Description Company Case: Bose: Better Products by Focusing on the Product In a survey by brand strategy firm Lippincott, the most trusted brand in consumer electronics was not Apple. Nor was it Samsung, Sony, or Microsoft. It was Bose, the still relatively small, privately held corporation that has been making innovative audio devices for more than 50 years. In consumer electronics, Bose’s $4 billion worth of annual headphone, speaker, and other product sales is “relatively small”—think Apple, which rang up $265 billion worth of techno-gadgets and goodies. But when it comes to the passion customers feel for their brands, the Massachusetts-based technology company outshines even Apple. Bose forges that deep consumer connection based on the brand’s design simplicity and brilliant functionality. Bose adheres religiously to a set of values that have guided the company since its origins. Most companies today focus heavily on building revenues, profits, and stock prices. They try to outdo competitors by differentiating product lines with features and attributes that other companies don’t have. Although Bose doesn’t ignore such factors, its competitive advantage is rooted in its unique corporate philosophy—the product comes first. “We are not in it strictly to make money,” says a Bose spokesperson. “The business is almost a secondary consideration.” From its earliest days, the strategy at Bose has been to make the most innovative products by focusing on research and design. THE BOSE PHILOSOPHY To understand Bose the company, you must first look at Bose the man. In the 1950s, founder Amar Bose was working on his third degree at the Massachusetts Institute of Technology. He had a keen interest in research and studied various areas of electrical engineering. He also had a strong interest in music. When he purchased his first hi-fi system—a model that he believed had the best specifications—he was disappointed in the system’s ability to reproduce realistic sound. It was then that Bose began heavily researching the problem to find his own solution. Thus began a stream of research that would ultimately lead to the founding of the Bose Corporation in 1964. It also led to the development of the long-standing Bose slogan, “Better Sound Through Research.” From those early days, Amar Bose worked around certain core principles that have guided the philosophy of the company. In conducting his first research on speakers and sound, he did something that has since been repeated time and time again at Bose. He ignored existing technologies and started entirely from scratch, something not common in product development strategies. In another departure from typical corporate strategies, Amar Bose put all of the privately held company’s profits back into research and development, a practice that reflected his avid love of research and his drive to produce the highest-quality products. In doing so, he also bypassed the process of figuring out what customers wanted. Instead, Bose kept research confined to the laboratory and centered on the technical specifications of creating a superior product. Today, this approach is considered heresy in the innovation world. Amar pursued this approach because he could. He often pointed out that publicly held companies have long lists of constraints that don’t apply to privately held companies, noting that “if I worked for another company, I would have been fired a long time ago.” For this reason, Bose always vowed that he would never take the company public. “Going public for me would have been the equivalent of losing the company. My real interest is research—that’s the excitement—and I wouldn’t have been able to do long-term projects with Wall Street breathing down my neck.” INNOVATING THE BOSE WAY The company that started so humbly now has a breadth of product lines beyond its core home audio line. Additional lines target a variety of applications that captured Amar Bose’s creative attention over the years, including military, automotive, homebuilding/remodeling, aviation, and professional and commercial sound systems. It even has a division that markets testing equipment to research institutions, universities, medical device companies, and engineering companies worldwide. The following are just a few of the products that illustrate the innovative breakthroughs produced by the company. Speakers. Bose’s first product was a speaker introduced in 1965. Expecting to sell $1 million worth of speakers that first year, Bose made 60 but sold only 40. The original Bose speaker evolved into the 901 Direct/Reflecting speaker system launched in 1968. That speaker system was designed around the concept that live sound reaches the human ear via direct as well as reflected channels (off walls, ceilings, and other objects). The speakers featured a completely unorthodox configuration. Shaped like one-eighth of a sphere and mounted facing into a room’s corner, the audio waves reflected off the walls and filled the room with sounds that seem to be everywhere but come from nowhere in particular. The speakers had no woofers or tweeters, composed instead of eight four-and-a-half-inch mid-range drivers. The speakers were also very small compared to the high-end speakers of the day. The design came much closer to the essence and emotional impact of live music than anything else on the market and won immediate industry acclaim. The reflective approach, although groundbreaking at the time, is commonly found in home theater systems throughout the industry today. Back then, however, Bose had a hard time convincing customers of the merits of these innovative speakers. At a time when size meant everything, the 901 series initially flopped. In 1968, a retail salesperson explained to Amar Bose why the speakers weren’t selling: “Look, I love your speaker but I cannot sell it because it makes me lose all my credibility as a salesman. I can’t explain to anyone why the 901 doesn’t have any woofers or tweeters. A man came in and saw the small size, and he started looking in the drawers for the speaker cabinets. I walked over to him, and he said, ‘Where are you hiding the woofer?’ I said to him, ‘There is no woofer.’ So he said, ‘You’re a liar,’ and he walked out.” To resolve this credibility problem, Bose developed another core competency—identifying and targeting the right customer with the products it was confident were superior to even the best offerings. For Bose, this generally meant targeting higher-income customers who aren’t audio buffs but want a good product and are willing to pay a premium price for it. For the 901, this included using innovative display and demonstration tactics. Throughout its history, this approach has served Bose well. Although hardcore audiophiles scoff at Bose products as little more than smoke and mirrors, customers whose expectations haven’t been shaped by preconceived specifications perceive Bose products to be exceptional. So far as the 901 is concerned, the product became so successful that Amar Bose credited the speaker series with building the company. The list of major speaker innovations at Bose is a long one, dating back to the original 901s. The company introduced concert-like sound in the bookshelf-size 301 Direct/Reflecting speaker system. Fourteen years of research lead to the development of acoustic waveguide speaker technology, a technology today found in the award-winning Wave music systems. The Acoustimass system again changed conventional thinking about the relationship between speaker size and sound by enabling palm-size speakers to produce audio quality equivalent to that of much larger high-end systems with the aid of a remote subwoofer. This concept is just another example of how Bose influenced the industry as the subwoofer/satellite speaker configuration became the standard for home theater systems. Recently, Bose again introduced the state-of-the-art with the Bose Soundbar 700, “designed to be the world’s best soundbar.” Bose has led the way in developing Bluetooth wireless speaker systems—a move quickly followed by all competitors. Not only was each of these speaker systems groundbreaking when introduced, each was so technologically advanced that Bose still sells it today—even the original 901 series. And with cutting-edge products in the categories of smart speakers, wearable speakers, portable speakers, multi-room speakers, and home theater, Bose continues to set the standard. Headphones. Over a period of nearly two decades, Bose invested tens of million of dollars developing headset technology before ever selling a single pair. Now, headsets are one of the company’s core products. Initially, Bose focused on noise reduction technologies to make headphones for pilots that would block out the high levels of noise interference generated by aircraft. Bose headphones didn’t just muffle noise; they electronically cancelled ambient noise so that pilots wearing them heard nothing but the intended sound coming through the phones. Bose quickly discovered that airline passengers could benefit as much as pilots from its headphone technology. Today, the Bose QuietComfort series, used in a variety of consumer applications, sets the benchmark in noise canceling headphones. One journalist considers this product to be so significant that it made his list of “101 gadgets that changed the world”—right up there with aspirin, paper, and the light bulb. Other Innovations. Since 1980, the inquisitively innovative culture at Bose has even led the company down the path of developing technologies for products other than audio speakers and headphones. This includes the radical—like automotive suspensions and seat systems—to the more conventional—like noise-masking Sleepbuds and audition-boosting Hearphones, two products that apply Bose’s headphone technologies to the creation of new categories of wellness products. Bose is currently working with automakers to apply the noise-canceling technology from its headphones to the audio system of vehicles to cancel road, wind, and other outside noise. Bose’s commitment to research and development has produced groundbreaking products that have contributed to the trust that Bose customers have in the company. Customers know that the company cares more about their interests—about making the best products—than about maximizing profits. Amar Bose passed away a few years ago at the age of 83. With the passion of a genuine scientist, he worked every day until shortly before he died. “He’s got more energy than an 18-year-old,” one of Bose’s colleagues once revealed. “Every one of the naysayers only strengthens his resolve.” This work ethic illustrates the passion of the man who shaped one of today’s most innovative and most trusted companies. His philosophies have produced Bose’s long list of groundbreaking innovations. Even today, the company continues to achieve success by following another one of Amar Bose’s basic philosophies: “The potential size of the market? We really have no idea. We just know that we have a technology that’s so different and so much better that many people will want it.”343 Based on concepts discussed in this chapter, describe the factors that have contributed to Bose’s new product success. Is Bose’s product development process customer centered? Explain. How is Bose unique with respect to product life cycle management? With respect to the product life cycle, what challenges does Bose face in managing its product portfolio? Can Bose continue to maintain its innovative culture without Amar Bose?
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