For Harley-Davidson inc., the last 25 years have been a long, strange trip -- and now the company is gearing up to ride again.
Most people know the harrowing tale of the $1.35 billion motorcycle maker's journey to the edge of death and back to the pinnacle of American business iconography. Less well known are the unexpected turns that Harley's saga has taken in the past few years as unbridled success has created new problems. In 1996 Harley shipped 118,771 motorcycles, up from 105,000 in 1995. But even with increased output, supply has lagged demand, leaving disappointed customers who can't get their hands on a Harley. The imbalance between supply and demand has created a flourishing black market, with bikes selling for more than the suggested retail price and customers high on waiting lists selling their places to impatient buyers lower down. At the same time, supply constraints have prevented Harley from going after new growth opportunities in international markets.
The upshot: Plan 2003 -- Harley's ambitious vision to more than double its production for the company's 100th anniversary. "We did a bunch of soul searching and said that by the year 2003 we want to be able to make at least 200,000 to 300,000 motorcycles a year," says Jeff Bleustein, president and COO of Harley-Davidson Motor Co. "And we want to do that without losing any of the quality or family feeling we have right now. Even if we went up to 300,000 motorcycles a year, we'll still be a little special, a little mysterious, a little bad. All the things that represent individuality and freedom of adventure."
Here's the behind-the-scenes story of Harley's next ride: beneath the image of a hard-riding, tough-as-nails Harley-Davidson bike is a company that thrives on the "soft" side of management, emphasizing participation, inclusion, learning, and cooperation.
Fast Company recently traveled to Harley's Daytona Bike Week in Florida and its York, Pennsylvania Manufacturing and Finishing Plant to see what makes Harley-Davidson "a little special, a little mysterious, a little bad" -- and very successful.
The standard organization chart for an old-line manufacturing operation is a pyramid, with rigid boundaries keeping functions strictly separate. At Harley, the organization chart is a circle -- three overlapping circles, to be more accurate: a Create Demand Circle, a Produce Products Circle, a Support Circle, and in the center where the three circles intersect, a Leadership and Strategy Council.
The idea, says Bleustein, is simple and democratic. "We're applying the concept of self-directed work teams used in the factories to the executive level. Most management concepts get tried out as far away from the executive offices as possible," Bleustein says. "At Harley we said, Let's try this right up at the senior management level."
Harley's circle organization did away with the executive vice president level and substituted the three circles, which include eight to nine senior managers in each. The Create Demand Circle is responsible for sales and marketing issues; the Produce Products Circle handles engineering and manufacturing; and the Support Circle takes care of legal, financial, human resources, and communications concerns. The Leadership and Strategy Council consists of seven Harley executives: Bleustein plus six managers elected by their peers from the three circles. Each circle nominates three people from any circle; the top six vote-getters win a two-year term.
The circle organization emphasizes participation and collaboration. "We draw the organization chart as three interlocking circles," says Bleustein, "because there's so much interdependence among them. At the same time, the Leadership and Strategy Council looks at issues that go across all the circles -- strategic plans, operating budgets, policies affecting all employees."
Behind all the chrome and leather, behind the brawny bikers and burly bikes, is a company that competes on...brains. Harley is one smart operation -- and its top managers see to it that learning is the engine that continues to drive the business. In addition to providing workers with 80 hours of training each year, Harley uses four specific approaches to building its corporate intelligence.
First, the Harley Leadership Institute focuses on three competencies the company believes all employees should have: interaction competencies including communication, conflict resolution, and team skills; execution competencies such as planning, problem solving, decision making, and performance management; and technical competencies including functional skills in specific tasks and a commitment to continuous improvement.
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