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Posts Tagged ‘Wandell’

Interbrands Ranking of the Best Global Brands

Brand impact.  That’s what H-D desires.

Trust and customer loyalty are the words that matter most in today’s economic market place.

Let’s recap the various statements made by CEO, Keith Wandell on the Harley-Davidson brand.  I found it interesting and thought you might too:

October 2009 — “As our announcement regarding Buell and MV Agusta indicates, we are moving with the speed and decisiveness required to bring our business strategy to life,” said Wandell.  “The fact is we must focus both our effort and our investment on the Harley-Davidson brand, as we believe this provides an optimal path to sustained, meaningful, long-term growth.”

January 2010 — “Focusing our investment behind the uniquely strong Harley-Davidson brand provides the most attractive path to sustained, long-term growth,” Wandell said. “We also expect to achieve substantial gains in the efficiency of our operations through continuous improvement.”

April 2010 — “Throughout the past 16 months we have taken a number of actions to address the immediate challenges and establish a bold, clear direction that will maximize our opportunities going forward,” said Wandell. “We have come a long way in a short amount of time, and I could not feel better about the progress we have made and where we are headed.”

July 2010 — “Despite the decline in second-quarter retail motorcycle sales, we believe interest in the Harley-Davidson brand remains strong among riders of all generations. In fact, Harley-Davidson is the U.S. market share leader of on-road motorcycles among young adults. We will continue to focus our resources on expanding the global reach of the brand and developing new products that will reach even more riders going forward,” Wandell said. “I would like to thank our employees for their continued hard work and support of our strategy.”

How’s all that brand focus working out Mr. Wandell?  Check it out.  According to Interbrands 11th annual ranking of the “Best Global Brands,” Harley-Davidson (#98) saw a decline of 24% in brand value!! For the first time ever, it nearly fell OFF the top 100 list of global brands.

Quick to provide an “interpretation” and point out their view of the pitfalls of Interbrands ranking system – Harley-Davidson spokesman Bob Klien stated“Given the financial focus of the Interbrand rankings, the results aren’t really all that surprising,” and then went on to say “It’s to be expected given the economy and the effect it’s had on the motorcycle industry and Harley-Davidson.”

Not that surprising.  Huh?  If it’s a financial focus let’s contrast the H-D brand with the auto industry which has had a difficult time in this economy too.  Mercedes Benz (#12) and BMW (#15) were able to sustain and build their value through innovative design and a focus on delivering premium value vehicles with luxury features. Award-winning products like the Q5 helped Audi (#63) lead industry growth this year with a 9% increase in its brand value.  Even the media’s preoccupation with the Toyota (#11) recall which caused the brand to lose -16% of its brand value was handled in a way that it out performed H-D!

What about other luxury brands?  Even with the economic downturn, luxury brands Cartier (#77), Armani (#95), Louis Vuitton (#16), Gucci (#44), Tiffany & Co (#76) and Hermes (#69) all saw the value of their brands increase in 2010 by continuing to invest in their heritage and legendary status. Outstanding customer service and a focus on unique in-store and online experiences allowed them to stay strong, even while consumers cut back spending.

Interbrand publishes the ranking of the top 100 brands based on a unique methodology analyzing the many ways a brand touches and benefits an organization, from attracting top talent to delivering on customer expectations. Three key aspects contribute to a brand’s value; the financial performance of the branded products or services, the role of brand in the purchase decision process and the strength of the brand to continue to secure earnings for the company.

The Harley-Davidson brand investment does not seem to be working.  Now what?

Photo courtesy of Interbrands.

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First was a slam about H-D imitating and going down the General Motors path.  Then there were calls for a Lazarus-like resurrection!

Not my words, but direct from Mr. Keith E. Wandell (Harley-Davidson CEO and President) who states; “Look in a mirror – Harley was already so far down that same (GM) path it wasn’t even funny.” More talking point nuggets from his first in-depth press interview HERE and HERE.

I’m not sure about you, but I’ve never thought of my Harley as a “Chevy” and I own both!  Never mind that many GMs are made in Mexico or Canada.  The public perception of GM is that it stands for overlapping product lines with bland differences and the “bigger is better” mantra is followed to extreme, and then a crash diet when fuel prices soar.  This has lead to a sea of monstrosities as well as a few genuine moments of clarity and even a hint of brilliance.  But in total, the brand is most often marred with an indifferent quality perception and inexpensive or cheap label.

I don’t hang on Mr. Wandell’s every word, but his point above is an interesting way to send a condescending comment to the Harley-Davidson employees and buying public.  Does the Harley Chief really want his current customers to associate their recently purchased premium ride with GM?  It seems disingenuous to compare GM to the state-of-state at Harley-Davidson or use them as the poster child for everything wrong at H-D.  Wasn’t it just a little over a year ago that H-D management and the board approved what many would consider the equivalent of GM buying Ferrari (H-D acquires MV Augusta)?

Keith E. Wandell - CEO Harley-Davidson

The implication from the CEO interview is that H-D, like GM is a fading American industrial might, one that offered up a motorcycle to feed every market segment which has since degraded into exuding minimal coolness from contrived models.  Many others with little identity and somehow you’ve been duped into paying a premium price for indifferent quality.  This doesn’t seem intellectually honest or make for good PR!

The mind-set reminds me of an article in yesterday’s Wall Street Journal about plastic corks and how they’ve made major inroads into the 400 year-old world of wine-corks.  One quote rang especially true and reminded me of the Harley motorcycle business.

“By the 1990’s, retailers and wineries were clamoring for a solution to wine taint, but the cork industry didn’t respond.  No industry with 90% market share is going to see its propensity to listen increase – and that’s what happened to us,” stated Mr. Carlos de Jesus (Head of Marketing, Amorim Group (largest cork producer in Portugal)).

The bottom line is corks didn’t work that well and wine ended up contaminated/bad because of cork deficiencies.  No cork manufacture believed there was a problem and didn’t see the opening for an entrepreneur.  In less than 10 years, plastic corks account for about 20% of the bottle stopper market.  They changed the way winemakers think about making and closing wine.

Lessons for Harley?

  1. Never lose focus on your core mission.  Which is bringing great quality motorcycles to the public.  Some motorcycle manufactures have tumbled into the abyss because it became more about hip-hop star alignment, brand marketing, finding a tiny niche and filling it, oblivious to the point most of your market just doesn’t care.  Oldsters and hipsters are both confused.
  2. Don’t be inured to nostalgia or old technology.  The public is more open to innovation than the supplier.  People are not married to the old ways, they’ll embrace new ideas even if not every innovation triumphs.
  3. Success breeds complacencyAll most innovation in the motorcycle business is by the independents or custom shops doing it outside of the system.  To say you need a major motorcycle company to triumph is to say plastic cork suppliers can’t win unless they align with real cork suppliers in Portugal, who after all are fluent in distribution and have pre-existing relationships with wineries.  But, the plastic cork guys went it alone.
  4. Efficiencies and price. We’re not talking virtual here, corks are physical whether real or plastic.  The future is lower priced motorcycles and the cycle time for new models can’t be like harvesting cork from a tree every 9-to-10 years.  The fundamental measurement of lean manufacturing is cycle time.  It doesn’t matter how many “Kaizen” events or “six sigma” projects a company holds. Cycle time is to lean what weight is to a dieter.  You can get all the bean counters to measure inches lost or reductions in calorie intake, but at the end of the day the bottom line is determined when you step on the scales.
  5. Multiple answers. There is always more than one answer which can take hold.  Screw caps are triumphant ‘down under’ in Australia and New Zealand.  Who will develop the next “screw cap” for the motorcycle industry?

The point is not to be weighted down by your presuppositions.  Don’t think that you’re operating in a world of immutable laws.  And to realize that trying to hold back the future is a losing proposition.  The only way to maintain your share is to improve what you’ve got. Concentrate research dollars on fewer models, pack them with the latest features and technologies, manufacture them in low-cost, U.S. factories (non-union?) and update them relentlessly on rapid fire engineering design cycles.

Schematic photo taken at H-D Museum; Keith Wandell photo courtesy of Tom Lynn/JSOnline.

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