Jeffrey Bluestein has played an outstanding role for in the history of the world renowned company – Harley Davidson. During his career span of over thirty years, Jeff Bleustein has fixed oil leaks, completed a multi-billion dollar buyout deal and helped transform his troubled company into a market leader that competes with brands like BMW, Honda and Yamaha. This is an amazing success story of a man who started out as a English major in a pre-med curriculum and took up work as a professor of engineering at Yale University.
He joined the Harley Davidson Company as a doctorate in engineering mechanics from Columbia University as vice president of engineering. As chairman and CEO of Harley-Davidson (1998-2003), Inc. , Jeff turned around the fortunes of a company that was spiraling down in the 1970s and 1980s. During this turnaround, Jeff Bleustein had to face survival from quality problems, bankruptcy threats and Japanese competitors (Teresko, 2007). Today, the company reigns as champion of the heavyweight motorcycle market in the United States, with a 46 percent share.
Bleustein joined the company in 1975. Bleustein and a dozen other Harley executives organized an $82 million leveraged buyout in 1980 to purchase the company back from American Machine and Foundry Co. which had owned Harley-Davidson since 1969. The new owners faced a 20% slide in the market for heavyweight motorcycles within a year. Moreover there was increased competition from European and Asian firms with superior manufacturing methods. There was a situation when the company had to cut its workforce by 40% (Teresko, 2007).
More than half of the bikes on the production line failed quality tests and had to be sent to ‘hospitals’. Bleustein personally saw that there was a puddle of engine oil on his garage floor the morning after he rode a brand new Sportster model home from work (Moskal, 2007). A dramatic makeover was needed to turn the company’s fortunes. A manufacturing strategy that focused on remaking manufacturing processes into competitive strengths had to be devised.
Bleustein’s engineering leadership led to the redesign of the power plant on the Harley Sportster, making the oil leaks history and giving birth to the critically acclaimed Evolution engine (Moskal, 2007). Jeffrey Bleustein also introduced new products such as the belt drive, vibration isolated power-trains, anti-dive suspension and a total redesign of the V-Twin engine (Moskal, 2007). He modernized engineering practices and improved the company’s testing and product-development facilities.
His efforts helped Harley Davidson survive initially and later blossom out as one of the most successful companies in American history. Bleustein followed a participative leadership style as he believed in the importance of building consensus in the context of strategy, product plans, major people initiatives and changes in compensation or the incentive system. He is personally a very intelligent and curious person and he humbly attributes his knowledge to role models in many places: “Throughout my career, I have always tried to be in a learning mode.
I’ve learned from everyone: name-brand CEOs and the folks on the production line. ” There was one major executive who inspired Jeff Bleustein a lot – Vaughn Beals, who served as chairman and CEO of Harley- Davidson from 1981 to 1996. Beals taught Bleustein to focus on the positive and transform minuses into pluses. Bleustein implemented a unique team organizational structure that speeds decision-making at the senior level and gives top managers the opportunity for input.
A total of 30 vice presidents are grouped into three broad functional teams, or “circles,” of 10 executives each: “Create Demand Circle”; “Produce Products Circle”; and “Provide Support Circle”. These executive circles make the routine business decisions for their respective functional area (Teresko, 2007). All three circles overlap to create the Leadership and Strategy Council (LSC), comprising about 10 functional vice presidents from the three circles. Council members are either appointed by Bleustein or elected to the LSC by their respective circle peer group.
The LSC makes broad long-term decisions affecting such areas as asset allocation, budgets, human resources and the strategic plan. This arrangement made it possible for people to voice their opinions. It also facilitated faster decision making by eliminating an entire layer of management hierarchy: executive vice presidents. Jeffrey Bleustein was also an excellent brand strategist. The Harley-Davidson brand is targeted to 35- to 54-year-old men, who comprise some 60 percent of the company’s consumer market (Varma, 2007).
By including unions in the act of decision making Jeffrey Bleustein was able to boost productivity and generate greater job security. With the help of about 1,300 dealers, Harley-Davidson produced more than 260,000 bikes in 2002 (Varma, 2007). The Electra Glide, Sportster and Fat Boy are three of the company’s 28 models (Varma, 2007). Bleustein also designed marketing strategies for younger consumers. He introduced internal financing to increase the company’s profitability and provide mutual benefit to consumers and dealers (Varma, 2007).
Statistically, Bleustein’s success can be figured out through the following figures: Harley-Davidson’s annual revenues grew from $1. 5 billion in 1996 to $4. 6 billion in 2003 and net income grew from $143 million to $761 million over the same period (Teresko, 2007). And most importantly for the stockholders, their equity value has increased almost 400 percent. The Harley Owners Group (H. O. G. ) has expanded from 75,000 Harley bikers in 1986 to more than 840,000 members worldwide in 2003.
The success has been attributed to many factors such as product innovation; quality based manufacturing technology, increased capacity and processes, a modernized and strengthened dealer network, and “close to the customer” marketing. In a futuristic mode, Jeffrey Bleustein awaits an upsurge in women riders and the branding effect of massive self-promotion events.
Teresko, John (2007). Technology Leader of the Year — Fueled By Innovation. Industry Week. http://www.industryweek.com/