By
Brad Herzog /
Cornell Alumni Magazine
 Just
south of downtown Milwaukee, along a bustling avenue in the town
of Greenfield, a stark white twostory building rises into the
Wisconsin sky. It is a temple of sorts, in the sense that it is a
place of worship: the House of Harley-Davidson.
Inside the motorcycle dealership, new and used bikes are lined up
in shiny, neat rows--a Baditude 240 with painted flames licking
the blue chrome, a Fat Boy as black as oil, a Heritage with
studded leather saddlebags. And there, too, are the custom
cylinder covers and fender trim that let the rider turn a cycle
into performance art. But it's the assorted Harley accoutrements--
the coasters and coffee, mints and mouse pads, designer headwraps
and die-cast collectibles-- that reveal the depth and breadth of
Harley Nation devotion.
The brand name itself is an icon, consistently ranking among the
ten best-known in America, according to Fortune magazine. The town
of Harleyville in South Carolina had its sign stolen so often that
it started selling them for $20. In the summer of 2003, when a
quarter of a million enthusiasts converged in Milwaukee to
celebrate the company's centennial, six couples got married on the
steps of Harley headquarters. Indeed, for many, a Harley-Davidson
motorcycle is such a means of individual expression that the
bar-and-shield logo becomes part of their permanent selves. You
don't see many folks with Rolex or Levi's tattooed on their
biceps.
A Harley is a product with such cultural cachet that the slogans
devised to explain the passion--mantras like "Live to Ride, Ride
to Live"--convey a sense of knees-in-the-breeze enlightenment. To
run a company that seems to sell a means of transcendence as much
as transport is to be both guardian of a corporate legacy and
spiritual figurehead of a devoted cult. To be top dog in the world
of Hogs, one would think you would need not only a business degree
on your wall but leather in your closet and a bit of the rebel in
your soul.
Or you can be a nice Jewish boy from Scarsdale whose mom really
wanted him to be a doctor.
When you buy a Harley, you are immediately enrolled in a
company-sponsored motorcycle gang of sorts--the Harley Owners
Group, of which there are more than one thousand chapters and
nearly 800,000 members worldwide. These H.O.G. chapters are both a
means of product promotion and a statement of common purpose. The
days of the rebel biker have given way to the era of the
joiner.You are officially part of the Harley family,with the
sixty-five-year-old CEO Jeff Bleustein '60, BME '61, as its
unlikely patriarch.
A century ago, Bleustein's family made very different machines:
his Polish grandfather, father, and two uncles ran Atlas Baby
Carriage in the Bronx. "These were fabulous things," Bleustein
recalls, "with handpainted striping and beautiful leather finishes
and chrome wheels."He grew up in the suburbs, graduated from high
school in three years, and entered Cornell with plans for a career
in medicine. But natural disinclinations got in the way of his
pre-med path. "I didn't like memorizing things, I was a little
woozy around blood, and I didn't like the smell of formaldehyde,"
says Bleustein. "Plus, I found chemistry a little difficult to
understand."
 He
opted instead for a five-year engineering degree and then earned a
master's and a PhD from Columbia. (After getting his doctorate, he
overheard his mother tell a family friend, "Well, thank you, but
he's not the kind of doctor who can help anybody.") After a year
in England on a postdoctoral fellowship from NATO, he spent five
years teaching engineering and applied sciences at Yale--until he
had an epiphany. "It was my first midlife crisis, at age thirty,"
says Bleustein. "I just looked around and asked: Is this what I
want to do for the next thirty-five years? Maybe I had been in
academia too long. I wanted to get back from the frontier of
research and closer to where more day-to-day action was taking
place in engineering."
American Machine & Foundry (AMF), a large sporting-goods
manufacturer, was looking for technology consultants, and in 1971
Bleustein began working for the company's nearly sixty business
units, one of which was Harley- Davidson. In early 1975, however,
AMF asked him to commute weekly from New York to Milwaukee to help
reorganize Harley's struggling engineering division. When the vice
president of engineering was fired, Bleustein, to his surprise,
was tapped to replace him.
Until then, he had never run a business or ridden a Harley. But a
fellow Cornellian, Seth Siegel '74, JD '78--who has known
Bleustein for more than two decades while serving as licensing
division chairman of the Beanstalk Group, which oversees the
remarkably successful extension of the Harley-Davidson brand--
describes him as "a person of almost limitless capacity to master
new worlds."
At the time, one of those new worlds was a land called Wisconsin.
"We were New Yorkers, born and raised," Bleustein says. "To go
significantly west of the Hudson was really getting out beyond
charted civilization." He promised his wife, Brenda, it would be a
temporary move--two years, maybe three. But there was a lot of
work to be done. Back then, the storied Harley-Davidson company
appeared to be running out of gas.
 The
Harley story began along with the twentieth century when
twenty-one-year-old Bill Harley and his neighbor, twenty-year-old
Arthur Davidson, began experiments on "taking the work out of
bicycling," as they called it. They were soon joined by two other
Davidson brothers, toiling in a shed behind the Davidson home. In
1903, the same year Henry Ford started his company and the Wright
brothers took flight, the four friends founded Harley-Davidson and
constructed their first motorcycle, using a tomato can for a
carburetor.
They sold three bikes the first year, five the second year, eight
the following year. Then Bill Harley decided to enlarge the engine
to two cylinders, simply grafting an additional cylinder onto the
original unit to create the famous V-Twin engine that produces the
guttural roar so synonymous with the brand. Years later, the
company would try (unsuccessfully) to trademark that sound.
Soon the company began finding buyers-- police departments, the
postal service, and, particularly during World War I, the U.S.
military. By 1920, Harley-Davidson was the largest motorcycle
manufacturer in the world, with production of nearly 30,000 units
and dealers in sixtyseven countries. It was in these early days
that the "Hog" nickname arrived, apparently via Harley racer
Leslie Parkhurst and his penchant for giving his pet pig a ride
around the track after a victory.
Why They Ride
 Harley-Davidson
is a very embracing culture," says CEO Jeff Bleustein. "It's
one of those few places where you find people from all walks
of life who are drawn together by some common bonds--a sense
of adventure, freedom, and individual expression."
In 1993, a decade out of college, Monica Daniel '83 wanted
some of that adventure. She was living in Florida at the time,
and she decided to sell most of her possessions, including her
car, so she could purchase a Low Rider. "I figured if I was
going to go for broke and really have a great adventure," she
says, "I wanted to be able to tell my grandchildren someday,
‘Yeah, when I got that Harley and rode across the country . .
. ' It just didn't sound right to say Yamaha or Honda."
She had never ridden a motorcycle in her life, and as a rather
petite woman she wasn't necessarily built to pilot a heavy
touring bike. But she learned to ride, and she hit the road.
She broke down a few times, wiped out once or twice, and
cracked several windshields, but she made her way all the way
up to Michigan before hopping on a plane (along with her
Harley) and rumbling around Europe for four months.
Now married with two kids and working as an independent nurse
midwife in Ithaca, she no longer rides (she sold her bike in
Germany so she could afford to come home), but she treasures
the memory. "I always loved everything about Harleys," she
says. "They're beautiful bikes, and there's just something
about the sound of the engine. There's something about a
Harley in fifth gear."
That same sound called to John Eckerson '46. A retired
schoolteacher who is now the village historian in Akron, New
York, Eckerson purchased his first Harley, a used military
bike, back in his high school days. "I came home with it, and
my mother had a fit," he recalls. "I rode it around for two or
three days until she made me get rid of it."
It was several decades before Eckerson bought his next bike, a
blue-and-white Electra Glide purchased secondhand from the
Miami police department in 1974. He rode that one for
twenty-eight years, until he turned eighty. "I liked to drive
up into the middle of the village and listen to it," he says.
"Isn't that wild? I liked the sound of 'em."
 Around
the time Eckerson bought his second Harley, Bill Talmage '78
was dreaming of his first. He rode a Honda 750 in his days on
the Hill, but yearned for a Hog. "A lot of us always wanted
one and just never got around to it, because of business and
kids and all the other things," he says. "But eventually you
get a little more successful and have a little more time, and
the kids get a little older, and you're able to do it."
On his fortieth birthday, Talmage's wife presented him with a
Harley Heritage Classic. These days, the forty-eight-year-old
real estate developer pilots a Heritage Springer around
eastern Long Island. "I come home from work and if it's a nice
night, I jump on the bike and ride around the vineyards or the
coast," says Talmage, whose son Kyle is a freshman on the Hill
and a fifth-generation Cornellian. "It really clears my head."
While Talmage takes to the open roads of rural Long Island,
nutrition consultant Abby Stolper Bloch '64 and her husband,
Stanley, maneuver a bright red Fat Boy around Manhattan.
"Everybody in New York looks at us like, ‘What are those old
fogies doing on that hot bike?' " says Bloch.
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The company struggled through the
Depression and prospered during World War II (supplying nearly
90,000 motorcycles to the military). In 1953, Harley's fiercest
U.S. competitor, the Indian Motorcycle Manufacturing Company,
stopped production. (A succession of bike buffs has tried to
revive the Indian brand over the years, the latest being Frank
O'Connell '65, MBA '66, who was named CEO of the New Indian
Motorcycle Corporation in 2000. Several thousand bikes were sold
through about 200 U.S. dealers, but the company was forced to
close its doors again in September 2003 when an eightfigure
investment deal fell through.)
For Harley-Davidson, international competition quickly filled the
void left by Indian, and the company had to compete with cheaper,
lighter cycles from the U.K. and Japan. In an attempt to raise
capital, the company sold shares publicly for the first time in
1965, but it still foundered, finally offering itself up for
merger or takeover. On January 7, 1969, AMF acquired
Harley-Davidson.
That year, the film Easy Rider would firmly cement the
Harley-Davidson motorcycle as a rebel icon, a transformation that
had begun in the late 1940s, when returning servicemen joined
motorcycle clubs, donning thick black leathers and courting
notoriety. A 1947 biker rally in Northern California inspired
1953's The Wild One, in which Marlon Brando was the star but rival
Lee Marvin and his stripped-down Harley were more menacing. Harley
riders were the closest thing to modern-day cowboys, swapping
their horses for 800 pounds of chrome and steel. The company began
promoting its product as the "great American freedom machine." But
the problem wasn't the freedom; it was the machines.
AMF was a massive conglomerate, and its indifferent management
philosophy quickly sparked resentment among Harley employees.While
production rose during the early 1970s, quality control suffered.
More than half of the motorcycles on production lines failed
inspections (as compared to 5 percent of Japanese bikes). The joke
went that customers had to buy two Harleys at a time--one to ride
and one for spare parts. By the end of the decade,
Harley-Davidson's market share had collapsed, and the company
experienced its first operating loss in fifty years. Harley
management finally convinced AMF to sell the business to a buyer
who would invest in it. In 1981, that buyer turned out to be the
Harley managers themselves.With an $81.5 million leveraged buyout,
Bleustein and a posse of twelve other executives rode in on their
Hogs to save the day, literally, leading a convoy from the
company's York, Pennsylvania, plant to Milwaukee, stopping at
every Harley dealership along the way.
Having been hired by AMF in the first place, Bleustein was forced
to prioritize his loyalties."The opportunity to do something
entrepreneurial, to have an equity stake in a company and in fact
to be on the side of the underdog . . . all of those things were
pretty compelling," he says. "And by that time I'd been at
Harley-Davidson for six years, and it doesn't take that long to
get some of that oil in your blood."
But the buy-back was ill-timed; a recession and high interest
rates sent general motorcycle sales plummeting, and the company
was forced to lay off nearly 40 percent of its workforce over two
years. When Japanese manufacturers began flooding the market with
their products, Harley-Davidson appealed to the International
Trade Commission for relief in the form of higher import tariffs
on large (700cc engine displacement) touring motorcycles. The
company came very close to filing for bankruptcy at the end of
1985, rounding up new lenders in the eleventh hour.
At the same time, however, something else was happening at
Harley-Davidson: the company was remaking itself from within. Line
workers and middle managers were given a greater voice in
decisionmaking, including a redesign of the production process.
Creation of the Harley Owners Group fed brand loyalty. And the
motorcycles themselves improved: quality control became a
priority, and soon 99 percent of the bikes produced were ready to
ride. As vice president of engineering, Bleustein had overseen a
significant expansion and revitalization of much of the product
line, notably a total redesign of the venerable V-Twin Shovelhead
engine, dubbed the Evolution, that made believers out of the
hardcore enthusiasts who had lost faith in the product. "If they
hadn't come up with that, it might have been the end of Harley,"
says Albert George, the Carr professor of mechanical engineering
on the Hill, who served, at Bleustein's request, as a
"scholar-in-residence" at Harley-Davidson during his 1996–97
sabbatical year. "Harley had such a poor reputation for
reliability and oil leaking, which the Japanese had already fixed,
that they had to get some modern quality standards."
The Evolution helped spark a revolution of sorts for
Harley-Davidson. For the first time, riders didn't have to be
expert mechanics. The Harley became a yuppie status symbol, and
the affluent weekend rider became the company's core customer. By
1987, the firm was beginning to thrive again.Harley-Davidson
raised cash with a listing on the New York Stock Exchange (once
again Bleustein and his fellow executives headed a mass Hog
parade, this time down Wall Street) and boosted productivity by 50
percent. The company asked the federal government to remove the
import tariff a year before it was scheduled to be lifted, a
masterful PR move that drew Ronald Reagan to Milwaukee to praise
Harley as a shining example of the quality and competitiveness of
American industry. Soon they were selling every motorcycle they
could make, and Bleustein, who had helped engineer the turnaround,
rose through the ranks to become CEO in 1997.
The free flow of ideas is a centerpiece of Bleustein's management
philosophy. Make every voice count, he says. Don't be complacent,
but before making changes try to understand why something has
become, as he puts it, "part of our collective wisdom." Be sure
that Harley-Davidson's 9,000 employees understand what the company
is trying to achieve, and then turn them loose. "We long ago
realized that the only sustainable competitive advantage that any
company can have is what's embedded in its people," says Bleustein.
"Our company is stronger if we have 9,000 people thinking each day
when they come through the doors of how they can improve things,
rather than a dozen or so at the top thinking about it and
everyone else waiting to hear from the mountain."
According to George, who worked on product development during his
Harley- Davidson sabbatical, the Harley Way helped him steer
Cornell's Formula SAE race-car team to four world championships in
the past five years. "I've used many ideas from Harley, almost all
positive, to help improve how I run the team, because Harley does
a lot of things really right," he says. George Barton '02, MEng
'03, who spent three years on George's racing team and now works
as a mechanical engineer at Harley, has learned that the styling
and marketability of a Harley are at least as important as the
mechanics. "We're given something to shoot for aesthetically," he
says. "It's important to our customers that it's like a piece of
jewelry or a work of art."
The formula has worked. In 2001 Harley-Davidson passed Honda in
U.S. sales for the first time since the 1960s and was named Forbes
Company of the Year. The following year, Industry Week magazine
named Bleustein and Harley- Davidson as its Technology Leader of
the Year. In 2003, when the company announced its eighteenth
consecutive year of record revenue, Bleustein was elected to the
World Trade Hall of Fame. Today Harley-Davidson, which has sold
some three million motorcycles since 1903, again dominates the
global market for heavy cruising bikes.
Harley still faces challenges, to be sure, the most obvious being
an aging customer base. For a large portion of the company's
customers, this erstwhile icon of youthful defiance is a means of
staving off middle age. The average Harley owner is forty-six,
nearly a decade older than the industry standard, and earns more
than $75,000 a year. Bleustein says that management is well aware
of the graying ridership. "We don't take our core customers for
granted. We don't ever want to alienate them, but at the same time
we want to reach out to new groups of customers--people who aren't
yet in the family. There are a lot more years in those baby
boomers, but we're also looking to the next several generations
and making sure we're relevant to them."
The children of baby boomers prefer trimmer Hogs, and the company
has responded during Bleustein's tenure, acquiring sport-bike
manufacturer Buell Motorcycles in 1998 and introducing a sporty
model of its own--the sleek V-Rod, with the liquid-cooled
Revolution engine--in 2001. Also catering to new converts is the
Harley-Davidson Academy of Motorcycling, which annually teaches
more than 11,000 novices--nearly half of them women--the basics of
riding.
And, of course, the Harley-Davidson licensing and merchandising
phenomenon has become a key ingredient in creating and maintaining
company loyalty. As cofounder of the Beanstalk Group, which has
served as the licensing agent for both Ford Motor Company and the
Olsen twins, Seth Siegel has spent more than two decades studying
the power of a strong name, and he's never seen anything quite
like Harley-Davidson. "Their core audience," he says, "is more
devoted to their brand than any other company I've ever worked
with."
Under Bleustein, the company has turned that loyalty into a
windfall. In 1998, his first full year as CEO, sales of
Harley-Davidson's non-cycle merchandise totaled $115 million. Over
the next five years, that number more than doubled. And nearly $1
billion is now generated annually by Harley-Davidson's licensing
program, which boasts some eighty licensees across eighteen
product categories. According to Siegel,Harley-Davidson's
licensing philosophy evolved over the past two decades, from a
focus on trademark protection to revenue generation and finally to
brand building, furthering the company's goal of providing a sense
of exclusivity. "If someone comes along and simply wants to take
the Harley logo, slap it on a product and not design it uniquely,
they would turn it down," says Siegel, who is also a partner in
the Harley-Davidson Café theme restaurant in Las Vegas. "They
could make two to three times as much money every year on
licensing."
Traditionalists scoff at the "Disneyfication" of the storied name,
but Bleustein says the overarching theory of brand extension is
two-fold--to meet the needs of existing customers who want to
identify with Harley-Davidson even when they're not riding one and
to reach out to new customers. So, yes, you can buy
Harley-Davidson leather jackets and riding gloves, but you can
also find Harley kid's bicycles and baby clothes that shout "Born
to Ride."
"We want to get into their psyches at an early age and keep that
dream alive," says Bleustein, "until they're ready to buy a
motorcycle."
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