Harley-Davidson’s Recent History.
The previous strategy from the former Harley-Davidson CEO, Jochen Zeitz, focused on expensive touring bikes, with the average buyer age in the “late 50s,” meaning many Harley-Davidson owners are well into their 60s and above.
Mr. Zeitz focused on Harley-Davidson’s Boomer biker constituency and on the big, expensive touring bikes that Boomers know and love. Two of these models, the CVO Street Glide and the CVO Road Glide, start at US $44,499 and range up to $51,999.
Mr. Zeitz’s approach contrasted with that of his predecessor, CEO Matthew Levatich, who focused on international markets and on selling smaller, less expensive bikes, turning away from the Boomer customer base, which prefers big, heavy, more costly machines. The Levatich strategy was to support the less expensive, lighter models. Mr. Zeitz told analysts that the lighter, more affordable bike strategy of model expansion while chasing new customers and markets added manufacturing complexity and “diverted attention from Harley’s profitable models.”
With Artie Starrs, Harley-Davidson is back to focusing on affordable bikes such as the Sportster, “an entry-level bike the company stopped making in 2022 after concluding its air-cooled engine wouldn’t meet European environmental regulations.” This issue has since been fixed. The bike has now passed the international rules.
The Wall Street Journal points out,
“Starrs said the company will also proceed with a previously announced bike called the Sprint, which will cost around $6,000 and have a 440 cubic-centimeter engine. It will be in dealerships later this year.
“The focus on entry-level motorcycles is a reversal of the strategy plotted by Starrs’ predecessor. Jochen Zeitz, a longtime company director who became CEO in 2020 and departed in October, gave priority to Harley’s large, expensive touring bikes and cruisers, which can cost more than $50,000.”
In other words, Harley-Davidson is returning to a strategy that failed during the period 2015 to 2020.
Of course, affordability is critical. Of course, having entry-level bikes is important. Of course, the environment has altered. But, focusing strategies on age, price, and bike weight are elements of death-wish marketing. One of the things that made Harley-Davidson such a powerful brand was its ability to understand the needs and occasions of motorcycle customers.
A big brand such as Harley-Davidson is not a unidimensional brand. Harley-Davidson is a multi-dimensional, multi-faceted, multi-segmented, many-sided brand. Harley-Davidson should change from a positionista approach – a uni-dimensional, own a single position, approach – to a multi-faceted, multi-segmented, many-sided innovation, marketing, and development strategy. Harley-Davidson is a brand that means different things to different people. Harley-Davidson does not have one brand position. It is perceived differently by young adults, Millennials, and Boomers.
They used to know that simplifying a brand to a single position is not simplification, it is simplistic. Simplistic marketing is marketing suicide. Brands are complex. Brands are multi-dimensional.
Harley-Davidson has been bouncing between single positions for so long now that the brand is repeating what did not work. Furthermore, it appears that they have always been aware that it is a multi-dimensional brand, something its three past CEOs have not leveraged.
In a June 25, 2012, edition of Hog Happenings’ part 2, a segmentation of Harley-Davidson riders and owners appeared, taken verbatim from an “official” Harley-Davidson handout at an internal marketing and management course. The segmentation was described as “The Diversity of HARLEY-DAVIDSON Buyers.”
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This segmentation was generated about 40 years ago, when the majority of Harley riders were male. Since then, Harley-Davidson has created communications and outreach to female bikers. But just because the segmentation was generated decades ago does not mean there is no value in the insights. Reading the segment descriptions still sounds fresh and real. Even though the segmentations might need updating, this does not mean the segmentation should be overturned when generating a winning strategy.
1) Sensitive Pragmatists (29%)
The largest segment of Harley owners tends to be blue-collar workers. They consider themselves easy-going and practical. These owners take motorcycle riding seriously. They say, “You’d better know something about what you’re doing before riding a motorcycle.” They like the “high” of riding. They tend to be FL-series owners.
2) Laid Back Campers (24%)
Quiet and soft-spoken. That describes these Harley owners. This group likes to cruise, not speed or race. They also view their bikes as a way to get out of the city and in touch with nature. These bikers are patriotic: the “Made in America” label is their number one reason for buying a Harley. They tend to be Sportster owners.
3) Cool-Headed Loners (17%)
The loners consider a Harley motorcycle the perfect getaway vehicle to express their independence. They tend to be higher-income “white-collar” individuals. In their opinion, the “Harley experience” is the ride itself. They describe Harley as a “fingerprint: you buy the basic cycle, then personalize it so no one else has one exactly like yours.” Loners also believe in “live and let live;” to them, riding a Harley reflects that attitude. They tend to be Softail owners.
4) Adventure-Loving Traditionalists (10%)
This market segment rides a Harley for its independence, freedom, and adventure. These individuals love risk and seek thrills. Traditionalists consider new Harley-Davidson riders trendy and unappealing. Like the Laid-Back Campers, this group believes the reason for Harley’s great performance and quality is the “Made in America” label.
5) Classy Capitalists (8%)
Sometimes described as “Rich Urban Bikers” or “RUBS,” this segment represents the traditional American success story – a class of winners. Famous stars are represented in this group; members are often 45 to 50 years old. Most promised themselves years ago that they would reward themselves with a Harley-Davidson after making a certain amount of money. This group loves the attention they get when riding a Harley-Davidson. They tend to purchase Softails.
6) Cocky Misfits (7%)
This buyer enjoys its reputation as the ‘bad guy’ and the ‘wild man.’ These owners claim to have “tattoos with attitude.” The last thing they want is to be seen as stylish! They live for a chance to cut loose on their machine. The sound and speed of a Harley are important to this group. They’re always looking for an opportunity to “open it up.”
7) Stylish Status Seekers (5%)
The smallest Harley-Davidson market segment is young, stylish and elitist. This group tries to emulate the “famous stars” of the Classy Capitalists group. These riders say, “ Riding a Harley separates you and makes you stand out.” Like the Classy Capitalists, this group wants to be noticed. Harley aesthetics have the biggest appeal to this group. Owners liken a Harley bike to a vintage car –both are made for a ride on a sunny day.
Reading the above descriptions, it is easy to see how actionable and viable this decades-old account of Harley-Davidson customers is for renovation, innovation, resource allocation, and communications.
Instead of continuing to focus on a single customer and resuscitate losing strategies, Harley-Davidson should modernize its multi-dimensional heritage.
Contributed to Branding Strategy Insider by Joan Kiddon, Partner, The Blake Project, Author of The Paradox Planet: Creating Brand Experiences For The Age Of I
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