Lockean

Introduction
When looking for an example of organizational success beyond profitability and product quality, one particular company comes to mind, Harley Davidson.  The company’s longevity came into question during the sixties with increased foreign competition and poor product quality.  However, in the eighties not only did executives find a way to pull the organization from the brink of bankruptcy but also managed to become highly successful with a strategy of selling an “experience” rather than a product and engaging employees in change.  The organization reinvented itself through discovery of embedded loyalty to the brand and broadened its market by planning and changing strategy, operations and management around this loyalty. 
Strategy
Initially, building a brand based on this customer and employee loyalty was not an automatic or obvious choice to upper management when looking at strategic planning and reorganization.  It was clear that product quality was poor, production efficiency was less than sub par and profitability was unattainable under the circumstances.  It was not until a group of loyal executives including William Davidson, the grandson of the founder Arthur Davidson, formed the “rescue team” (Schinwald 2005, para. 5) through a leveraged buyout and developed a clear organizational strategy and mission based on loyalty and the Harley “experience”.  Through this strategy a new organizational culture was cultivated and grew, redefining what Harley Davidson stands for.  This strategy remains the core of Harley Davidson’s business today.

Description

After the buyout was complete, the rescue team went to work focusing on quality and efficiency issues.  The initial strategy was to focus on short term and immediate fixes in order to stabilize the organization due to its precarious financial situation.  Executives found ways to critique competition for best practices.  A perfect example of this was touring a Japanese manufacturing plant to find ways in which to improve.  What the team found was that foreign competition was using TQM (Total Quality Management) practices that originated in the United States but had been rejected by U.S. manufacturers (Schinwald 2005, para. 6).  The team immediately went back and implemented the rejected practices as well as JIT (Just In Time) inventory.  This strategy coupled with lobbying for increased import tariffs on foreign motorcycles reduced costs and helped stifle competition, giving Harley breathing room to focus of future strategy and growth.
After the organization stabilized, the rescue team focused attention and emphasis on the branding of the Harley experience based on evidence of employee and customer loyalty.  Research had shown that 75% of Harley’s customer base made repeat purchases (Schinwald, 2005, para. 8).   Further, it was evident that during crisis employees bound together to not only save their jobs but save what Harley stood for.  The mission and vision of Harley changed to emphasize and embrace these partnerships and “partnering became a fundamental part of Harley Davidson’s vision statement” (Teerlink, 2001 p. 8).
Example
Building a brand that was built on internal and external loyalty and encompassed the “experience” required a paradigm shift in how business would be done.  Internal strategy started with leadership and included maintaining employee loyalty and collaboration that had been observed during crisis.   Early on, it became clear that while the “command and control” hierarchy leadership style was necessary in survival mode, it would not promote or nurture innovation and collaboration for the long term (Teerlink, 2001 p. 8).   The necessity to engage employees and reduce the leadership hierarchy lead to changing the organization structure to what Harley calls the “Circle Organization” (Teerlink, 2001 p. 9).  Employees were given the opportunity and expected to take responsibility as well as make contributions to the success of the organization.
Externally, the branding strategy took on new form as well.  It was believed that the strategy to “partner” with customers (riders and dealers), employees, suppliers, shareholders, the government and society  would be mutually beneficial.  Further, partnering across the value chain supported the notion that Harley was more than just a product but rather an “experience”.  Harley made great strides to work with dealer organizations to improve Sales Service Agreements and made historical strides and progress working with unions for the betterment of union members (Teerlink, 2001 p. 9).
Critical Analysis
Harley’s strategy to focus and build on loyalty both internally and externally through a vision that “Harley exists to …. Continously improve the quality of mutually beneficial relationships with stakeholders…” (Teerlink, 2001 p. 9) gave not only a renewed mission to the organization but proved to the outside world that Harley was more than just a motorcycle.  Harley’s Circle Organization was revolutionary in business restructuring and proved that “shared leadership” was possible as well as profitable by turning an operating profit shortfall of $15.2 million in 1982 to a $416 million operating profit in 1999 (Ganzel, 2000 p. 90).  The traditional “command and control” leadership proved to be counterproductive to the Harley Davidson loyalty phenomena and thus its abandonment helped not only save the organization but provided opportunity for innovation based on employee experience with the brand. 

Planning and/or Operations
In 1988, Rich Teerlink (former CEO) and Lee Ozley (Harley’s organizational consultant) worked with the Harley “Operations Committee” which consisted of senior Harley executives to lay the groundwork for how the organization would operate after abandoning the traditional and rigid top-down leadership style (Ganzel, 2000 p. 90).  A major focus was on operations as it had been very clear that product quality and efficiency was lacking. 
Description
With innovation in mind, Harley needed to go back to the drawing board to find ways to build on that initial customer and employee loyalty while improving products and processes for financial sustainability.  One of the of the three integral components of the “Circle Organization” was the PPG or “Produce Products Group” (Oosterwal, 2010 p. 36).  The purpose of this group was to engage employees in the development and production decision making process by tapping into their passion, having multi-directional communications regarding the products and building a learning organization around product development based on customer (employee) experience. 
Example
The PPG not only instituted lean manufacturing, TQM and JIT practices but also implemented “standardized work” in product development to progressively improve processes in this area.  The idea behind “standardized work” is that “all workers are engaged to collectively find and agree on the best ways to accomplish work” (Oosterwal, 2010 p. 77).  Further, it was recognized that part of the underlying problem with product quality and development was the fundamental process itself or the lack thereof.   The traditional phase gate methodology behind product development didn’t flow with Harley’s freethinking and collaborative teams.  But perhaps more importantly, internal examination of historical product development data not only showed that the phase gate process had “no positive impact on the success of the overall project” but that “data even suggested the inverse may be true” (Oosterwal, 2010 p. 149). Therefore, an emphasis on phase gate method was abandoned in exchange for point based methodology that encompassed redesign loops in the development process, thereby supporting Harley’s “circle” vision.
Critical analysis
The rigid hierarchal bureaucracy embedded in the “phase gate” methodology at Harley made product development slow and often lead to failed projects or poor quality of new products.  The dedication and commitment of the employee’s and management to discuss and debate the minutiae of each process, think outside the box and be willing to try something different paid off in product, process and profitability.  Further, the operational processes put in place have helped align the Harley vision and leadership philosophy with day-to-day business operations.
Organizational Culture, Values and/or Ethics
The organizational culture, values and ethics of Harley Davidson in the sixties through the eighties are drastically different than what they are today.  The dramatic shift in culture and values took place only after existing owners stopped bleeding the organization of profits and then putting the remaining shell on the auction block.  Dedication to the intangible and a belief in core principles strengthened and nurtured an underlying culture that had always existed but had not been capitalized on until loyal executives instilled a vision that embraced this undercurrent and believed that Harley was more than just a manufacturer.
Description
Today, Harley’s organizational culture and values are far from the stereotypical hardcore, bad-boy, outlaw image of the sixties.  While the casual work environment still exists, the “gang” like image has been softened and more compared to a familial type connection between riders and/or employees. Further, a strong commitment to five core principles can be found in the organizational value statement that says, “Tell the Truth. Be Fair. Keep Your Promises. Respect the Individual. Encourage Intellectual Curiosity” (Harley-Davidson.com, 2010 Student Center Section, Values).  These values stem from identifying and changing a counterproductive culture and building a learning organization by removing traditional barriers to innovation and productivity such as rigid linear management styles and processes.
Example
Harley has remained committed to supporting their core principles through different avenues.  They have implemented a Code of Conduct that applies to the Board of Directors as well as employees with very detailed advice and processes for handling issues such as conflicts of interest.  Also, early on the organization created H.O.G (Harley Owners Group) providing both employees and customers a mechanism to bond and share the Harley experience outside of the stereotypical “gang” setting of the sixties.  Further, evidence of a casual and fluid work environment can be found almost anywhere, from the “committee” style meetings to the dress code.  It is not uncommon and perhaps more expected to see executives in jeans and tee shirts and observe true enthusiasm for the work, the product and the “experience” during meetings and events (Oosterwal, 2010, p. 30).

Critical Analysis
It is clear that early on in restructuring top executives focused on organizational behavior.  Identifying and analyzing past and current culture and organizational citizenship behavior lead executives to Harley’s goldmine founded in loyalty.  It was a classic case of employee’s being a product of their environment.  Poor leadership and a driving focus on pushing products out the door through traditional “in the box” management and processes undermined the core asset of the organization.  There had been a disconnect between management and the employee culture.  New leadership lead by executives that shared the genuine Harley culture renewed employee’s organizational commitment.
HR and/or Performance Management
Harley Davidson’s strong familial bond within the organization has created challenges for the HR Department in regards to new hires.  Further, increased demand for a revived product created a drive to increase supply to meet this demand.  In order to meet these challenges, an employee performance management system became necessary.
Description
Harley’s performance management system focuses on employee engagement and accountability, innovation and learning as well as individuality and teamwork.  To monitor and improve these specific areas of performance, several mechanisms have been put in place.  Performance appraisal methods, improved “onboarding” methods for new hires and continuing education opportunities are just a few.
Example
To engage employees in the larger picture, Harley implemented a performance management system that includes its “Performance Effectiveness Process: a contract written by each employee that defines annual measurable goals, which are reviewed quarterly with a supervisor” (Imperato, 1997 p.2).  To ensure employees are given opportunity to grow and meet their goals, Harley provides “workers with 80 hours of training each year” (Imperato, 1997 p. 1).  Further, to assist newly hired employees in becoming acclimated to a very tight knit culture, HR management changed their “onboarding” process through a program called HR EDGE (Employee Development Generating Excellence).  This self-guided orientation program was specifically created around the Harley culture and includes “topical modules, online gaming, face-to-face events, and both live and e-seminar action learning” (Andersen, 2008 A Great Ride Section, para. 2).  The process is meant to transition new employees into a very unique working culture and allow them to thrive in the environment.
Critical Analysis
Harley Davidson’s unique organizational culture lends itself to unique challenges for HR and performance management.  A culture driven by freedom, collaboration and innovation has forced HR to innovate new techniques to support employee growth and ensure success.  In a time when manufacturers were against unions, Harley chose to partner with two (the International Association of Machinists and Aerospace Workers and the United Paperworkers International) and negotiated the Modern Operating Agreement which showed a commitment by both to make Harley a “high performance work organization” (Imperato, 1997, p. 2).  While no organization or process can be perfect, Harley is determined to improve in every aspect, leaving no stone left unturned.
Management Control
Throughout the years, Harley as keyed in on productive ways of evaluating resources to keep in line with the organizational mission.  One of the most beneficial management control systems in place today is the close participation in the many events networked with dealers, vendors, employees and customers.  From smaller events such as weekend H.O.G excursions to the well-noted main events such as Daytona week and Sturgis, each is a mechanism to gather feedback up and down the value chain.  Physically seeing and experiencing Harley in real world scenarios brings a richness to the management control conversation and process that a simple survey cannot match.  A vendor, customer or dealer can demonstrate a design flaw, product quality or supply issue in real time bringing three dimensions to the subject.
Appropriateness of Leadership
The previous “command and control” leadership style, while necessary in the early stages of restructuring, proved later to inhibit the almost natural culture of the organization. Teerlink and Ozley proved to be the right leaders at the right time.  Their transformation leadership and vision for a cohesive and collaborative organization meshed with the tight knit and loyal culture of the employees.   Further, their desire to improve not only the productivity and processes but also the relationships with all stakeholders by creating a organization based on partnering and team oriented management was revolutionary to the industry.  Organizational performance across the board proved that Harley could be more productive and profitable by empowering its people.
Organizational Change (prepare for)
Harley Davidson has seen the writing on the wall and has made strides in changing to meet new challenges and demands.  While not as hard hit as the car industry, the organization has seen a slump in sales due to economic conditions.  Harley motorcycles, once seen as the upper-middle-class toy, is not as easy to purchase when disposable income is in short supply.  Further, Harley’s customer base, the predominately male Baby Boomers, are aging.  Generation X, Generation Y and women are leading drivers for changing market and product strategy.  Harley, in an attempt to appeal to these groups  “transformed their grimy bike shops into retail emporiums” (Helyar, 2002 para. 15) and focused development of “youth oriented” bike models (Helyar, 2002 para. 12).  An emphasis on technology and producing sleeker, faster bikes has emerged to try and capture the hearts of the “twenty somethings”.  In the global market, Harley had committed to the faster, sportier bike model through the acquisition of MV Agusta in 2008 and their Buell line.  However, by 2009 Harley determined that MV Agusta would be put up for sale so Harley could “focus its effort and investment on leveraging the unique strengths of the Harley-Davidson brand” (Crowe, 2009 para.3).
Within the organization Harley continues to evaluate and analyze processes and practices for improvement.  One change that was implemented twice (once in 2004 and again in 2006) was the HCDF (Human Capital Development Framework) by Accenture.  This analytical tool allows organizations to “better assess its core human capital capabilities (such as leadership, workforce performance and talent management), identify the human capital processes that will likely improve them and then prescribe the specific process interventions that will improve the capabilities—as well as overall business performance” (Cantrell, et al, 2005, para. 1).  
Conclusion
Both internally and externally, Harley has committed to its loyal following.  Revolutionary processes of partnering with employees and empowering them through the Circle Organization or by mutually working with the unions has proved to be successful investments.  Further, Capitalizing on the “brotherhood” by attending events has proved to be invaluable in management control, research, product development and process review.
It is evident that top executives are not finished with their journey to improve.  Improving processes in HR to production are continuous.  If anything is constant, it would be change.  Executives are aware of changing demographics and the importance of staying ahead of the game.  Innovation and life long learning through collaboration is at the core of this organization.  And while the casual, fluid work environment may not work for every organization, it has proved to work for Harley.
Critics wonder if Harley has longevity today with the current economic crisis and aging demographic of their ridership.  Harley is not worried and should not be.  Harley loyalty and fascination is as unique as the American muscle car phenomena.  The nostalgia of hearing Dad’s bike coming up the street after work will eventually inspire the Gen X and Y to want the experience.  It is a generational family experience as well as a part of the American fascination with individual freedom through what we drive.  Branding that experience has and will keep Harley alive.

References
Andersen, Allison. (2008). Onboarding HR at Harley-Davidson: The Spirit of the Ride. EBriefs.com.  Retrieved October 15, 2010 from http://www.lorenet.com/pubs2/eBriefsArchive/Quarter12008/OnboardingHRatHarleyDavidson/tabid/842/language/en-US/Default.aspx

Cantrell, Susan, Benton, James M., Thomas, Robert, J., Vey, Meredith A., Kerzel, Linda. (2005). The Accenture Human Capital Development Framework: Assessing, Measuring and Guiding Investments in Human capital to Achieve High Performance. Accenture.com. Retrieved on October 18, 2010 from, http://www.accenture.com/Global/Research_and_Insights/Institute-For-High-Performance/By_Subject/Talent_and_Leadership/ThePerformance_old.htm

Crowe, Paul. (2009). Harley Davidson Hires Firm to Sell MV Agusta. Motorcycle Business.  Retrieved on October 18, 2010 from http://thekneeslider.com/archives/2009/11/19/harley-davidson-hires-firm-to-sell-mv-agusta/

Ganzel, Rebecca.  (2000, December). More Than a Motorcycle: The Leadership Journey at Harley-Davidson. Training, 37(12), 89-90.  Retrieved October 18, 2010, from ABI/INFORM Global. (Document ID: 65663876).

Helyar, John. (2002). Will Harley-Davidson Hit a Wall? Fortune.  Retrieved October 19, 2010 from http://www.mutualofamerica.com/articles/Fortune/2002_08_01/fortune.asp

Imerato, Gina. (1997). Harley Shifts Gears. FastCompany.com.  Retrieved on October 18, 2010 from http://www.fastcompany.com/magazine/09/harley.html?page=0%2C1

Oosterwal, Dantar, P. (2010). The Lean Machine: How Harley-Davidson Drove Top-Line Growth and Profitability with Revolutionary Lean Product Development. AMACOM. New York, NY. Retrieved on October 11, 2010, from http://proquestbus.safaribooksonline.com.csuproxy.egloballibrary.com/9780814413784/firstchapter#X2ludGVybmFsX0ZsYXNoUmVhZGVyP3htbGlkPTk3ODA4MTQ0MTM3ODQveGlpaQ==

Robbins, S.P. & Coulter, M. (2007). Management. Upper Saddle River, NJ: Pearson Prentice Hall.
Schinwald, Josef. (2005). Case Study: Harley Davidson. WebProNews.com. Retrieved on October 9, 2010, from http://www.webpronews.com/topnews/2005/07/28/case-study-harley-davidson

Teerlink, R. (2001). The Leadership Journey at Harley-Davidson. Corporate University Review, 9(2), 1. Retrieved from Business Source Premier database.