Harley Davidson Case Study

Table of Contents

Page

1. Introduction 3

2. Background 4

2.1 Leadership and Changeability 4

2.2 Current situation 6

2.3 Contribution and expectations 8

3. Plan to create and communicate the vision 8

3.1 Members of the company and their behavior 8

3.2 Measurement of progress 9

3.3 Detailed plan of action 11

The process of change starts with Step 1: Create Urgency 11

Step 2: Form a Powerful Coalition 11

Step 3: Create a Vision for Change 12

Step 4: Communicate the Vision 12

4. Implications & Conclusion 13

I. References 14

"No business can survive over the longer term if it cannot continually reinvent self.

But this is most difficult to do as it requires working across all layers of the firm.

Essential and difficult, it is the ultimate test of leadership."- Dr. John Kotter

1. Introduction

In the era of globalization and in a rapidly changing, modern business world, change is inevitable for almost every company. Due to this omnipresent phenomenon, the assignment at hand will deal with the topic of change management. By way of example and to illustrate the topic, the choice has fallen to Harley-Davidson. The consensus of the group members involved in this assignment was that Harley-Davidson is exemplary in that it has been almost destroyed in the past, because it was not able to change quickly enough. However, the company finally managed to change and to learn its lessons from history.

Today, Harley-Davidson is facing again a complicated market situation caused by its dependence on the U.S. market. An opportunity for future growth could be a thrust into development of foreign markets, including the Asian markets. However, if its competition is more forceful in developing global markets, Harley-Davidson may have difficulties competing in these markets. Therefore, the central challenge and goal will be in the beginning to convince the employers of Harley Davidson's that a fundamental change in the organization's strategy and market orientation is necessary and that independence from the U.S. market is essential to the firm's future. This task is somewhat complicated because there is no generally perceived need to change at this moment.

The memorandum at hand delivers background information on Harley-Davidson and change management in the past, its current state and challenges as well as a plan of action to realize the goal by example of Kotter's Eight Steps (Kotter, 1995).

2. Background

2.1 Leadership and Changeability

The Harley-Davidson Motorcycle Company was founded in 1903 and was soon to become the world's leading manufacturer of motorcycles (Oosterwa & Dantar, 2010). The first bike was incapable of climbing through the hills of the state, which led to the first challenge, because the founders were forced to cope with the situation and to develop their motor further. History has shown that their development of the motor was successful and grounded the elevating success of the company. In 1969, Harley-Davidson was sold to the American Machine Foundry (AMF) and production was increased by 300 % (Wright, 1993).

However, the new policies of AMF caused an imbalance of the organization resulting in an explicit clash of organizational cultures between the old Harley-Davidson management team and the AMF one resulting in severe labor strikes and a drop in quality to a dangerously low level. Honda was trying to take over the American motorcycle market and gained a significant market share. By the early 1980's Honda almost totally dominated the world market and Harley Davidson had to make remarkable and deep changes to survive (Wright, 1993).

It was Tom Gelb, one of the new owners of Harley Davidson who tried to find the solution for the quality and change problem (Oosterwa & Dantar, 2010). Therefore, firstly he learned from the Japanese and what they were doing different. He understood that the Japanese were using three practices that were not used at Harley-Davidson:

1. Employee Innovation (E1); Enlisting the full participation of all employees in solving problems and controlling quality. Harley-Davidson had already tried quality circles since 1978, but they lacked the understanding of the total concept, and they lacked the commitment.

2. Just-In-Time Inventory (JIT); This is a production method that eliminates large parts inventories, with their pitfalls and high costs. JIT delivers small quantities of parts to the assembly line as they are needed.

3. Statistical Operator Controls (SOC); Providing all employees with the statistical training for measuring the quality of their output.

Secondly, Harley-Davidson realized that the introduction of these practices meant a radical and intense change first of all of top management like old habits and attitudes concerning employees. It became clear, that the process of change could furthermore only be successful if the company gets its employees focused on one goal and if they don't confuse the employees by too many changes with no apparent interconnection. Harley Davidson understood that it is far better to focus on a single, simple, understandable goal; an umbrella under which all company improvement programs can be linked together. In this case the focus was "quality" and everyone in the company could understand and relate to it and which could be applied to any aspect of organizations operations. Quality also appealed to their pride to turn out a better product.

Furthermore, the company began to involve employees: Quality Circles, Employee Involvement programs (EIP), Employee Involvement groups (EIG) or Employee Solving problem (ESP). However, unless these formats are provided in a fruitful organizational climate, their benefits wouldn't survive through formal structures and mind-sets. Therefore, the policy is based on an "open-door management" founded by William Davidson with the goal to secure change and development through the feeling of psychological safety