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Sidney Harman Reflects On Decades Of Industry Change

4/15/2011 11:02:45 AM Eastern

EDITOR'S NOTE: This
interview of of the late Sidney
Harman
, who died on Tuesday, April 12, with TWICE senior editor Joseph
Palenchar appeared in our August 4, 2008 issue. As a tribute to the CE Hall of
Famer an excerpt of the original interview appeared in our print issue of April
18, 2011. Here is the full interview with a timeline of his career - up until
2008.

 

BY JOSEPH PALENCHAR

Washington - Few people can speak about the consumer
electronics industry from the perspective of Sidney Harman, the Consumer
Electronics Association Industry Hall of Fame member whose industry career
spans almost 70 years.

 Sidney Harman

On July 1, Harman retired as chairman of Harman Industries,
the company that he founded, and on Dec. 3 he will leave the company's board
but remain chairman emeritus.

On the eve of his retirement from active involvement in the
consumer electronics industry, Harman spoke with TWICE to discuss the
industry's evolution and potential.

He speaks from industry experiences that began in 1939 when,
fresh out of college, he joined the engineering department of the David Bogen
Company, a supplier of public-address equipment on lower Broadway in Manhattan.
In 1953, he co-founded hi-fi equipment maker Harman/Kardon (H/K), which began
the following year to market the world's first home audio receiver. H/K
followed up in 1958 with the world's first stereo receiver.

In the following decades, Harman went from playing Frank
Sinatra records on H/K equipment during consumer/trade shows in the 1950s to
heading up Harman International, a worldwide electronics powerhouse that now
employs 11,000 people and posted sales of $3.6 billion for the fiscal year
endied June 2007.

Harman's audio and electronics brands in the home,
automotive and pro audio industries have grown to include AKG, Audioaccess,
Becker, BSS, Crown, DBX, DOD, Harman/Kardon, Infinity, JBL, Lexicon, QNX
Software Systems, Revel, Soundcraft and Studer. About 70 percent of sales
during that fiscal year were generated by the Harman/Becker division, which
makes OEM sound and infotainment products for automakers. The remaining sales
were about evenly split between pro and consumer products.

During his interview, Harman called the industry blessed
with "historic" opportunities to profit from ever-improving ways to reproduce
audio and video, but he warned that the winner's circle will include only those
companies whose products and services are responsive to consumers' changing
lifestyles and habits. The winner's circle will also be limited to companies
that harness technology to achieve the desired result in a transparent and
intuitive manner, he said.

Harman also maintained that the home audio industry remains
vibrant because the industry has evolved to include iPod-related products for
the home. The component-audio portion of the home audio industry, however,
likely won't regain its past glory in terms of dollar sales, he admitted.
Nonetheless, in part because of the iPod, more people are listening to more
music everywhere on earth, and that increases the opportunity for companies
offering high-performance audio equipment, including components, he said.

These topics and others were addressed by Harman in the
interview, which follows.

 

Lessons Learned

TWICE: What
lessons has the CE industry learned over the years, and what lessons hasn't it
learned?

The one thing that clearly has not changed in half a century
is a combination of opportunity that is rare, and in some respects unique, to
the consumer electronics industry, a combination of opportunity and the reward
that comes to genuine innovation. The opportunity arises out of the fact that
much of the industry is devoted to the reproduction of either the visual or the
audible signal, in voice or picture, and certainly with respect to music. There
has been no exception through history - every culture has been distinguished by
its love of music. The music has varied from century to century, from culture
and country to culture and country, but music has been unfailing. Music is the
equivalent of cultural oxygen. So the opportunity for visual and audio reproduction
in an ever-improving fashion is the essence of the industry, and that is a
wonderful essence. People in the perfume industry wish they could have it the
same way.

 he reward for
innovation has been demonstrated over and over again going back to my earliest
days when we, among other pioneers, determined that the three-tube AC/DC radio
was inadequate to the opportunity. And clearly, people were utterly astonished
when they listened to the music with which they were familiar - not Strauss and
Zarathustra but Frankie [Frank Sinatra] singing. When they listened to that, as
they typically did on their little radios or on their large cabinet phonographs
- which were really nothing more than disguised three-tube AC/DC devices - then
when they listened to it on our elaborate equipment, they were utterly
astonished. "Where is he [Sinatra]?" was the not-infrequent question as people
would walk into these little rooms of ours [at early electronics shows] and
listen to their first Harman Kardon experience.

That's little different from the response to the iPod. The
opportunity is always there. The responsiveness to innovation, which is
responsive itself to the way people live their lives, is always there, and
there is no doubt in my mind that it will continue to be always there.

Now I made a comment just now that I think is central to the
industry, certainly central to my thinking. What you need in marketing is
anthropologists, people who interpret the way consumers live, not people who
decide how they ought to live, but people who understand the changing habits
and lifestyles of consumers and respond with products and services to that
changing lifestyle and that changing need. Those are the companies that are
invariably successful. The companies that determine unilaterally, the companies
that act out of a kind of engineering triumphalism - that we know how to do it
and therefore this is what the consumer ought to have - are the companies that
turn out monstrous duds.

So it seems to me that I've said several things. One is that
the industry is blessed with a historic and unvarying opportunity, that the
industry history makes clear innovation is rewarded and the opportunities for
innovation are always there, and it's critically important to any company in
that industry to put aside its vanity, to put aside its ego, to put aside its
own egocentricity and to look backwards from the view of the consumer into the
company rather than from the company out to the consumer. Those companies that
approach this world and product need in anthropological terms are the ones more
and more likely to win. Certainly they're the ones who clearly improve the
odds.

 

TWICE: Do you
think Apple with its iPod was a company that looked at things in
anthropological terms?

Oh yes. Look at the product. Look at the timing. See the
consumer response. And I think it's pretty evident they know how to do that
more than once.

 

TWICE: In your
book, "Mind Your Own Business," you mentioned that the makers of consoles,
which integrated a turntable, radio and speaker, reacted with disdain to the
emerging hi-fi industry, were oblivious to a changing industry and became
dinosaurs. Has this mindset continued in the CE industry? Are there any
specific examples you can site?

I don't think I should do that. The history is pretty clear.
I grew up in a period, and it was hardly a brief one, where the great names in
the electronics industry [were] names like Capehart, Admiral,
Stromberg-Carlson, RCA. They're gone. In the high-fidelity industry, names like
Fisher, Scott, they're gone, virtually gone. Part of that has simply been
economics. Companies are acquired, folded in. Part of it has been management's
failure to do what I think is central.

 

TWICE: You
mentioned in your book that it is difficult to create and maintain a successful
brand. Why is it so difficult?

That's an interesting but extraordinarily complicated
question. One reason is that success can often breed failure. Success can lead
to complacency so easily. And success can persuade you that you've got it
knocked. You know how to do it. If the world stood still, the probability is
that if you were successful in a particular approach, you had it knocked. The
world doesn't change. You keep it knocked.

But if you stay with what you've got while the world is
changing, and peoples' lives are changing, and you are unresponsive to those
changes, you don't have it knocked. You're knocked. It's not difficult to
imagine, it's not difficult to recognize by now, that companies and people can
get comfortable while it's going nicely. They persuade themselves there is only
one answer, and I've got it. And that, of course, is the road to ruin.

Then it is fair to say success can breed failure in another
way. A company grows. It develops a set of obligations to deliver, to produce,
to be effective. If it's a public company, it's to perform financially. And
those pressures tend to lock in the model. Think about it in terms of
technology or engineering. You build a company. It's doing well. You spend a
significant percentage of revenue in engineering, but in a curious way, the
better the company is doing, the higher the percentage of the engineering
monies you spend in sustaining technology, and in effect, it can detract. In
doing well, you've got to keep this thing moving, but the stuff that is driving
this thing is the current state-of-the-art technology. Where does the new
disruptive leapfrog technology come from?

 Now it's not
impossible to imagine an existing successful company doing it. Your Apple
example is a very good one, but you can see why, in effect, it's more a
challenge to an existing successful company than it may be to a start-up
company, one without both positive and negative baggage of history and success.

 

Home Audio Prospects

TWICE: Will the home
audio industry ever come close to matching its peak year of 1990 in dollar
sales? 

It's almost certainly not down from its peak if you include
all those products that are an expression of music reproduction - iPod-type
product. If you're asking whether the audio industry as expressed in larger
boxes, the high-fidelity product category, will ever again experience that
level? It's hardly likely, but I don't think it will ever go away. There is a
whole series of audio reproduction products that are in fact responsive to the
way people now live. People are more mobile. Their lives are more varied. They
need to have the music instantly at hand and transportable. I don't simply mean
in terms of lifting and carrying it but being able to have access to your music
wherever you are. All of that has altered the way the product and service needs
to be provided, and it is an expression of the way people live.

 

TWICE: Do you
think there have been a number of home audio brands that haven't been
responsive to these changes?

Well, you know that's so. The answer to that question is
evident.

 

TWICE: Will
products such as iPod speaker systems and audio networking products help
established audio brands survive?

Yes. And certainly, a matter of consequence is the ability
to get seamless connectivity in a system that reflects the way in which we
live, and to be able to do it effortlessly is something that people need. It's
an aspiration that makes sense.

 

TWICE: Do you
think the home audio industry has moved too slowly to embrace some of these
products and consumers' lifestyle changes?

Some companies have a history of responding effectively.
Some companies don't. Back to an earlier comment, the truth is it is often
easier for a small new start-up company, unburdened by obligations or
responsibilities to sustain existing product lines, to respond effectively to
change.

 

TWICE: Are
established audio brands losing awareness of younger consumers who believe the
iPod is the be-all and end-all of music reproduction?

It's a good question. Decades ago, a wonderful writer, H.L.
Mencken, said, "For all these serious problems, there is one single, simple
solution. And it's wrong."

The iPod has some limitations. You know what they are.
Digital has some limitations. You know what they are. But there isn't any doubt
at all that the general digital world, and iPod is an expression of it, has
multiplied enormously the interest, the appetite, the accessibility of music.
Anybody in the industry has to say that whatever does that is a good thing. Right?

More people are interested in music now. More people listen
avidly to music now than anytime in history, and for all the weeping about the
disappearance of music, live or otherwise, there are more concert halls in
America today than ever, and tours draw larger crowds than ever. Is there a
marketplace out there? It's so obvious. These developments have significantly
multiplied the market, and that means there is a significant market opportunity
for someone who is interested in designing and producing product that will
reproducer music to the optimum.

There's no question that you don't see high-fidelity stores
on every corner. There is no doubt that although it is a smaller percentage of
the total than it was then, the hunger, the need, the opportunity for that kind
of sophisticated product is still there. Though the percentage is smaller, the
market opportunity in the gross is probably larger than it has ever been.

I'm saying simply that when you use the iPod less as a
specific and more as a general expression of what the technology and
marketplace have generated, it is clear that today there are more people
listening to more music everywhere on earth. As that happens, it increases the
number of opportunities for firms offering specialized equipment to do the job
better.

 

Keeping It Simple

TWICE: In your
book, your mantra was simplicity in meeting a consumer's needs, that technology
must be subordinated to people it serves. Did that lead you to introduce the
first mono receiver and first stereo receiver in the 1950s?

Yes ... I'm pausing because I think there is a kind of
profound lesson there, whether it drove Harman/Kardon to its first receiver or
not. The lesson is so complex. That's the reason that story is so important to
me. In its most fundamental terms, that story says the technology is there to
serve the customer, not to terrify, not to intimidate the customer. That's a
mindset of colossal

importance. If management and engineering believes it's
there to show off how damn smart we are, you get a product with so much
complexity that it baffles the consumer. If the mindset of management is that
technology in effect needs to be doing its magic without the consumer really
being aware of how it does it, and having the process intuitive and
transparent, then if that is the mindset, you produce a very different kind of
product. I don't work for technology - technology works for me. I'm the
subject, not the object, of technology. That's the first thing.

It also has implications for me about the role of the
employee, of the worker. It says to me that the technology is never the end, a
substitute for the human being, that real opportunity, the greatest potential
for innovation, lies in the human being, with honoring people within the
company, honoring all those people who are working, including every last person
who works on the production line. That is crucially important in the
development of a really healthy, innovative and surviving company.

 

TWICE: Has the CE
industry heeded this advice in making technology serve the consumer?

The consumer electronics industry has done a good job at
times, and a superb job at times ... There are examples all over the place.

Years ago, a company developed a car that spoke to the
passenger and actually delivered verbal instructions, and people were driven
crazy by it. And here was an effort at innovation that failed utterly to
consider whether people would be comfortable with it or not comfortable with
it. If they [engineers] knew how to do it, people would love it.

 I came upon a little
product six months ago or so, a camcorder no larger than a package of
cigarettes, called the Flip. It's a wonderful expression of something that I
have always thought was the essence of consumer electronics design. It is a
really inexpensive portable device, intuitive in its usage, one button that
does it all, with nice simple but elegant industrial design, lightweight, and
it is a substantial success.

 

 

Harman Timeline:

 

1939: Sidney Harman
joins the David Bogen Company, a supplier of public-address equipment.

 

1944: Harman
drafted into army, assigned to Army Experimental Station in Watertown, N.Y.
Returns to Bogen in 1946 to become GM.

 

1953: Harman
teams up with Bernard Kardon, Bogen's chief engineer, to form Harman/Kardon,
whose first products are a mono FM tuner and mono amplifiers for the nascent
high-fidelity market.

 

1954:
Harman/Kardon develops the world's first mono receiver, which combines separate
tuner and separate amplifier into one chassis.

 

1958:
Harman/Kardon markets world's first stereo receiver (below).

 

1962:
Harman/Kardon merges with Jerrold Electronics to become Jerrold Corp. Jerrold
was builder of first cable set-top boxes and first cable system in
Williamsport, Pa. Harman leaves company in 1964.

 

1960s: Harman
invests in Jervis Corp, a builder of jet-engine components and side-view
mirrors for automakers. Jervis name later changed to Harman International and
later reacquires Harman Kardon.

 

1969: Harman
International acquires James B. Lansing (JBL).

 

1976: Harman
sells his stake in Harman Int. to conglomerate Beatrice Foods to avoid conflict
of interest when he is appointed deputy secretary of commerce.

 

1980: Harman buys
back Harman International from Beatrice after he leaves government, but
purchase excludes Harman Kardon, which Beatrice sold off previously. CE and pro
audio brands reacquired include JBL.

 

1983: Harman
International buys Infinity.

 

1985: Harman
reacquires Harman/Kardon and buys Cleveland Electronics, maker of car speakers
for automakers; changes Cleveland name to Harman Motive.

 

2008: Harman
brands in the home, vehicle aftermarket and pro audio industries consist of
AKG, Audioaccess, Becker, BSS, Crown, DBX, DOD, Harman/Kardon, Infinity, JBL,
Lexicon, QNX Software Systems, Revel, Soundcraft and Studer. Company employs
more than 12,000 people worldwide and posted sales of $3.55 billion for year
ending June 2007. Seventy percent of sales were in Harman/Becker division,
which makes OEM sound and infotainment products for automakers. Fourteen
percent of sales come from consumer products.

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