Stanford Study on Motorcycle Company Failures

Discussion in 'The Perfect Line and Other Riding Myths' started by joker-b, Sep 12, 2021.

  1. joker-b

    joker-b Here and Now

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    https://www.gsb.stanford.edu/insigh...-gears-specialized-companies-may-be-left-dust

    More-direct link to the July 2021 issue of _British Journal of Management:_ https://onlinelibrary.wiley.com/doi/full/10.1111/1467-8551.12435

    "An analysis of the UK motorcycle market serves as an empirical illustration for our theoretical prediction and proposed measure."

    TL;DR: big companies that don't see their markets moving away.... die.

    “Managers have to understand the tradeoffs and make decisions about what to offer and when,” Hannan says in summary. “In the end it’s not really how long you’ve been around as a firm but the processes that are unfolding as time passes. Beware taking things for granted.”

    As ever, don't feel a need to read the article before commenting :D
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  2. ExodusRider

    ExodusRider ExodusRider

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    Pretty much same theme for all /most companies :)

    Blockbuster, circuit city comes to mind.
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  3. mmattockx

    mmattockx Adventurer

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    Yep. 'Adapt or die' applies to all businesses, big or small. I'm not sure why it took another research paper to confirm this, it has long been known.


    Mark
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  4. r60man

    r60man Long timer

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    Not really news. Look at Blockbuster, the guy that invented the concept of Netflix took it to them, they laughed at him. Now they are belly up and Netflix is on top. Innovation is key, leading new technologies and spotting future trends. You can do that you will be top dog. If you can't/don't you go out of business.
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  5. AdventureTrail

    AdventureTrail Alex

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    We are seeing/experiencing it in real time with the emergence of electric cars and bikes.
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  6. engineman

    engineman Long timer Supporter

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    Same as Sears. They were perfectly positioned to take over the online shopping market. Would have been a relatively minor shift to swing from printed catalogs to the internet but they missed it completely
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  7. mslim

    mslim Long timer

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    Yeah this was always clear to me too. I guess their highly paid CEO's just didn't have the vision to see this obvious transition.
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  8. ManWithHat

    ManWithHat I don't like hats.

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    it’s clear because we’re starting in the present and looking in the past, building a narrative that presumes the people in the past had access to the same information without all the noise and distractions. Its never so obvious at the time. Rational people don’t kill their business. They likely turned away hundreds of ideas, tried many new ventures that failed. These proposals that now are pivotal technologies at the time were just another new idea.

    And survivorship bias.
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  9. joker-b

    joker-b Here and Now

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    Rational people kill their businesses all the time, if they can get personal gain from it.
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  10. Meriden

    Meriden Yea whatever

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    Interesting. I’d never lent much thought to how to measure the effect customers, suppliers, etc. have on an organization’s ability, or willingness, to innovate. HD may be an obvious example, since the diehard HD faithful haven’t accepted anything except the Pan American since the 1980s. (Or maybe they have hit on a product someone other than the diehard HD faithful will buy.) What about the survival of the BMW boxer? From what I have read, BMW would have been happy to let the boxer go by the wayside decades ago in favor of the brick where they could apply more of their automotive R&D directly to their Motorrad products, but customer demand for the tried and true was too high.

    In my own business experience the problem is clear in hindsight. Decades ago, I started with an office supply company. While the company grew through acquisition from local to regional to national and ultimately international, the market was in secular decline. Suppliers paid (in rebates) to continue to sell their obsolete products and front line sale people continued to drive sales in those same products. It was what customers expected of the industry. In the meantime, businesses increasingly automated and new companies were creating “tenure in the market” selling tech to our customers. I had given a lot of thought to how we, as an industry, chose to not innovate, but never to how much our suppliers and customers paid us to let the market pass us by.

    Lots to unpack. Looking forward to reading it again.

    m
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  11. markk53

    markk53 jack of all trades... Super Supporter

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    Awe hell... I coulda toldja the same junk without no steenkin' research! :-)
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  12. BetterLateThanNever

    BetterLateThanNever Nice, until you're not.

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    It all seems so easy. "Innovate or die."

    Unless you're caught between advancing technology and homologation requirements on one side, and a deeply conservative consumer on the other, as the motorcycle industry is. Risk every way you turn.
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  13. shupe

    shupe Long timer

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    Perhaps.
    Or are we seeing wishful thinking ignoring reality?
    The transition to EVs ASSUMES that we will be able to transition to having hundreds of millions of vehicles charging on the electrical grid without any cost or downside.
    It ASSUMES the range/time-to-recharge issue will be solved.
    Is it progress or utiopian wishful thinking willingly turning a blind eye to reality?
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  14. mmattockx

    mmattockx Adventurer

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    The basic rule/concept is simple, but I don't think anyone said it was easy to implement. There are so many often conflicting interests/desires/factors that the balancing act can be crushingly difficult to manage well.


    Mark
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  15. BetterLateThanNever

    BetterLateThanNever Nice, until you're not.

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    Agreed... if it can be managed at all. Speaking from experience, I guess I'm saying it's not always a "rule." Sometimes, what today's customer wants is in direct conflict with what you know tomorrow's customer will want. That transition - "the chasm" as Geoffrey Moore calls it - can be almost impossible to navigate. The only way through it for an industry like motorcycles is to be so big and diversified that you're always hedged no matter what you do.
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  16. VX Rider

    VX Rider Long timer

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    Or set the trends so as to be proactive rather than reactive


    And always be doing something
    That is forward thinking, even at the risk of losing every dollar allocated for it...
    If you hit a homerun, the investment in the wild and crazy will not only pay off, it will set your competition back
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  17. BetterLateThanNever

    BetterLateThanNever Nice, until you're not.

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    About 1% of the time. Otherwise, blind faith in category leadership has littered history with the corpses of 'innovators'.

    It also becomes tougher when you're publicly traded. What you're saying here is exactly what got Matt Levatich fired.

    I'm not dismissing your point. Only saying that it's far from universally good business practice. Professors at Stanford rarely have to pay the price for taking their own advice.
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  18. VX Rider

    VX Rider Long timer

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    I don't think he did anything innovative at all to attract new riders to the brand

    Livewire was not innovative at 30k for an urban commuter

    Livewire at 12k and 300mile range would have been a home run.

    So woild some lightweight non-cruiser bikes

    He gave us more of the.same, from what I saw and.that.is.why he resigned before being fired
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  19. BetterLateThanNever

    BetterLateThanNever Nice, until you're not.

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    This is factually the precise opposite of true.

    Levatich was promoting a strategy called "More Roads", in which HD would branch far outside the cruiser space (the completely new PanAm/Bronx architecture was just the start of this and developed on his watch, as were the e-bikes and, of course, LiveWire, though it has more history), as well as diversifying into new markets outside the US, including with new small displacement bikes. He was replaced because a hedge fund with strong board alliances won a proxy war, started because they (like all hedge funds) didn't like the combination of high risk and deferred return. The new CEO was put in place because he knows how to extract value from a company (look up his history at Puma, for example). The new strategy is for Harley to stick to its knitting, diversify far less, and push margins as high as the market will allow... which is what hedge funds like. The PanAm and LiveWire were too far along to kill, and have probably complicated (and may even change) things. LiveWire and Serial were spun off to get them off Harley's balance sheet, since margins are paramount and an exit is likely in the cards down the road. So Harley has chosen to innovate less. This is a matter of public record.
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  20. VX Rider

    VX Rider Long timer

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    Well one would not know any of that was.getting done in a timely fashion....
    OR we might have seen.some of those other bikes
    #20