Between 1997 and 2000, Huffy Bicycles changed its focus to become a multibrand, multiline marketer and distributor of bicycles that it designs, but are manufactured offshore. Royce Union has been developed as a trade-up line for those wanting a better bicycle. In 2000, the company successfully launched the X-Games brand, based on the televised sport of stunt bicycling.
In the process, the company went from focusing on reducing manufacturing costs and avoiding inventory write-downs to rapid innovation in introducing new products and brands. Employment dropped from 1,600 to 120 people. Yet the company still delivers more than 4 million bicycles annually, while becoming more profitable and less capital-intensive.
Although the company continued to use market research to monitor its marketplace and external environment, a shift was made to rely extensively on rapid, inexpensive tests with limited risks to identify and seize opportunities. For example, repeated internal engineering studies had “proven” that purchasing bicycles from offshore suppliers would increase costs and reduce quality. Huffy’s new leader, Don R. Graber, proposed a different evaluation method based on his experience with the international operations at Black & Decker. He challenged Huffy’s purchasing team to place an actual order for 50,000 offshore-manufactured bicycles. The cost was $10 less per bicycle than expected, and quality was fine.
Later, Graber helped to establish an expectation that everyone could find his or her own methods. Not all trials are expected to succeed, so the only “failure” is not employing such trials. One notable success was rapidly adding a high-volume in-line scooter when that type of product became popular. Now the company prides itself on being able to develop and bring new products to market in only six to seven months.
Graber also encouraged Huffy’s people to imagine what other companies would do if they were in the bicycle business. One such model was Nike, the sports apparel and footwear giant. Following Nike’s example, Huffy was soon licensing rights to popular sports (such as the X-Games) and finding new ways to tie in its marketing to cycling competitions.
Most significantly, the change-out of self-manufacturing caused a shift in what was and was not a good economic bet to take. With the ability to purchase bicycles with limited inventory risk, almost any market test could be undertaken inexpensively. The main issue was whether or not consumers and retail customers would want to purchase the item. While that subject was always important, Huffy’s people had more time to focus on it when most other economic concerns were eliminated. As a result, more learning in new products could take place in a year than would have been affordable in 10 years with the old business model of self-manufacture.
The key constraint for the new Huffy approach was that large-scale advertising continued to be unaffordable. With a desire and ability to do more marketing, Huffy’s marketing people began to learn new ways to acquire inexpensive awareness of its offerings. For instance, Huffy began to work with television and movie directors to give its products visibility.
What are the lessons that Huffy developed about increasing employee learning and making it more valuable?
- Understand the marketplace through constant experimentation and communication.
- Face the external realities. If what is being done now doesn’t work, each person needs to learn how to find alternatives that will.
- Employees must value finding and learning how to make helpful changes as a positive part of their jobs.
- Success with recognizing the need to change, learning how to do so and making appropriate changes should be publicly recognized and rewarded.
- Change your business model and allocate the time of your best people and your compensation budgets to encourage the most valuable kinds of learning.
- Establish and continually communicate a vivid picture of what learning should look like in the organization.
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