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Top-down leadership may very well be necessary during a
crisis. But when the crisis has passed, what’s needed is a leader who can
create an environment where every employee is responsible for sustaining
success.
by Rich Teerlink
When I became President and COO of Harley-Davidson’s
motorcycle division in 1987, the hard work of saving the company was done. We
had survived seven arduous years of crisis. But that hardly meant Easy Street
lay ahead. In fact, we faced an altogether new and daunting challenge —
sustaining progress. But how to do that? For me, the answer was clear —
especially when it came to issues of leader-ship. We needed to create an environment
at Harley where everyone took responsibility for the company’s present and its
future.
I knew that such an approach wouldn’t come naturally to
Harley. After all, our crisis had been man-aged with an unmistakable top-down
approach, as is so often the case with turnarounds. But now that times had
changed, so, too, could our way of doing things. I believed then, and still do,
that people are an organization’s only sustainable competitive advantage. The
leader should mind the interests of all stakeholders, of course, but he or she
should also be an outspoken advocate for employees, making sure they are front
and center in an organization.
It’s important for people to under-stand that even if you
are hardwired, like me, to be a leader who shares power rather than exerts it -
even if you set out to be a listener and a team player - the
command-and-control model is hard to avoid. That’s be-cause the top management
job carries certain expectations on behalf of employees, colleagues, and the
out-side world. It takes trust on the part of employees and discipline on the
part of the leader to push back on those traditional expectations and create a
company where decisions and accountability are owned by all.
My career with Harley-Davidson dates back to August 1981
when I joined as CFO. I began my new job just two months after a group of 13
Harley managers had bought the company from its then parent company, AMF, in a
leveraged buyout. I knew I was walking into a tough situation. Harley-Davidson
was certainly an American icon, but back then it wasn’t having any success in
the marketplace. It had a poor reputation for quality and reliability, and it
was behind the curve on product design and development. Break-even points were
high and, not surprisingly, market share was falling. What’s more, the company
faced some of the toughest competitors in the world: Honda and Yamaha. It’s no
wonder that in 1980, when AMF engaged an investment bank to sell the division,
it found no takers.
When an organization is under extreme pressure - so much
so that one wrong move can mean its collapse - authoritarian leadership may
very well be necessary. It certainly allows managers to act fast. Vaughn Beals needed speed, and so that’s the kind of leadership
style he tended to use. Indeed, it came to him quite naturally.
Over the next few years, Vaughn and the leadership team
(of which I was member) cut the overall work-force by 40% - affecting both the
salaried ranks and the hourly work-force. All remaining salaried employees
took a 9% pay cut and agreed to have their pay frozen at those reduced levels
for at least two years. This change, and many others, originated at the top of
the corporate pyramid, with no room for push back from the ranks below.
By the mid-1980s, it appeared that Vaughn and the team
might pull off the miracle Harley needed. The company had introduced its
Evolution Engine in 1984, and that engine, combined with the new Softail product line (an elegant variation on the classic
Harley look), began to make some money. Harley had also initiated special
programs to help its dealers attract and retain customers, with notable
success. Perhaps the most significant program was - and continues to be - the
Harley Owners Group (HOG), created in 1983. Be-gun as a way to communicate more
effectively with the company’s end users, HOG quickly grew into the world’s
largest motorcycle club. And dealers regained confidence that Harley could and
would be a depend-able partner. At the same time, important improvements were
made on the operating side of the business, and a financial restructuring positioned
the company to go public.
By 1986, the company’s prognosis looked good. Our
manufacturing costs were falling; reductions in in-process inventories and
associated carrying costs generated savings of more than $40 million a year.
Our quality had improved; the number of warranty claims was going down. Our
dealer network was revitalized and growing. And then we went public in July,
and the offering raised $25 million more than the underwriters had expected.
Once it was clear the present was in good order, it was
time to think about the future. We still had a great deal of rebuilding to do.
Yes, we had a great brand, new products were coming to market, quality was improving,
and we were making a profit. But our quality standards were not on par with our
competitors’, and our cost structure was still the highest in the industry.
Internally, the company was still a shell of its former self. Whole
departments had been hollowed out by the layoffs. And many other good people
had left voluntarily, hoping to find more promising futures elsewhere. Who
could blame them?
I myself didn’t have a plan for the company in my back
pocket. I only knew that capturing the ideas of our people-all the people at
Harley-was critical to our future success.
Tom Gelb, then vice president of manufacturing, John
Campbell, vice president of human resources, and I were meeting a lot in those
days - mostly informally - to talk about what the company was doing and why. I
knew we needed big changes in the motorcycle division. We had to identify some
sort of strategy that could carry everyone forward-everyone meaning employees,
customers, and all other stakeholders. We had to improve operations. And I
felt strongly that we needed to change the way employees were being treated.
They could no longer be privates, taking orders and operating within strict
limits. We needed to continue to push, and push hard, to create a much more
inclusive and collegial work atmosphere.
One idea we came up with in those meetings was gain
sharing - a pro-gram that would allow all employees to share in the company’s
financial success. We saw it as a possible toehold-a way to focus everyone on
how we could all get better together. But an organizational-change consultant
quickly set us straight. He told us that gain sharing would be like putting a
Band-Aid on a gunshot wound. He recommended that we talk to a few other
consultants, get their input, and then make the call.
Enter Lee Ozley-the second consultant
we spoke with, the one we hired, the one who has been with the company ever
since, and who has become, over the years, my mentor, coach, sounding board,
and good friend. Lee’s first meeting with me was typical of the kind of brutal
candor he brought to Harley. The gain-sharing program, he pointed out, had
been created at the top and was about to be imposed from the top. So much for
inclusive leadership!
Well, we didn’t pursue the gain-sharing program. Instead,
over the course of the next several months, we explored several questions: How
does constant crisis management affect a workforce? How can we - in the absence
of a crisis - create an environment where employees want to do better, where
they care about the company on a personal level and work together to improve
both individual and overall performance?
Lee talked a lot about the psychologist Abraham Maslow in those early months. One of Maslow’s
theories, as many people know, was that absent a crisis, people rarely commit
to a program that is imposed on them. But they will willingly commit to a
program they help create. That thought made a huge impression on me. And
eventually, in late 1988, we agreed to launch a series of programs designed to
elicit ideas, thoughts, concerns, complaints, and vision from our employees -
across all departments and functions.
First we approached the union leadership of the roughly
700 employees in the Wisconsin operations and asked them to help us create a
vision for the business. Lee had warned us that it would take 12 to 18 months
to prepare people - both union and salaried leadership - for such a process.
But I decided we couldn’t wait. Our union contracts expired in three months,
and I wanted a new labor-management relationship sanctioned before then. The
solution I came up with was to put in place one-year contracts with each local
union that included the joint vision-building process. That happened.
Over the next several months, many people in the Wisconsin
operations worked hard to craft a joint vision. First, about 70 leaders, both
union and management, wrote down their individual
ideas for what Harley should become. Then a facilitator met with them in groups
to build consensus. Finally, all 70 people met for three days to forge a shared
strategic vision for Harley-Davidson. The sense of exhilaration at the end of
the process was wonderful.
Our next step was to roll the vision out to the rest of
the company. But an interesting thing happened at the first presentation, where
union and management leaders were ad-dressing a primarily salaried audience.
One of the salaried employees asked, “Who represented us in this process?” I
was genuinely ashamed. Once again, we had behaved like traditional managers.
We had not included everyone who should have been a part of the process. But
we quickly made amends, establishing two groups of salaried employees to share
in the responsibility of implementing the vision.
Despite the great progress we made in crafting a shared
vision, Lee’s warning came home to roost. Our leaders weren’t prepared to implement
the kind of dramatic change the shared vision called for. In fact, implementing
the vision came off as a sort of forced march, sending mixed messages and
causing confusion on both the shop floor and in the offices. Not surprisingly,
the largest local union opted out of the process after two years. I learned that
changing people’s long-held assumptions and behaviors takes time. That doesn’t
mean you give up; it just means you keep your focus and accept that the journey
has its downs as well as its ups. Ultimately, although the joint visioning
process did not succeed as we had hoped, it did lay the ground-work for shared
leadership agreements with the unions in 1997.
In March 1989, I became CEO, and I soon decided that it
was time to bring together the company’s 6o senior executives at an off-site
meeting. I wanted them to get to know one another and begin to work as a truly
unified team.
I discussed the idea with Lee and the executive committee,
and we developed a program that would feature two expert speakers on the
issue of change and one outside CEO who had led a major change effort. After
hearing the presentations, we would break into groups and talk about what we’d
heard, what we thought we could accomplish, and how we could do it.
At the opening ceremony, I ad-dressed the group. “We’re
here to learn,” I said. “There are no right answers. We’re here to have fun, to
get to know one another.” And in-deed, that’s what seemed to happen-at first.
The speakers were well received, and the first night, people did skits that
were hilarious-the ice seemed to have been broken. I was feeling good about the
whole event.
As planned, after each speaker, we moved into smaller
cross-divisional, divisional, functional, and cross-functional groups. People
in these groups would talk, and as they did, I would visit each cluster with
the speaker so that people could ask questions. I noticed, as I went into each
room, the question “What does Rich want?” on many of the easels the groups were
using to record their thoughts.
I felt terrible. I thought we had been so clear at the
outset that the point was not to figure out what I wanted but to figure out
what every-one wanted for the company. The senior executives weren’t supposed
to be trying to guess the right answer according to Rich. And yet, clearly,
they had a concern about a hidden agenda.
At the closing session, I expressed my frustration. I
blasted the whole group. I said, “We need a revolution, and I’m not going to
lead it. You need to lead it.” I told them I was disappointed with what I’d
seen on the easels. That ended the meeting.
When I returned to the office on Monday, one of my
colleagues was waiting for me. She took me aside and let me have it. She said, “You
know, you really stuck a pin in our balloon at that session. We were doing fine.
We were going through a natural process, getting to know one another,
expressing our fears as well as our thoughts about what we wanted for the
company.”
And then I realized that what had been upsetting me most
was simply that the participants had not done what I wanted them to do. My ego
got in the way. Rather than being happy that people were talking, and
understanding that it was normal for people to want to figure out whether “the
boss” had an agenda, I had, in my heated enthusiasm for inclusivity,
picked up on - and picked at - what was in reality a minor point. My
expectations weren’t important at that exercise. What was
important were their expectations. And they were happy. Too frequently, we as
leaders are trying to satisfy our-selves rather than others.
Fortunately, that colleague felt comfortable enough to
tell me that I had been wrong. Lee and I talked through the event and discussed
why we both felt responsible. We realized, however, we had introduced
something that would be useful in the future. And I realized that I had to get
myself recalibrated if these meetings were going to be successful. I did. The
second session went well. By the third, we had jettisoned our facilitators - as
had been the plan-and took responsibility to teach one another instead of
listening to the experts.
I retired as Harley’s CEO in 1999, and I now serve on its
board. Looking back, I can see that many times during the course of my tenure,
I slipped in my commitment to inclusive leadership - even as I was preaching
its virtues. Each time (or most times-I imagine that there were times when no
one called me on it; I hope there weren’t too many) Lee or another colleague
pulled me up short and re-minded me that I wasn’t “walking the talk.” I was
always grateful.
When you’re a CEO, there is al-ways a barrier between you
and the rest of the company, no matter how hard you try to break it down. And
so I also tried very hard to learn to discipline myself-to step out of my-self
before I spoke or took action and ensure that I wasn’t going to slip out of my
chosen role.
Overall, I believe I succeeded in my journey to be a
different kind of leader. Harley’s culture has changed, but the work is not
done. Transforming a culture takes time. Everybody hasn’t fully bought in to
the inclusive approach. We still have some people who think they know all the
answers, but these people are getting fewer in number. We still have people who just want to bring their bodies and not their
whole selves, mind included, to work. But their ranks are dwindling, too. We’ve
been trans-forming ourselves since the buyout and will still be at it ten years
from now. It is a journey that will never end unless we let it.