Harley-Davidson is feeling the full brunt of the COVID-19 pandemic and the subsequent economic crisis. The company is to put it plainly doing really poorly (big surprise, huh?). Because of this, Harley decided to restructure its strategy from the “More Roads to Harley-Davidson” plan that was put in place by the former CEO. That plan prioritized new products and reaching out to new customers. This new plan seems to do the opposite.
Enhance core strengths and better balance expansion into new spaces
Prioritize the markets that matter
Reset product launches and product line up for simplicity and maximum impact
Build the Parts & Accessories and General Merchandise businesses to full potential
Adjust and align the organizational structure, cost structure, and operating model to reduce complexity and drive efficiency to set Harley-Davidson up for stability and success
Now, the headline here is that Harley will be pulling back from some of the new things it was doing. This isn’t smart because those new things like electric bikes are what it needs to do to attract new riders in the long-term. A lot of people (including myself) see this as a big mistake. Harley is in the position it’s in because of its stubborn commitment to its core products and a customer base that is aging out of riding. The new products would draw new riders, which could potentially save the company.
However, I will not call this new strategy a complete steaming pile of crap. The first two bullet points above worry me, but the last three are good calls.
First up, Harley sells too many of what is essentially the same bike. It would make more sense to sell a few different versions of the Sportster, Softail, and Touring bikes and then sell the crap out of the parts and accessories. Having 11 Softail models is silly. Taking a hard look at its lineup and reducing internal competition is smart.
Building out the Parts & Accessories and General Merchandise business is never a bad idea, especially if it coincides with the right kind of lineup shakeup. I don’t know how much further Harley can take this (the company already does tons of it), but if there’s an opportunity there, go for it.
Lastly, any kind of organizational structure, cost structure, and reduction of complexity within the organization is smart. Harley is a huge and complicated business. When a business gets complicated in the way Harley is, there’s tons of room for improvement in terms of business efficiency, which can save millions. This is an important place where Harley can improve.
All told, I find the new strategy worrisome. The move to focus on core products is infuriating because Harley finally seemed to be shedding its past and looking to the future, but I do get what it’s trying to do here. A lot of it comes down to execution, and I don’t have much faith in The Motor Company anymore.