Harley-Davidson announced last week that its CEO for the past five years, Matt Levatich, has stepped aside. Or, it may be more correct to say he was pushed. We don’t actually know; it’s not the way of a company press release to let people in on the dirty gossip of boardroom dealings. But certainly his departure was unexpected, came with immediate effect, and was announced quietly (not through Harley’s usual PR channels) on a Friday afternoon. That doesn’t sound like a totally mutual agreement.
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Levatich “will assist with the transition through the end of March,” according to an investor press release, but was immediately replaced by board member Jochen Zeitz (lots more on him below), who takes on the position of “Acting President and CEO.” He also takes on the role of Chairman of the Board. Per the Harley-Davidson news release: “A committee of the Board will be formed, and the Company will utilize an external search firm to undertake a search for a new CEO… [Zeitz] will remain Chairman once a new CEO is appointed.”
Levatich has been with Harley-Davidson in one form or another for roughly 26 years, taking over the top slot in May 2015. Things haven’t been easy for him; the past five years have been a period of constant decline for the MoCo. Last year, the company’s global motorcycle shipments were the lowest they’d been in a decade, according to the Milwaukee Journal Sentinel. And one assumes this leadership change comes in anticipation of even more bad news. The financial year comes to an end this month; Harley’s board of directors will already have some preliminary numbers, of course, and this action suggests they don’t like what they’re seeing.
The sudden nature of Levatich’s departure has kicked the Internet Speculation And Hater Machine™ into high gear, with many feeling uncertain about the future of the iconic brand. I’ll admit I feel a little bad for Levatich. I’ve personally met him and he seemed alright. Also, his tenure coincides exactly with my gradual change of heart about Harley-Davidson. I used to dislike the brand – in particular what I felt it stood for. My perceptions were hardly unique; a lot of people have had, and still have, the same negative impressions I did. Levatich seemed to be serious about wanting to change those impressions. I’m sure he’ll be OK, though. I’d be willing to bet that whatever severance package he walks away with will be greater than my lifetime earnings.
The Bad Old Days Are Not Coming Back
I spent a lot of time reading through the comments on both Common Tread and Motorcycle.com‘s coverage of the Levatich story, and a common theme of speculation is the belief/fear/hater-fuelled hope that Harley-Davidson will abandon recent efforts to expand into new genres (via products such as the LiveWire, Pan America and Bronx) and instead retreat into the “safety” of targeting Boomers – the audience that helped it achieve market-dominating status in the 1980s, ’90s and early 2000s. I’m relatively confident that assumption is all kinds of wrong, though. Take a look at all the parts of this story and there isn’t much pointing to a company eager to regress.
First of all, there’s the simple fact that such an idea has little, if any, support from within the company’s structure. Over the years I’ve had the opportunity to interact with people from all levels and all areas of the company – engineers, designers, marketers, and, as I say, even Levatich himself. I consider myself pretty damned lucky to have had such access, especially because it’s usually been informal. It’s been a bunch of moto nerds sitting around at dinner or the bar, talking about everything and anything for a number of hours. Yes, those company men and women have their talking points but you’d be surprised how candid they can be. With that in mind, I’ll put this next sentence in bold: I have not met one person who works for Harley-Davidson that believes the company’s future will arrive on the saddle of a Road King.
Yes, several thousand consumers are still keen on buying big, shiny expensive bikes, so Harley’s happy to keep making them, but the company’s leadership structure knows such bikes are not the pillars of growth. (More broadly speaking, by the way, this is a perspective shared by Indian‘s higher ups as well. They know they’re not going to rule the world with Chieftains.)
Secondly, related to the above, Harley-Davidson is aware that Boomers are old and therefore unlikely to be buying a lot of bikes beyond the next 5-10 years. It knows, too, that pandering to Boomers can be an anathema to younger generations.
Third, the news release issued by Harley-Davidson mentions the “More Roads to Harley-Davidson” plan twice. This is the plan begun under Levatich to diversify Harley’s products, improve its dealership network and develop new methods of interacting with customers. You don’t twice sing the praises of a strategy in a press release if your plan is to ditch it soon afterward.
I used to work in public relations and have written plenty of press releases over the years. The quotes you see in releases rarely, if ever, come from the people to whom they are attributed. The person writing the release has talking points that he/she needs to address, thinks up a quote, then clears it with the person who’s supposed to have said it (or his/her staff). In mentioning the “More Roads” plan Harley is signaling that it intends to continue forward with it. If anything, the plan may be accelerated (see below).
Lastly, take a look at Jochen Zeitz, the man taking over for Levatich – appointed as Acting President and CEO of Harley-Davidson as part of Friday’s leadership overhaul. This is not the person you put in charge if you want to be regressive. Co-founder of the B Team – an organization focused on encouraging ethical and sustainable thinking in leadership – Zeitz is disruptively progressive. That is his calling card.
Back in November, Wired described Zeitz as a person whose work “involves supporting businesses who have realized they need to transform, but lack the confidence to proceed.” Supporting that is something he said in an interview with the Independent in 2015: “I just don’t like to talk about the past.”
Zeitz has been on Harley’s board for a while, quietly exerting his influence. Most obviously that influence has come in the form of LiveWire – a bike that Zeitz was very much behind, telling the Independent: “When it came to the discussion about, would Harley do an electric bike? I said: ‘Absolutely, this is a no brainer. Let’s define the sound of the future.'”
In addition, Zeitz was the impetus behind Harley-Davidson’s sustainability efforts. Sustainability is a big thing for Zeitz and serves as a central tenet of B Team’s efforts. The group has also played a big role in pushing world leaders to commit to net-zero greenhouse gas emissions. It is as part of that effort that the United Kingdom plans to ban petroleum-powered cars and vans in 2035.
Oh, and Zeitz (who has a home in London) thinks Brexit is a boneheaded idea. Last year he told The Wealth Report that: “it just makes absolutely no sense… thinking that you can do this on your own is just wishful thinking.”
It’s not a stretch to assume he has some equally critical opinions of some of the Trump administration’s policies. This is not a guy who fits the outdated view of a “traditional” Harley owner. He is arguably the antithesis of that stereotype. If Harley-Davidson wanted to go backward it would not be putting the reins in his hands, even temporarily.
So, What Happens Now?
There is an old saying in Texas: “Shoulda coulda woulda don’t make pie.” In other words, what you should have done in the inalterable past doesn’t really mean anything now. This is a truth that a lot of people forget when discussing Harley-Davidson. Take a look at the aforementioned internet comments sections and you’ll find a bunch of Gen Xers and Xennials airing grievances that they were overlooked by Harley-Davidson when they were younger. They’re carrying a grudge that is now old enough to run for Congress and it’s clouding their ability to assess the company in the present tense.
I mean, I get it. The “Middle Aged Racists* On Road Kings” monoculture that existed in the Minnesota motorcycling scene when I first got my license played a big part in my losing interest in riding in my 20s. Obviously, a company can’t really control who buys its products but Harley’s narrow focus on a very specific type of Boomer left people my age feeling a little ostracized. Equally – and I think we often forget this aspect – it didn’t do a particularly good job of appealing to Boomers like my mother and father, who held such radical ideas as believing women can be CEOs and presidents, and that their value should be measured in more than just their ability to model a studded leather halter top.
FROM THE ARCHIVES:
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But that was a thing that happened. It is boneheaded thinking of the past that, if we’re honest, was not actually that out of line with a lot of the boneheaded thinking of the past (I can remember magazine ads from Kawasaki, Honda and Suzuki that were just as eager to chase after the same type of Boomer), and which, either way, is in the past. It’s done. We can be angry at it, but bitching about what should have been done 20-30 years ago doesn’t really answer the questions of what should be done now. So, shut up about land pirates and Buell and oil leaks and chrome and leather tassels.
Under Levatich, Harley-Davidson has been more forward-thinking and progressive. We’ve seen changes to engines, suspensions, brakes, chassis, and tech that have brought the bikes into the modern era, in line with the sort of thing we expect from the wider motorcycling market. In fairness to Levatich’s predecessor, a number of those changes were begun under Keith Wandell (CEO from 2009 to 2015). To that end, I think a major criticism of Levatich’s tenure could be that the company has not been as forward-thinking and progressive as it should be. Harley-Davidson has been evolving over the last decade, but not as quickly as the world around it. Levatich has arguably played things too safe.
I think you can see that in something he said in an interview with Kara Swisher last year. Talking about the challenge of moving certain aspects of production fully back to the United States he said: “To me, innovation comes from knowhow; it comes from the daily practice of doing something. And because you do something you’re able to figure out how to do it better. And conversely, once you stop doing something you no longer have the ability to be excellent at it, because you’re starting from scratch.”
Wandering deep into the world of speculation here and quietly ignoring the fact that a CEO is just one person in a corporation and therefore his or her influence only goes so far, we could perhaps assume that Levatich held the same kind of attitude toward motorcycles that weren’t cruisers. Hence the half-hearted approach Harley-Davidson took with the Street 500/750 and Street Rod models, or the fact that Harley doesn’t have a scrambler – even though such a thing would make perfect sense. He may have worried that building something other than big-twin cruisers was a dangerous business decision because Harley had no recent experience/expertise in other genres.
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The Last Good Thing
Now, however, keeping in mind what I just said about the influence of CEOs, it appears that in placing Zeitz at the top Harley-Davidson is eager to move forward at a greater clip. We know that Zeitz was/is a big proponent of LiveWire and Harley’s other electric efforts; I think that in speculating on where the company will go from here it might be fair to expect to be surprised. Hitherto, Harley-Davidson has always taken great pride in the fact it “listens” to its customers, but Zeitz has argued that sometimes this may actually be incorrect thinking.
“Traditional consumer goods companies are very research driven, and don’t really decide on action until research tells them to change – but the reality is that research doesn’t always tell you what the consumer wants, because you ask the consumer, and then the product comes out two years later,” Zeitz told Wired last year. “Nowadays you need to think more about using a product to create a new demand, not satisfy an existing one.”
So, who knows what we’ll get? More electric bikes? More naked bikes (the fastest growing segment in Europe)? More characterful midsize bikes? Motorcycles that young riders can actually afford? I’m personally hoping for all those things. More broadly, I’m simply hoping to see the company continue to diversify its offerings.
If you’re someone who works for Harley-Davidson, you may be hoping to see Zeitz implement some of the ideas formulated by the B Team group. Zeitz has promoted the idea of shifting emphasis away from shareholders, focusing more on everyone involved with a successful company – from suppliers to employees to consumers. B Team has also been a strong proponent of the four-day work week.
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Zeitz is a passionate environmentalist, so I’d expect to see the tenements of his sustainability initiative get greater attention. His major contribution to the More Roads strategy was the ambition to grow Harley’s business without growing its environmental impact. Electric models will play a role in that, of course, but we may see Harley aiming for greater fuel efficiency in its internal combustion models. We may also see changes in supply chains and materials. The Sportster as we know it may be doomed. But I’d expect to see the concept behind the model (“smaller” bikes for younger/hipper/more urban audiences) receiving greater attention.
If you’re an ad agency working for Harley-Davidson you may have reason to be nervous. A new direction may be ahead. Zeitz started his career in marketing and it’s something he seems to understand in terms of its power and importance to a larger business. To his credit, Levatich shifted a fair bit of dough to marketing and the challenge of redefining what a Harley-Davidson is and what it means, but I’d not be surprised to see Zeitz pushing things even further. To that end it’s interesting to imagine the new and different ways in which the Harley-Davidson brand might be promoted.
Zeitz, being German and living primarily in London and Kenya, obviously brings a more global perspective to Harley-Davidson. I think it would be foolish for Harley to steer too far away from its American heritage but I would like to see it embracing the more internationalist aspects of the American character. More Ernest Hemingway, less Kid Rock.
Overall, I think it’s safe to assume Harley-Davidson will carry on for years and years to come. The haters love to grab hold of every negative bit of news and scream that the MoCo’s end is nigh. Unlikely. It may never regain the almost total market domination of the ’90s and early 2000s, but I’d argue that such a thing is good for motorcycling, which, in turn, is good for the health of the company – keeping it from falling into complacency.
Whatever happens, it will be an interesting ride.
* Yes, I realize they weren’t all racist but the handful I had interactions with were. And since the culture of the time seemingly encouraged every Twin Cities rider to be a clone of one another, right down to the POW/MIA sticker or flag, my 20-year-old self wasn’t interested in finding the guys twice my age who were actually OK.