No, not that kind of hog. I grew up on a farm and I’ve never seen a pig bounce. A bear, yes. I’m talking about Harley Davidson who trades under the symbol HOG. I had lunch with a leader and friend there and they’re working hard to put bounce into their company. Can they do it? Not without fundamental changes to the design of the business.
Keith McFarland wrote the book Bounce, The Art of Turning Tough Times Into Triumph. Bounce, as he defines it, is the resilience companies need to handle tough times (like the recent recession) and bounce back even better than before. One of Keith’s premises is that great companies are not built during the good times, they’re built in the bad. Check out Keith’s book here.
There’s no question recent times have been very tough for Harley Davidson. When the recession hit, consumer spending pulled back and sales dropped 40%. To cope with the dramatic impact, HOG went to work; most notably on labor contracts that had escalated over the years when times were much better.
The contracts in Milwaukee were recently renegotiated but that won’t be all that’s required. During the good times, more things grow than just the revenue line (and the labor costs). So does the portfolio. And structures become, well, too structured and rigid. Unnecessary process accretes over time. Decision and approval processes designed to manage risk associated with growth, now become stifling and uncompetitive. And all this gets reflected in a culture, which like an immune system circles new ideas and kills them off quickly.
All this said, the leadership appears to be making the changes required to put Harley Davidson on track to a full recovery and even more. It takes a strong will to renegotiate union contracts but their success in doing so shows they might have what it takes. More work to do, I’m sure, but maybe I’ll get to see a HOG bounce after all.
