New Harley-Davidson chairman and chief executive officer Jochen Zeitz has not shied away from critiquing the Milwaukee-based motorcycle makers leadership since taking over the top job in March.
Zeitz, a member of Harley’s board since 2007, has said the company’s culture and employee morale has been hurt by repeated cost cutting initiatives and that management and decision making was too centralized and disconnected from the business.
The former chairman and CEO of Puma has also moved quickly to make changes to the company, including the departure of chief operating officer Michelle Kumbier and chief financial officer John Olin. Harley also announced the elimination of 700 positions globally as part of The Rewire, Zeitz’s plan to reset the company’s operations ahead of a new five-year strategic plan to be announced in the fourth quarter.
On Tuesday, Zeitz detailed some of the changes Harley has already made to its operations, including giving more responsibility to leaders in individual countries, a new approach to managing dealer inventory in response to customer demand and plans to “streamline” model offerings by 30%.
“From my perspective, management has been … removed too much, removed from business and from culture, and that is something that needs to change dramatically,” Zeitz told analysts on Harley’s second quarter earnings call.
“If I meet a managing director of a relatively important country and that person has not spoken… for 15 years to senior management, there is a problem, right?” he added.
Zetiz said Harley needed to delegate responsibility to leaders within countries that best know how to make decisions for their market. He added it isn’t as simple as just delegating, but instead providing employees a framework for making decisions without having to wait “for leadership to ultimately micromanage in markets.”
Harley’s plan to eliminate 700 positions globally, including the departure of around 500 employees, came after the elimination of around 150 production jobs earlier this year. Zeitz said the latest actions are intended to set the company up for long-term success by making sure it has the right operating model, the right people in the right place and the right processes.
The goal, he said, is to become faster, less complex and more focused.
Some of the actions the company has taken include:
- Creating a new global commercial function accountable for sales and inventory management across all product lines and markets.
- Restructuring the marketing function to focus on maximizing messaging, placing an emphasis on the company’s brand.
- Increasing operation support at Harley-Davidson Financial Services, aligning hours of operation to dealer needs, providing more specialist staffing and collection capabilities and improving online processing support.
- Managing production to eliminate peaks and valleys throughout the year.
- Creating a new motorcycle management function to focus on enhancing Harley’s core strengths, better balance expansion into new spaces and fine-tuning the company’s product portfolio.
- Creating a new administrative function to support “our critical people and stakeholder priorities”
- Merging communications, public relations and investor relations.
- Elevating digital and IT functions out of the finance organization.
In addition to reducing its model offerings by 30%, Harley is also making changes to how it launches new motorcycles. The new model year will now debut early in the first quarter with the goal of building demand and interest heading into the riding season. Previously, Harley launched new models late in the summer.
Zeitz said the new motorcycle management function would help set clear performance criteria, allowing the company to focus on the most desirable and profitable products.
He said the company has extraordinary products and more in its pipeline but also acknowledged Harley’s offerings can be somewhat complex.
“That complexity, I think, might even be for some customers a bit confusing at times, especially for those who come into the brand and would like to buy a new bike,” Zeitz said.
He added Harley shouldn’t launch into every potential category at once, instead focusing on those that are true to the company and are not a stretch for its brand.
“You can’t be everything for everybody,” Zeitz said.
Harley plans to launch an adventure touring model next year, but when pressed by analysts Zeitz did not commit to a streetfighter model or a small-displacement bike planned for the Asian market, both of which had been previously announced by the company.
“We would like to reveal our product much closer to actual launch,” Zeitz said. “And whether and when we are going to launch specific products is not something that I would like to elaborate on right now.”
