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Posts Tagged ‘Innovation’

2013 H-D FXSB Breakout

2013 H-D FXSB Breakout

Introduced last week at the 72nd Daytona Bike Week,  the latest Softail model is called the 2013 FXSB Breakout (MSRP $17,899).

It has gloss black Gasser cast aluminum wheels on a 130mm wide and 21-inches high front while a 240mm chunk of Dunlop rubber on the rear. It comes equipped with 1.25-inch drag bars that sit atop a beefy fork, the bars are mounted atop a four-inch riser with a speedo incorporated into the chrome risers. The wide front fork kicks out at a 37-degree angle while the front fender has been cut down about as much as legally possible.  There is the Twin Cam 103B engine and its machined fins and chrome covers contrasting the black powder-coated cylinders.

2013 Honda Fury

2013 Honda Fury

If the name is familiar it’s because the motor company released a CVO version of the motorcycle back in August of last year.  The production version receives the same long and low stance with the sinister looking disposition.  Someone in marketing didn’t get the memo that factory custom chopper manufacturers have been dropping like flies!

The Breakout is the first CVO model to be “reverse” adapted into a production model.  You might recall that CVOs are typically “juiced” up motorcycles taken off the production line and layered with chrome.  Up until 2009 they were all hand-built, but these days you’ll find them rolling along on the standard production line in York.  And, if imitation is the highest form of flattery then this year’s “breakout” is proof that the copy kat’s are alive and well.  But, who is copying who?

Take the 2013 Honda Fury (MSRP $13,390) which continues to sport a fuel tank with distinctive lines mounted high on the backbone, opening up the space above the engine and the tubular frame. It rolls with a 21-inch tall front wheel that is kicked out at a 38-degree angle and the chopper-ish dimensions balanced out by the 200mm wide rear.   It’s powered by a liquid-cooled 1312cc V-Twin.  Since the Fury’s introduction in 2010 the entry price point has jumped only $391.

2014 Star Bolt

2014 Star Bolt

And then there’s Yamaha’s Star Motorcycles who recently unveiled the 2014 Star Bolt (MSRP $7,990), a simple and stripped-down performance bobber ready for personalization.  A direct competitor for the minimalist H-D Sportster crowd.  The Bolt is powered by a 60-degree, 950cc (58ci) air-cooled V-Twin with fuel injection. A five-speed transmission provides the power via belt drive to the cast-aluminum rear wheel. A double-cradle frame, using the engine as a stressed member, along with a 540-pound curb weight will make this motorcycle easy to handle.   There are some nice touches such as a smoked-lens digital meter, wave brake rotors and LED tail lights to bring home some modern performance to the Bolt.

Whenever I hear about copy kat merch, I almost always think of China knock-offs.  It’s not completely undeserved, given all the fake DVDs, designer clothing and copy Rolex watches.  But, on the motorcycle front Harley-Davidson looks at minimum liked they rolled out a recalibrated Rocker C version or worse is complicit in “breaking out” a Raider/Stryker copy.

Photos courtesy of H-D, Honda and Yamaha.

All Rights Reserved © Northwest Harley Blog

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H-D announced Q2’11 financial results this morning.

In a word – Booyah!

By every financial measure Harley-Davidson generated improvements in the second quarter of 2011, with strong earnings growth, increased shipments and growth in its dealers’ new motorcycle sales both in the U.S. and globally.  Here are some of the stats that CEO Keith Wandell and CFO John Olin reviewed from Anaheim, CA. where the annual dealer meeting and new product launch was in progress:

  • Revenue in Q2’11 was $1.51B (up 15%) with income up 36.8% to $190.6M
  • Motorcycle shipments up 7,769 in Q2’11 vs. Q2’10; Motorcycle segment revenue up $204.6M (18%) vs. Q2’10
  • Touring motorcycle shipments made up 38.3% in Q2’11; up 3.6%
  • International shipments were 36.2% in Q2’11 vs. Q2’10 at 42.5%
  • Shipment forecast for 2011 rose by about 8% and now H-D expects to ship between 228,000 and 235,000 motorcycles worldwide
  • Market segment share (651+cc) is 53.8%; up 0.2% from 2010
  • U.S. dealer network sales of uses motorcycles up 11% through May; Used bikes sales continue to firm up (meaning they offer the dealer a method to help offset the “sticker shock” of new bikes)

Did anything go less positive?  Well that depends on your viewpoint.  From a shareholder’s perspective it’s “Houston, we’re ready to throttle up”!   Stock price set a new 52-week high at $46.88.

As a rider/layman the touring motorcycle shipment increases were offset by the decreases in Custom and Sportster declines.  There were no age demographics quoted in the analyst call, but we’ve been told that typically “youngsters” don’t buy the higher priced baggers.  In addition, the new 2012 touring models that were announced earlier in the month have… shall we say… “lean” engineering innovation compared to previous years.  In a number of cases there we’re only paint palette changes and price increases made up the so-called “new” touring models.  There was about a 1% price increase in the U.S. market.  The lack of innovation is especially troubling (to me) given that product development spending was up $7M in the first half of 2011 which was described as a continuation of their strategy and focus on leaner engineering.  Sure metals and fuel costs are up, but the lack of stronger product changes is not always a recipe for long term success.

Nothing was noted on the call about the recent expansion in India.  Not sure why given that SG&A expenses were up about $13M on the strategy to grow 100 – 150 international dealers by 2014.  Latin America saw a decrease in retail sales which was largely due to all Brazil dealers being terminated.  There was a restart in that country and the new dealers (6) were coming up to speed.

Congrats to H-D on a great quarter!

UPDATE: Full transcript of the analyst call is HERE courtesy of SeekingAlpha.

Photo courtesy of H-D.  Full Disclosure: I don’t own H-D stock

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2012 Paint Palette

Have you been reading the headlines? There was a big earthquake in Haiti. Some men were rescued from a mine in Chile. Oh, and apparently there was a gigantic oil spill in the Gulf of Mexico.

What’s that you say? This all sounds like last year’s news?

Well, don’t tell that to Harley-Davidson. The motor company recently introduced 15 new models, which it considered innovative and groundbreaking  products:  a “tubeless” laced wheel option, and six new colors or color combinations on the touring models!   Then in a déjà vu lapse they announced the retention of last year’s integrated branding firm Graj + Gustavsen Inc. to continue advising the company on strategic branding initiatives related to apparel and apparel-related accessories.

It would seem that even Harley-Davidson understands that the touring models have so few innovations that their only hope of differentiating itself from the other players is through paint palettes…. So, the only buying question you’ll have to ask yourself, then, is: Does H-D make a convincing enough “color case” that you should invest about $20K in a “new” touring model?

Here’s the crux of H-D’s argument.  First of all, the new colors or color combinations are beautiful. The mostly unchanged motorcycles from 2011 are even more beautiful in 2012.  The unchanged frame is beautiful, too. It’s graphically coherent, elegant, fluid and satisfying. That, apparently, is the payoff when a single company designs and builds both the engine and frame housing?  The ‘advanced’ Harmon/Kardon radio retains its 1970’s BMW inspired ‘red’ glow and that glossy Vivid black paint — continues to be a magnet for fingerprints, boot scuffs, and unfortunately looks wicked great only in the dealer showroom. I think the words in the H-D press release were “The Legend Lives On.”  The band, Talking Heads, said it best… in the song “Once In A Lifetime.”  The “same as it ever was, same as it ever was” lyrics… really resonates for the 2012 touring models.

It’s been a while since I’ve had a good, proper, Harley-Davidson rant. Part of that has been the adventures of this year; I think it’s softened me and given me more patience, made me a little more graceful. Another part of it, probably closer to the heart of the matter is that I’ve been busy doing other things and a good rant takes time to incubate.

Well a rant has been building and I finally snapped as I read an article in last week’s “Wall Street Journal” (subscription required) where there was a front page story on Hyundai. How it went from a laughingstock to a runaway success in the car market. Now that they’ve solved the quality problem, now that they’ve caught up with Toyota and Honda, the company is confronted with a huge issue going forward, creativity. How do you lead when you’ve spent your entire manufacturing life following? Read WSJ article HERE.

The new Elantra is so far ahead of the market that Corolla sales have stalled and the new Civic has been blasted by critics as it fails to fly from the showroom. Instead of focusing on the econo box look, Hyundai imitated BMW and Mercedes-Benz. And the model was redesigned in four years instead of five, trumping its competitors in the marketplace.  The success of the Elantra is testimony to the change in culture at Hyundai. To one now focused on leading, on creativity.

This leads me to the question of is there a culture of innovation at Harley-Davidson?  When talking about innovation we often define the term too narrowly. In fact, innovation can – and does – occur in every industry of our economy, from consumer electronics to health care.  Yet, when I re-review the 2012 touring models, instilling creative thinking must be a work in progress.

For comparison, a few times a week, video screens around Hyundai’s headquarters in Seoul show a one-minute clip that has become a favorite. It shows an open office where workers wearing the same shirt and haircut are “beavering” away (that’s Oregon slang). Then a new person arrives with a different hair cut. Each time he voices an idea, the others shout him down. Eventually he gets the same haircut and everybody likes him. Then a question appears: ‘Aren’t we stuck in conventional thinking?’

I don’t know if a video loop like that would necessarily fly in a Milwaukee plant with the union workers, but that’s not the point of this post.

It’s about how most every American business is in a mad dash to innovate except for H-D.  The only answer can be the titans at the top are traffic cops sans creativity?  Don’t blame the public or the economy, blame the fat cat executives who are denying they’re the problem like the honchos at Goldman Sachs. What makes the rich believe they’re invulnerable, always right and entitled?   Somehow in the “dash-for-cash”, it’s all about shooting low, to the sweet spot, where most people live so the purveyors can make money.  Good enough just doesn’t cut it and of course there are exceptions, but generally speaking we’re in a low point for H-D touring motorcycles.

It’s a new game. No one gets to rest on his laurels. Making it today is no insurance you’ll thrive tomorrow, look at the carcasses strewn along the highway… OCC, Indian, or Big Dog.

We’ve got endless hype and yet sales are anemic.  Mediocrity thrives at Harley-Davidson because it’s all about the money.  About playing it safe… with new paint palettes!

Photo courtesy of  Hyundai and H-D.

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Practicing the piano for 10-years does not make you creative.  It just allows you to replicate what’s been done before.

I’m not sure who coined that phrase, but for some reason I’m reminded of Harley-Davidson and the debut of their 2011 models.

I can neither confirm or deny that I’ve been busy testing a sample of the 2011 H-D motorcycles.  I cannot confirm or deny that I’ve signed a NDA/embargo agreement to not disclose, either in print or talk about what the good folks at Harley-Davidson have been up to until July 27, 2010 – the date that the company will roll out some new thunder.

The plant is filled with journeymen, skilled at their jobs, but the motorcycle models are not famous. Because to be famous you’ve got to make jaws drop, people have to forego crucial financial activities in order to invest in H-D motorcycle ownership, people have to want to tell others about your brand.  In order to succeed you’ve got to innovate.  It requires perspiration and it demands inspiration.  I’m talking about innovating in such a way that a large percentage of the motorcycle riding public cares.

We’re in a era of marketing.  Because it’s so easy.  Go online and tell your story.  Start a Facebook page, upload some stop-action videos and evangelize to the ADHD 20-somthings.  Tweet about anything and everything.  But, isn’t it interesting that as more motorcycle manufactures go online trying to sell, fewer motorcycles are moving…both sales-wise and emotionally.  The key isn’t about putting a motorcycle in front of people.   It’s about creating something so good that it builds its own audience.  It’s an incredible challenge.  To employ a classic art form, include pop references, but come up with something new.  So new that the new thing excites us, that not only makes our blood boil, but makes us want to tell everyone.  So good it gets inside your psyche and affects you…not like the lasting power of a popsicle.

For so long the basic tools have been ignored and Harley-Davidson has taken the easy way out.  It’s been about marketing an image or brand over product innovation and their spot in the firmament is at risk.  They’ve always been good about building relationships, but too much of the H-D model line-up can be denied.  You can play that “tune” for a friend and they just ignored it.

The 2011 models need to tap us on the shoulder lightly and then wrap itself around our heart.  In other words, be so good we can’t ignore you…

Photo courtesy of Deviantart.com

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Meetings.  Talking.  Meetings.

We’re always being reminded that political leaders, policymakers and industry leaders are “gathering” to hash out ideas on how to get the mojo back and what the key is to unlocking innovations and jobs of the future.  We’re suppose to feel good, but from my vantage there is little visible in the way of action.

The White House has made a quiet but extensive effort to reach out to corporate executives in a series of dinners and lunches at the White House with President Barack Obama.  Attendees have largely been kept secret or at minimum very quiet… until now!

Politico.com states Keith Wandell (Harley-Davidson CEO) had dinner with Obama’s chief of staff Rahm Emanuel and other top White House officials.  Another comprehensive list is available HERE.  It’s not clear if it was at an off-site local restaurant or something more elegant in the White House.  Given the state-of-the-states, I seriously doubt the motor company will be creating any new jobs soon. In fact, the recent ratified agreement calls for a drawdown of nearly 50% of the employee’s base at the York, PA operations.  Asia or India look like expansion alternatives and I suspect it won’t be long before we hear about plants being set up there.  So, what did Mr. Wandell share w/ the White House chief of staff?  Would H-D coming to the government to offer ideas on how they can help be a startling conversation changer?  Does H-D have eyes and ears on future trends that they can grab and then be able to exploit?

I’m not sure, but do you think the U.S. is still the world’s center for innovation, or is it falling behind countries such as India and China?  Fueling the debate is a new poll on innovation published by Newsweek. One interesting finding: while 82% of Chinese citizens believe the U.S. remains a technologically innovative country, only 74% of Americans feel the same way.

At any rate,  the other industry officials who joined Mr. Wandell at the June 16, Rahm Emanuel dinner were:

Penny Pritzker, CEO, Pritzker Realty
Mark Gallogly of Centerbridge Partners
Mike Fascitelli, CEO, Vornado Realty Trust
Klaus Kleinfeld, CEO, Alcoa
Dave O’Reilly, CEO, Chevron
Richard Smith, CEO, Realogy
Mike Ullman, CEO, J.C. Penney
Keith Wandell, CEO, Harley Davidson

I’m not attacking or implying that only favor-curriers are “sitting at the presidents table” but I’m not reading a lot about how the voice of the average lower and middle class American are being heard.  As the White House National Economic Council Director Lawrence Summers has recently urged attendees at these dinners to “think about what your institution should be called on to do, not in its own interest, but in the broader national interest.”

Photo courtesy of Presidential inauguration.

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As Thanksgiving approaches and families prepare to gather around the table to share turkey and stuffing, the Northwest Harley blog editorial team (me), decided it was time to look back at the announcements and decisions from the motor company that made news this past year for all of the wrong reasons.

This is my list of the top H-D turkeys over the last 18 months – clearly the ideas and business strategies didn’t live up to expectations or were so poorly executed that they flopped with the consumers. Between the economy, the shutdown of Buell, cuts in production, the credit crunch, a transition to a new non-motorcycle-riding CEO, management departures, adding a new CFO and Mango’s for distribution rights in India, to an abrupt about-face on MV Augusta… it’s been an ugly, yet busy year-and-a-half!  Here is a recap with a couple winning moments highlighted (Bold):

  • Harley-Davidson to cut jobs, ship fewer motorcycles (April 17, 2008)
  • Harley getting burned by loan crash (May 2, 2008)
  • Harley-Davidson to buy Italian motorcycle maker (July 11, 2008)
  • With acetylene, Harley-Davidson opens museum (July 14, 2008)
  • Harley-Davidson profits down 23 percent (July 17, 2008)
  • Harley-Davidson officially kick starts celebration (August 28, 2008)
  • Harley-Davidson profit down 37 percent (October 16, 2008)
  • Harley CEO Ziemer to retire in 2009 (December 15, 2008)
  • Harley-Davidson to cut 1,100 jobs, most in Milwaukee area (January 23, 2009)
  • Harley-Davidson sets $600M debt sale to fund finance arm (February 3, 2009)
  • Harley-Davidson sales down 13 percent in 2009 (March 5, 2009)
  • Harley-Davidson names Johnson Controls’ Wandell as next CEO (April 6, 2009)
  • Harley-Davidson reports sales, profit declines (April 16, 2009)
  • Harley-Davidson completes funding plans (May 1, 2009)
  • Harley-Davidson’s CFO resigns (May 4, 2009)
  • Buell plans to consolidate operations in East Troy (May 12, 2009)
  • Buell scraps East Troy consolidation plan (May 19, 2009)
  • Pennsylvania may offer aid to keep Harley in York (May 22, 2009)
  • Harley-Davidson to cut 1,000 more jobs; 480 in Milwaukee area (July 16, 2009)
  • Harley scouting four sites for new factory (August 19, 2009)
  • Buell to temporarily shut down East Troy plant (September 8, 2009)
  • Harley names Olin permanent CFO (September 18)
  • Harley-Davidson to end Buell line, cut 180 jobs (October 15, 2009)
  • In general it was a tough year for the motorcycle industry. H-D has made some pretty large missteps. They ranged from products that simply did not take off, to entire business plans that went awry. Clearly, some of the turkeys are bigger than others. In the face of this adversity, H-D management decided the future of the company is based in large part on cost takeouts.  I think the company should shift away from that thinking or  obtaining large union concessions and to focus on innovation and growth initiatives.  Mr. Wandell has to know the Strategic Inflection Point is real and that you cannot save your way out of a recession.  Growth based on innovation, new products and the emotional connection with customers will help turnaround the company.

    I know it’s never nice to point out the faults and failures of others, but I’m hopeful by bringing a spotlight on these H-D management will learn from the struggles. While this list is by no means exhaustive, it does include some of what I believe are the bigger flops.  As always, I welcome your comments.

    Photo courtesy of Exploratorium

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    Re-CycleIt’s economics.  You can’t recycle when it costs more to use the existing product than to use the raw material.  You can try, but the economics will likely run you out of business.

    And speaking of recycle costs, the H-D marketing folks who are never bashful to re-hash an idea, decided to change the dates and re-roll the Sportster guarantee or “Ride Free” program.  First announced back in January my thoughts on the program were posted HERE.  Dealers reported the initial program provided an uptick in showroom traffic and many requested that H-D corporate create more similar programs which would help drive traffic to the dealer.  Rather than innovate It seems the H-D organization creates ideas via committee because that is not my concept of a “Bold Idea” … to push out program dates through August 31st and if you buy one of the qualifying 2009 Sportster models you’ll get what you paid for it when you trade-in or buy-up to a big-Twin on a Dyna, Softail, VRSC or Touring model is…

    “Did that voice inside you say I’ve heard it all before…  it’s like déjà vu all over again.” – John Fogerty

    I have a simple suggestion to help the marketing folks solve this classic “need some creative ideas” problem:

    1. Locate your PC and bring up a browser
    2. Navigate to the Google
    3. Select a word, any word at random
    4. Remember the word you selected at random?  Now enter/type the word in the blank field
    5. Click the “I’m feeling lucky” button

    Like magic it will take you to a web site strongly associated with that word and amazing things might inspire.  I know it sounds like I’m taking a cheap shot at the savvy marketing dudes and I can certainly understand a business’s desire to avoid additional expenditures in these trying times.  But, is this truly THE best sales promotion idea out there?

    Another ad-hoc suggestion is to ping the Facebook group or independent bloggers and have them share ideas or comments on the best way to spark people’s interest.  Sure it’s subjective opinion, but who knows what ideas it may inspire.  Let me know how it works.

    Photo courtesy of Flickr.  Motorcycles recycled into chairs/table in Sass Fee Switzerland.

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