Former Harley CEO on Being the Head of the Pack

Visualize the typical Harley owner. Beard, tattoos, leather. Right? Actually, customers average 46 years of age and have annual incomes approaching $96,000, said former Harley Davidson CEO Richard Teerlink, ’76 (XP-36).

But the rough-and-ready image associated with motorcycles doesn't hurt when it comes to sales. “Everybody in this room wants to be a little bad,” the bearded, broad-shouldered Teerlink said to laughter on April 27 when he visited the strategy symposium class of Harry Davis, Roger L. and Rachel M. Goetz Distinguished Service Professor of Creative Management.

Harley was in sad shape when Teerlink took the helm in 1986, two months after the company went public. The company had a poor reputation for quality and reliability.

“It was said that if you had a Harley you had to own two—one for parts,” Teerlink said.

The entry of Honda Motorcycles into the market in the early 1980s had chopped Harley’s market share from 70 percent to 14 percent.

Harley management eventually turned the company around, but not without taking drastic measures. Under Teerlink, Harley laid off 40 percent of its workforce and cut the pay of remaining employees. It canceled major product development, asked suppliers for price reductions, and shrank its dealer network while cutting dealer margins, he said.

Externally, Harley built a community of riders largely through local chapters of Harley Owners Group (HOG). Internally, the company empowered its employees, Teerlink said. In other words, it offered them “freedom with fences,” the fences being values. “Now Harley is known as a great place to work.”

The result? “We were successful,” said Teerlink, coauthor of  More Than a Motorcycle. “We rode into the New York Stock Exchange on motorcycles."

Along the way, he learned a few things about leadership. “It took me about two months to understand that in reality I was insignificant,” Teerlink said. “My job was to make sure that the people who reported to me had the tools they needed.”

Now he defines leadership as making possible “a process in which people work together to achieve mutual goals because they want to, not because they have to.”

— Gary Wisby