Delve Talks is a podcast that digs into the challenges around design, product development, leadership and innovation. Our second season continues to explore how to create a culture that supports innovation through interviews with leaders of startups, educational and banking institutions, and multinational corporations.
Dave Franchino [00:00:00] Hello, everybody, Dave Franchino here and I'm joined by my business partner, Vice President of Strategy, Stefanie Norvaisas, and really excited about today's guest, Vance Strader, Chief Group Engineer in Advanced Engineering for Harley- Davidson.
[00:00:13] Vance, I know you've been working on motorcycle engineering for more than 20 years, 15 of those with Harley-Davidson. And then, you were with Buell before that, which was how we met. And for our listeners, just a reminder that we started this podcast last year and we're trying to explore a culture of innovation and to do that we've been facilitating conversations with a wide variety of business leaders and people with backgrounds and experiences might be able to give us insights into where innovation comes from. So, really excited to be joined today by Vance, who is the chief engineer for one of the world's most iconic brands and has a really unique background and experience. We're excited to talk to him about his experience in building culture and creativity in innovation at Harley-Davidson.
Vance Strader [00:01:03] It's great to be here, Dave. And especially since we've known each other now more than 20 years. So I really, really appreciate the opportunity to get together and talk.
Dave Franchino [00:01:13] Great. What do we start, Vance? Maybe for our listeners, tell us a little bit about yourself and how and why did you become to become an engineer and why focus on motorcycles? What was the path you took for that?
Vance Strader [00:01:24] Yeah. So I knew I was going to be a mechanical engineer when I was 9 years old. I was into BMX bicycles. I had a dirt bike my dad had bought me. My dad happened to be a mechanical engineer, as well. And it was at that point I realized, "I'm going to be a mechanical engineer and I'm going to design cars and motorcycles." And amazingly, that's exactly what I've had the opportunity to do, design cars and motorcycles. Not a whole lot of people are fortunate enough to have that kind of clarity from such an early age. So choosing to go to college, choosing my major, finding the companies I wanted to work at -- everything just kind of fell into place for me. So, I've been very fortunate to have been able to do what I've done so far.
Dave Franchino [00:02:05] It's interesting, Vance, my father was also a mechanical engineer and I'm just kind of curious what having sort of that family influence meant in terms of maybe your approach to innovation or the decision-making process for your career.
Vance Strader [00:02:22] Well, of course, I could thank my genes that my father passed down. It turns out that actually both my grandfathers were also engineers -- one a civil engineer for the city of Los Angeles and one mechanical engineer that did all sorts of things from designing engines to tractors across the Midwest. So, it's sort of a family thing that probably even if I didn't want to do it, I probably couldn't have avoided. And so, you know, this idea of innovation, I think there are some of us who are just wired that way. I can't not think that way. I can't not be innovative and think about what could be. It's just how I was made.
Dave Franchino [00:03:01] Yeah, one of the interesting things about your background I think our listeners might find it kind of interesting is the fact that you worked for a while in the radio- controlled car industry, correct? Tell us a little bit about that experience. I know that was very early in your career.
Vance Strader [00:03:17] It was. That was my second real job out of school. And, in fact, when I was first approached about that job, I said, "No, thank you. I do real things." Prior to that, I had been designing components for industrial and aerospace and automotive industries. And I thought, what do I want to do with toys? Well, it turns out it was a company that developed high-end radio-controlled race cars, and had a team that raced all around the world. And as soon as they convinced me to go visit, I was convinced that this was the right thing for the next step in my career. And frankly, it was one of the best learning experiences I could have had, especially because for a large portion of the time, I was really the only engineer, the only design engineer. There was a manufacturing engineer there as well.
[00:04:01] And in so having to rely on nobody but yourself, it just created really great habits around learning and around being accountable for results because there is nobody else. And so I think I developed a lot of the things that have since become strengths through that experience. And of course, it was just super fun to be able to work with some of the other people. The founder's son, who really was a ... I think of him as a creative genius, but barely got through high school. And working with someone like that, and to be able to conceive an idea in the morning, design it in the afternoon, have it made in our shop at night, and then have someone on the race team testing it that evening at one of the local racetracks. That kind of rapid learning cycle allows such exploration and allows you to really go nuts with theories, with hypotheses and very quickly evolve them into something that is really meaningful.
Dave Franchino [00:05:03] So one of the things I think is really interesting about the trajectory your career's taken is you started at a very small firm, but then you moved to the firm where I met you, which was Buell, a little bit larger, but still kind of, I'll call it, an innovation incubator. I know originally somewhat affiliated with Harley-Davidson, eventually owned by Harley-Davidson. Tell me how that influenced your approach to innovation, working at a sort of an arm which was a little bit separate from the larger organization?
Vance Strader [00:05:36] Well, first of all, the reason I chose to go to Buell is ... I wasn't even looking for a job, but I happened to be sitting at my desk eating lunch one day at the RC car company and I was reading, I think, Design Engineering magazine and saw an ad for a project leader at buell Motorcycles. At the time, I was still very much into motorcycles and the idea of going and leading a team to develop an American sport bike was super compelling to me. So I immediately reached out and one thing led to another. Ended up working for Erik Buell, who again, it was just another fantastic learning opportunity. I worked with a ton of great people there. Erik is such an inspirational guy, super creative. I think similarly wired but probably just to the next level where he can't not innovate. And it was ... I think there were good and bad things in terms of the connection between Buell and Harley-Davidson. Certainly, it's something that feels more like a startup. But having the financial backing and the stability and the resources of a large company is really valuable. But I think as many in that situation learn, is there also a lot of challenges with that.
[00:06:49] And we may talk later about some of the challenges, even within Harley-Davidson that we see in doing that with some of the new work we're doing in the new facilities we've opened up. But, you know, there's oftentimes cultural differences that are hard to overcome. And so lots of learning opportunities for me and the others that were involved there. But I give a lot of credit to Erik and the rest of the team there that was able to work through those things. And, you know, we developed some really innovative products. One of the things I'm most proud of is when we released the XB family of motorcycles that I was responsible for leading Cycle World magazine called it perhaps the best chassis in sport motorcycling. So that was really fun to me to be able to be a part of that and to really have an impact on the industry. But, you know, overall, there's lots I look back on and think, "Boy, I wish I would've handled that differently. I wish I would've done this differently." But awesome learning experiences.
Stefanie Norvaisas [00:07:53] So in the two experiences that you just shared with us ... both were marked with leadership that you referred to as like creative genius. How do you think having leaders who are wired that way? How did that affect the ability for each of those teams? Or did it to innovate?
Vance Strader [00:08:17] Yeah. You know, oftentimes with people like that, they have these amazing strengths. You know, the person I mentioned at the RC car company, he would come in oftentimes and tell me about, hey, I had this dream last night and woke up and had this idea for a lawnmower that this is how it would steer. And like totally unrelated things, like he couldn't not think about that. So we had these amazing strengths and Erik was the same way. But oftentimes with that come things that aren't such strengths. And so I think for those of us, especially in leadership positions at companies like that, we have a real responsibility to help understand where the gaps are and either personally or by bringing in others, figure out how to address those gaps. And then also to assess what is my individual role in this process to help ensure that we get the best out of every individual in the company and so everyone can contribute to their fullest.
Stefanie Norvaisas [00:09:21] Yeah, it seems to me that having a creative genius at the home requires a very strong next-level leadership to control that without squashing it, right? And it sounds like you're just trying to do this dance.
Vance Strader [00:09:36] Yeah, you're absolutely right. And so I I don't think Erik would mind me saying this. I think oftentimes I felt my role was to sort of be an intermediate. At times a buffer. I think about like a leader's role -- you can either be a pass-through or you can be a buffer or you can be an amplifier. And it's a conscious decision. Or it should be a conscious decision for in every situation how you ought to handle that. And so, that was one of the things I learned there. Sometimes out of need about my role in determining what was the right way to handle this particular situation. And in order to provide the stability, the clarity, and the appropriate support for the teams that I was responsible for while still completely adhering to the vision that in that case, Erik had for where the company was headed and what these cool new products were going to be and all the great things we were gonna accomplish.
Dave Franchino [00:10:39] Vance, you talked about a couple of things you might do differently. And one interesting parallel that has occurred to me. I think, you know, I started my career at Saturn Corporation, which was intentionally constructed as a subsidiary of General Motors. You had a significant role at Buell, which was a bit of a subsidiary to Harley-Davidson. Can you talk a little bit for our listeners on what the sort of strengths and weaknesses of that type of an approach are for a company that's sort of identified an arm as having maybe a different mission or a different role or different expectations in the innovation process?
Vance Strader [00:11:15] So the strengths for the company that is setting out to do this? Well, certainly it gives you the opportunity to tap into things that the core organization is not likely to be able to achieve. Oftentimes, that requires a different mindset, a different culture, different objectives, and it oftentimes requires different strengths. I think a more near recent example is what we've done at Harley-Davidson when we've started up our LiveWire labs in Silicon Valley. And that's been a really interesting experience for me personally, but I think for everyone involved. And we looked at it, I think, in terms of what you were talking about, Dave, that this is an opportunity to have this new part of the organization where, yes, we are targeting specific deliverables and work. We are creating capabilities. But at the same time, we also wanted it to be a catalyst for change within the company, because so often that's difficult to do within the core of the business.
[00:12:25] How do you create this change? It's not impossible in the core of the business, but this is one of the ways that in certain situations you can help with that. And so at one point we had been searching pretty hard for EV systems experts, people who had significant expertise in designing, developing, and producing electric vehicles. And we'd been able to hire a few of them in Milwaukee, but nowhere near at the pace, with the quality of people that we were looking for. So we did a quick assessment and it became obvious that the two opportunities, that really the epicenters of electric vehicle expertise and experience in the United States were Detroit and Silicon Valley. And so, we had a decision to make -- which of those do we want to do. And because we needed to create a facility where we were going to have a better shot at bringing together all the talent that we needed. And certainly, Detroit would have been more comfortable, more familiar, shorter commute, less expensive, and so many things going for it. But the reason that ultimately we agreed we would create that facility in Silicon Valley was the culture. And so we wanted it, as I said, to be a catalyst for change. And part of that is the different mindset. So we wanted to be there where that the predominant mindset was the tech industry, where people thought differently, they work differently. There were a bit more entrepreneurial. And so that's why we went there. And it's really been an interesting process that we've gone through. First of all, we're nearly fully staffed and I am super proud of the team that we've built. There's just an amazing diversity of talent.
Stefanie Norvaisas [00:14:18] How many years is it?
Vance Strader [00:14:19] It's been about a year and a half, not quite a year and a half since since we got the building and started hiring. So it's been very fast and, yeah, so it really has been great as we've pulled people mostly from that area, people from the tech industry, from other electric vehicle startups in the area, people from software companies, really talented, diverse team.
Stefanie Norvaisas [00:14:50] I have a million questions about this, so how's it going?
Vance Strader [00:14:53] It's going well.
Stefanie Norvaisas [00:14:54] How they started a project?
Vance Strader [00:14:57] Oh, yeah. We have really at this point multiple projects going, but really two major critical path projects that that team is now central to delivering. So real work is happening there. And really, they ... I should've mentioned this earlier ... Why are we doing this? Well, Harley-Davidson, you know, our mission is to fulfill dreams of personal freedom. And one of the ways that we are doing that going forward is we intend to lead the electrification of two wheels. So to do that, it's certainly much easier to say than to actually do. And so we think one of the big parts of that is we need to have the world's best E.V. systems. So motors, high voltage batteries, power electronics, and associated software. Ours needs to be the best because these are the core building blocks of these products. So that's why we're there. And so, first part is we have to have great people that are capable of doing that. So that part is very good, yes, so huge progress. And it's when you go and visit there, it's just energizing to see. There's a buzz there. And it's because we have people that are capable of doing so much. And so already that team has done quite a bit of real work. And we have real stuff now that is destined to go to production before too long.
Stefanie Norvaisas [00:16:21] That's super exciting. So just to help me understand the real work that they're working on. Is it subsystems like you were talking about or is it full products or both?
Vance Strader [00:16:32] So that team's specific deliverables is the E.V. system. However, they work every single day very interactively with the full motorcycle teams that are being led from Milwaukee. So, this is certainly one of the challenges that Harley over the last, well, over most of its existence has not really had to deal with. We've been fortunate enough to really have centralized product development. So, like the core engineering and purchasing and manufacturing, planning and industrial design, all of those functions, we've been fortunate to have them all located not only in the same city but in the same building. So, this is one of the exceptions for Harley-Davidson, where now we are across the country from each other. And so we've had to build new muscles that we haven't really had to utilize in the past to be able to do that effectively. And then you add on top of that the cultural differences. And there certainly are challenges in doing that.
Stefanie Norvaisas [00:17:32] So if I am to understand you, your teams are collaborating.
Vance Strader [00:17:37] Yeah, absolutely. Every day. Many times a day.
Stefanie Norvaisas [00:17:39] Yeah, that's different than I've heard how some other people are having their innovation centers. I've heard of people like trying to build full products or new lines of business off in their remote innovation center. But what it sounds like is they're working on something in particular in your innovation center. But while you're doing that, you're also collaborating with the folks back in Milwaukee.
Vance Strader [00:18:04] Yeah. Correct. So a big part of the work is innovation. A big part of their work is also delivery. And they are different. Sometimes, there are people that have specific responsibilities. Some of them even are almost completely dedicated to more of the innovation side, more the front end, and defining what could be in some cases. Those people transition then into the development and execution of those things. In other cases, we have people that tend to remain more focused on innovation.
Dave Franchino [00:18:35] So, it sounds like things are going very well. I perversely am always interested in the problems and the challenges because they feel it's the place to learn. There's two things that kind of occurred to me that I was wondering maybe you could share, I guess, your perspective on. One is that if one of the charters of this innovation organization is to try out new tools and methodologies and development styles, how do you integrate that with a lot of muscle memory back at the mothership that knows and understands how to develop products? And the other thing is that I think anytime a company opens an innovation center, you have to be careful to make sure that that doesn't present itself to your existing employees as where all of the excitement and energy and emotion and innovation is going to be occurring. I'm sure you've grappled with both of those things. What what lessons have you learned or what messages might you be able to share with our listeners about those areas?
Vance Strader [00:19:25] Yeah, so redirect me if I go off course here. So I'll try to answer that. First of all, this is not the only group of people doing innovation at Harley-Davidson. So, we also have a team in Milwaukee that is doing innovation work. This one in Silicon Valley happens to be focused on electric vehicle systems and software. We also have a couple of people out there doing some work on infotainment, connectivity, telematics, and software. So we already had built a really great foundation for innovation, for how we do it, some of the tools and techniques. And certainly we had learned a lot of it through failures about what that process ought to look like, what the scope ought to be, how to plan for integrating the positive learnings from the innovation work into mainstream product development and how to ensure the right level of cross-functional engagement. So we'd already gone through over the last probably 10 years, a lot of the the trial and error and painful learnings. And of course, you know, like everyone, we go to the conferences on innovation and try to pick up the best practices. You know, my personal opinion is a lot of what you hear at those are buzzwords. And, you know, personally, I think that really principles are the most important things around innovation and that it starts with great people. It's around providing really clear and refining the view of why we're doing innovation. Because without a really robust purpose, it's easy for things to go off track and just to question everything that we're doing.
But if we really have good alignment on the why behind it and what we're trying to accomplish, that's important. And giving those people the freedom and empowering them to do things and explore things in a way that they think could be really compelling. Give them the time to do that. Give them the focus. Those are the things that tend to yield real innovation, not a bunch of, you know, complicated processes and specific tools and things. It's more about empowering people that have it in them and giving them some really key catalysts and giving them a vision of where they might go. And great people are going to figure it out. So, back to your original question. The integration of those things into the broader organization, as I said, even over the last 10 years we've learned a lot about what works and what doesn't work. But certainly, there are lots of challenges about how to integrate innovation into the mainstream. How to get it, how to involve product planning. In our case at Harley-Davidson, enough that as we are working through that innovation and starting to realize some successes, being aligned about the what's next. That's where a lot of our failures came initially about, you know, getting through some innovation and saying, "Hey, ta da! Look what we did!" And everyone saying, "OK, so what are we gonna do with it?" And so I think we've gotten a lot better at ensuring that there's the right level of engagement alignment so that if we do get to that ta-da moment, everyone's like, "Awesome, we know what to do with this."
Stefanie Norvaisas [00:23:08] Now, is that coming from the top down? Like, how did you guys get to that?
Vance Strader [00:23:15] We got to that by it not working really well for a while and having to reflect and say, all right, what are we going to do to get more value out of this innovation work? So it's not innovation for innovation sake, but it's innovation. We talk about why do we do innovation at Harley-Davidson. It is really for two reasons: it's to support and inspire. The support part is, you know, we have company goals and objectives. We have targeted consumers that we intend to reach and ideas about how we might reach them. And there's a big product component to that. So a big part of innovation is figuring out how do we do that? How do we make sure that the products are super compelling and that we can really amp up the things that matter. Sometimes innovation is for, you know, how do we get costs down? There's plenty of innovation there. How do we improve quality? And so, it's everything from super macro to like you going into new spaces, all new spaces. We have some examples of that where, you know, we've shown publicly some prototype vehicles that are sort of in an all- new space. We had we showed them at X Games. We had some X Games athletes, right? This was a great example of the inspire side, which is having the ability to do work nobody asked for that we think could be really awesome. And so it was more of a grassroots effort. And we had this hypothesis that there may be opportunity for these sorts of vehicles. And we actually built them, went all the way through design, develop and built them and let people check them out. And it's been really interesting to see how that has both allowed us to get feedback externally, but also to inspire internally. So the reason we do it is to support product plans, to support the company's objectives. And there's often great value in innovation there. But then the second is to inspire and to help more people understand what could be, which in some cases might even change product plans. Might even change in different directions we could take the business.
Stefanie Norvaisas [00:25:24] So in terms of how your employees ... Is there anything ... One of the ways that I've seen innovation fail within organizations is that they don't go all the way through with a culture change and people aren't measured or rewarded based on things that are valued or critical, like you mentioned, for being innovative. Have you guys gone through that step?
Vance Strader [00:25:48] Yeah, so I'm hearing two questions there, one is about going all the way on the culture change and the other is around how do you measure and and how do you recognize and reward. And I would say I'll start with the latter. How at Harley-Davidson, how we've recognized and rewarded innovation. I think it's easy to recognize and reward when you do something like what I mentioned earlier, when a team produces these really cool prototype vehicles that are in an all-new space that nobody knew to even think about. That's super tangible. And it's easy to say congratulations, you guys have done an awesome job and in encouraging people to think outside the box. Oftentimes, though, if we're doing it right, a lot of our innovation work fails. And so I think this relates both to how do you measure and how do you recognize and reward. It's much less natural to say to a team and to individuals, congratulations, you did a great job when there isn't some some tangible thing that everybody can look and say, "This is awesome." But instead, you did something that seemed to be really compelling and it actually didn't work. It turns out that's a really valuable learning. But it's just, I think human nature makes it more difficult to reward that the same way. So have we gone all the way in the culture? Well, I think you can't have every part of the business be super innovative and in the culture that you need for that early front end, creative, innovative kind of process. There's a certain culture that's ideal there, and that's probably not the culture you want on the assembly line. And so somewhere in between those two, there are different stages or different different attributes of the culture that that are ideal for that group or for that part of the process. And I would say that we're pretty early in our journey. I think we're seeing a lot of successes, but we're certainly finding cases where we still have a fair amount of work to do.
Dave Franchino [00:28:08] Vance, when I was thinking about this conversation, one of the things that occurred to me and excited me about the chance to talk to you was that Harley-Davidson is clearly one of the most iconic and valuable brands anyone can think of. But it's a brand that is rooted in authenticity and heritage. And I could build a case that would say that might feel like a headwind to innovation. There might be some challenges to being innovative at a company where heritage and authenticity are so deeply ingrained in the brand. You probably anticipated this as a question. I'm just curious how you would react to somebody who says, "I don't see how Harley can be innovative without losing sight of what makes Harley-Davidson Harley-Davidson."
Vance Strader [00:28:54] Yes, it is. It is a common question and something that I and plenty of others have given a lot of thought to. I think part of it is usually getting to a really good understanding of your brand and what is your brand all about. And what does it stand for? And in having that rich understanding of the brand and in the company, what you talk about is Harley as a brand, how valuable that is. And so, that is really important that we understand the brand and what we stand for and what it should mean to people and what are the experiences we want to provide. So that's like the foundation that then you build on it. And so when we think about innovation, we also have to consider who are we innovating for. And this is really kind of a two-pronged approach. And this is not only for innovation, but for much of what Harley-Davidson does. And we've been very public about this, that this two-pronged approach starts with the faithful riders that we have today. People for whom the brand is an important part of their lives. And no matter how focused we become on innovation and change and evolution of our brand, those people still are of the utmost importance to us. So a big part of even our innovation efforts are focused on those people. How do we continue to create excitement, continue to improve the experiences that those people can have so that it's always fresh? And it doesn't mean that everything has to change massively.
[00:30:49] So, for example, I could point to things on our touring bikes that are kind of what the stereotypical Harley consumer might ride. And we continue to evolve and innovate on those with industry-leading infotainment. We recently have introduced telematics on those bikes that provide a lot of neat features for those riders. And so, we will continue to innovate and continue to evolve to serve those customers and to give them ever-improving experiences. But then there's this other part, which has been a significant focus over the last several years for Harley-Davidson, which is around building more Harley-Davidson riders globally. And so this isn't like stealing riders from our competitors. This is how do we create more riders? And so this is where a huge part of our innovation focus has been as well. And so to get at what I think is at the core of your question, let me just give an example. A number of years ago, I was fortunate enough to lead the team that developed the prototypes, the first running prototypes of Harley's first electric motorcycle. It was an unbelievable experience. And it taught me a lot about the brand and I'll give an example of that.
So we had we had this small team that designed, developed, and eventually built these first few running prototypes and we took them out for unbranded consumer research. And in that research in that we did this around the world, starting in San Francisco, the first place. And we had people come in and it was in the beginning, portions of it looked like any other focus group. And we'd talk to them about different motorcycles and things and what they found important. And then we showed them the prototypes next to a bunch of other vehicles, including some competitive vehicles they might consider as alternatives. And then we actually let them ride them. Now, none of it was branded Harley. They didn't know who this was. And we have video of the participants. And first of all, the riding experience was transformational for them. They couldn't believe it because most of them at that point had never written an electric motorcycle. And so they had these preconceived notions of what is riding an electric motorcycle might be. Probably very similar to prior to Tesla most people's preconceptions about what it would be like to drive an electric car. And so they went in with a particular view about an electric motorcycle. And then after the riding experience came back just completely changed. And what was super interesting, and this applied to people that rode competitive products, people that were longtime Harley enthusiasts, hardcore Harley customers -- one of the questions we asked all of them afterwards is what would you think if Honda built this motorcycle? What would you think of Ducati built this, and Honda, Ducati, BMW? The answer was like, "Okay, that makes sense. I can see that." But when they were asked what if Harley built this motorcycle you just rode, it was so interesting to watch like people say, it didn't register. Like, "No Harley would never do that." It didn't compute for them. And again, this is both Harley core customers all the way to hardcore sport bike riders who had never been on a Harley. And then, when they thought about it, some of them would take a minute to really reflect on this. And then they'd say, "That would be awesome." And so, it was a huge learning for us as a company that the brand is powerful. Whether people are connected with it today or not,it has real meaning for people globally.
[00:34:36] And it has a lot more opportunity to stretch than we had been giving it credit for. And so from that point forward and this, by the way, was in the start in 2011 when we first rode those vehicles and began the consumer research with those vehicles. We did more public research starting in 2014. And then ultimately, as you may be aware, in September of 2019 those the first Harley-Davidson electric vehicles, the LiveWire, were available for sale. So, no doubt that was really one of those key moments for us to really reinforce that we have a super valuable brand and it can go lots of places. However, we have to be true to what it stands for and we can't just do some commoditized lame thing and slap a Harley badge on it and act like everything's okay. It has to be something that provides a unique, compelling experience that aligns with the brand.
Stefanie Norvaisas [00:35:41] How many years ago did you guys Get the mission of fulfill dreams of personal freedom.
Vance Strader [00:35:49] Gosh, off the top of my head I don't remember exactly, but it's been a number of years now.
Stefanie Norvaisas [00:35:54] Yeah, because that folds in nicely with that brand flexibility, right? Because that is a mission that opens you up to lots of opportunities rather than one that boxes you in.
Vance Strader [00:36:05] Exactly.
Dave Franchino [00:36:06] I think your comments were really insightful. I found myself thinking, I would guess that more brands have been damaged by a fear of innovating than brands that were damaged by, you know, innovating in a way that sort of annoyed or disenfranchised their current clients. So, you can probably make mistakes both ways, but you can become paralyzed by your brand to the extent where you don't move. And then the end is kind of clear.
Vance Strader [00:36:32] Yeah, I couldn't agree more, Dave. And I think one of the things that's most important to doing that well is, as I said, knowing what your brand stands for, but not to have like the super compartmentalized view of the brand, like our brand means that we only produce a particular type of motorcycle that has this particular type of part on it. And it looks exactly like this. No, you have to take it up a couple levels to what is like the essence of the brand. And so we have a lot of talented people at Harley-Davidson that have really helped us dig deep into that. We do a lot of consumer research and it's been great to help us drill deeper and deeper into that. What is the essence of our brand and then take that back up to what could that mean from a product standpoint? From a positioning standpoint? From a marketing standpoint? And so, those insights that are behind the brand, you'll continue to see show up in places that may be unexpected in terms of the type of products we do. But then, you'll see there is this like continuity there. But it also has informed ... I just saw a new video and I think it's going to be in a commercial that will release or may have already released that just really reinforces like the essence of the brand and what Harley-Davidson uniquely brings not only to the motorcycle industry but to the world.
Stefanie Norvaisas [00:38:01] When you think back about your ... Harley has really had a culture of innovation for quite a number of years now -- 20 years at least in various different ways. What have been in your sort of career history at Harley, what have been some of the obstacles that you've run into for innovation?
Vance Strader [00:38:26] Well, first of all, I'd point out that the founders of Harley-Davidson in 1903 were absolute innovators. When they first hacked together a bicycle and put one of these new gas-powered engines in it at a point when there weren't there wasn't such thing as gas stations. And if you wanted gasoline, you'd go down to the local hardware store and buy a mason jar full of it and bring it home. So to think about what our founders did in 1903, that really was the beginnings of creating an innovative company. Now, certainly there were periods of time where Harley-Davidson, especially on the surface, but in some cases perhaps even in reality, kind of stagnated from an innovation standpoint. Getting to the other part, your question about why is that? What are those potential roadblocks to innovation? I think part of it is what we talked about earlier, that too narrow a view of who you are and what you stand for can be an impediment to innovation. And it's that like that surface sea view of who you are that limits people. And it's easy to just fall into that trap and say, "Oh, this is what who we are. This is what we do." And that can be so limiting if you're not really intentional about digging deep into who you are, what you stand for, and then exploring the possibilities and tapping into the resources that all of us -- all companies like ours have really talented people and there are some people that are really good at doing different types of work. But some people are really good at coming up with new ideas and figuring out what could be made that no one had even thought of before. And so a big part of innovation is finding those people and giving them enough structure and then empowering them to actually do something with those ideas.
Dave Franchino [00:40:26] Vance, I want to pivot a little bit, if it's okay. You talked earlier about the global nature of your business. And I'm just kind of curious, from what I understand, a lot of the company's real exciting growth is going to come outside of the United States. I'm just curious how being responsible for innovation, how do you manage innovation when the opportunities lie outside of your country and outside of your own culture?
Vance Strader [00:40:48] Yeah, well, first of all, for quite some time, Harley has partnered globally to do innovation. So, we have a lot of different technology partners. It can be individuals. It could be large and small companies. It could be universities that we have worked with for decades and continue to work with on how we do innovation on innovation projects themselves on particular technologies, and so every year we have new opportunities that emerge to work with people that are at that leading edge in some space that we want to partner with. And so we continue to do that. But I think what you're probably getting at is more the consumers than R&D, the people that we would like to innovate for. And so, for example, China and India are two of the I think probably the two largest two- wheeler markets in the world, and we have a tiny, tiny market share in those in those areas. We do have businesses there. We do sell products there. But to innovate in order to really be a significant player in those in those regions, it has to start with deep understanding. If we just say, "Hey, let's go grab a whole bunch of our stuff that has has been so successful for us in the United States and just throw it over there and, you know, well, maybe put out a few ads, some billboards have a few dealers. And this will be awesome. We're gonna be the new leader in that area." But not likely to be successful and I think I'm stating the obvious there. But to talk a little bit about what we've done, well, we've actually been in those markets for a while. And I think the longer that we're there, the more it's just reinforced that there is such value in a deep, rich understanding of the individuals there. So even fairly recently ... I'll give two examples. The first is we've publicly announced that we are developing and will soon begin shipping a new family of middle-weight motorcycles. That is going into new spaces that we've not been in previously. Places like Adventure Touring and Street Fighter and a good, good portion of the reason for doing those is the European market, where those are far larger classes than where we currently play today in Europe. It turns out that the classes we play in, the segments that our products are sold into, we actually have very good share. In fact, in most of them, even in Europe, we are the leaders in this in the segments we play today. But in some of those other segments, like I just mentioned, we are nonexistent. And so. In order to do that, I was fortunate enough to participate in a ride. And this was one of a number of the kinds of things we do to inform innovation.
And so we had a group of I think there were eight of us that went to Europe and spent eight days on competitors, motorcycles in these spaces with no support vehicle, riding from city to city through the Alps, through the Dolomites, with only what we could carry on our back or strapped to one of these motorcycles, which were not large, comfy touring motorcycles. And so, this was one example of attempting to put ourselves in the shoes of these target consumers and, of course, having some of the people that were from that area with us and that had planned this out and ensured that that what we would experience would be somewhat representative of sort of the aspirational journey that somebody might take on one of these. And it was valuable in so many ways. But one of the key things was, we had put together ahead of time a list of like important criteria and all these things that we were going to assess along the way and all these very objective things. And every day at the end of the day, and we rode eight to 12 hours a day and this was "hard" work. Through the Alps. And there was the snow sometimes on the side of the road. So as it wasn't all like sunshine and everything super easy, which was perfect because we got to it. It was real. And so, we got we got to ride in torrential rain and really cold temperatures and got lost and things like that. But at the end of each day, we would have these kind of recap sessions and we'd go through all these objective measures. And at the bottom, you kind of add it all up and which bike was the best. And inevitably, what that process said was the best was not actually the best. The best was ... It was not objective. There were these subjective things that we began ... That was the beginning of our journey of really understanding and this is what Harley is great at, by the way, is understanding these things that aren't so obvious. People have been trying to copy Harley-Davidson and capture the market share and the profits that we've enjoyed for many, many years, and they've been unsuccessful. And this is a big part of the reason why we are differentiated in the best form of differentiated is through things that are hard to understand or hard to explain. Because then they're hard to copy. And so, over the course of these trips, we began to decipher like some of these things and this new product family that we are about to introduce. All of those learnings were baked into the foundation of this product family, like what is going to separate these and, of course, there are what we call the table stakes. What are the core things that, you know, are these objective things that we must be at least this good or people aren't even going to consider us. But then there's this other stuff, the secret sauce that we won't tell anybody, that this is why someone's going to get off our motorcycle next to the next person's and they're going to say, "I'm not sure why, but I have to have that one." And isn't that like the magic? That's where you want to be. You want to have that kind of differentiation.
Stefanie Norvaisas [00:47:51] I think it's really an amazing story and experience. I do think it takes hands-on experience, like what you're talking about, to really start to understand the essence of something.
Vance Strader [00:48:04] So the other example I was going to share and this one won't be as drawn out is back to China and India. Recently, we've we've worked with a number of research firms that have facilitated the process of us deeply understanding individuals in those in those countries. So, very recently we went to multiple cities in China, multiple cities in India, and did all sorts of -- and this was Harley employees there interacting with people and in some cases spending a few hours with an individual in their home. Understanding how do they live? What are the problems they're trying to solve? What does a motorcycle mean to them in their life? And it's not so we could go back and do what they told us. But it's so that we could get the deeper insights of like .. yes, there are these objective metrics, these objective measures that they will use to make decisions in their life. But what are the underlying emotional drivers? What are the things that will allow us not only to be relevant, but to somehow stand apart? And so, Harley, invests a great deal in getting to that level of rich understanding of the people that we would like to engage with our brand.
Dave Franchino [00:49:24] Vance, innovation is more about getting the subjective right than the objective right, and I strongly agree with that. You know, there's a sort je ne sais quoi associated with innovation that's sort of hard to put metrics and can be frustrating to us engineers who want things in a spreadsheet where we tallied up and they answers the bottom. What does that mean for you as a manager? How do you how do you manage successful innovation when the answer isn't going to be at the bottom of the spreadsheet? The one with the largest score?
Vance Strader [00:49:57] Yeah. I think this kind of gets that some of those cultural challenges associated with innovation because so often we want, well, we want to be able to set out super clear goals, super clear deliverables, a nice clean plan for how to get there, clear metrics. And when you're attempting to do something really different, really unique, break new ground, innovate, oftentimes it just doesn't work that way. And the path isn't super direct and there's learning every step of the way. And so, I think one of the things we've tried to do is back to being in Silicon Valley with LiveWire Labs. One of the learnings there is adopting some of the tools and techniques from the tech industry. So, for example, more of an agile process where you acknowledge that you simply can't put together a plan at the beginning, that you're simply going to follow it exactly that way and then come to the intended end.
[00:51:08] But instead, that you have more of a directional plan. You have clear objectives, and you constantly learn and adapt and adjust and be willing to recognize that you don't know enough upfront to have that complete plan. And oftentimes, even to have complete requirements. And so, yeah, it is challenging. And then there's also the the potential to find something unexpected. Certainly that happens a lot in the negative sense. And so people have to be good at adapting and getting around those obstacles as they emerge, but then also finding those unexpected surprises in a positive sense. And those are the things that can be really exciting, that in the right environment where people feel empowered to find that little nugget and then build on it. That's where real innovation can emerge.
Stefanie Norvaisas [00:52:11] So given your experience, what would be some advice that you would give to somebody who maybe is trying to get their organization on this path?
Vance Strader [00:52:24] Yeah, I would say it depends. There are probably a couple of approaches that might work. And it depends a lot on what the starting point is. And so, for example, if from the top there's a great deal of support and acknowledgement that innovation likely looks different than a comprehensively planned, executed process, I think in that case, it would be ... It's always important to have support from the top and alignment for what you're setting out to do. And I think they're just really getting into that next level of detail of what's this going to look like is important. And then, as I mentioned, it has to start with great people. None of us is going to accomplish anything without great people.
[00:53:19] And so finding the right people within the organization or bringing them in to the organization that are smarter than you, that are better than you, that have a diversity of not only capabilities, but a diversity of ways of thinking and working, because it's that diversity that's really going to allow a team to be better than the sum of its parts. But I think that's probably the more straightforward example. The less straightforward example is perhaps in a company that's enjoyed a lot of success, that knows how to do what it's doing, where maybe not everybody sees a need for innovation or a need to change or for different mindset. And I think that's when it becomes a bit more challenging because, you know, it's easy when there is a quote-unquote "burning" platform to get support. But when everything seems to be going well, I think that's when it's often hard.
[00:54:24] And in those cases, I could probably talk for a whole day about all of the things that don't work. But certainly there, too, great people have to be at the core of it. But some of the most painful lessons I've learned relate to the need to build support and alignment and you know, one of our most important roles as a leader is to create and communicate a compelling vision and to give people the opportunity to ask questions and to really understand and come along for the ride. At the same time that I say that, it is so easy to try and shortcut that process and then find that you're having to rework later because you didn't do a thorough enough job. That's certainly been one of the primary root causes for my failures in this space. But in the end, without some sort of a compelling vision about what could be and why we should innovate, it's going to be very difficult to get the level of support, the funding, the resources to actually do it. And then the last thing I would add is so even once we have that support and alignment within the organization, that we should maybe carve out a team because it's going to be hard if it is a company that's sort of set in its ways. It's gonna be hard to have that be too close to the mainstream. And so there needs to be some sort of boundaries around that team to allow it to create sort of its own micro culture where it's more about exploration. It's more about learning and adaptation work, where individuals truly feel empowered and where failure is not viewed as a bad thing. But it is learned, it is viewed as something that you want to do, but you want to do quickly. You want to do inexpensively, and you want to be ... you want to do it with a focus on the learning so that the next step can be better.
Stefanie Norvaisas [00:56:37] Yeah, I think you articulated really well at the beginning the opportunity that the LiveWire Lab gives you and you really, I thought it was great that you said that its main roles are, yes, there are special deliverables, but it's also about creating capabilities and it's also about acting as a catalyst for change. And I think that's a really powerful way of looking at that and having it be successful.
Vance Strader [00:57:02] Absolutely. But I have to be honest and say that we're still in the early stages of writing this book about how does this actually play out at Harley-Davidson. So, I'm not here to claim success yet. I'm here to say we're off to a good start. And it it's certainly there have been challenges along the way. And my hope is that when we're able to look back on this, we'll be able to say that it was a full success. But there's a lot of hard work to be done to get to that point.
Dave Franchino [00:57:33] Well, for us, this has been fantastic. A lot of great insights for our listeners. And thanks for both sharing those and recapping what's been an amazing career. Once again, Dave Franchino, joined by my business partner, Stefanie Norvaisas, and very pleased to have the today's guest Vance Strader, who is the Chief Engineer at Advanced Engineering for Harley-Davidson. Thank you very much for your time and for your insights.
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