Interview with Michael Orscheln, President and CEO, Phonak Hearing Systems
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Topic: Collaboration, Service and the $64,000 Question
Michael Orscheln
CAROLYN SMAKA: Today I am speaking with Michael Orscheln, CEO of Phonak US. Mike, thanks for your time today.
MICHAEL ORSCHELN: Thank you, Carolyn.
SMAKA: Mike, what is your background, and how did you come to your current role as CEO of Phonak?
ORSCHELN: My background includes almost 29 years of experience in the healthcare industry. Prior to coming on board with Phonak, I was leading the medical-surgical and pharmaceutical distribution business of Cardinal Health into the physician office and surgery centers across the United States.
I joined Phonak in October 2007. I was contacted about the role of Chief Operating Officer, which would involve working very closely with Cathy Jones, the CEO at the time. Cathy wanted to transition into more of a philanthropic role over the course of a year or two, so the plan was that I would transfer into the role of CEO. What was interesting to me about this opportunity was I had never heard much about hearing healthcare before, despite my years of experience within healthcare in general. I had spent the bulk of my career in the distribution of medical-surgical goods into hospitals and physicians offices.
To truly understand where I'm coming from, a little family history is necessary. I grew up in an entrepreneurial family - my dad and uncles started a truck line in 1926 - so the influence of corporate America and respect for the entrepreneurial nature of our country has always been in my life. When I got into healthcare, I grew to love the entrepreneurial spirit of the office-based practitioner. I first experienced this when I would speak to physicians when working for Cardinal Health, and now, as CEO of Phonak I see it in audiologists and hearing instrument specialists as well. I find this aspect of our industry very interesting and very appealing.
SMAKA: You mentioned not having a great awareness of this industry when the opportunity first came about, which is something we frequently hear from those outside the industry. What do you think we can do as an industry to get people thinking about the importance hearing healthcare?
ORSCHELN: That's the $64,000 question, and that's what I find to be so intriguing and intellectually stimulating about the hearing healthcare industry. Why don't more people who need hearing aids wear them, and what can we do to change that? That question has caused a lot of frustration in this industry over the years. Even in my short tenure, I have seen people enter this industry claiming to possess the answer, only to throw their hands in the air six months later and leave the industry, frustrated. I don't believe that there is a simple solution to the issue, as if there were, the industry would have figured it out. And, there are many facets that need to be considered.
Our main objective is to provide quality hearing healthcare to those patients who need it. Every audiologist and hearing instrument specialist that I've met, at the core of who they are, are interested first in helping people who have hearing loss. That is why they got into the business. It has nothing to do with making money, or making a person or company more successful. This is a healthcare business and therefore the well being of the patient is the primary focus. At Phonak, our purpose, really why we exist, is to enrich the lives of the hearing impaired by providing the best products and services to the professionals who serve them. That's why people get up and come to work at Phonak every day. That's why our customers get up and open up their offices at 8:30 in the morning and see patients all day long, whether it's an audiology private practice, medical office, or retail store. What's inspiring to me is we all are working with the same purpose in mind.
Having said all that, I believe we, as an industry, need to find new ways to come together to find breakthrough strategies that would open up doors for all of us by reaching out to the people who need our services. We know that there are plenty of people out there who are not hearing as well as they could be, and are thus missing out in critical areas of their lives.
This is a lot easier said than done, and there are many individuals in this industry who are taking a collaborative approach. There are challenges, but the successful results of collaboration are evident, for example, in the hearing aid tax credit bill (www.hearingaidtaxcredit.org). H.R. 1646, the Hearing Aid Tax Credit, just attracted its 100th co-sponsor in only 5 months since its introduction in March. The bill has attracted bi-partisan support thanks to the efforts of Hearing Industries Association, who, along with consumer groups, have come together to raise awareness of hearing healthcare, and to support this legislation. It is really inspiring to see the diverse group of people that have set aside their differences and are working together to get the hearing aid tax credit bill passed. This kind of effort makes me really proud to part of this industry.
SMAKA: Another example of collaboration is the Hearing Loss Association of America's (HLAA) Chicago Walk4Hearing that you're chairing later this year (www.hearingloss.org), where consumers and professionals, some of whom may be competitors, will all be walking together for one cause.
ORSCHELN: Yes, agreed! I was honored when HLAA's president, Brenda Battat, asked me to be the Business Team Chairman. I thought it would be a great opportunity from a personal and professional standpoint, to bring people together from many distinct, and often competing, parts of the industry, to work for the common good. The goal is to raise money to help HLAA move their agenda forward and to support people with hearing loss.
So that's a very important goal, and this event is also a lot of fun. It takes the focus away from the business aspect of hearing healthcare, and puts it on making a difference in the community, both the local community, as well as the greater hearing healthcare community as a whole. HLAA and Brenda have done a great job of putting these walks together across the US and making them very successful in supporting their initiatives, and I'm very proud to be a part of that.
Our team at Phonak is going to be a big participant on walk day, October 18, 2009 in Chicago. It's a great time of year to be walking in Chicago, and hopefully, the weather will cooperate with us on game day.
SMAKA: It is encouraging to hear about the collaborative efforts in our industry to help people with hearing loss. Do you think we're effectively making headway toward reaching that large percentage of people who need hearing aids, but are not using them?
ORSCHELN: Our industry statistics would say that we still have a lot of work to do in order to make substantial headway to reach those people. I also don't think any of us yet know what impact the economy is going to play into this question. Although the industry seems pretty resilient judging from past history, I don't think we can say for sure what effect the current economic downturn will have on hearing healthcare.
I do think that it continues to be an acute issue in healthcare. I believe that the Veterans Administration has the potential to benefit the market in a positive way, because of their growth. The dramatic increase in veterans wearing hearing aids has certainly helped from an awareness standpoint. The first-time users in the Veterans Administration have increased dramatically and that may be having an impact on the overall market.
At Phonak, we are a part of a publicly traded company, so we are concerned with our success as a business, but that's not what gets us up every day and that's not what drives all of our decision-making. We are constantly evolving our company. Phonak has been known for premium-level hearing aids, power, pediatric fittings, BTEs, and FM systems. In this past year, you may have noticed that while we didn't necessarily change our strategy, we've certainly broadened it. This is because we continue to pride ourselves on great technology, and we want to help professionals reach as many people as possible. We've become a company that offers a full line of products, with more economy products than we've had in the past. We want to make sure that our products are made available to all people who need hearing aids regardless of the lifestyle they lead, their age, their level of hearing loss, or their budget. We are all facing a tough economy right now. We believe we have some of the best products available, and we want to ensure that the broadest range of consumers possible can benefit from them.
Phonak's Certéna offers a complete product line including a wide range of custom products as well as micro BTE and traditional BTE, accommodating mild to profound hearing losses.
SMAKA: Speaking of technology, where do you see the future of hearing aids going?
ORSCHELN: Sonova and Phonak are going to continue to enhance the technology we are currently using to make sure that Phonak products can be made available to anybody regardless of lifestyle, budget, or hearing loss. Our senior management is committed to offering a full product line and to being a comprehensive service provider. The more innovative technology that can help the hearing impaired, the better. I also believe offering increased services is important today and will become even more important in the future.
One thing that I ask our customers or potential customers when I visit with them is whether they consider product or service to be more important in their choice of hearing aid manufacturers. They tend to say it's a balance, that both are important.
However, they go on to say that if the company falls short on the service end of the spectrum, such as not listening to customer issues, not delivering products and repairs promptly, or making it harder for the practitioner to do his or her job, that a service failure is far less forgivable than an occasional product problem that can be easily fixed or repaired. Poor service will get a company fired faster than a product defect because occasional product issues are expected. Service defects should be avoidable.
That's the main message I've taken away from my interaction with customers. A major focus for us today and in the future is to provide the best products and services. By offering superior products and services, we can make a huge difference in a practice's customer satisfaction, growth and profitability. So while we will continue to innovate on the product side, our focus will be a balance of great service and the best product going forward knowing that great service can make all the difference.
Phonak's Exelia delivers the unique combination of cutting-edge technology, audiological expertise and wireless connectivity.
SMAKA: You mentioned visiting with customers and talking with customers. How does the CEO of a large company like Phonak make the time for that kind of relationship with customers?
ORSCHELN: I have learned in my career that the customer is the most important person in the organization. They are the ones who pay the bills, keep the company running, and keep me employed. To run this business properly, I need to listen to our current customers as well as potential customers. When you ask customers questions that are fact-based, they give you fact-based answers. You can then build your strategies based upon facts presented by your customers versus based upon a belief of how you think the customer should feel. The voice of the customer is critical to Phonak and the industry, and that's what's going to guide us to a leadership position. In a service-oriented industry like we are in, how can I expect to succeed if I don't listen to those who make us successful?
Also, another motivating factor for me is that it's fun to spend time with customers. I've never met two customers that are alike and that makes my job interesting. Phonak has been doing in-person customer training events to promote our wireless products, and I've been taking time to attend a few of these events as I want to have the opportunity to meet customers, introduce myself, and get some face-to-face feedback on how they feel about Phonak, our products, and our service. I value and care about our customers and what they have to say, both the good and the bad, and I'm really looking forward to these upcoming events.
SMAKA: Mike, it's been great speaking with you, and thanks for taking the time to speak with AudiologyOnline today.
ORSCHELN: Thank you, Carolyn. It was a pleasure.
About Phonak
Headquartered near Chicago, Illinois, Phonak, a member of the Sonova Group based near Zurich, Switzerland has developed, produced and globally distributed state-of-the-art hearing systems and wireless devices for more than 50 years. The combination of expertise in hearing technology, mastery in acoustics and strong cooperation with hearing care professionals allows Phonak to significantly improve people's hearing ability and speech understanding and therefore their quality of life.
Phonak offers a complete range of digital hearing instruments, along with complementary wireless communication systems. With a worldwide presence, Phonak drives innovation and sets new industry benchmarks regarding miniaturization and performance.
For more information please visit www.phonak.com or the Phonak web channel on Audiology Online.
