Joe Atkins of Bowers and Wilkins
“A Religious Conviction” was first published by Malcolm Steward in the British Audio Journal in 2002.
“If you want long-term success you have to be as religious about things as we are,” says Joe Atkins, the enigmatic Canadian owner of Bowers and Wilkins. Malcolm Steward talks to the man who says he’s “tired of seeing retailers burned”.
Malcolm Steward: Despite your role in the industry as the head of one its most prominent loudspeaker manufacturers, very few people know much, if anything, about you. Tell us how you came to own B&W?
Joe Atkins: In 1987, a mutual friend introduced me to the then North American B&W distributor who was interested in selling his business. It was my first introduction to B&W as a brand and it looked very interesting so I came to the UK and met John Bowers. I subsequently decided to buy the North American distribution business and that was, unfortunately, just before John Bowers died.
Although I had looked at this as something I would invest in but not get too involved in, I found myself more actively caught up in the North American side of B&W, which led to me becoming more interested in the brand in particular and the industry in general. Over the next 10 years, through various events here in the UK with the primary business, I ended up becoming the only shareholder, which has been the case since 1996.
MS: Were you involved in the hi-fi business before B&W?
JA: No. I was a chartered accountant living in Toronto, Canada. I was primarily an insolvency specialist with KPMG for the five years prior to buying this business. I went into insolvency right after getting my CA, two years out of university. So I have been involved in other businesses but none of any real consequence.
MS: What was it about B&W that attracted you?
JA: Initially it was the financial performance of the North American business but it soon became apparent that within the wider consumer electronics business B&W had already achieved a reputation for the quality of its products, its R&D capability, and that it had a real opportunity to grow and become even more successful within the premium loudspeaker category.
Although it was an international business it didn’t take me long to meet all the distributors from around the world and they were – and still are – an outstanding group of people; passionate about the brand and very much a family, which was something John Bowers had been instrumental in creating since starting the business in 1966. The ‘chemistry’ of the business, if you care to call it that, was remarkable. I’ve been involved in many companies that were commercially successful but they didn’t offer any of the same intangibles in the sense of the quality side of the business. That side of B&W made it easy and enjoyable for me to become more involved over the last 15 years. Everyone around the world who is involved with B&W is committed and passionate about the brand, and you don’t see that sort of personal investment in a business very often. And they’re mostly fun people to work with, and that adds to my enjoyment of the business over and above what I expect to see in a commercial sense.
MS: It’s interesting to hear you talking about passion and commitment. I suspect most people, not knowing you, would imagine that as an accountant you would be predominantly driven by the numbers. Yet you seem to be involved in the business at a very detailed level: right down to choosing office carpeting, I’m told.
JA: Most chartered accountants get painted with the same brush, probably because it’s a safe assumption for people to make. My involvement in B&W is perhaps deeper than it needs to be but that’s partly because I’m interested in the brand and we’re still small enough as a company for me to get involved in things that add to my understanding of how the business operates That adds value to decisions that get made and certainly helps me to do what I do, which is travel the world visiting our distribution businesses and dealers so that I can have a better feel for what’s going on than people who tend to focus only on their home market. In order to make good decisions from a product development perspective, the more of a feel you have for what’s going on in other parts of the world, the better.
However, all levels of the business can be of interest to me at a particular time or at a certain level. When we built the new factory, for example, whether it got painted green or silver was something I’m interested in. Obviously, if I don’t like the colour green then I don’t want my factory painted green. That sort of involvement isn’t a necessity; it comes more out of opportunity and interest.
Making sure the business is on a sound financial footing, and making sure we have the funds to run B&W the way we want to run it, is my primary responsibility but that isn’t a full time job. I’m not a person who is interested in not working, and I certainly have the opportunity and the right to get involved in anything that I want. That can cause problems occasionally but … well, so be it. [laughs]
MS: When I spoke recently to another Canadian businessman, API’s Howard Heiber, he argued that taking care of business wasn’t always something at which loudspeaker manufacturers excelled.
JA: I would agree. There are many brands in the specialty part of the business in which we operate that weren’t started by commercially driven individuals. The reality, I think, is that to start a brand, as John Bowers did, and to be able to put the energy and engineering investment in to get it going, obviously means that you’re not likely to be commercially driven: John certainly wasn’t.
But when you grow a brand to the point where it becomes a serious business, there are other challenges you have to face and those individuals are less likely to have the experience of how to manage them. One of the things that has ironically been part of B&W’s success was that John Bowers – who must be credited with everything that B&W is today because he effectively set the platform in terms of its standards, its R&D objectives and so on – unfortunately passed away and so created the need for a change of ownership.
The global distributors, who had all heavily invested in the brand and their own businesses, worked closely with the people in the UK not only to make sure the brand continued but also to sort out what the ultimate ownership would be. Had circumstances been different it’s quite likely that with estate taxes and various other considerations the company could have been bought by an investment banker. I don’t think that would have created the opportunity for B&W to continue to develop the way it has.
One of the interesting things about this industry is that there are so many brands competing and there are so many that deserve to be competing. The industry not only provides a living but plenty of rewarding experiences for those people who are interested in the industry, in music and in trying to make better products. It’s clearly an industry that has been capable of feeding a lot of mouths but not many companies have been able to go beyond that in terms of commercial size. A relatively small percentage of electronics, video and speaker brands has gone beyond the point where one person, often the founder, can continue to manage them. I think that’s fine. I don’t think that hurts the industry. In fact, it probably helps it in terms of the number of choices available to buyers and in keeping the larger players working harder to be better. Industries that are dominated by a very small number of manufacturers tend to become more concerned with controlling the market than trying to be innovative or deliver better products.
MS: Many of what we’d call large manufacturers in the UK, with origins not dissimilar to B&W’s, are probably still turning over not much more than £10million a year. Why is B&W turning over eight or nine times that amount?
JA: It would be too easy to try to attribute B&W’s success and growth to one or two things because it’s clearly down to a whole series of events. The uniqueness of B&W’s ability to grow its business beyond a certain level is primarily the international focus that, again, goes back to John Bowers but which has been developing for the past thirty five years. Our global success, which is a result of having a good understanding of the American market, the European market and so on, goes back to the distribution base John Bowers put together in the 1970s. He built a group of good distributors in the major markets who worked very hard at the local level to build the brand. That is something you don’t see with many brands. Most American brands have a hard time being successful in Europe and the Far East, while most European brands find it difficult to be relatively successful in the USA. I think B&W is very fortunate to be able to say that its position in most of the world’s serious markets is very strong. That comes down to a lot of factors but primarily it’s the work of the people in those local markets over the past two or three decades. It’s the sum of those successes that determines the overall size of the brand.
Another unique attribute for B&W is that it started as an export brand, not a domestic brand. As a result of that there’s a certain pricing structure and financial models that you need to have if you’re going to be able to sell your products in foreign markets without the prices in those markets being ridiculous compared to those in the domestic market. Usually, when a guy starts a business the last thing on his mind is whether he’s going to be able to sell his products in another country. He’s primarily concerned with selling his products locally. Once you’ve started down that path it’s very difficult to change later on. I think that John felt – and I don’t think it was a commercially driven feeling – that he wanted his brand to be an international brand so he created – and his distributors helped him create – a financial model that would allow him to work in those export markets.
But there are many, many other factors still to be considered. There are many other brands that have achieved a pretty good position internationally and, for whatever reason, lost it.
MS: I can think of one or two companies that have exported a large percentage of their products and then encountered severe difficulties through having no domestic market to fall back on when currency fluctuations and bad markets have killed their business in other parts of the world. As far as I can remember, B&W hasn’t been affected by such problems.
JA: It goes without saying that, as in many other industries, there are many, many ways to run into problems. In the loudspeaker business, whether it’s global or local, there are many things you can do wrong, or external circumstances that can, if you’re not capable of managing them because they’re outside your control, get you into trouble. Business carries a lot of risks: you have to address all the potential problems constantly so that you minimise those risks and be in a position to deal with them when they arise. Currency fluctuations are certainly one of the things that can have a big impact on any company that’s selling products globally and B&W has certainly been through periods where they have made life more difficult.
But it’s not just one thing, one person or one element of a brand that determines success or failure. A good brand or a good business is just like a good soup: there’s a whole lot of things that go into it. You don’t know for certain if it’s the vegetables or the spices but you do know that you’ve managed to cook something that people like. The challenge then is not to spoil it by adding too much of something or letting one discipline override another.
MS: One area in which B&W has always appeared to me to be very strong is in its aesthetics – even long before we had ‘lifestyles’ and a heightened perception of design in the market. Has that always been part of the company’s strategy?
JA: It’s always been a consideration during my 15 years’ involvement. I think that when you get into larger speakers, in particular, they’re certainly furniture at some level. If a brand is to be attractive to consumers beyond pure audiophiles you have to take into consideration more and more that there will be other factors entering into the buying decision. So, we regard industrial design as a very important element of developing any product. It never takes priority over the sonic performance but it certainly has to be considered highly. I don’t think that industrial design will become more important to us but it will continue to be as important and more challenging.
It’s challenging because you’re trying to balance trends that are important in various parts of the world. We sell all our products in every market. We certainly don’t make products for one specific market so the ability to balance the particular tastes of Europeans with those of Americans, Koreans and Chinese, say, is something that our industrial designers have to incorporate into their thinking. The world is becoming a more complicated place and those types of issues are becoming more difficult to deal with so I don’t see industrial design becoming any less important in the development of B&W products.
MS: I asked the question because you seem able to deliver global products that are distinctive but don’t have, for want of a better expression, any regional identity. At the same time, they’re not like bland global products from the Far East that seem to suffer the same box, different badge syndrome.
JA: From the very beginning of the brand – first with Kenneth Grange and more recently with Morton Warren – we’ve used people that we consider to be top industrial designers. We work closely with them – they’re integral to the product development. We don’t go to them at the end of the development process and say “Put a few shapes on this to make it pleasing to the eye.” The designers are involved at the beginning of the process. And we don’t use a wide range of designers so I think that over time the few individuals that we have involved with our products have become just as comfortable with what B&W is as have our dealers, distributors and end users. They know what these people are looking for. Industrial design is an evolving process and there are similarities between the products we made 20 years ago and the products we make today. Those similarities are part of defining the brand. Many of those design elements have become associated with B&W and have therefore become part of the brand presentation. They will be preserved, enhanced and evolved as we go forward.
MS: I’ve seen that in your latest marketing material you’re reintroducing the Bowers and Wilkins name as part of your branding. Why?
JA: This may involve an answer to part of a question you haven’t asked yet. You said “Where’s the brand going?” and I think that the challenge for Bowers and Wilkins – and the opportunity that comes with it – is that there many consumers throughout the world who are not necessarily being exposed to the better products that are available in the consumer electronics industry. That’s because they are shopping in what seem to them to be appropriate places to buy a home theatre system but to B&W or a specialty audio dealer, they’re not. One of the things we’re spending a lot more time and money on is looking for efficient ways to introduce the notion of premium audio and video products to non-traditional specialty consumers. In order to do that with any level of success you have to be able to achieve a certain critical mass: once you get outside the traditional vehicles to advertise and promote it becomes much more expensive to have any impact. We’ve developed a number of programmes and are working on many more in various markets to create awareness among new premium audio consumers, people who may not before have considered going to a specialty dealer to buy their home entertainment products. We’re trying to find ways to reach those people and to make them aware that you can buy products that will give you a much better home theatre experience than what you may go and buy at a Circuit City type operation, to use a US retail example.
We see that as absolutely critical to the future growth of our specialty dealers who we are committed to support. They need people other than Sony to create awareness for audio and home theatre products.
So that’s a big part of our plan going forward and we are starting to feel confident that it can be achieved. We’ll be spending a lot more time and energy looking for more ways to do that. The Internet has created new opportunities for communicating with a wider consumer base and that perhaps is the best opportunity we have, not only to help our dealers – our business partners – to be more successful but obviously to sell more B&W loudspeakers. We’re not going to sell more loudspeakers by adding more dealers: that’s something we will not be doing.
MS: I asked about the Bowers and Wilkins idea because it seems to me that in the UK we can be a little parochial: we know that B&W stands for Bowers and Wilkins and perhaps forget that in other markets that might not be part of the ‘culture’ because B&W is a foreign brand. At the same time, Bowers and Wilkins sounds a little retro.
JA: Naturally, we’ve taken professional input on this. Once you get into non-audiophile publications and you’re looking at vehicles for true branding, we felt that adding Bowers and Wilkins, which is a further definition – or the definition – of B&W, simply adds more substance and more staying power. We’re not dropping B&W, and I’m sure that many people will still refer to us as B&W, but in some markets the brand has always been referred to as Bowers & Wilkins for other reasons, some of which are as simple as translation.
We feel that the change to Bowers & Wilkins will help in longer term brand awareness out of the box, by which I mean outside the traditional premium audio segment within which we and our dealers have historically operated.
We’re not looking to sell expensive home theatre and audio equipment to ninety per cent of the population: we’re looking to sell it to those people in the market who take home entertainment seriously and who want to spend a reasonable amount. Obviously, those are the people our dealers want as customers. We are not as sceptical as some manufacturers about our dealers’ ability to grow their businesses and to support our brand in the future. Our responsibility is to try to make their job easier by creating more awareness through direct marketing and various other vehicles, particularly those with a global perspective. Our dealers will benefit from that and hopefully that will help solidify the relationship that we have with them. That’s our strategy and we’re confident that it will be successful.
MS: Clearly things are going well for you at the moment as you’ve recently opened a new factory. What made you decide to invest in that?
JA: Regardless of how well business has been, we’ve been in desperate need of a consolidated facility here in Worthing for many years. The problem has been – and I must say that as a Canadian it’s hard for me to understand the difficulties in trying to accumulate some land and build something here, which has been an enormous struggle – that as the business has grown we’ve been forced to use a number of locations. It’s been difficult and very inefficient to operate that way. It’s only been during the last 18 months that we’ve been able to find appropriate land close to our previous factory and build the new facility. The reason we wanted to stay close to where we’ve been is that the core of our labour force has been with us a long time, they’re familiar with the products, their skill set is appropriate, and we did not want to lose those people by moving the factory to another part of the country. It’s great to have it done and I suppose it evidences our commitment to keeping the manufacturing here in the UK, although that was never a question in my mind.
MS: Our mailing database tends to show those manufacturers who have a high turnover in staff and I’ve noticed that there’s very little churn at B&W.
JA: That’s because we overpay all of our people, and I’ll take responsibility for that: it’s a weakness of mine. [laughs] Being serious, though, I think there’s a degree of pride that goes with being involved with a brand that’s perceived as being a good brand. I think we’ve been fortunate in that as the brand has become more known and better respected the people who have been with us a long time have drawn a great deal of satisfaction from that – as they should because they’ve played a big part in that growth – and other people are naturally attracted to any opportunities we may have. It’s a kind of strength on strength situation where good people in our industry want to be associated with good brands because they are very passionate about what they do. They didn’t get involved in selling loudspeakers because they thought it was a get-rich-quick ‘dot com’ type opportunity. We’re very fortunate and we’re always looking for ways to preserve that because we need to keep the people who’ve been with us for a long time and to attract new, younger good people to ensure that our brand is successful in the future.
MS: How do you imagine potential customers perceiving B&W? I ask because one of you recent adverts featured Albert Brendel: given that classical and jazz music sales form a miniscule percentage of total music sales, why wasn’t it Ozzy Osborne or Kylie Minogue?
JA: I’ll let our marketing man answer that.
Danny Haikin: Having seen our customer base when I was in retail, I think we manage to cater for all tastes. John Bowers founded the company because of his passion for classical music and all his contacts were in the classical world so, historically, B&W had a strong association with classical music. However, over the past 10 years, and most notably over the past three years with the introduction of the 800 series, we’re increasingly seeing B&W speakers used by rock fans. They’re being used in Abbey Road Studios for mastering rock music and there’s a whole list of contemporary musicians, from Dave Stewart to Paul McCartney, who use B&W at home. I think it’s a testament to our products that you can use them with any type of music.
In terms of internal perceptions, we have such a range of people here that it’s inevitable that our speakers get listened to with every musical genre.
MS: Why is B&W now distributing Rotel and Classé products?
JA: There’s a number of reasons. One is that we operate distribution businesses, which need to be commercially viable in their own right. In smaller markets, that can difficult if you only have one brand and we’re not interested in extending distribution, even in small markets, to try to capture revenue. That’s a short-term approach. Long ago we recognised the benefits of adding a mid-fi electronics brand – and our relationship with Rotel goes back 20 years. More recently we added Classé for slightly different reasons, although some of them also apply to Rotel.
If you look at the electronics business it is becoming more difficult to see which brands are going to be prepared to stay with specialty distribution globally. Obviously, most of the larger Japanese brands are interested in top-line growth. In our view they are too broadly distributed. We’re also familiar with most of the premium electronics brands that would compete with Classé: many of those are owned by multi-national corporations. So, I think that in order for us to be able to execute our limited dealer network model long-term, it’s important that there be other brands – good brands with good products and good programmes – that our dealers will be able to access.
We also see it as adding brands to a portfolio that our dealers can feel comfortable going forward with knowing that we will sell those brands only to them.
It also moves us closer to being able to provide complete solutions – at least to a customer that’s just listening to music. We’re not in the video business and we’re not likely to get into it because it’s a completely different type of business and one to which we’re not particularly attracted.
We’re very comfortable with the situation we have with Rotel and Classé and I think we currently handle about 90 per cent of Rotel’s global distribution and about 60 per cent of Classé’s. So it’s not as though we don’t have a considerable amount of influence over how those brands are developed. We intend to apply the same principles that we’ve applied to B&W in terms of how we manage and develop those brands in the longer term.
MS: So will you be as selective with the distribution of Rotel as you are with B&W?
JA: We certainly will. If you look at those markets where we’ve had Rotel for many years you’ll find probably eighty per cent overlap between B&W and Rotel dealers. If anything, there’ll be fewer Rotel dealers than B&W dealers. Obviously it’s early days in the UK but we definitely intend to have very limited distribution. As the brand develops we’ll selectively add appropriate dealers as we have with B&W. In the medium to longer term we expect that there will be a lot of overlap because, effectively, we expect the dealers that are attracted to what we do with B&W to be attracted to what we’ll do with Rotel.
MS: You seem understandably determined to stick to what has proven to be a formula for success for B&W. Is it as straightforward as you make it sound to keep treading that path?
JA: The key to being able to adhere to a particular business model over a long period obviously comes down to who decides what the business model is. Because B&W is a private company it does not have to satisfy the needs of investment bankers or a family trust or any number of other outside influences, so we’ve been able to be very disciplined – certainly over the past seven or eight years. We don’t have competing decision makers and we’re fortunate in that regard because a) I’m not 65 years old and b) I have no interest whatsoever in selling the business. It’s too good a business and I’m having too much fun.
As you go around talking to manufacturers I’m sure you see in many cases that although the individual may want to execute a five-year plan, he can’t. He’s simply on somebody’s payroll … I use the term Vice President of the Week. He has a plan but the new guy who comes along next week has a different vision. I’ve seen dealers burned many times through wanting to believe what they hear, making all kinds of investments in a brand, working hard and positioning it in their stores, and the next thing they see is it going on sale in the shop across the street.
You can never be totally sure of what’s going to happen in the future but we’re not going anywhere different in terms of how we run our business and how we want to build our brands. That’s because that is my decision alone and I have absolutely no intention of seeing us deviate from that model because I am 100 per cent convinced that it’s the only way to be successful in this business long-term.
You can be successful for a short time through other means but if you want long-term success you have to be as religious about things as we are. If I were a dealer I’d want to look very hard at whoever it is in the company that is giving me the message.