EVERYONE likes a nice bit of kit for Christmas, so hands up who got something
sleek from Bang & Olufsen (B&O)? With its sliver-thin designs,
top-notch quality, and whopping price-tags, the Danish electronics giant is
a prime producer of big boys’ toys. “No, no, no,” says Torben Sorensen, B&O’s
affable chief executive, aghast at my stereotyping. “More than 50% of the
buying decisions are made by women. She decides what goes in the sitting
room. When we design a product, we have something called WAF – women’s
acceptance factor. Though I did once say this to your Guardian newspaper,
and I got a nasty letter back.”
Sorensen frowns, then sprints on, words tumbling out in his lilting English.
“My point about women is a positive one. When it comes to technology they
have a distance; they can say if it’s making life easier, or making it more
complicated. They have an ability to select what is essential for family and
what isn’t.”
How anyone gets B&O products past their wife as “essential” is beyond me,
but who’s to quibble? Sitting in the upstairs showroom of B&O’s
flagship store in London’s Knightsbridge, Sorensen is such a likeable
enthusiast that you would forgive him anything. With his wiry grey hair,
rumpled face and happy grin, this Danish captain of industry looks more mad
professor than bureaucrat, even if he is crammed into a sharp, steely-grey
suit.
This week his company reports interim results, providing another chance to
gauge how Sorensen’s restructuring of B&O is going. In a Europe
where a downturn in consumer spending has already dented profits for
electronics retailers, some think B&O – based in Struer, 160 miles
northwest of Copenhagen – will be feeling the pinch.
Sorensen, 56, brushes off the doom-mongers. He has an almost childlike zest
for talking up his business and explaining how it can still be improved. No
surprises that he spent his youth pulling apart and rebuilding audio
equipment. He is also an ardent salesman, showing me B&O’s
extraordinary, sputnik-shaped Beolab 5 speakers (£11,000), its black-trimmed
Beovision 7 flat-screen television (£7,480), its shard-slim Beosound 4 CD
system (£1,635), and his own brushed-aluminium Serenata mobile phone
(£1,000), recently described by Stuff magazine as “a drool-inducing hotty”.
The only problem is, I can’t afford them.
“Well, here’s the Beosound 3,” says Sorensen, almost in sympathy. He pulls out
a tall, silver box and flicks an invisible switch. Music pumps out at
frightening volume. “Good eh?” he shouts. “Only £440, I’ll take credit
cards. Hahaha.”
But it’s essentially an AM/FM radio with a memory-card slot, and it’s not even
digital. Doesn’t he make it with a digital radio? No, he says, trying not to
look hurt. Not yet.
And that’s the thing with B&O, many still don’t know if the company
is brilliant or barmy. Founded in 1925, tucked away in rural Denmark and
revered in Scandinavia as a Rolls-Royce among brands, it does things in a
way that few would copy. For starters, it has more than 700 standalone B&O
stores worldwide, some owned, most franchised, and it’s opening more all the
time. Yet the one in my local high street never has any customers. What’s it
there for?
And then there’s the competition. It’s not hard to find beautifully designed,
high-performance kit these days, at less eyewatering prices. Surely Apple,
Samsung and others have whipped B&O’s dinner right off the table?
“Yeah there is competition,” grins the ever-upbeat Dane. “But we just have to
get up one hour earlier in the morning. Did you know that the wheel
navigation system used by Apple iPods was invented by B&O in 1994? We
just didn’t patent it. We were too complacent – it’s our biggest
contribution to Apple. Hahaha.”
Likewise its Beoplayer music-filing software preceded Apple’s iTunes, but was
never developed to mass-market potential. Others might be weeping at this
point, but Sorensen simply shrugs and says B&O’s quality distinguishes
it from imitators.
“A Kia looks nice from a distance, but that doesn’t make it a Mercedes, eh?”
Maybe not. Hence B&O’s interest in having its own shops. Like any
luxury-brand owner, it wants to control the environment in which it presents
its product. And, he points out, there are enough aficionados to keep B&O’s
£440m sales buoyant – especially with increased interest in the brand from
the developing economies.
Sorensen has been wrestling with the B&O conundrum for seven years now.
When he came in, after failing to clinch the top slot at Lego, B&O had
sales of £300m and a deteriorating stock-market performance. “Profit had
declined since 1998. It was not a crisis but there were signs of mental
tiredness,” says Sorensen. “The attitude was, ‘We are the brand and if
people don’t understand it, we pity them’. I said, ‘Actually guys, we are on
a burning platform, and we need to translate it into products that can be
invoiced’.”
So Sorensen pushed through reforms, broadening B&O’s product range, moving
some manufacturing to Czechoslovakia and diversifying into new areas. B&O
systems now appear in top-end cars (Audi, Aston Martin) and hotels (The
Dorchester and 200 other top sites). And the company’s spending on research
has doubled from 6% to 12% of profits.
Sorensen’s team cite the energy at the top. “Torben’s a dynamo,” says Derek
Mottershead, B&O’s managing director for UK, Ireland and Benelux. “He’s
very plausible, very straight, and tough enough to make things happen.”
And what Sorensen wants is more products and more innovation, especially on
the software side, allowing B&O and its dealers to organise all your
entertainment needs, wherever you are. So the more B&O equipment you
own, the more fun you have – just like Lego.
It sounds logical, but there is a suspicion that, behind Sorensen’s drive, B&O
is still moving too slowly. Danish analysts have been impressed by his
changes, but worry about the company’s future. Its growth is now found in
cars, hotels and Asia, not in European or American retail sales.
And this week’s figures could show revenue growth below B&O’s
full-year guidance of 8%. That may make Sorensen’s promise to push revenues
to £600m by 2010 hard to keep. With consumer spending on the slide and B&O
late into certain product categories, being a luxury brand may not be
enough.
Sorensen nods. Part of the problem with new products is that his team
sometimes feels certain technologies aren’t advanced enough to warrant a B&O
version yet. “We were a bit hesitant to go into flat-screen TVs because the
quality wasn’t good enough, but the world moves quickly, so we built our
prestigious, aluminium-framed screen. Maybe I shouldn’t say that, but we got
back the pride in B&O.”
Born the middle child of three, with two sisters, Sorensen ascribes his
passion for reassembling structures to a childhood spent playing with Lego
and Meccano. His father ran a trading company, and he says his own
upbringing, in Aarhus on Denmark’s Jutland peninsula, was affluent but
egalitarian.
“We went to state schools, our parents wanted us to mix with everyone.” He
ditched early dreams of becoming a geologist in favour of computers and
business, and later found his feet at the Danish catalogue printer Stibo. He
ran its American computer graphics arm CCI, and later CCI Europe, before
joining Lego.
From 1995 he worked on the Mindstorm project as “a skunk outside the
mainstream”, finally launching the new product line in 1999. Mindstorm,
which allows Lego users to build basic robots, is now a major revenue earner
for the company.
But Sorensen left to join B&O after falling out with a new boss brought in
by Lego owner Kjeld Kirk Kristiansen. He later returned to Lego as a
nonexecutive director.
Yet he joined B&O as chief executive with no consumer-electronics
experience? He shrugs. Everyone knows B&O; it’s an iconic brand, his
grandfather used to let him repair his B&O radio when he was just a
little boy. Lack of familiarity was not an issue.
“Things had just got complicated in B&O, too many compartments and
silos. I like things being simpler,” says Sorensen.
That has driven his reform of the company, but an economic downturn could yet
torpedo his plans. “If people don’t have money, there’s only so much we can
do,” he says. Increase the efficiency, make better choices.
“We have so many ideas, the difficulty is selecting them. The next thing we
are working on is how to merge computer technology into your living room
without an ugly PC in there. Within 12 months we will have a product you’ve
never seen before which can navigate your entire collection of music, and
you’ll hear music you’ve never heard, using neural intelligence to take you
to music.”
He runs a hand through his unruly hair. There’s so much to do. He is off to
the airport next, onto another plane, more outposts to see, more tech
laboratories to visit, more products to push – for boys and girls,
naturally. It never stops.
TORBEN SORENSEN’S WORKING DAY
THE Bang & Olufsen chief executive wakes at his home in a remote area
outside Struer, on Denmark’s Jutland peninsula, at 6am. Torben Sorensen
checks his e-mails, walks his dog, has a light breakfast, and then drives to
work at B&O’s Struer base before 8am. “My days are booked up with
meetings,” says Sorensen, “but I like to spend a lot of time with our
creative people in the ideas factory. We have a very flat organisation, with
about 10 people reporting direct to me.” He finishes at 6pm, then often
works from home later. He travels two weeks in four, dividing his time
between Europe, America and Asia.
VITAL STATISTICS
Born:February 7, 1951
Marital status:married, with two daughters
School:Viby Amtsgymnasium
Universities:Aarhus School of Business in Denmark and Stanford
First job:trainee at Radiometer
Salary package:undisclosed
Homes:Struer, Aarhus and Provence
Car:black BMW M5
Favourite book:Good to Great, by Jim Collins
Favourite music:Rolling Stones, Robbie Williams
Favourite film:One Flew Over the Cuckoo’s Nest
Favourite gadget:B&O Serenata mobile phone
Last holiday:France
DOWNTIME
TORBEN SORENSEN paints to relax. “Usually abstract paintings, of something
like horses – but only I can see they are horses.” He used to keep seven
Icelandic horses when his daughters were younger. Now he has only one. As
well as a house in Struer and another in Aarhus, where his wife works as a
biotechnician, he also has a French holiday home in the hills north of St
Tropez. But he is happiest with simple pleasures, like boating round the Lim
fjord, near Struer. “It’s the biggest fjord in Denmark. You can sail to
small islands with birds. And I always have a beer in the boat.”
