Mendoza School of Business

A Turnaround Is a Lot Like Baking a Cake

Published: March 21, 2014 / Author: Gregory Jr.

The following is an excerpt from The Management Blog in Businessweek that was co-authored by John Sherry, the Herrick Professor and Chair of the Department of Marketing, about companies trying to reinvent themselves. To read the entire article visit: A Turnaround Is a Lot Like Baking a Cake

After Karl Benz invented the motorcycle, Harley-Davidson (HOG) battled 110 rivals, including Henry Ford and BMW, to emerge as the undisputed leader in the U.S. Harley-Davidson dominated the market for years, becoming the ride of choice for the military, police, and biker gangs. When Honda (HMC) launched an inexpensive model for consumers in 1959, Harley-Davidson largely ignored it. Within seven years, Honda was outselling Harley-Davidson two to one. Harley-Davidson’s market share plunged from more than 80 percent to less than 10 percent, casting the future of an American icon in doubt.

Harley-Davidson’s story of success-followed-by-struggle reveals an obvious, if overlooked, truth: All companies struggle, sooner or later, no matter how successful or for how long. All may appear invincible, but none is, of course. Just look at Microsoft (MSFT).

Struggling companies resort to a list of familiar actions: Bring in new faces, hire consultants, rejigger incentives, listen to the customer, or reorganize—sometimes more than once. Despite dedicated efforts, massive resources, and even brilliant managers, most efforts fail.


Topics: Mendoza