Taking the High Road
An Inside Look at Motorcycle Giant Harley-Davidson
By Rebecca Smith
In 1903, 21-year-old William S. Harley and 20-year-old Arthur Davidson built their first motorcycle in a small shop with the words "Harley-Davidson Motor Company" scrawled on the door. One hundred years later, the Milwaukee-based company's storied past and promising future is being celebrated throughout Wisconsin, across the United States and around the world.
The School of Business has a variety of partnerships with the legendary motorcycle maker to celebrate, including internship opportunities for students, career placement of graduates and executive education provided to Harley-Davidson employees.
In September, Richard F. Teerlink (left), retired CEO of Harley-Davidson, spoke to MBA students at the Dean's Executive Leadership Series. Teerlink, shown with Dean Michael M. Knetter, shared his thoughts on topics from ethics to branding.
School of Business Dean Michael M. Knetter invited Richard F. Teerlink, retired CEO of Harley-Davidson, to speak at the Dean's Executive Leadership Series in September. The speaker series provides MBA students with the chance to learn from giants in management. Teerlink didn't disappoint, as he shared the tumultuous past and successful turnaround of the company, offering his insights along the way.
Teerlink joined Harley-Davidson in August 1981 as chief financial officer, just after the company's management buyout from AMF Incorporated. Then the nation's sole motorcycle manufacturer, the company was on the brink of bankruptcy, facing a declining market, poor product perception and heavy competition from Japan. Through aggressive actions in product development, manufacturing and marketing, the company made significant improvements and was gaining recognition.
In 1985, however, the company's financial condition was still shaky enough that the firm was faced with bankruptcy. Teerlink successfully negotiated a financial restructuring through new lenders and kept the company out of bankruptcy court. A year later, Harley-Davidson went public, and Teerlink was promoted to chief operating officer before becoming CEO in 1989.
"In 1982, Harley-Davidson had no money of its own," said Teerlink, who once served on the company's board of directors. "We were $90 million in debt, and bankers weren't willing to loan us a penny. We had a good brand and loyal customers, but we weren't generating a profit because we didn't have a quality product at that point. We had to improve the quality of our product to be fair to the customer. If we hadn't improved the reliability of Harley-Davidson products, the company wouldn't be here today."
Not only is the company alive and well today, it reported record earnings for its third quarter ending September 28, 2003. Revenue for the quarter was $1.134 billion, and retail sales of Harley-Davidson motorcycles in the United States grew more than 27 percent compared with last year's third quarter.
Teerlink On...
Career Goals
“I carried two things with me throughout my career, advice my father had passed down to me. First, never work for just money. No one has enough money to make themselves happy. Second, work somewhere you look forward to going to work in the morning.”
Respect
“Management can be a strange area if you haven't had the proper training. How do you add value and get people to respect you? Respect them, and they will respect you.”
Management
“Everyone wants to do a great job. It's usually the leaders who get in the way, due to their insecurities or egos. Be aware of controls that are barriers to effectiveness.”
Branding
“Don't prostitute your brand. Licensing is not free money.”
Business Ethics
“The Sarbanes-Oxley Act won't prevent greed from taking over. Use ethical values as a driving force in your company. It's tough to teach ethics; it starts in your upbringing.”
Making a Difference
“Everyone complains about the world. What are you going to do to make it different? If you're not willing to get involved, keep your mouth shut.”
Passion
“The biggest thing going at Harley is our passion. Never be afraid to show passion.”
Richard Teerlink, retired CEO of Harley-Davidson, recounted the history of the company's successful turnaround at the Dean's Executive Leadership Series in September.
In his talk, Teerlink said that although the company is riding high at its century mark, it faces future challenges. "All successful companies have the same challenge, it's crisis of success. Arrogance, greed and complacency: you have to avoid all three to remain successful."
To help keep the company on track, Harley-Davidson operates under five guiding values according to Teerlink: Tell the truth, be fair, keep your promises, respect the individual and encourage intellectual curiosity. Teerlink warns: "If you are ever driven by money and money alone, you'll make unethical decisions. I've seen it happen. Beware."
One tenet of the Harley-Davidson philosophy involves improving society through volunteerism and financial contributions. Each year, a portion of the company's profits is directed to the Harley-Davidson Foundation, which provides support to non-profit organizations in communities in which Harley-Davidson does business. Moreover, the company has provided funding for student support to the Erdman Center for Manufacturing and Technology Management at the School of Business.
The company's ties to education extend to recruiting and hiring School of Business students. Harley-Davidson has been an on-campus recruiter at the school several times in the last decade, hiring graduates and filling several internships in supply chain management, buying/planning and e-business. These internship opportunities provide students with the opportunity to gain crucial business experience that sets them apart during their job search.
Evan Smestad, a second-year MBA student in the Grainger Center for Supply Chain Management, held a network analysis internship at the company's Milwaukee headquarters last summer. Prior to joining the Harley-Davidson team, Smestad researched its business processes. He then began by locating, cleansing and delivering data required to find opportunities for shipment consolidation and freight payment savings. By the end of the summer, Smestad was able to provide the data needed to complete the project, while creating a more efficient way to do future analyses. "The internship exceeded my expectations," said Smestad. "It was amazing to be a t Harley-Davidson while they celebrated their 100th anniversary. I met motorcycle enthusiasts from around the world. It really struck me to see so many people, regardless of age, gender, socio-economic and cultural backgrounds sharing their love of chrome, the sound of the Harley V-Twin engine and the experience Harley-Davidson has created. What other brand can motivate and excite people to go to such lengths? I'll never forget that summer."
Ted Bouras, director of the Grainger Center for Supply Chain Management, said the hands-on experience gained through internships strengthens concepts learned in the classroom. "Harley-Davidson Motor Company is a key corporate partner and a valued member of the Grainger Center community,Ó Bouras said. ÒIn addition to recruiting our students, Harley-Davidson often hosts faculty, staff and students on tours of their facilities and their senior managers have made in-class presentations to share their experiences with students. Other ways they contribute is by having their director of logistics, Brian Smith, serve as a member of our Executive Advisory Board and by sponsoring the International Graduate Logistics Case Competition."
Dean Knetter said, "We are very fortunate to have a company of the caliber of Harley-Davidson nearby. Their involvement with the School of Business though internships, recruiting, financial contributions and sharing their experience with students is invaluable."
Rebecca Smith is assistant director of alumni relations