Everyone knows Harley-Davidson for motorcycles, the company has deep roots in technology, manufacturing, and a variety of business areas. On this episode, Harley's Chief Technology Officer, Sean McCormack, shares the company's innovation story.

Sean McCormack is the Chief Technology Officer for Harley Davidson Motor Company. Prior to joining Harley Davidson, Sean held numerous leadership roles at Manpower International, most recently Chief Architect with global ownership for all key platforms across 82 countries and 5 lines of business.

Sean serves as the HDI CTO, responsible for leading all aspects of innovation, technology strategy and operational activities, in addition to delivery of major IT initiatives. He is also responsible for process management and continuous improvement, core processes and continuous improvement activities across IT, to include ITIL, SDLC, CI training and Six Sigma Belt awards.

Sean holds his Executive MBA from the University of Wisconsin - Milwaukee and a BA in Middle Eastern Studies from the University of Texas at Austin.

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Innovation at Harley-Davidson with Sean McCormack, Chief Technology Officer

Michael Krigsman:

(00:05) Welcome to episode number 176 of CXOTalk. I’m Michael Krigsman and my guest cohost today is Dion Hinchcliffe. And Mr. Dion how are you?

Dion Hinchcliffe:

(00:19) I’m doing very well Michael. Glad it’s Friday, and looking very forward to our very special guest today.

Michael Krigsman:

(00:24) Well we have a very special guest and Dion why don’t you introduce our special guest to our special audience.

Dion Hinchcliffe:

(00:32) So I’d like to welcome to CXOTalk the Chief Technology Officer of one of Americas iconic brands, Harley-Davidson, who has been kind enough to join us today to talk about that very exciting topic of the intersection of the automotive industry and transportation industry and technology. So welcome Sean and glad to have you with us.

Sean McCormack:

(00:55) Thank you guys happy Friday.

Michael Krigsman:

(00:58) Hi Sean, yeah great. Harley-Davidson is one of those brands that everybody has heard of but we also wonder, well you’re Chief Technology Officer and so tell us about yourself and tell us about Harley and why does Harley-Davidson have a chief Technology Officer?          

Sean McCormack:

(01:18) Sure, so Sean McCormack. A brief history of myself actually started my career in military intelligence and through a random series of events ended up in startups, and did a lot of different startups across multiple industry. So automotive, education, electronics in a lot of different areas. Eventually moved into the fortune 500 world, so worked for Miller brewing which then what became MillerCoors. Manpower Group, which is a $22 billion recruitment firm and then eventually came to Harley-Davidson.

(01:50) So Harley-Davidson, a pretty amazing company and there’s a lot more going on than I even realized before joining the company. If you look, I think everybody knows we’re the leader in the heavyweight motorcycle segment, but we actually have a lot of other businesses to that we’re in. So if you look at retail we’ve got motor clothes which I’m wearing right now. We’ve got the finance space, we’ve Harley-Davison financial services. We’ve got Harley-Davison dealer systems which is essentially a software company. We’re in the event space so we have events across the globe with half a million people plus. We do renting and tours. We have our own museum, so if you ever come to Milwaukie, Wisconsin, visit the Harley-Davison museum. It’s an amazing experience. So a lot of different industries we’re in.

(02:32) As why they need a Chief Technology Officer, pretty much any of those have technology behind them, and so my focus is really on just making  sure the company runs both looking at the current technologies that are in place and some important business functions, but then also what do we need in the future to enable the business.

Dion Hinchcliffe:

(02:50) That’s quite a list of things to do and I’m sure that Harley as a brand. It’s kind of hard to wrap your arms around all of the things you guys do. So maybe you can highlight a few of the biggest things that Harley who focuses on as a business these days.

Sean McCormack:

(03:04) Sure, so I think one of the biggest things is really just customer outreach. If you look at I think the standard perception of Harley-Davidson view is that the customer is somebody who looks like me. And that’s partially true, except they are cooler looking than me. But you have a lot of people that do kind of fit the profile of me as an individual, but we have tons of customers along different segments.

(03:26) And so if you look at young adults, if you look at women, if you look at different ethnic groups, we’re actually the leader in all those segments to and we have been year over year. So one of the big challenges is how do we just get that story out to people and get them to understand that we have products and experiences that relate to them. So that’s one big focus and we do a lot in that space.

Dion Hinchcliffe:

(03:47) If you don’t mind me asking, how do you use technology to do the customer outreach piece? How is that intersection between the function that you do in your part of the organization and engaging with the customers and marketing as a whole?

Sean McCormack:

(04:00) Sure, just like most companies we’ve got you know all the social capabilities in place. We’ve got a really good media presence and media engine. If you go to our website, there’s tons of information on there that we’re constantly getting out. Video campaigns, mobile applications. So there’s a lot we do in the social media and marketing, sales space to try to get the message out.

(04:21) And we do some pretty cool stuff. For example, we have something called the Harlista, So if you have ever heard of Anthony Pettis Ufc Champion, we do a lot to try to celebrate the Latino community and what they are doing with riding. We have something called iron elite, which we try to celebrate the African American riding community. We do some really cool stuff with women, things like garage parties, which is where we try to bring women into the dealership and let them learn in a safe environment. How a motor cycle works and the different parts and accessories are and the gear, so there is a lot of cool stuff that we do to just try to reach out to those different communities.

Michael Krigsman:

(04:52) So Sean what is your role or as Dion was saying the role of technology in these various businesses. I mean just to pick one, you were talking about customer outreach, so how do you work with other parts of the business to bring technology and innovation to that.

Sean McCormack:

(05:13) Sure, so I’ll give you an example. So another big thing that we are focusing on right now is global demand. The more we go into the world and we put our products out there we’re seeing a lot of markets open up, and we have about 35% of our revenue right now that comes from outside of the United States. So as we do that we’re doing more and more of a global presence. We have dealerships, 1400 plus dealerships throughout the world. We’ve got 14 facilities throughout the world. All of those are running and based on technology. We have manufacturing plants, a heavy technology component there. We talk about sales marketing, corporate finance, product development. I mean all the areas that you can think of within the business with technology in some aspect, and we are working with those different areas.

Dion Hinchcliffe:

(05:55) Exactly, so you probably have one of the most interesting CTO jobs out there. You know you guys have all these tremendous vehicles, and your future plans must be amazing in terms of the technology that you’re bringing to bear. But I was curious, about the story of how did you end up as the CTO at Harley of all places.

Sean McCormack:

(06:19) Yeah it’s a funny story actually. I was living in Austin Texas at the time and I’ve moved 30 plus times in my life and we had been there about a year, and I got contacted by an executive recruiter through LinkedIn which almost never happens. And they said, we have this role at Harley-Davidson we think you will be a good fit, are you interested. And because we had just moved there, actually I wasn’t interested and completely ignored it, did nothing with it. And about three weeks later I was sitting at the dinner table with my wife and I said, a funny story, Harley-Davidson, reached out to me. They were interested in me as a potential CTO. She said, well did you respond? No, and I got ordered right there at the dinner table. Go upstairs and get on the computer, respond to them and tell them that you’re interested. So I went ahead and did that and it ended up working out really well.

Michael Krigsman:

(07:01) So are their common technology threads that you are dealing with across Harley?

Sean McCormack:

(07:12) Sure, so we have a couple of different areas that I focus on and one is the overall technology strategy for the company. And so that’s looking at where are the current trends, emerging trends, and what do we need to do to bring those in. I’ve got the architectural space, the innovation space; we do a lot with innovation. Global operations and that’s importing all of those facilities and dealerships and everything that we talked about.

(07:36) One example is the manufacturing plants, so I’ve actually got all of the domestic manufacturing plants, and we have some really amazing technologies that are powering those plants.

Dion Hinchcliffe:

(07: 45) So the innovation is really the hot topic, and I think one of the challenges that we have is you know, in terms of developing strategy for organizations, you know, the common phrases that everyone is using now the ‘culture, its strategy for lunch’. Can you tell was a little bit about your innovation processes? Are you doing things like hackathons, do you have incubators and can you talk in terms of how is Harley’s latest innovative ideas and making them reality.

Sean McCormack:

(08:12) Sure, so I’ll talk about three different areas. The first one is product development. So that’s something I’m not directly involved in, but if you look at product development, we have some great innovations taking place there. So if you have ever heard of Live Wire, which is the electric bike concept that we put on the market and it was actually in the Avengers movie. So some really good innovations taking place in the product space.

(08:32) If you look at the manufacturing space, we did a massive transition I think probably about five years ago, where we took our current manufacturing processes and move them over to lean manufacturing. And one of our facilities went from 42 different buildings down to one building. And we were able to put in just some really good things where we could build any bike on any line based off of customer demands; lean manufacturing and real time integration with our suppliers. The ability to do surges, so based off of seasonal demands. The ability to move production up and down. So we have some good stuff in the manufacturing space.

(09:07) If you look at specifically to our team, we went through a transformation as I said probably about three or four years ago. And one of the big things that we were interested in was how can we just bring more innovation into the company, especially from the technology space.

(09:20) We actually created a dedicated innovation team, which I think is fairly rare in the market and they have been able to do some amazing things. We have that innovation team as part of that we set up something called a Digital Innovation Counsel, and we have representation from all the major business units that are involved in that Digital Innovation Counsel. They are able to bring ideas in on pretty much anything that they want to pursue, and we’ll work with them to do a proof of concept and eventually a pilot. And if there’s value in that technology, then we’ll work with them for them to sponsor and take it to production.

(09:53) Today, we’ve got about a 30% conversion rate, which for the industry is really good and we’ve had some leading firms come in and benchmark us and give us feedback that it’s one of the best innovation corporate programs that they’ve seen.

(10:07) I’ll give you an example of something we’ve done. So we if you look at the retail space, I mentioned that something we do a lot in, and one of the questions was how can we make the retail space much more engaging, so that when people come in. It’s more personalized and they can get access to better information. So we did something called the Pop-up Shop. And one of the focuses we have is how can we get retail experience out into the urban areas a lot more, so people have access to these dealerships and things that may not be otherwise close to them. How can we get closer to events that are happening? So we set up a Pop-up Shop, and the concept is you basically have this mobile retail experience that comes in. You throw it up within 48 hours. When you walk in, it’s got RFIDs, so I can look at a product, put it on the smart table and the smart table will give me information on that product.

(10:52) We had some stuff with cameras that’s on the outside, and people can get pictures with themselves on a motorcycle. And then that camera would send information to them and encourage them to come into the mobile retail experience.

(11:05) We had a 360 dome, which is probably my favorite part. It’s a 360 dome, so it’s not virtual reality, it’s not augmented reality. It’s a truth 360 experience that you can go in with your friends. There’s a motorcycle in there and you will be able to see just some very picturesque ride that take place and be able to do without a bunch of goggles and other stuff. You’re able to sit there with your friends and experience it. So some pretty neat things that we did and got some really good feedback from everybody that was engaged in it.

Michael Krigsman:

(11:31) I want to tell everybody that listening that we are talking with Sean McCormack, who is the Chief Technology Officer of Harley-Davidson, and right now there’s a Tweet chat going on on Twitter of course with the hashtag #cxotalk and you can send your questions in to Sean for to get them answered. So Sean, it sounds like product innovation is a very important part of the underlying culture at Harley-Davidson.

Sean McCormack:

(12:04) Yeah, very much so, and you see it very much in the product development space where they have where they talk about some really good things going on. We have in the technology space, and we do a lot to try to Foster that. So a good example is we have something called Innovation Challenges, and if you can think of Shark Tank that’s a kind of an internal Shark Tank, where we’ll put a challenge out there, have a bunch of people submit their ideas. Then we pair it down to a couple of key ideas. Those people actually come and do a pitch in front of a live audience, and we have judges and the top idea that is selected actually goes to our innovation team and they bring that all the way to pilot. We’ve done that with our young professionals within the organization. We’ve done that with different functions, and we’ve gotten some amazing results. To me, the cool thing is that you see people that you know, have these amazing ideas, and really don’t have a channel to bring those out. And you have someone in the sales organization and the service organization and the finance, and bring forward some great ideas that aren’t just cool technology ideas but they are impressive business ideas.

Dion Hinchcliffe:

(13:04) That’s a great story, so Sean in terms of we normally think about in a CTO world that we kind of think about the data center and all the technology that’s in the back office. But you also have the technology that’s helping with the manufacturing process, and I understand that you have some advanced manufacturing systems, you have some mobile advances, and the Internet of Things. Can you tell us a little bit about that?

Sean McCormack:

(13:31) Sure, so I talked about the advancement that we made with manufacturing and execution in general, and the ability to bring in lean manufacturing and surge capabilities and all of that. We have a continuous improvement system in place, so we have real-time dashboards, where we are able to get information immediately on how the plant is performing. I can actually pull it up on my cell phone and see here in Milwaukee how the York plant is performing, so many things there.

(13:55) We’ve also looked at mobile technologies. So today on the line, you have a lot of people that are dealing with high pressured situations like a lot of stuff coming through, how can we make it easier to wear something occurs that they don’t have to walk to another computer or walk over to a different desk. We do mobile communications and mobile transactions.

(14:15) So we have done some good things there. We actually had our CEO, Matt Levatich talk at the Smart Manufacturing Seminar not too long ago, and he was able to highlight some of the new things we’re doing in the manufacturing space. Another good example is you mentioned IoT, so with IoT we are just into that, but a lot of the focus today is on sensors and how can we put sensors into the plant that are going to give us information on things like energy. So are we consuming energy in the right way, or are there ways to not run machines when we don’t need to. Is there a way to do predictive maintenance where we can look at machines. And rather have invest a bunch of time and money to go and inspect these machines, and have a better idea is this going to break and when and try to focus on that.

(14:57) We’re trying to do things around quality, so how can we do better quality inspection, is there a way to pair the manual inspection in a more automated fashion, so that you know these smart machines can very quickly pick out if there’s an issue or not. So we have a lot of different things that we’re looking at and trying to bring to the manufacturing space.

Michael Krigsman:

(15:12) I was at a conference this week in Paris of all places, and boy, I just have to say yesterday I was in Paris and I got invited to a cooking class and I learnt how to make French macaroons, meringue cookies. So I was doing that yesterday, but I am loyal to CXOTalk and I’m back here now. Anyway, at this conference Harley-Davidson was brought up as an example of an world-class, really advanced world-class manufacturing organisation. So maybe tell us a little more about the manufacturing and that as a focal point and why is that so important for Harley.

Sean McCormack:

(16:02) Yeah, so if you look at our products, I mean we have some of the best quality products in the world. We have the most amazing motorcycles in the world. And so the focus that we have within the manufacturing space is how can we constantly improve that. So a lot of the things that I talked about, you know, being able to deal with seasonal demand. If our customers you know want certain bikes how can we get them down the line as quickly as possible with the best quality as possible. So there is a constant focus on manufacturing, and how can we improve safety.

(16:31) One of the neat things that we did you know, with the lean and the continuous improvement environment is that we actually drove safety issues down to over 91% in some of our plants. So it’s a really big focus across the entire organization, obviously, that’s the heartbeat of Harley-Davidson.

Dion Hinchcliffe:

(16:46) Yeah, so with all of these manufacturing capabilities and you’ve got all these technologies you’re trying to bring in, how are you going about the process of ensuring that you’re connected to the business, that you’re really enabling Harleys mission to contribute a tremendous riding experience. That’s still one of the longest standing challenges in information technology is that if we connect the technology to the business, how do you go about doing that?

Sean McCormack:

(17:11) Yeah, very much so. I think we’ve had kind of three things that we’ve done. One is around technology modernization. We have probably the most massive and impressive effort that I’ve ever seen at a company in modernizing our technologies. And a lot of that was done because we knew the business needed it, both for things that are they are today and things that are coming. That is bearing a lot of fruit, because the business function starts to say wow, technology can really be an enabler instead of something that hurts us. So that’s then a big gain and given us some good press.

(17:41) The second one is around business enablement. So we have business relationship managers embedded with all the business functions, constantly looking at strategies, what do they have coming up. What other things, can we do to support them, everything from analytics to immigration, to mobile enablement, you know is a lot of capabilities.

(17:58) And the third one is the innovation space. I think the innovation space has done a lot to really just improve the integration, because it’s one of the places we can have not just one business function, but multiple business functions coming together and talking. And they are saying that we are doing something in the retail space that may also benefit us in the event space. Part of which is the innovation charter is we’re trying to get ahead of what the business demands are and go and test these technologies. So that when the demand comes we’ve taken something and improving that, and we can take it off the shelf and say, here you go. And I think that’s really started to change the dialogue in the company, where they realize it’s not then pulling off to have the latest and greatest or enable them. Or rather, it is, are coming to them and saying, we think we found something that we think can help you.

Michael Krigsman:

(18:42) So when you are thinking about innovation, and thinking about doing things differently and improving things,. Getting back to Dion’s comment earlier, how are you linking it back to the ultimate reference point, which is a better and safer riding experience for the people who buy your motorcycles?

Sean McCormack:

(19:06) I mean that’s embedded in the company. Everything we do focuses on quality and safety, so that’s actually critical to any technology that we put out there and any experience that we put out there.

Michael Krigsman:

(19:18) So it’s just – I shouldn’t say just. It’s essentially quality and safety are embedded in the DNA and it is sort of imbued in everything that you’re doing.

Sean McCormack:

(19:28) Absolutely, and that comes from the top down. So you look at every initiative that we have, every focus that we have, quality and safety are absolutely paramount and they are nonnegotiable.

Dion Hinchcliffe:

(19:39) So Sean, how do you maintain that culture. We see a lot of these ideas of lean, agile, and DevOps is another big popular topic and it’s creating a more collaborative culture inside the technology groups and connected to the business. Those are hard to instill and maintain, and what are you guys doing to try to ensure that you don’t lose that.

Sean McCormack:

(20:08) So I love bringing in people from the outside, because I think it’s very easy to become somewhat stagnant. You develop a culture and one way of doing things, we do a lot with for example with the start-up world and incubators, and the West Coast to look at how are the operating and what best practices are they bringing in. A lot of the key vendor’s that we work with, what are they doing that making their development cycles and there delivery much better. And so we go pressure test that and then we look at how we can infuse it and it could be infusion through a very large program, or it could be the infusion of just having some quick wins for people that start to see the value and actually want to pull that in.

Michael Krigsman:

(20:47) So, it sounds easy on one level, you know this innovation is embedded in your culture. But, what are some of the challenges or the obstacles that you face when you try to have this culture of continuous innovation?

Sean McCormack:

(21:06) So I think one key challenge is just what the definition is of innovation and where it should be focused. And this is actually one of the debates we had a lot I think in the early days of establishing our innovation team. We segment innovation into kind of three key areas.

(21:21) So one is tactful, so this is where I’m making just small operational improvements. There are strategy’s so we have business strategies and how do we exonerate those. And then there’s disruptive where we are looking at potentially new business models and new business opportunities. Depending on who you talk to, everyone has a different perspective of which of those you should be doing and how much you should focus on them. In our case we actually came up with percentages, but it was a lot of debate for everyone to agree that you know we shouldn’t be purely disruptive, or we shouldn’t be purely tactful. I think that’s one challenge.

(21:53) I would say another big challenge is really just around speed and risk. If you look at trying to just prove out the concept that you want to move very quickly because that concept doesn’t work, you want to be able to walk away from it and not met a lot of investment. Traditional delivery cycles are the exact opposite. They’re focused on, how do you minimize as much risk as possible. How do you look at long-term is the sustainment, so once I put this in how do I keep it supported. Oftentimes, those two views come into conflict, and so you have a lot of challenges on how did you modify your risk profiles, how do you modify your delivery cycles. How do you modify expectations when you are doing innovation on one end, and then if that’s successful kind of swing depending on the other side. When you have covered the risk and you have covered the long-term operational sustainment, so that’s another challenge we see a lot.

Michael Krigsman:

(22:42) When you see… please Dion I insist.

Dion Hinchcliffe:

(22:50) Thanks Michael. So let’s talk about resources of product innovation, do you have a well proven model and don’t change it round very much, or from a technology and product development end and manufacturing standpoint, you say you bring in other folks, and that like sounds outside experts and maybe start-ups, how do you manage that mix?

Sean McCormack:

(23:14) So I think we try to do both. If you look at our innovation process, the technology one we set up we actually relied heavily on the product development innovation process. They had a really good innovation process that was already established. We spend a lot of time with them understanding that, and then how to morph that for our specific needs. So I think we had a fairly proven methodology in the way that we are able to adopt, and we really haven’t had to tweak much at all.

(23:38) I talked about how internally. We had some really good ideas that are generated, both through the Innovation Challenges, the Digital Innovation Counsel avenues, but then we do a lot, just to go out and see what’s happening. And so we’ll be at different conferences where, for example start-ups are launching. We do a lot with analyst firms, doing a lot with West Coast, East Coast. A lot of the vendor’s we work with, and we have strong relationships with and just looking at their innovation labs and at the capabilities that they’re developing. So we have a lot of channels internally and externally to get that information.

Michael Krigsman:

(24:08) We have a question on Twitter from the twitter name, fourvalaka41, okay and he or she or it since I don’t know the person’s name is wondering how are you looking at trends like 3-D printing. And I’m assuming you’re not going to tell us detail about Harley’s upcoming plans. So just in general.

Sean McCormack:

(24:35) So just in general, 3-D printing I personally find fascinating. And you are seeing 3-D printing starting to emerge in a lot of different areas that I don’t think anyone ever expected. You are seeing 3-D printed house’s, you’re seeing 3-D printed buildings where people are actually doing concrete, there is food. I think one of the more fascinating areas is around human components, so being able to do cartilage, skin, and a lot of things.

(25:02) Obviously, from an industrial perspective, there is tons of value. I may be wrong, but I’m pretty sure that NASA has 3-D printing parts that they can use within their rocket ships. There was a big news item not too long ago, where there were able to produce parts on demand in space through 3-D printing technologies. So I think the possibilities are endless.

(25:23) The biggest challenge that I see right now is to part. One, speed and I know that the industry is working on this a lot, but the challenge to take something that would normally be created and do it in a much faster manner 3-D printing, from what I’ve seen isn’t there yet. The current manufacturing processes in a lot of cases are still faster than you can do it 3-D printing.

(25:42) I think the other big challenge is around materials. So when you are dealing with single purpose materials, nothing is difficult, but when you start dealing with composite materials, and things that require a lot of materials to come together to do something, I think there are still a lot of challenges there. So an amazing space. I follow it a lot, but still emerging.

Dion Hinchcliffe:

(26:02) So what I find, sorry Michael, what I find so interesting about the 3-D printing is that not just what it makes possible, but how it can change your supply chain. The point of manufacturing is that it could even be in someone’s home. You can build most of the parts are you know, very DIY can assemble their own vehicle. So you can have a Harley-Davidson 3-D printer. So it changes what’s possible and it moves everything around, and I think organizations like yours will have a real challenge, not just in the technology, but how it’s going to reshape your organization potentially.

Sean McCormack:

(26:35) Yeah, I think the possibilities are endless. So it will be fascinating to see where that industry goes.

Michael Krigsman:

(26:41) As you look at advanced technology, such as 3-D printing as such an example, at what point you decide that a technology becomes more practical than being merely experimental?

Sean McCormack:

(26:59) I’m sure a lot of the viewers have seen the adoption curve. That’s something we try to pay attention to a lot is where something is within an adoption curve. I think for us, the first thing we want to do is prove out the concept. So we do a POC, does that make sense specific test. Then we do a pilot and that’s where we start actually interacting with customers, dealers, all other people that can tangibly use it and give us feedback. If we think there’s value, but do they think there is value?

(27:24) Then from that point if the answer is yes to both of those then we start saying there is really something here, and we start looking at how can we adopted within the business. If something just doesn’t have yet, but we think potentially long-term, so it could be a technology that we think has value. But hasn’t really reached that level of maturity yet, we put it on the shelf and will come back and visit it in a year or two years from now to see that maybe a really good concept, but has the technology mature what to the point where we would be comfortable to integrate them.

Dion Hinchcliffe:

(27:57) So another interesting topic in terms of technology trends is autonomous vehicles, and I know that you can’t talk specifically about what you guys are thinking about. But that seems to be a very challenging space for motorcycles in particular, and I was wondering if you could share your thoughts about how autonomous vehicles might affect your industry.

Sean McCormack:

(28:17) So autonomous vehicles is something else that I’m just fascinated by. I think it’s coming much faster than the average consumer realises. If you look at most predictions, 2025 is where the belief is that most manufacturers will have autonomous vehicles on the road.

(28:34) If you look at for example Tesla, Tesla is accelerating that much faster. They have the autopilot capability that they have already rolled out. It’s not truly autonomous, but it’s a very big first step. And you are seeing Google and Apple, and Ford had a lot of other companies making announcements in that space.

(28:47) I think the implications are going to be fascinating, you know one example is when an accident occurs who is guilty. So is it the car that was created, is that the software that was running it, or is it the rider that was sitting behind the steering wheel. So you are going to run into a lot of and legislative and legal questions, and it’s going to start to change how do you deal with insurance. So you are insuring the software, you’re insuring the driver. I think you are going to see some fascinating business models.

(29:17) You have seen the Uber CEO talk about how his long-term goal is to have fully autonomous fleet’s, and I think that the potential is that I was talking to my daughter about DVDs and she has no concept of DVDs, CDs and that’s not something she grew up with. To her, music is Apple music. It’s subscription on demand. DVDs is Netflix.

(29:38) I think there is some potential, and I don’t think the entire automotive industry will go away, but I do think there is some potential for a lot of subscription-based services. Where now, I don’t necessarily need to buy a car, I can sign up for a subscription, and if I want to talk to work I can do a ride share. If I want to take somebody out on a date, I’m in a Ferrari. I think there is a lot of ways that can go. So it’s a fascinating space, very fast moving and a lot of things happening quicker than I think the average consumer realises.

Michael Krigsman:

(30:04) The business model implications about what you are talking about for a company like Harley are potentially profound. How much time, effort do you do as a company put into thinking about these future business models or realities that that may be completely different from there today than in 10 years?

Sean McCormack:

(30:25) Yeah, so I think if you look at any emergent trend we absolutely look at it and try to understand what are the implications. It wouldn’t be good business if we weren’t paying attention to those trends. So we looked at everything and try to figure out what the right strategies are based off of that.

Michael Krigsman:

(30:41) What about, I was going to say what about AI and machine learning, does that come into play at all?

Sean McCormack:

(30:50) Yeah, I think it I is pretty fascinating, especially for just being able to help workers out. So a simple example is if you look at Amazon Echo, to me that’s a pretty fascinating product. Amazon Echo is kind of this little tube that you buy and you can put in your house and you can start having conversations with it. You can tell it to order pizza and you know, play music for you. If you look at the founders of Serie, they actually have a product that’s coming out, which is their vision of you know could have been or should have been you see a lot of investments taking place from Microsoft and Apple in their AI technologies. I think there is a really interesting space, because the potential is to make life much easier for the average person, and reduce a lot of the various tasks that we have to do that can be distracting. So that’s really going to be fascinating just to see for the consumer in how that helps, and then I do think there are going to be you know some fascinating used cases for businesses also.

Dion Hinchcliffe:

(31:44) Yeah, that makes a lot of sense, and I think one of the most exciting parts for our industry right now is to try and figure out how AI gets added on to everything that we do right. So you mentioned things like augmented and virtual reality just briefly when we were talking about your pop-up shops, which is a fantastic concept in itself. But it sounds like that experience could be extended to these new user interface technologies. How do you think they are going to affect the motorcycle industry?

Sean McCormack:

(32:14) So I think so AR and VR, is interesting because virtual reality is something that I worked on. I want to say almost 15 years ago, and the thought at the time was that virtual reality was going to take off and you know it was going to completely change the world. I’ve yet to see that happen. It doesn’t mean it won’t, but I think virtual reality is probably not as powerful as augmented reality.

(32:33) So for those that don’t know the difference, virtual reality is where you are putting a set of goggles on and you are immersed in a totally different world. I think there is a lot of value and benefit probably in the consumer entertainment space. I think that’s where it’s definitely going to take off, beyond that I’m still curious to see what the benefits and used cases are.

(32:51) Augmented reality, which is where I have a current world and I’m putting something into add to that world in front of me, and a good example is Microsoft HoloLens, which is just a set of glasses, or Google Glass, if you can think of Google Glass wasn’t true AR. But HoloLens, for example, I could take this room in front of me and I put these goggles on, and then all of a sudden I could introduce virtual objects and station them within the room. So I could have an imaginary dog, and every time I walk in the room this imaginary dog comes up and greets me. I think AR has some very interesting implications across a ton of industries. You know it could be as simple as you know, if you are in your house and you have a washing machine, and being able to just hold up an iPad and that washing machine all of a sudden displays information to you that you can’t see in the real world. I think there is probably a lot more implications and a lot more benefits and become faster with AR than virtual reality.

Michael Krigsman:

(33:48) And do you have a skunk works or innovation pathways, or something to look at the implication for technology such as these on motorcycle riding?

Sean McCormack:

(34:03) Sure so as we talked about, we have the you know Innovation Group and the Digital Innovation Counsel, so any idea that comes up any emergent technology trend that someone sees then we are welcome to bring that into the pipeline and then we will run it through the standard innovation process.

Dion Hinchcliffe:

(34:18) I was talking to a razor blade manufacturer, Senior Executive and he told me that every day when they go in, they try the next crop of razors from that days R&D batch in the lab, and I believe you guys have some major concept bikes and let you drive those things every day.

Sean McCormack:

(34:37) I wish. That’s a very special group.

Michael Krigsman:

(34:44) So what are some of the advice that you might have for people inside organizations like Harley that are in the midst of dramatic change. I mean I know you spend a lot of time thinking about how to manage the changes that are taking place inside the motorcycle industry.

Sean McCormack:

(35:05) I think one, just pay attention to I think what’s happening. It’s very easy for people or corporations to focus on what’s in front of them and not really understand the broader trends or what’s happening in the outside world. So I think personally you just have to pay attention.

(35:19) I think secondly just be very clear on who you are as a company, and in the case of Harley-Davidson we have a very clear purpose with our own dreams and personal freedom, and everything that we do tries to build to that filter. So be very clear in what you’re purpose is, and be very clear based off of that purpose where you want to go. The risk is that if you don’t do that, you can see all these things happening in the world and try to react to them and then you have a very fragmented and kind of scattered approach to the market, and the consumer automatically sees that.

Michael Krigsman:

(35:48) So that is the underlying theme that cuts across all of the different businesses that Harley is in, which is really quite a lot.

Sean McCormack:

(36:00) Yep, so it’s a mantra that every company knows, we have very clear brand attributes that we align everything to, and I think that makes it very simple to make decisions on is this alignment with our strategy, is this something that should be pursuing or not.

Dion Hinchcliffe:

(36:15) And so it’s towards the end of the show here and you know, one of the hottest topics in the industry right now or at least is the phrase digital transformation. Right, making your business more into a technology company into a digital business that thinks and acts like a digital leader in the technology industry would, is that something you guys would think about? Do you have a separate for that, or do you look at that as something that you can role into everything that you do?

Sean McCormack:

(36:43) So there’s a lot of buzz around digital and I think depending on who you talk to they have very different opinions. For others, digital is very simply is taking the physical world and the virtual world and making sure that those connect in the right way, so that you are not sending confusing signals to people, depending on how they interact with the company. So we obviously pay attention to what’s happening in the industry, and there are very specific things that we think that means full are we are pursuing on.

Michael Krigsman:

(37:07) So for you, you spend a lot of time thinking about the clarity of what you are doing, and so what the consumer experiences online is not in conflict in any way with what they experience in your stores all with your bikes. That sounds like a key point for you.

Sean McCormack:

(37:28) Yeah, so I think the ultimate goal, if you look at the Harley followership it’s absolutely amazing. I don’t think there is any other brands in the world where people actually tattoo you know the corporate logo on their body. We just have amazing followers and very loyal customers. So that’s paramount for are that we make the experience as seamless as possible. It doesn’t mean we always nail it, but that is something that we are very heavily focused on, and as we continue to move forward, it’s at the forefront of everything that we do. So how do we make that customer experience is amazing as possible.

Dion Hinchcliffe:

(37:59) Now one word I haven’t heard you say is the word cloud, what do you think about that and how does that play a role and what do you think about that technology enablement at Harley?

Sean McCormack:

(38:13) So cloud kind of cracks and me up to be honest. If you look at and cloud and I mean you can get into technical discussions, but is other people’s data centers. And that’s what people have been doing for ever, it’s just that there’s newer ways to approach it, and different marketing techniques. We obviously have vendors that we work with; we run systems within our own data centers and other data centers. So cloud is something that we openly embrace and have no concerns with as long as it doesn’t violate security or legal or anything else we can care for as a company.

Michael Krigsman:

(38:44) So you’re not part of the cult of cloud. I mean one hears people talk about the cloud and make claims that the cloud will pretty much save all of us, say that the cloud will save the world and you don’t see it that way.

Sean McCormack:

(39:03) I’ll say it saves the world until the cloud goes down. So I think there’s absolute benefit in it and you can do some really neat things. And you seem companies like Netflix and a lot of others really embrace the power of the cloud. I fully believe in it, but I also think it is a place just like everything else. First things that are cloud appropriate, and these things that you still want to maintain internally, so that your business isn’t disrupted.

Dion Hinchcliffe:

(39:29) That make sense, and so hardly is a design company that is renowned for the design of its vehicles. And we see in the technology space that design is getting more and more important. Apple kind of virtually proved that great design can change the world right, in the technology space. And we see a lot of companies using phrases like design thinking, you know trying to have more of a contextual solution to applying technology to problems. How do you guys think, given that you are so well known to design on the product side rather than the technology side?

Sean McCormack:

(39:58) Yeah, so you know on the product side we focus very heavily on the voice of the customer and the ability to design thinking and any other methodologies out there. The most important thing is talking to the customer and seeing what they want, and then trying to make the product. Fairly simple and you can build a lot of methodologies around that. To me, it’s no different than the technology space. Really understanding what is the voice of the customer and what they are looking for, and then how do we quickly get there, put it in their hands and allow to give are continual feedback on that.

Michael Krigsman:

(40:23) So your reference point then for all of these methodologies, design thinking, agile, although I’m not sure that you use agile. It’s all about bringing in the voice of the customer and making sure that you are listening to the customer.

Sean McCormack:

(40:41) Yeah, right. I think you can do okay, but you’ll run into a lot of trouble. The further you get away from the customer. And so the closer that you can say to the customer, like we do with our motorcycles, to me it’s no different than technology. Got to stay close to them, and understand what they need, try to get into their hands quickly and validate the feedback. To me that’s paramount to being successful.

Dion Hinchcliffe:

(41:05) Yeah, getting customer needs is a real challenge and you’re a global company. Are you finding that technology requirements and technology needs vary widely as you go into other geographies and how do you manage that mix?

Sean McCormack:

(41:21) So I would say in a small contextual and if you look at APAC for example, Asia/Pacific, very heavy mobile focus much also, then you may find in for example, so you definitely have to look at the local flavors and how do people interact with the product, how they want to interact with the brand and then try to tailor something that one, is still consistent to the brand across the globe, but also meets the local needs and the desires with the people within that area.

(41:54) Yeah, I have to imagine that really complicates the kind of view of the same thing over and over again from the technology planning and development perspective for each one of those regions, right?

Sean McCormack:

(42:04) Yeah, I think it’s a problem that every company faces. You know, how do you have brand consistency and standards, and experience that doesn’t vary too much across the globe, but also make it relevant to the person in that specific geography.

Michael Krigsman:

(42:17) So as you are designing technology, to what extent and how are you thinking about that impact on the customer and the brand experience? I think that’s really fascinating question.

Sean McCormack:

(42:33) Yeah, so I think just but we talked about before you have to understand what is the experience that you want, and then as much as possible try to make that consistent based on every interaction that takes place. So if you look at when people engage with the brand there is multiple ways they can do it. It can be an event. It can be a website. It can be a mobile app. It can be walking into a retail location. How do you try to really look at all of those and make sure that every way that you present yourself to the customer, you’re providing things that are still a value, things that are connected, and things that matter to the customer and you’re not confusing them. So it’s a challenge that every brand faces, but it’s one that we are very passionate about.

Michael Krigsman:

(43:12) Well as you said you are one of the few brands in the world where people love you so much that they will tattoo your brand on their body!

Sean McCormack:

(43:22) Yeah, I haven’t done that yet, but a lot of people are already there, they love it.

Michael Krigsman:

(43:27) We’re almost out of time, Dion do you want to have the last word here.

Dion Hinchcliffe:

(43:33) Yeah sure, so you would have seen many amazing things inside Harley in your years of working there. What is one of the coolest experiences that you’ve had at the company?

Sean McCormack:

(43:47) The coolest experience, that’s a good one. So I would say probably that we had our 110th anniversary a couple of years ago. And first of all it’s pretty cool to be part of the company that has 110th anniversary, you know, especially a fortune 500 and the celebration was actually in Rome. So I was able to go to Rome with my wife and go to the Vatican, and the Pope actually did the ceremony where he blessed a bunch of Harley-Davidson bikes. Sell St Peters Square was filled with – I couldn’t even count how many people, I mean you know tens of thousands of people. And then you had in the middle this core set of bikes, and people rode their bikes into the square. You had the Pope bless them. We were up on stage with them, got to do a private tour of the Vatican. And to me that was just an amazing experience. If nothing else I mean just cool personally for me, but it’s one of the few companies that I’ve seen in the world that can just pull that off. I mean, how do you have the Pope, and bikes, and all of these people coming together? It just shows you the power of the brand and the experience that people want. It was really cool.

Michael Krigsman:

(44:49) So how do you pull that off?

Sean McCormack:

(44:54) That’s the secret sauce! A secret sauce that a lot of people have figured out, and I’m probably not one of them, but we’ve done an amazing job.

Michael Krigsman:

(45:02) Well you’ve been around for 110 years. So we have been talking with Sean McCormack, who is the Chief Technology Officer of Harley-Davidson. And my co-host today has been Dion Hinchcliffe. Dion, thank you so much.

Dion Hinchcliffe:

(45:19) Yes, thanks again Michael for a great show.

Michael Krigsman:

And there were special thanks to Sean McCormack. Sean, thank you so much for taking your time today.

Sean McCormack

(45:28) Yeah absolutely. Thank you guys for having me. Appreciate it.

Dion Hinchcliffe:

(45:30) Thanks Sean.

Michael Krigsman:

(45:31) Everybody you been watching episode number 176 of CXOTalk and it’s that time again. Next week we have three shows, so take a look at CXOTalk.com and check it out and we’ll see you soon. Thanks a lot. Bye bye.

Companies mentioned on today’s show:

Harley-Davidson         www.harley-davidson.com

Amazon                       www.amazon.com

Apple                           www.apple.com

Google                         www.google.com

LinkedIn:                      www.linkedin.com

ManpowerGroup        www.manpowergroup.com

MillerCoors                 www.millercoors.com

Netflix                         www.netflix.com

Tesla:                           www.tesla.com

Twitter:                       www.twitter.com

Uber                            www.uber.com

 

Sean McCormack       

LinkedIn:          www.linkedin.com/in/seanmmccormack