By Laura Collacott
Bang & Olufsen ME managing director on why the company will never abandon its innovative approach to design.
Bang and Olufsen'S (B&O) reputation precedes the company. Its products are highly coveted with price tags to reflect their exclusivity; it only takes a single mention of the brand and both these attributes become very apparent. As with any successful business strategy, this current status is not incidental but by means of careful design and meticulous planning. This strategy, however, began life not as scientific business theory, but as a general approach to the audio-visual industry.
To illustrate this point, the managing director of the Middle East region, Jakob Odgaard tells me a quick anecdote: The founding fathers of the company, Peter Bang and Sven Olufsen, developed a device to allow constant electric input to gramophones in the 1930s. The mains supply in their hometown of Copenhagen, however, was permanently unstable and would cut out at any time, therefore Bang and Olufsen came up with a plan. They wanted to create a machine that would be unaffected by power surges or dips. The situation that the two envisaged was of a party where a power cut suddenly plunges the house into darkness. As Odgaard says, "if the music also stops it's an embarrassing experience for the host but if the music continues to play then it's the opposite - it's a very good opportunity to maybe dance a little closer."
While it is an amusing story, it also demonstrates the underlying philosophy that now drives the company. Technology should conveniently support the way that people live. Not only should it play a role in enhancing day-to-day life, it should also allow the user to do so in a relaxed fashion. The management call this the ‘lean back' philosophy, picturing their clients using the equipment while relaxed as opposed to hunched over a PC or desk.
Perhaps more important and overarching is the ‘human-centric' approach that B&O apply to all its developments. At its headquarters in Denmark, it harbours a number of psychologists and anthropologists tasked with analysing precise data on how people interact with their environment and technology. The company has discovered that people are predictable creatures of routine and, as such, need only a few settings for the technological kit in their homes, not the minefield of confusing options that many contemporary machines offer.
"Our routines are very predictable so why not pre-programme all this so that if you press a button you have a morning setting? And press another button for an afternoon setting?" questions Odgaard.
Conscientious research has allowed the company the confidence to deselect a number of features, simplifying its products as well as the entire consumer experience process.
This attitude has led to some bold product designs being released onto the market over the years, not all of which are to everyone's tastes. This too has been factored into the company strategy.
"We believe that we offer the market some innovative solutions and there are lots of people who don't like them but there are a few that do. And we're such a small player in the business that we can easily live from the small fraction who do like our products," Odgaard explains.
Many consumers who know the company realise that its design flair stands in Bang & Olufsen's favour, but who can say they have seen the mini spacecraft-shaped BeoLab 5 speakers and not wanted them? And who has not lusted after the sleek curved of the BeoCom 2 telephone? Creating innovative and iconic home entertainment appliances is what B&O is famous for.
To ensure that this reputation continues for another 82 years, a unique product design process has evolved at B&O. Designers are encouraged to create products that will "provoke the marketplace". There are two key strategies for fostering innovation among the design team. The first is to always work with external designers. This policy has been inherited from the forward-thinking founders (once again) who believed that any in-house designer would have a separate agenda, aside from simply creating the best product: "if he's internal, whether he wants it or not, he will try to please us as the top management."
The second is not to pay royalties. Odgaard tells me that B&O believes that if you do pay royalties, the designers, "will always look at what is probably selling best in the market right now and if you do that, you will always be a market follower." Again, the justification behind this is sensibly geared towards fostering the originality that keeps the company in a class of its own. Once off the drawing board, the company will not compromise design. Where other companies will take production and cost factors into account and adjust the design accordingly as the development process builds, B&O steers away from this path. Instead, the "designer is king" at B&O and it is only if the engineers charged with making the design a reality can prove that the idea is physically impossible that alterations can be made. But surely this approach must hit the company's top line harder than its competitors? Apparently not. Odgaard, however, insists that it is important to, "never say never". The recent design for the BeoVision 7 is a case in point and required polishing stripes on an aluminium backplate that the designer wanted to run horizontally instead of vertically. The problem was the manufacturing plant did not have a polishing machine big enough for that piece, so B&O bought a new polishing machine at a cost of US$2.5m. "But that's the philosophy; you don't compromise. If you can do it, you do," adds Odgaard.
Essentially, the company has the clout and reputation to allow it to take experimental steps and succeed in the process. These experimental steps are in pursuance of long-term goals as opposed to short-term objectives, adds Odgaard. "This company is a very healthy, cash-rich company so we don't need to do short-term solutions. We like to think in long-term solutions and prioritise our brand name over short-term issues."
Of course, staying ahead of the competition is easier when you have taken such a drastically different product line to the rest of the audio-visual market: "We take the human approach and the human being's perception; that doesn't change as fast as technology does."
It certainly has the desirable products but how does it plan to market itself, especially within the expanding and ever-aspiring Middle Eastern population? The approach is twofold: though B&O has the conventional marking mix of brand advertising and mass media, it has also created strong alliances with hotel and property developer partners. It is this consultancy angle that B&O hopes to focus on in the Gulf. Though it recognises that this takes away from its budget allowance in other areas, liaising and planning the equipment and wiring specifications with the developers is something it considers to be significant in its marketing package. Consulting might not seem an obvious marketing strategy, however, Odgaard explains that the wiring and installation features that it recommends are not unique to B&O, but can also be used for any brand of equipment.
"That's why it's part of our marketing package because we still haven't signed the final agreement on supplying our equipment. But if we prove to be good consultants, they will also tend to buy from us," he points out.
By the same token, relationships with five-star hotels in the region are both lucrative and serve the same purpose. With iconic, instantly recognisable products, contracts to install systems in hotel rooms are not only an essential and lucrative source of income, but also further increase brand awareness. Cunning tactics maybe, especially at the high end of the market in which B&O operate, but one that has to be used to keep up with market demands and also stakeholder pressures.
If the business continues to grow by the same methods in the Gulf as is has in the rest of the world, it is sure to retain its position as one of the most sought-after suppliers of audio-visual appliances in the world.