Wednesday 8th June 2011. Struer Grand Hotel - Struer, Denmark.
It's 7am. Tue Mantoni, the new CEO of Bang & Olufsen A/S has already been on a 15km run around the town and now meets BeoWorld for a chat over breakfast of muesli and yoghurt..
Dressed in a sharp, dark blue Hugo Boss suit, looking younger than his 35 years (damn him!) he carries an endearing mix of relaxed confidence with boundless enthusiasm. Not shy of awkward questions he seems very pragmatic about what has happened to the company 'pre-Tue' but is also acutely aware of what needs to be done - and how.
I think he has a very clear vision and a very clear strategy for the brand and the company. Please read on and make your own conclusions.. we present to you.. Tue Mantoni.
____________
BW – Hello Tue – it’s a pleasure to meet you, and welcome to your first BeoWorld Interview!
TM – Thank you, I’ve been looking forward to this !!
BW : Okay - correct me if I’m wrong but looking at recent past CEO’s I’d say Torben Ballegaard Sorensen was a ‘marketing guy’, Kalle Hvidt Nielsen was a ‘technical guy’ – and now we’ve swung back to a ‘marketing guy’ in yourself. There seems to be a pendulum effect here, where B&O excel at one thing but drop the ball on the other?
TM : It’s really interesting when people always call me a ‘marketing guy’ as I have a degree in mathematics and statistics! I started out working with Goldman Sachs Investment Bank, then two years with McKinsey & Co (Business Advisors) working on corporate and finance deals, followed by one year with the same company working on pricing and cost-cutting. After that, one year of marketing – but mainly quantative (pricing, research etc). Then after that I ended up working for Triumph after the company brought McKinsey in as advisors on how to rebuild the business and take it forward.
At that time the company (Triumph) had made huge losses and had been doing so for 10 years, with dealers being unprofessional and the brand being kind of a ‘romantic notion’ more than a viable proposition. John Bloor, the owner of Triumph asked me to leave McKinsey to come and work for him – which I did. The idea was to start with a clean sheet, build a new factory and have a complete new mindset. Everyone thought this would be the end of Triumph Motorcycles, but I had different ideas..
As part of my job I spent around 10% of my time on marketing, around 50% of my time on R&D and Technology and the remaining 40% on the dealer network and retail sales. So you can see perhaps I’m not just a ‘marketing guy’ !!
BW – So, what are your initial thoughts on the Dealer Network you have ‘inherited’ with the job?
TM – To be honest, I’m very impressed with the fact they still keep in good spirits! After 2 or 3 really tough years, with sales dropping almost 40% from their peak business we still have pretty much the same number of dealers worldwide. Sales of products are down though for these dealers and this is very tough for them.
BW – That said, I’m sure when you walk into a shop they’re going to be upbeat and positive as they’re talking to the CEO ! However, after you’ve left – I’m sure they’ll have some grumbles? The dealers have had quite a long period of what I would call ‘duff products’ and also 'long-in-the-tooth' products which they’ve had to endure..
During your time at Triumph you had strategy of keeping products fresh and updated. For instance, between 2006 and 2010 I believe there wasn’t one single bike in the range which hadn’t changed in its design or spec during the lifecycle. Is this true?
TM – Absolutely - we had a strategy of introducing three new motorcycles per year, which everyone thought was absolutely crazy for such a small company!
BW – With Bang & Olufsen products in mind, part of the appeal and justification of such a high value purchase is that the item retains value due to it looking so ‘current’. Very few external changes are made during the products lifecycle, which surely helps owners feel good and also be able to obtain a good resale value when they wish to upgrade?
TM – Companies have a tendency to say ‘well, this is a fantastic product – so let’s just leave it at that’. However, I believe that the better designed a product is the more frequently you should update it. Actually something like the BeoSound 9000 is still a really good product for us. Every time we talk about taking it out of the range the dealers shout ‘No, you can’t do that!’
The power of the BeoSound 9000 was immense - appearing in Hollywood movies and in the press and this really moved the company forward, but I believe this product should have been updated every 2-3 years. This doesn’t mean you should change it completely – but you should keep it ‘fresh’..
BW – Such as DAB?
TM – Yes, internal improvements of course – or even very slight cosmetic changes which may improve the look.
BW – Won’t this lead people to say ‘well, if I’m paying £3,000 for a CD Player and it’s going to be 7 models old and totally outdated within 5 years – what’s the point?’
TM – This is the case everywhere. Look at Bentley, Audi and all the other premium brands. The most successful car models are the ones where the designers and manufacturers make a ‘tweak’ to keep it fresh, but you still see the original. Look at the Porsche 911 for example – this is a perfect example of continuous evolution.
I think B&O as a company need to be more intelligent in how we update the products. They key fact is that in this industry there are very few things a really fantastic product cannot solve.
BW – You’ve been quoted as saying ‘complacency leads to death’ in the past. Do you think B&O have been complacent.. or just unlucky?
TM – I honestly don’t think any business is ‘unlucky’.. I think in this business circumstances can change quickly and it’s the management’s job to foresee this and navigate it properly. You can start feeling sorry for yourself and start blaming your competitors, but at the end of the day it’s our job to deal with this..
BW – You now have experience of successfully turning a brand around – so looking at the recent history of B&O and had you not gone to Triumph - how would you have done things differently over the last 5-6 years?
TM – I think a recession (which we are in now) shouldn’t really change what you do at the highest level in terms of strategy. It obviously changes the way you need to think about funding and cost control, pricing and capital management – but fundamentally all you need are two things. One, fantastic products – and two, very service oriented dealers. As long as you have those two components the rest really, is basic!
At the end of the day (and I keep saying to my team), 'it's the customers who pay our salaries’. It’s not me, it’s not your immediate superiors, it’s the customers. So, if you can provide an outstanding experience to your customers as well as an outstanding experience with the products – then you have a real business.
BW – That said, in order to provide an outstanding experience – you need to get the customers through the doors of the dealerships. What in your opinion do you need to do in order to achieve this?
TM – I think products can do a lot, then obviously you need a fantastic sales and marketing machine which leverages those products. We have to build one of the best sales and marketing teams which exists – and this is my aim. Of course, it’s going to be difficult in times like this but it’s not rocket science.
There are many people and companies we can learn from, using their experiences – and B&O employees are so loyal and committed that as long as we show them a vision and direction, they will grasp a given challenge and run with it. Every one of our employees wants to see the company succeed.
BW – With regards to marketing, I personally think it’s been pretty poor over the last few years. Sending mailers out every month seems to be a great way of annoying people and making sure people simply transfer media from ‘mat to bin’ without even opening it. One thing which we also see as important – a good internet presence, seems also to be lacking. How do you plan to change this?
TM – We’re working on a website overhaul, of course - and we also aim to deliver service which will be marketing in itself. Look at the Apple Genius Bar.. you take something in which they say will take five days to fix (which they know will take three) – then they call you after three days to say ‘come and get it’ - and you’re delighted!
There’s a great opportunity for creating a very ‘cool’ brand here at B&O if you did some great entry level products and complimentary products through complimentary channels. Some dealers may not like this, but the aim is to strengthen the B1 network over time. The best way to get people into a B&O store is a kind of ‘fishing rod’ in the form of say a pair of headphones. We need young people buying our products to create a memorable experience which they will keep and translate into future purchases.
BW – ‘Complimentary Channels’ means being able to compare B&O products against others of course which is a great way to sell B&O products. It also creates a more relaxed atmosphere not found in many B1 dealerships where you can sometimes almost feel guilty for being in there if you’re not able to spend big money. What are your thoughts on this statement?
TM – Well, what I’d like to do through these complimentary channels is get hold of people who would never normally go into a B1 store. I really cannot see this cannibalizing sales in B1 stores – it will create an important entry point into the brand. If you are never given that opportunity there’s the risk the potential consumer will turn 20 or 25 and will have never even heard of B&O. If we can create some fantastic entry level products such as portable speakers, iPod Docks, Headphones and Earphones we can sow the seed for future 'customers for life'.
BW – This is a very difficult task as there are a lot of very good products out there at much lower prices. Do you think you can make products which are so much better than the competition they justify the price premium?
TM – I think in the BeoSound 8 we have certainly delivered that!
BW – But it’s twice the price of its nearest rival..
TM – Yes, I think perhaps a factor of 1.5 would be our target – so 50% more expensive than the nearest rival is ideally where we would need to be. However, the BeoSound 8 is now our best selling product – so we must be doing something right!
BW – You favoured Thailand as a manufacturing country with Triumph. Would you consider this with B&O?
TM – No, perhaps for motorcycles but not for B&O. I visited our factory in the Czech Republic and was amazed at the high quality, attention to detail, the good people there. I’m really happy with this setup, you could eat your breakfast from the floor - it’s that spotless. The investment in machinery there was also huge and it’s truly impressive to see it all in action.
BW – One thing which the BeoWorld Membership asked was that after being pioneers in tactile interaction for so many years, how do you see the future of B&O in a time when it’s all about software? Is the future mechanical – or all about software interfaces?
TM – I think it really has to be both. Of course, our ‘mechanical magic’ has made us successful (and is still very important), but I think what we need to figure out is as products become less and less ‘physical’ (especially Audio Masters) – what is mechanical magic? I certainly think we are achieving it with our TV’s – they are certainly different to all of our competitors, but with other products the user interface becomes more and more important.
BW – Your software really fell down over the last few years – so are you investing more in this area then?
TM – Definitely.
BW – Coming from one of our moderating team, a software expert – it appeared that although you may have hired the right companies, they were perhaps not given the right direction, thus culminating in poor results?
TM – Yes, perhaps that’s correct. Spending 5 years a consultant I can say that the result of what you do is never actually better than the people who manage you. So, I completely agree with that.
BW – Moving on from software to hardware now - B&O TV’s are quite unique in their look and keeping them looking different from the competition must be a real challenge. Traditionally you’ve relied upon brushed aluminium, anti reflective glass and soft touch plastics – all expensive to produce and prohibitive for others to copy due to the expense. Do you plan to keep doing things this way?
TM – I think in addition to aluminium there will be other ways of differentiating our design. I can’t really comment yet though, it’s too early to say.
BW – So what’s your ‘Number 1’ agenda for the moment – what are you looking to bring to the table straight away?
TM – Actually, I think customer focus. I keep saying to my team it’s all about how well you understand your customers. Our top 30 employees are going to be sent out to work in a dealership for one week every single year. That will be important for them to experience for themselves how our customers feel, what they do and don’t like. It’s a kind of ‘R&D’ which will be very valuable.
BW – I often get the impression that it’s the dealers who have been ignored, not the customers. They have been telling you what they do and don’t want for some time and from the outside it just looks as if they have been given products to sell which were not what they needed and just been told to get on with it and sell them. What are your thoughts on this?
TM – I think I need to act on all the impressions I get. However, sometimes not everyone is right! (laughs) If you take Henry Ford as an example – he said that if you had asked everyone what they wanted, they would have said ‘a faster horse’ – but he said ‘I’m not going to ask them if they want a faster horse, I’m just going to give them a car!’
I think you have to understand where your customers come from – but you cannot rely completely on one groups set of views, wether that be customers, dealers, specialist, journalists, innovation specialists or universities. What you DO need to do is listen to what everybody is saying then take all of that input and complex information and decide, as the Bang & Olufsen management team, what to do – what we are and what we stand for. Of course when we make that decision, we cannot act upon everyones wishes. However, the decisions we make will always be in the best interests of the company – and there will always be people who don’t agree with what we are doing. However, over time you have to demonstrate that you are doing the right thing.
Giving an example of this at Triumph, we spent two years and millions of pounds on a new bike, but I took the very unpopular decision to scrap the project and divert R&D resources to the new twins and triples. There were lots of people very upset by this who had invested literally thousands of hours, but after about a year they all agreed that in hindsight it was indeed the correct decision for the company.
Back to our dealers though - I’ve been all over the world in the last three months and with respect to them have probably seen more dealers in this time than the other CEO’s did in their entire time. They have given me some tremendous feedback which nobody inside of B&O could have given me and I will definitely listen to them. This will become part of the overall research.
BW – So eventually , instead of a faster horse – you want to give people a car. Something B&O used to be world leaders at doing in decades past..
TM – For sure – it’s always better to have the courage to surprise you, the courage to move people.
BW – The other area - user interface, is an area where great advancements can be made. One thing which springs to mind is voice recognition – is this something your engineers are able to pursue? In 20 years time we could all be looking back and wondering why we ever actually had to press buttons to get things to work, and perhaps what B&O need to do is lead they way in a technology just like you used to..
TM – Well, of course – this is something we have looked at, but we feel the technology isn’t mature enough just yet and a lot of advancements need to be made. There are some companies making great progress though, so let’s wait and see!
BW – Looking at new ideas, technologies and indeed products – one thing which B&O have lately been painfully slow at is taking a product from idea to production. This has been very disappointing for buyers as it has always seemed to be ‘too little, too late’. Do you have any plans to remedy this?
TM – The ‘time to market’ has been a real challenge for us. I can explain why though – it’s because people within B&O always want to do such a good job. They never really stop working on the spec - adding and adding features, tweaking and changing – but there is a balance somewhere. You certainly don’t want to release mediocre products, but you also mustn’t over engineer products to the point that when they are released they are outdated.
20, 30 or 40 years ago, you could afford to have a development strategy like that. You could take your time knowing that this particular technology would be relevant for the next 15 years. But today, it’s a race against time as a product only has a lifecycle or two or three years. So, if you burn another 12 months you are potentially halving your overall sales, making the return on investment become pretty depressing.
BW – Do you think the global boom has fuelled R&D budgets and perhaps accelerated advancements in technology, but now with a global recession things will slow down again?
TM – I never really looked at it like that! I think the current economic climate will simply put more focus on exactly how we approach R&D and how much we spend. Things have definitely changed though!
BW – Well, that about wraps up our allotted time with you – so we’d like to wish you on behalf of all the mebers of BeoWorld, the very best in your new job and we look forward to seeing the results of your hard work!
TM – Thank you, it’s been a real pleasure!
End
______________________
There we go - that was Tue Mantoni. Dynamic, driven, focused - everything a CEO should be. I wish him well - as we all do.
So what did we learn from this interview - and what can i add from my experiences over my week in Struer? Well.. here are my thoughts..
* B&O are still working out their overall strategy. They have been set a more challenging scenario than ever before because of the rapid advancement and changes in technology.
* It's becoming much more difficult to differentiate products from competitors.
* TV Screens are essential in order to drive speaker sales, even if they may not be great sellers or radically different in design.
* Mp3 is the future, clearly – but even this is changing radically and quickly – especially with Apple launching the ‘cloud’
* Is all we now need a good DAC and a pair of BeoLabs for Audio? This is the question..
* Actual physical interaction with B&O products is now dwindling, which was a B&O core competency for many, many years.
* B&O Remotes could be the future of interacting with our computerized libraries - which is a highly competitive area.
* B&O see this as an opportunity. People will return to high quality sound. A generation has been listening to low quality Mp3 – B&O hope to organize the mess which has happened.
_________
And here are some snippets of info for you!
* Tue Mantoni went to see Apple for a ‘hello’ meeting and spoke to Philip Schiller (Apple No.2 who reports directly to Steve Jobs) to simply exchange ideas and thoughts - to find he is a huge B&O fan with many products in his home, as most members of the senior management do!
* Apple are looking forward with the idea of people being able to access and interface with iCloud, which will indeed generate the critical mass of users they would like. They would like it to become THE place for everyone to store music, books, photos and all other data we use in our everyday lives.
_________
So, in conclusion - I can see B&O and Apple working together as never previously done before. I think Tue is the perfect kind of person to build bridges and synergies between the two companies - and I'm certain it's down to his personality and passion that this will result.
I feel we will see more low-cost and pretty lifestyle products before we see anything substantial. Why? Because B&O need to increase sales and profit in order to survive. Of course, new and very exciting products will follow - but I wouldn't expect anything 'killer' just yet..
Tue certainly has a loyal team behind him - and he really does lead by example when it comes to work ethic, so I can only sincerely wish him well from all at BeoWorld and hope he is as successful at Bang & Olufsen as he really wants to be.
Lee & Peter - BeoWorld
