Bose: Better Products through Research

In a recent 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 making innovative audio devices for more than 50
years. Despite putting more than 30 million new sets of headphones alone on or in customers’
ears last year, Bose rang up only about $4 billion in revenues versus Apple’s $234 billion.
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. “We are not in it strictly to make money,” says
CEO Bob Maresca. Given the company’s focus on research and product innovation, he points
out that “the business is almost a secondary consideration.”
The Bose Philosophy
To understand Bose, the company, you must first look at Bose, the man. In the 1950s,
founder Amar Bose worked on his third degree at the Massachusetts Institute of Technology.
He had a keen research interest 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. So, he began heavily researching the problem to find his 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 company's philosophy. In conducting his first research on speakers and sound, he did
something that has since been repeated time and 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 keeping his 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, home building/remodelling,
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 sound that
seemed to be everywhere but some from nowhere in particular. The speakers had no woofers
or tweeters, composed instead of eight four-and-a-half-inches mid- range drivers. The
speakers were also very small compared with 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 ground
breaking at the time, is commonly found in home theatre systems throughout the industry
today.
Back then, however, Bose had a hard time convincing customer of the merits of these
innovative speakers. At a time when woofers, tweeters, and 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 has 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. This approach has
served Bose well. Although even today 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 was known for crediting the
speaker series with building the company.
The list of major speaker innovations at Bose is a long one. In the 1970s, the company
introduced concert-like sound in the bookshelf-size 301 Direct/Reflecting speaker system.
Fourteen years of research led to the development of acoustic waveguide speaker technology,
a technology today found in the award- winning Wave radio, Wave music system, and
Acoustic Wave music system. In the 1980s, the company again changed conventional
thinking about the relationship between speaker size and sound. The Acoustimass system
enabled palm-size speakers to produce audio quality equivalent to that of high-end systems
many times their size—a design so popular it also remains in the current Bose portfolio of
speakers. Recently, Bose again introduced the state of the art with the Music Monitor, a pair
of compact computer speakers that rival the sound of three-piece subwoofer systems. And
Bose has led the way in developing wireless speaker systems, a move that was quickly
followed by all competitors. Not only was each of these speaker systems ground breaking at
the time it was introduced, each was so technologically advanced that Bose still sells it today,
even the original 901 series.
Headphones. Maresca recalls that “Bose invested tens of millions of dollars over 19 years
developing headset technology before making a profit. Now, headsets are a major part of the
business.” 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 Quiet Comfort series, used in a variety of consumer
applications, sets the benchmark in noise-cancelling 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 lightbulb.
Automotive suspensions. Since 1980, the inquisitively innovative culture at Bose has even
led the company down the path of developing automotive suspensions. Amar Bose’s interest
in suspensions dates back to the 1950s when he bought both a Citroen and a Pontiac, each
riding on unconventional air suspension systems. Thereafter, he was obsessed with the
engineering challenge of achieving good cornering capabilities without sacrificing a smooth
ride.
The system Bose developed was based on electromagnetic motors installed at each wheel.
Based on inputs from road sensing monitors, the motor could retract and extend almost
instantaneously. For a bump in the road, the suspension reacted by “jumping” over it. For a
pothole, the suspension allowed the wheel to extend downward, retracting it quickly enough
that the pothole wouldn’t be felt by passengers. In addition to these comfort- producing
capabilities, the wheel motors were designed to keep a car completely level during an
aggressive maneuver such as cornering or stopping. The system achieved Amar Bose’s vision
to provide better handling than any sports car while simultaneously giving vehicle occupants
the most comfortable ride imaginable.
Bose invested more than $100 million over 30 years in the ground breaking suspension. In
the end, the system was simply too heavy and too expensive for use in passenger cars. Rather
than shelf the product, however, Bose did what it has often done—it found a market where
the technology could be used to provide genuine customer value. The company now markets
a smaller, lighter version of the Bose suspension as the Bose Ride seat system for heavy-duty
trucks. Surpassing current air ride and other conventional technologies in performance, its
$6,000 price tag also exceeded the going price of a truck seat by five to ten times. Although
most companies and drivers were skeptical at first, one Texas driver’s reaction drives home
the value of this product, even at the substantial price premium: “I had back pains. I used to
feel every bump in my back and neck. The truck still bounces down the road, but I don’t. It’s
almost like floating, detached from the truck.”
Bose’s commitment to research and development has produced state-of-the-art 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. But for a company not driven by the bottom line, Bose does just fine in
that department as well. In the personal headphone market, Bose is second only to Beats
(Apple) with 11 percent of the market. And with wireless speakers now dominating speaker
sales, Bose leads with a decisive 22 percent share, a full six points ahead of number-two
Sonos.
Amar Bose passed away a few years ago at the age of 83. With the passion of a genuine
scientist, he worked every day well into his 80s. “He’s got more energy than an 18-year-old,”
Maresca once said. “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 ground breaking
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.”

Questions for Discussion