The Management of DeclineHarley 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 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.
“if your marketing is so good, where’s the growth?”
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.
In discussing just how “adjacent” Harley is prepared to go in search of its golden 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?
