Tradition Is Not A Business Model

09/28/2009 @ 2:58 am, by Jensen Beeler10 COMMENTS

Tradition Is Not A Business Model tradition not business model 635x399

In my last year of business school I had to write a business plan in order to officially obtain a concentration in Corporate Innovation & Entrepreneurship. This was before the complete global economic meltdown, and entrepreneurship was still very much a dirty word in the hallowed walls of our MBA program. Many of my classmates were hoping for Wall Street jobs, and the class all-stars were all vying for jobs at the hottest hedge funds, so the idea of starting a company that would likely pay a negative paycheck in its first couple years was very much a foreign concept. It comes as no surprise then that only four or five business plans were submitted for consideration for the course concentration; one of which was mine, entitled Tradition is Not a Business Model – An American Sportbike Business Plan.

In this article, and its subsequent series of articles, I hope to re-examine what it means to start a motorcycle company in the United States. While my original business plan centered around the concept of a traditional motorcycle with an internal combustion engine, this series of articles will instead take the opportunity to look into corporate innovation in the motorcycle industry, through the lens of the newly formed electric motorcycle sector. In what I hope will become a weekly conversation on business in the motorcycle industry, we begin our discussion first with the perspectives of four entrepreneurs, which you’ll see in the coming Sunday Editions of Asphalt & Rubber.

Looking back on my business plan it is clear now that the title, Tradition is Not a Business Model, was of course a direct challenge to the many attempts to build an American bred sportbike that could compete against the best from Japan and Europe. Instead of focusing on building a brand that had red, white, and blue in the logo, my plan centered around the idea of creating a high-tech product design processes, modular components, and a distinct “American” school of design.

In essence, we wanted to try and rebuild a motorcycle company from the ground up, assuming that the barriers to change didn’t exist. At the same point, we didn’t want to build a motorcycle and sell it based on purely superficial notions. It was important to us that our customers purchase our hypothetical bike on its merits, and from its qualities, be proud that their purchase was made in the USA. Truly an exercise in entrepreneurship, our business plan was idealistic and passionate…it was also almost completely out-of-date by the time we finished writing it.

Months after starting this business plan, the full scope of the recession began to wrap its hands around the global economy. Even highly talented individuals like my classmates felt the slowdown in demand for future management. As a result, roughly half of our class was unemployed at the time of graduation. At some point we all got the same wake-up call; many of my classmates, myself included, faced the reality that there were no jobs ready to pluck us out of the debt of business school, and very likely our first new boss, would in fact be ourselves.

No one jumped off the business school roof that day, but the idea of starting something while in the middle of one the worst economic slowdowns seemed daunting to many. At that time funding was tight, and remains so today. Getting a business plan funded in some cases was harder than the actual implementation of the plan itself. For many, this seemed like the worst time to start a company.

I recently had someone from a startup tell me that “it’s harder to start a company in this recession,” and I couldn’t help but to argue the point. Sure, absolutely the recession makes business more difficult. But is that the same as saying it’s hard to start a good company in this economy? I’m not too quick to make the connection. Money isn’t gone per se, it’s just harder to get it out of people’s wallets, so what gets funded are arguably the “better” ideas.

If you can get funded in these uncertain times, it means your company has a solid footing, your business is planted in real provable concepts, you’re doing something innovative, and likely, your business centers around a new technology. Technology and innovation go hand-in-hand, and when we talk about corporate innovation, we can speak about it in two contexts: evolution & revolution.

I realize looking back on my original business plan that it was grounded in an evolutionary business step, a refinement on what was already out there. Entrepreneurship is often centered on evolutionary steps. No better example of this exists than the motorcycle. For the past 100 years we have been improving on the same basic concept: the internal combustion engine. We’ve made leaps and bounds of progress in that time, let’s not forget that, but let us also acknowledge that the motorcycle for all intents and purposes remains still a close cousin to its original self.

Recently I realized there are a series of companies writing their own business plans, with their own interpretations of what an American motorcycle company should look like. A couple of these companies take the approach I took, evolutionary steps that took the work of others, and improved upon them. But a select few decided to do something much more difficult, and also much more exciting. These companies were writing business plans that aimed to revolutionize the motorcycle industry. Succinctly, I’m talking about the recent advent of electric motorcycling.

Leaving all the hype, rhetoric, and politics of motorcycling behind, I went on a trip to talk to the founders of these companies about the state of the motorcycle industry, and about the trials and tribulations of launching a start-up company in our industry and amidst the current economic state.

Over the next few weeks I will share with you the thoughts and insights from the founders of Zero Motorcycles, Brammo, MotoCzysz, and Mission Motors. Mixed in with their similar goals of creating an electric motorcycle are ideas on what it means to be an entrepreneur in this economy, center a company around revolutionary principles of innovation, and in true motorcyclist fashion, challenge the status quo.

Comment:

  1. stephen says:

    this seems like an exiting series of articles. i myself am interested in one day running a business (hopefully centered around motorcycles).
    I wait with anticipation.

  2. Tradition Is Not a Business Model – http://bit.ly/ZOgAs #motorcycle

  3. John Adamo says:

    Man, can’t wait for this! :D RT @Asphalt_Rubber: Tradition Is Not a Business Model – http://bit.ly/ZOgAs #motorcycle #electric #ev

  4. Ceolwulf says:

    I likewise am really looking forward to the rest of these.

  5. Rene says:

    This is real interesting, instead of being screaming about the crisis this is the right thing to do, to take some action.
    As Stephen said before, i´m also interested in the motorcycle bussines, maybe this´ll help.

  6. jar_o_flies says:

    I’m interested in seeing these thoughts continue as well.

    I’m not a huge fan of E-powered vehicles (although I believe that bicycles/motorcycles are a bit more of a logical place to start), and hope that IC discussions are not completely left for dead.

    In particular, I’m interested to see how “innovation” is described, as I see little difference from one e-powertrain to the next – most innovation seems to be on the “control” side of things, where more technical systems (ABS, Fly by wire, traction control) seem to be much more attainable with an E-powertrain and control system.

    I’m also curious to understand how much some of the companies mentioned are actively involved in battery/motor development – which seems like a lot to bite off when one is still attempting to get a viable vehicle to market. We know Tesla did very little in this regard, providing little more than a glorified “cooler” for its massive amount of (conventional) batteries feeding a (conventional) spec’d and sourced AC motor.

    In my opinion, the companies mentioned above become “real” and their business models become “real” when they contribute valid solutions to the powertrain side, batteries/motors, versus offering unique, possibly pretty, functional packaging exercises of existing components into a two wheeled device. But, I suppose, times are changing, and perhaps with E-vehicles, the vertical design and development of road going vehicles will completely give way to a handful of battery companies and motor companies supplying various “coach building” companies……not all bad I suppose…..

  7. Brammofan says:

    What a timely subject to address. A fresh perspective on this industry from someone who doesn’t necessarily start off with the opinion that “if it can’t match an ICE bike in acceleration, range, price and volume, then it ain’t s4!T!” is just what the doctor ordered. And you’ve got a J.D., too. Should be a fun read.

  8. jar_o_flies says:

    Brammofan – such a business case has already been presented and executed, the Segway won few fans.

  9. Very nice piece. I am going to pass on your link to an ad exec buddy of mine called Laughingman, who operates a private blog, along with other auto / motor / engine industry folks. He may pay you a visit.

    As for the issue of entrepreneurship:

    Here’s a thumbnail of what it takes, in my view, for a society to be prosperous:

    1) An inventive / innovative class; people have to want to invent things and processes;

    2) Cross-culturalization, where multiple inventors get together and compare their inventions, and newer \ better inventions are created;

    3) Seaports or trade route intersections;

    4) Business flowing from invention / innovation;

    5) Decent Jobs flowing from business, so people can take care of their families with pride;

    6) A reasonably decent life flowing from more people having jobs; and

    7) Education encouraging the repeat of the process

    Either some force in society sets this in motion, governs the process, and maintains it, or it does not. If you leave it to chance, you might be on top for a while but you will be not on top indefinitely. But that is a cost of freedom, when you do not direct people what to do with their lives.

    My suspicion is that China will be the next world power because they tell more people what to do, and they are more controlling. More free? Of course not. But more planning, organization, consistency, and coordination take place under their model. We in the U.S. use the “herding cats” model, and there are benefits and costs associated with it.

    We’ve needed more inventors for years, and few in our country have paid attention to that issue.

  10. Well-written. A reason all by itself to visit this site repeatedly.

    Looking forward to the rest in the series.