Our post on Harrison Harmonicas going out of business provoked more comments from visitors than any other post we’ve written. One recent post said in effect that HH was a…

Our post on Harrison Harmonicas going out of business provoked more comments from visitors than any other post we’ve written. One recent post said in effect that HH was a great idea that was killed by greedy market forces–an interesting idea, but one we take issue with in this post.

The B-Radical was indeed a great product idea–a super-high-quality mass-manufactured diatonic harmonica. But there’s a big difference between a great product and a viable model for doing business. I haven’t talked to the principals at HH, but I think the basic idea behind their business model went something like this.

A Guess at Harrison’s Business Model

More and more harmonica players are buying harmonicas customized by craftsmen at prices ranging from $85-200 apiece. There is also an apparent market for high-end (and pricey) harmonica amps. All of this helps to confirm that there is a segment of harmonica players who have both the means and the desire to acquire very high quality, expensive instruments. (The size of this segment is of course an open question at this point, but Harrison apparently thought it large enough to pursue.)

A manufacturing company is better suited to meet this demand at competitive prices with consistent high quality than is a craftsman/customizer, assuming that products can be sold in sufficient quantity to make economies of scale possible. A manufacturing company can build high performance into the design from the start, allowing the use of less-expensive labor in the manufacturing process, thus increasing margins along with manufacturing capacity. A manufacturing company is also better-positioned to tap markets in multiple geographies.

So that was the basic idea: capture the high end of the market with a high-quality mass-manufactured product, using economies of scale to gain superior margins as well as wider distribution than any artisan could achieve.

Why didn’t it work?

The errors in Harrison’s Business Model

HH was gambling that 1) the market for high-end harmonicas is large, and 2) there is a substantial segment of this market whose needs (for price, availability, etc.) are not currently met by the customizers, and who are willing to pay customizer prices for mass-manufactured instruments.

In hindsight, both these assumptions seem questionable. First, I doubt that anyone really knows what the potential market size for high-end harmonicas is–and it may not be very large. Even many professionals, who should be the likeliest targets for high-end instruments, play out-of-the-box harmonicas priced in the $30-$50 range. Harmonica players seem to find it much easier to justify paying $1500 for an amp than they do paying $100 for a harmonica–and the initial Harrison models were priced at nearly twice that. Customer habits where harmonicas are concerned involve inexpensive instruments and frequent replacements; thinking of a single harmonica as a lifetime investment is new thinking indeed for most players.

Second, HH assumed that they would displace the customizers (and expand the market for high-end diatonics) with a better value proposition. But in what ways exactly did the customizers fail to meet the needs of the market? And in what ways was Harrison’s value proposition superior? Most customers probably think the products the customizers produce are very good. Most well-known customizers have waiting lists for delivery, which is not unusual with handcrafted products that are made to order, and the customers seem to be okay with what they perceive as a relatively minor delay between order and delivery (so long as the customizer delivers when promised, which most seem to do). The only thing their customers would really like to change is the price. But Harrison didn’t attack the customizers with reduced prices; the B-Radical came in at the very top of the established price range for customized diatonics. Further, the wait time for delivery of a B-Radical exceeded wait time for a typical customized harmonica, and at least some customers experienced multiple missed delivery dates on orders, with some paying but never receiving the goods. In short, Harrison’s overall performance was not nearly competitive enough with the established customizers.

Price was the biggest mistake

The biggest mistake HH made is probably the pricing decision, which reflects both failed assumptions. Harrison’s price point made them less competitive with customizers, and extremely vulnerable to attacks from traditional manufacturers. We appreciate that the technology involved in the B-Radical may have made a lower price point impossible to achieve profitably; the solution to that problem might have been to scale back the level of technology in the instrument, as opposed to scaling up the price.

Harrison took the reverse of the path for a “disruptive technology” described by Clayton Christiansen in his brilliant books “The Innovator’s Dilemma” and “The Innovator’s Solution,” both of which propose that disruptive technologies enter markets with low-priced products that are less functional compared to traditional alternatives, but easier to use, and which appeal to a new set of users with relatively low performance requirements, not established users seeking the highest possible performance. HH set out to upend the market from the top down; Christiansen argues that markets are disrupted from the bottom up.

HH’s business model left it wide open to an attack from the bottom, which was carried out by the traditional players, whose strategy was clearly to deny HH sole access to upwardly mobile diatonic players. (UPDATE: Steve Baker’s comments on this post, which can be found below, show that Hohner’s strategy at least was not a direct response to HH. But the effects were the same.) Just as HH was getting its first production models out the door, Hohner, Seydel, and Suzuki attacked the market for higher-priced higher-performance harmonicas from a different and more price-aware angle: they used their economies of scale to manufacture significantly better-performing instruments with only moderately higher pricing. A Hohner Crossover sells for about $60, less than twice the cost of a Special 20, and is noticeably louder and more responsive than the latter; Suzuki and Seydel have also introduced higher-performance instruments selling in the $60 range. There are obviously far more potential customers for these mid-premium instruments than there are for instruments selling at $200 apiece, and the upsell is a lot easier, especially when the seller is an established brand that the customer knows well. Harrison thus found themselves competing with traditional manufacturers as well as the customizers, and the traditional manufacturers had economies of scale working for them throughout the value chain that were unavailable to Harrison.

Economies of Scale Weren’t Available to HH Soon Enough

It is possible that Harrison intended to reduce prices once production was in full swing, but it seems that they did not achieve the economies of scale they wanted as quickly as they wanted. It appears that parts of the manufacturing process demanded more labor, and more highly-skilled labor, than originally anticipated. As delivery dates slipped, the company hired more labor at higher prices in an attempt to catch up. This put Harrison in the position of carrying costs far beyond those of both typical customizers and traditional manufacturers, with little opportunity for higher margins or, indeed, higher volume.

Harrison may also have been under-capitalized, and when you’re struggling to meet payroll, it’s tough to lower your prices.

Poor marketing and service iced the cake

Suppose a price of $200 wasn’t prohibitive for the market HH was trying to acquire? Leaving aside the question of how big the market is, to be viable HH had to demonstrate conclusively that their harps were absolutely the best-performing harps in their price range–indeed, at ANY price. Since there’s very little you can discern on a recording to distinguish one harp from another, players could really only experience the difference by playing the instrument. This means that HH needed to make instruments available to plenty of people quickly to build word of mouth, especially after early marketing efforts (not least appearences on CBS News) led to a surge of interest.

Astonishingly, HH put very few instruments into the hands of established players, with mixed results. To be fair, most professional harmonica players have long-established relationships with traditional manufacturers, and HH probably found the pickings slim when it came to finding well-known players to champion their instruments. But the company’s performance in building word of mouth was not tops. Delivery of instruments was apparently random in the sense that care was not taken to prioritize early deliveries to professionals and opinion leaders who could promote potential buyer confidence in the company and the instruments. At least some customers paid for instruments without receiving them, and other customers reported that quality was variable, with some instruments performing brilliantly and others far from it. In the Internet age, negative news of the company’s customer service spread rapidly, and did not encourage masses of buyers to throw their money down–if indeed there ever were masses craving to spend $200 apiece on harmonicas.

Conclusion: Too much, too soon

Harrison tried to do a lot with the B-Radical, including establishing a new technology and creating a mass market for it at a 6x increased price point for starters. I think it was a lot to take on, and in the end the company did not have the resources to execute against their vision and fight off the traditional manufacturers attacking from the low end of the market at the same time.

There may be a place in the market for a $200 diatonic. But I think Harrison, and harmonica players, would have been better served with an instrument incorporating some of the new design features at a price point in the $100-$125 range. This territory, I expect, will be mined by one or more of the traditional manufacturers in the near future–and they may well do so with designs that include technology licensed from whoever now owns Harrison’s intellectual property.

And there is one other important lesson here: in the Internet era, your first product release had better live up to expectations, because whether it does or not, everyone who cares to know about it will, almost instantly.

18 Comments

  1. I think you are spot on in your assessment Richard. I was one of those customers who wished to give a startup with a quality product a chance. I appreciated the quality of the HH case…a joy to hold, but found its performance inconsistent. As much as i wanted to play the instrument because of how it felt to hold, i was sadly frustrated everytime i blew through it.

  2. Everything you say is probably true.

    Another factor is that diatonic harmonicas are to a large extent commodities. It is not difficult or expensive to use the best reed and comb materials. The value in a customized harp is the customizing which requires labor-intensive twiddling and testing with the tuning and gap. I guess that HH vastly under-estimated the amount and skill level of labor required to cut reeds along the long dimension by a new manufacturing process, install, and tweak them to optimum performance.

    Being unable to assemble and adjust the harps quickly and efficiently slowed down deliveries and led to the downward spiral in customer relations.

    Vern

  3. One of the harmonica facts is that is cheap, and has to be cheap, Its history is about that, a cheap instrument, a toy which in the appropriate hands becomes a great, wonderful instrument.
    No one harmonica sounds better than a good ootb Marine Band.

  4. History is not destiny–just because it’s been a cheap instrument to this point doesn’t mean that it has to be a cheap instrument forever.

  5. I suspect that no one (other than Brad) knows the reason(s) why the company failed to live up to his anticipation.

    The slowdown in deliveries could have been due to many things. Something as simple as failure of a supplier of a key component to deliver on time could cause a spiraling reduction in production. Labor costs remain fixed (presuming that labor was not working on a “per unit produced” basis) while production slowed. As soon as customers began experiencing delays, that information was broadcast via the Internet harmonica-specific channels. I fully intended to “invest” (so to speak) in at least one B-Radical. However, as soon as word of delays began circulating, I rethought that position.

    There was some very highly skilled people who went to work for Harrison. Richard Sleigh and Dave Payne were at least two of them. If technicians like Brad, Richard and Dave couldn’t fine tune quickly enough to make production, then there was something lacking in the machining of the components.

    Another factor that MIGHT have been important was the enormous “jump” required to go from Brad’s experience as a highly skilled customizer working by himself to a company of technicians working for him. A classical managerial mistake is the assumption that production scales linearly; it never does. The epitome of this mistake is that “if it takes one woman 9 months to produce a baby, then we’ll hire 9 women and get the job done in 1 month.” Another manifestation of this linear thinking is that if production slows and the timeline is falling behind, simply add more people to the work force. Because of the necessity for training and the increased communication required, production slows down rather than speeds up (at least for some period of time and perhaps forever). That last one is known as Brooks’s Law, after the late Fred Brooks of IBM 360 fame: “Adding manpower to a late project makes it later.”

    The combination of multiple negative feedback paths in the process doomed the success when combined with undercapitalization. Sufficient capitlalization would probably have needed to be sufficient for 3-5 years without a profit.

    Any of these things (and myriad others) when combined would overwhelm the best of intentions.

    I’m sad that Harrison did not succeed. The failure makes it harder for him and others to try anything similar in the future.

  6. Another factor that’s common to a LOT of failed businesses (not at all unique to harmonica businesses) is debt. I remember in an interview BH mentioned that the company had taken on loan/s to get things up and rolling. Conventional wisdom says that is how businesses begin. Conventional wisdom is for losers.

  7. BH had all the infrastructure to make those harmonicas but lacked manpower to meet customer orders in time. I can imagine he was barely able to pay minimum wages to customizers who joined or offered to work for HH and at $10 an hour to be working on an assembly line? No way. BH still would have kept his clients happy and warm if he had been communicating frequently. My final thought is that BH should not have cashed out
    the money of his clients before delivering the goods.

    As to whether harp players should continue on their wait for B-radicals here’s something to consider- I have heard Jay Gaunt demonstrate at Garden State Harmonica Club Festival in 2009- Buddha harps vs. B-radicals- he only said there was a difference in playing them- but to my ears he sounded just the same with either harp.

    Venky

  8. Your last comment supports one of my points: that the only way for a customer to experience the difference in a Harrison Harp was to play it. And few ever got the chance.

  9. Thanks Richard for your comments about Harrison Harmonicas.
    Yes, I feel that many of us truly wanted Harrison to succeed.
    Nothing better than good competition out there in the business world.
    And yea, you are right… history is not destiny….

    And for me… I might be able to overblow one day…
    But pigs may fly and chickens may have lips and monkeys may fly outta my…..

  10. Richard,
    Well thought out. As a person who gave money and never received the product, clearly my disgust outweighs my ability to read with absolute objectivity. But, this was delivered well.
    Thanks.

  11. Interesting analyses: Harrison was undercapitalized when he boldly set up against big competitors who then defensively beefed up their position in higher end harps; he didn’t create effective outreach and promotion, and failed to communicate enough (or effectively) with customers, whose money was accepted before delivery was in sight, let alone before the products were assured of production. So, sadly it failed.

    I have a Harrison Harp, and I like it, it’s my first line A harp. However, after playing and working on harps and buying custom harps from a variety of good artisanal harp techs, I think the real drawback was that even the best harps need to be customized to the particular player’s approach, thus a $30 SP20 and a $180 HH BOTH need to be adjusted for the end user, in term of gapping & tuning, and for some plugging the end-holes. So if the HH lasts 30 years and never loses a reed, it may prove to be superior, but since I can work on my old SP20’s, the chance of me buying a whole set of HH’s was never likely.

    In other words, Harrison had a pipe dream, and not everyone got a hit. I think I’ll go smoke a joint.

  12. Perhaps the idea for the reed design could be pursued and these superior reeds could be sold as replacements with the proper screws or rivets for replacing reeds as they go bad.

  13. While it’s certainly true that the rise and fall of HH has coincided with the market releases of a number of new mid-price models by major manufacturers, the decision to upgrade the Hohner Marine Band line had been taken considerably earlier. The first step in this process was the release of the MB Deluxe in 2005. In summer 2008, before HH actually won the start-up awards and started taking orders, I was already testing various types of bamboo laminates for Hohner in the development of what would in 2009 be released as the MB Crossover. To suggest that the Crossover was a response to the emergence of HH would be incorrect. However, it’s undeniable that the emergence of custom harmonicas per se over the last 15 – 20 years has spurred all manufacturers to greater efforts, which have clearly benefited players.

  14. Thanks for the correction Steve. Clearly Hohner was not acting in response to HH, and I take the point in general that product development lifecycles for the instruments are long enough to make it unlikely that Suzuki or Seydel were responding directly to HH with their own premium instruments. However, it’s also clear that the arrival of these mid-premium instruments on the market concurrent with HH’s first releases was a serious blow to HH. I agree that players have benefited enormously from the efforts of manufacturers to upgrade their offerings; it didn’t help HH’s value proposition, though.

  15. I like this thoughtful discussion. Business ain’t easy. Many factors are involved…. I had been one of the OOTB harp buyers for many years…. always broke as the ten commandments…..
    ‘from Detroit the land of failed business. I find it sad not to know anything about the future of the innovations or of Brad …. himself….
    As far as an idea whose time had come…after buying so many shitty harp from Hohner
    …it is little wonder folks started customizing them….. the modified harp…are way better.
    I wonder if my cheapness ..in not ordering..contributed in the lack of success.
    Was starting small an option?

  16. Unfortunately , i am one of those people who paid my money but did not receive product. I did get to repair one and play it. I was impressed with the overall design and quality. Was it better than my Jimmy Gordon customs? No . I am upset because i was told my harp was being assembled and to send the rest of the money A month later they were out of business. Makes me sad and a little angry.

  17. Here’s a “weird” note: the Harrison Harmonicas Web site is still active at

    http://www.harrisonharmonicas.com/

    The copyright date is given as 2012, so somebody is still maintaining it.

    It appears that B-Radical gear (T-shirts) and three different CDs can still be ordered from the site, but not the B-Radical harmonicas.

    Given the past (lack of delivery) history, I’m not inclined to order anything through that Web site.

  18. I was stoked to learn about the b-radical american made harp and bummed to find out they failed so soon. There is nothing more destructive to any start-up than to advertise then not deliver. With all the television and internet hype the drum roll was quite loud. Does anyone have a clue who bought out harrisons IT and inventory?

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