In what might go down in powersports industry history as the ultimate ‘mic drop,’ Motorsport Aftermarket Group (MAG) CEO Hugh Charvat left the company at the end of June 2019.
In May he announced delivery on his plan to “unwind the errors of the past” with the strategic decision to “unwind the vertical” by “spinning out” MAG’s individual business units into stand alone, independent operations.
His view is that decisions taken following the LDI/Tucker Rocky acquisition of MAG – to integrate manufacturers, brands, distribution and retail into a multifaceted channel busting tall business model – were mistakes that “compromised the ability of the individual business units to conduct their business in the ways that had made them great companies and brands in the first place.”
Worse, Charvat believed that in a relationship-based industry such as the powersports market, one where “people buy from people”, this ‘vertical’ model alienated many of the group’s largest customers as it positioned MAG and its constituent parts as potential competition.
‘unwinding the vertical’
His solution, announced in May, was to “unwind the vertical” and re-establish the individual business units in smaller groups of sympathetic manufacturing, brand and sales management operations and return to them the freedom and flexibility to respond individually to their own specific market challenges and opportunities.
At the time Charvat announced what he (rightly) described as a “new and significant change to managing the multi-brand organization,” he said “we’ve asked each of our senior leaders to focus 100% of their efforts on creating value, delivering growth and expanding the entrepreneurial mindset within their business unit and their brands,” stating that “when we do this, we will become nimbler, more aggressive and have a greater focus on the market and on our customers.
“There’s no question that we damaged a lot of carefully built relationships. By recreating the independence among the business units, they will have the freedom needed to be able to re-establish those relationships.”