146_1407_cover_for_homepageReply to Sport Rider magazine editorial ““Super Sport Motorcycle Sales Still Flat” by Ken Kunitsugu, in the Wheelspin section of August 2014 issue.

In the August issue of Sport Rider magazine, editor Ken Kunitsugu’s laments the market dynamics that have pulled the rug out from under the party. He itemizes the major body blows inflicted on motorcycle sales by the worldwide economic meltdown, the consumer credit clampdown and inflated insurance rates.

In my view, Kunitsugu is missing the point, and I say that as an interested industry observer. I’ve spoken at the Motorcycle Industry Council, I’ve met with the majority of the original equipment manufacturers (OEMs), I have visited with over 90 dealers in the last 18 months. And I am also a fairly new motorcycle enthusiast with a good collection of bikes.

Kunitsugu has misread the situation: the industry’s fundamental problem is not the market dynamics hammering it, but rather the mindset that they can keep doing the same thing and expecting different results. It’s an industry ripe for real innovation in their business processes, in the way they build relationships, and in their go-to-market strategies. But they’ve failed to notice the inflection point.

Kunitsugu’ writes about the Great Recession’s impact as if it were entirely negative. Yes, it drove Ford to the wall, it drove Chrysler and GM into bankruptcy, but it also forced them to make drastic operational and cultural changes. In desperate times you’re forced to become more efficient, to become a dramatically higher quality operation.

The motorcycle manufacturers—think Honda, Yamaha, Kawasaki, Suzuki—are suffering from “me-too-ism.” They want to keep doing things a little better, simply iterating new versions of each others’ products.  I’m of the opinion—and I’ve shared it with the motorcycle industry at every opportunity—that success is going to come from innovation, not incrementalism.

How about a little customer-centricity?

Most OEMs are engineering- and manufacturing-driven companies, not sales- and marketing-driven. Having worked with these technically minded companies, I’ve seen their consistent and flawed assumption that “if we build a better bike, the market will come.”  Whereas a sales- and marketing-driven company would say, “Let’s do a much better job of understanding our end customer segments. What is it that they need from our products or services?”

When motorcycles are the second if not the third ride in most Americans’ garages, it screams, “We’re stuck in a model that isn’t going to get us anywhere.” The Japanese OEMs are following their home-country playbook in North America, a very different market, and for whatever reason incredibly resistant to thinking differently.

How long will it take for OEMs to discover they can position motorcycles as transportation, not recreation? The rest of the world caught on long ago. Only in the US do we think of riding as a hobby. With fuel costs rising and increasing emphasis on renewable energy, it’s shameful that the motorcycle industry hasn’t built any momentum to show people that motorcycles can be the answer. With the vast majority of cars on the road traveling nearly empty, a transformative opportunity is staring the motorcycle industry in the face, and yet they don’t see it. More focus on the market might lead to a change in mindset.

How about lessons from the market leader?

To see the opportunity in increased focus on the customer experience, look to Harley Davidson. They’ve never made the best bikes in my opinion, but they get that they’re not in the motorcycle business; they’re fundamentally in the lifestyle business. When every other OEM is struggling, Harley’s sales are up almost 10 percent to $6.5 billion in revenue, and they’re forecasting to sell about 280,000 motorcycles this year. They’re introducing lower-powered, lower-priced models for younger riders. And they’re introducing the LiveWire, a fully electric motorcycle. That’s not building a better mousetrap; that’s innovating to reinvigorate a stagnant market by responding to what end customers want. They epitomize what a forward-looking, forward-thinking company can do. I may not care for their product, but you cannot argue with the success of the company.

Harley DavidsonHarley’s LiveWire is an incredible corporate evolution forced by the recession. If you don’t bring new products through the pipeline, if you development cycle is sluggish, your good brand can insulate bad management for only so long. Sooner or later, the industry will demand visionary leaders who come in and change everything from how a product is designed to how it’s made to how the company interacts with its end customers.

Harley respects its dealer relationships but doesn’t let them get between the brand and the riders. They’re not releasing this LiveWire to end customers until the dealers have a chance to have a voice. Harley is more valuable to the dealers precisely because it does build relationships with the end customers – everything from Ladies’ Night at the local Harley dealers to their cafes to their salutes to Veterans and discounts for military personnel. They are proactively, not reactively, catering to niche markets, from wealthy Chinese looking for a traditionally American experience on two wheels, to the Millennials who want utility and affordability, not $20,000 bikes their dads or granddads ride. Harley is focused on really understanding different products for different markets. It’s no surprise that Harley owns an estimated 60 percent of the market. Again, you can’t argue with their success. They’ve been amazing at developing a lifestyle. When people tattoo the Harley logo on themselves, that’s commitment to the brand.

Focus on what you can control

Not every OEM aspires to be a Harley lifestyle brand, but that each strives to achieve and sustain profitability is a given. I submit that goal requires the industry to adopt a fresh mindset, focused on the factors you can control.

First, OEMs must anticipate the needs of the next generation of riders. Let me tell you about “Susan.” She’s witnessed my passion for motorcycles and she’d like to give it a try, but she’s 5’2. She can’t find a motorcycle that fits her. Why has nobody brought to market an adjustable seat? Nobody’s realized that not everybody who rides motorcycles is 5’10 or taller. The “Susans” can’t handle a 500 lb. Bike and they don’t need a 1000cc engine. But they want a motorcycle, not a scooter. So where’s the ride for the thousands of people like Susan? Manufacturers stuck in an engineering mindset are great at coming up with interesting technical advances, but they completely miss the market opportunity to engage new riders.

Second, OEMs must build relationships with end consumers, as Harley has done. The industry has been stuck in a two-tiered go-to-market strategy through the dealer channel, and dealers have fundamentally failed to understand that they’re in the experience business. Dealers are still trying to SELL where the market is trying to BUY. Most of the dealerships I visit sell like it’s 1984, not 2014. “Hey, what’s it going to take to get you on a bike today? But wait, there’s more!”  It’s a complete turn-off. You don’t know anything about me; you don’t know anything about my riding preferences, habits, or skills. All you’re thinking about is “How can I push another bike out the door today?”

Other industries have developed an ecosystem. There are Fiat stores in malls, but no motorcycle stores. I’ve seen the next generation of Porsches and BMWs displayed in airports. Why can’t the motorcycle industry think of similar ways to engage with potential riders?

I’d love to see Ken Kunitsugu spread a new message to the industry more suited to the 21st century: Let’s put sales and marketing in the saddle and get to know our next generation of buyers. Then let’s put the engineers to work innovating solutions to delight those riders.

Let’s do things differently, not just incrementally better.

Nour Takeaways

1. The motorcycle industry is a poster child for the need for innovation, not incrementalism, in the face of punishing market dynamics.

2. End customers and industry leaders can show you the way to true innovation.

3. A mindset focused on what you can control will get you further than a focus on market dynamics you complain about.


David Nour is an enterprise growth strategist and the thought leader on Relationship Economics® —the quantifiable value of business relationships. In a global economy that is becoming increasingly disconnected, The Nour Group, Inc. has attracted consulting engagements from over 100 marquee organizations in driving unprecedented growth through unique return on their strategic relationships. Nour has pioneered the phenomenon that relationships are the greatest off balance sheet asset any organizations possesses, large and small, public and private. He is the author of several books including the best selling Relationship Economics— Revised (Wiley), ConnectAbility (McGraw-Hill), The Entrepreneur’s Guide to Raising Capital (Praeger) and Return on Impact—Leadership Strategies for the age of Connected Relationships (ASAE). Learn more at www.NourGroup.com.

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