Interview with Paul Erickson President and CEO, Siemens Hearing Instruments
Share:
AO/Beck: Hi Paul. Thanks for spending some time with me this evening. I'd like to start by getting a little background on you. I know you have extensive international business experience. If you don't mind, I'd like you to tell me about your education and early business experiences?
Erickson: Sure Doug. When I finished my business degree at the University of Minnesota and began looking for a job, I focused my search on companies in Minneapolis that produced medical products. I was ambitious and looking for a way to get involved with international business and related challenges. To make a long story short, I ended up accepting an offer from Bill Austin to join Starkey. Starkey had a lot of great people and was experiencing terrific growth. They also had big intentions of growing their business in Europe.
In 1984, fewer than three years after joining Starkey, I was sent to Paris to work for Starkey's French company as Assistant Managing Director. The business was growing rapidly and I learned a lot. When Mike Jones, who was in charge of international sales at the time, asked me if I'd like to set up a business for Starkey in Italy I jumped at the chance. I ended up staying in Milan for 12 years.
In 1998, I joined Siemens and went to Brisbane to run their Australian company. We were able to reshuffle a few things, work hard, and within a year the business had doubled in turnover. After we restructured the business there, we set up SHI New Zealand in Auckland.
AO/Beck: Regarding your work in Australia, it must have been nerve wracking to disrupt and recreate a system that was up and running and essentially was working. In other words, I think many people would say, if it ain't broke, don't fix it.
Erickson: Well, in our opinion, it did need fixing. The difficulty is always getting people to take a fresh look at what they're doing and to be willing to change. There will always be people standing in the way because they consider the status quo to be acceptable and change to be frightening. But sometimes you can take a success and make it more successful with the right people, the right plan and the right motivation. If we're going to improve the products and services, we have to take some risk. Of course we can maintain the status quo without being very innovative, but if we're going to improve and grow, there will be risk.
AO/Beck: When did you leave the land down under and take over as President and CEO of Siemens Hearing Instruments in New Jersey?
Erickson: It was about 17 months ago. I believe we made the transition in April of 2000.
AO/Beck: When you got to New Jersey, did you find what you expected? Were the operations similar?
Erickson: Well, we've spent a lot of time studying the manufacturing process and Siemens manufacturing is pretty much the same worldwide, but that's where the similarities ended. First of all the markets themselves are quite different. From what I've seen, the US has the most complex and fastest-evolving hearing instrument market than anywhere else in the world.
When I arrived in New Jersey, my first priority was to assess the talents of the Siemens team. As you know, we lost two key people at that time and replacing them with competent people as soon as possible was paramount. Fortunately, we had an enormous pool of talented people, and that was immediately beneficial to our company as we restructured the management group. Fortunately, that has worked out very well and we have a very solid and highly experienced management team in place.
AO/Beck: What about the size of Siemens and the relative size of the hearing instrument division?
Erickson: Siemens is the 12th largest corporation in the world. Of course it will vary from number 8 to number 16, depending on what day it is and the stock market and other factors. But yes, Siemens is very large. I like to tell the story that when I joined in 1998, I had to meet with the senior management of Siemens to sign contracts and do all of the things one does when they join a company. Anyway, as I was flying back to Milan, I was reading the Herald Tribune newspaper and on the front page was a story that said Siemens was the 23rd largest company in the world, and the third largest spender on research and development (R&D). To me, that was confirmation that I had made the right decision to join Siemens. At that time, only Ford and General Motors spent more on R&D. So in comparison, the hearing instrument division is only a small part of Siemens, but it is a successful part. The hearing instrument division is now part of Siemens Medical Solutions, which focuses on the Siemens philosophy of integrated solutions to health problems.
AO/Beck: What about the current status of the hearing aid industry? What should we, as an industry and as a profession, be doing to grow the market?
Erickson: That's a big issue. We know that the quantity of candidates for amplification is growing dramatically. We know the current market is flat, and perhaps shows a bit of a downward trend. So we need to re-energize and re-double our creative efforts. First of all, as an industry we have to go back to the people that we have disappointed in the past and show them that hearing aids are better now. We have to find ways to reach the huge baby boomer portion of the market that are hearing impaired, but currently show no interest in hearing aids even though they need help, clinically speaking. And even though we have seen dramatic improvements in the quality of amplification over the past ten years, there are still secrets to unlock and room to improve on the technology side. Today's technology is not even close to what we will be offering the hearing impaired in the future. Hearing in noise is still a major opportunity for improvement. And wireless technology suggests some very exciting possibilities.
Another issue that I think, in an indirect way, affects growth in our market is the business management education of our professionals. I think it's probably shocking for some audiologists to get into their first professional position and realize that their ability to diagnose, manage and treat, as critically important as that is, is not what pays the bills. While they may be the best Hearing Health Care Professional in their market, they eventually realize that the business end of the profession is about managing the hearing aid business. Many audiologists are now taking business courses in their doctoral programs, and that will ultimately make an enormous difference. One cannot stay in business without knowing how to run a business, fill in HCFA forms, bill appropriately, market and sell the products and services, and obtain appropriate and fair reimbursement. Of course, business skills also involve personnel issues, marketing, negotiation, contracts and so on. So your original question was what should we be doing to grow the market, and the answer is to pursue excellence in all aspects of business and clinical practice, and understand, meet and exceed the wants and desires of the consumers and patients we serve.
AO/Beck: Paul, if you look into your crystal ball, where do you see the industry in 3 to 5 years?
Erickson: Within five years, I think everything will be digital. Once you spend the money for R&D, you maximize that investment by applying and spreading that investment across as many hearing aids as is possible. In other words, as we develop the technology in hearing instruments, hardware and software, the greatest flexibility and the least cost per unit is obtained by maximizing the knowledge across the entire product line. Even though digital technology right now is more expensive per unit, it will decrease as the R&D costs are absorbed across the product line and as more units are produced.
In addition, I think the dispensing model will probably change a little too. We are already building hearing aid shells using biocompatible, rapid prototyping technology. We call this LasR and we showed this new technology at the last AAA Convention in April. With LasR, we make 3D scans of ear impressions and send that 3D scan file to a machine that makes a highly accurate reproduction, or shell, from that file. We have also started offering e-ordering, where a Hearing Health Care Professional can create an order for a custom hearing aid online at our Online@SHI e-business Web site. Our customer gets immediate feedback about whether or not there is any missing information, or whether he has requested, for example, incompatible options. He gets immediate approval on the order specifications. So there are fewer errors when the online order arrives in the factory, as opposed to an order that is filled out by hand.
In the not-to-distant future, the next step will be to combine the scanning and creation of the e-shells we are already producing with the e-ordering that we are already offering. Essentially, the Hearing Health Care Professional will have his own in-office 3D scanner and will be able to send us an order with a file containing a 3D scan that includes the point cloud detail of each impression. His order will be shipped the same day. The next slightly more challenging step will then be to develop the technology to directly scan the ear. The technology isn't quite there yet, but it's going to happen.
AO/Beck: Paul, thank you for your time and expertise this evening. I'll look forward to the new products and development and I thank you for sharing a little about your history and your visions for the future.
Erickson: Thanks Doug. I appreciate your fine work at Audiology Online.
Click here to visit the Siemens Hearing Instruments website.
Erickson: Sure Doug. When I finished my business degree at the University of Minnesota and began looking for a job, I focused my search on companies in Minneapolis that produced medical products. I was ambitious and looking for a way to get involved with international business and related challenges. To make a long story short, I ended up accepting an offer from Bill Austin to join Starkey. Starkey had a lot of great people and was experiencing terrific growth. They also had big intentions of growing their business in Europe.
In 1984, fewer than three years after joining Starkey, I was sent to Paris to work for Starkey's French company as Assistant Managing Director. The business was growing rapidly and I learned a lot. When Mike Jones, who was in charge of international sales at the time, asked me if I'd like to set up a business for Starkey in Italy I jumped at the chance. I ended up staying in Milan for 12 years.
In 1998, I joined Siemens and went to Brisbane to run their Australian company. We were able to reshuffle a few things, work hard, and within a year the business had doubled in turnover. After we restructured the business there, we set up SHI New Zealand in Auckland.
AO/Beck: Regarding your work in Australia, it must have been nerve wracking to disrupt and recreate a system that was up and running and essentially was working. In other words, I think many people would say, if it ain't broke, don't fix it.
Erickson: Well, in our opinion, it did need fixing. The difficulty is always getting people to take a fresh look at what they're doing and to be willing to change. There will always be people standing in the way because they consider the status quo to be acceptable and change to be frightening. But sometimes you can take a success and make it more successful with the right people, the right plan and the right motivation. If we're going to improve the products and services, we have to take some risk. Of course we can maintain the status quo without being very innovative, but if we're going to improve and grow, there will be risk.
AO/Beck: When did you leave the land down under and take over as President and CEO of Siemens Hearing Instruments in New Jersey?
Erickson: It was about 17 months ago. I believe we made the transition in April of 2000.
AO/Beck: When you got to New Jersey, did you find what you expected? Were the operations similar?
Erickson: Well, we've spent a lot of time studying the manufacturing process and Siemens manufacturing is pretty much the same worldwide, but that's where the similarities ended. First of all the markets themselves are quite different. From what I've seen, the US has the most complex and fastest-evolving hearing instrument market than anywhere else in the world.
When I arrived in New Jersey, my first priority was to assess the talents of the Siemens team. As you know, we lost two key people at that time and replacing them with competent people as soon as possible was paramount. Fortunately, we had an enormous pool of talented people, and that was immediately beneficial to our company as we restructured the management group. Fortunately, that has worked out very well and we have a very solid and highly experienced management team in place.
AO/Beck: What about the size of Siemens and the relative size of the hearing instrument division?
Erickson: Siemens is the 12th largest corporation in the world. Of course it will vary from number 8 to number 16, depending on what day it is and the stock market and other factors. But yes, Siemens is very large. I like to tell the story that when I joined in 1998, I had to meet with the senior management of Siemens to sign contracts and do all of the things one does when they join a company. Anyway, as I was flying back to Milan, I was reading the Herald Tribune newspaper and on the front page was a story that said Siemens was the 23rd largest company in the world, and the third largest spender on research and development (R&D). To me, that was confirmation that I had made the right decision to join Siemens. At that time, only Ford and General Motors spent more on R&D. So in comparison, the hearing instrument division is only a small part of Siemens, but it is a successful part. The hearing instrument division is now part of Siemens Medical Solutions, which focuses on the Siemens philosophy of integrated solutions to health problems.
AO/Beck: What about the current status of the hearing aid industry? What should we, as an industry and as a profession, be doing to grow the market?
Erickson: That's a big issue. We know that the quantity of candidates for amplification is growing dramatically. We know the current market is flat, and perhaps shows a bit of a downward trend. So we need to re-energize and re-double our creative efforts. First of all, as an industry we have to go back to the people that we have disappointed in the past and show them that hearing aids are better now. We have to find ways to reach the huge baby boomer portion of the market that are hearing impaired, but currently show no interest in hearing aids even though they need help, clinically speaking. And even though we have seen dramatic improvements in the quality of amplification over the past ten years, there are still secrets to unlock and room to improve on the technology side. Today's technology is not even close to what we will be offering the hearing impaired in the future. Hearing in noise is still a major opportunity for improvement. And wireless technology suggests some very exciting possibilities.
Another issue that I think, in an indirect way, affects growth in our market is the business management education of our professionals. I think it's probably shocking for some audiologists to get into their first professional position and realize that their ability to diagnose, manage and treat, as critically important as that is, is not what pays the bills. While they may be the best Hearing Health Care Professional in their market, they eventually realize that the business end of the profession is about managing the hearing aid business. Many audiologists are now taking business courses in their doctoral programs, and that will ultimately make an enormous difference. One cannot stay in business without knowing how to run a business, fill in HCFA forms, bill appropriately, market and sell the products and services, and obtain appropriate and fair reimbursement. Of course, business skills also involve personnel issues, marketing, negotiation, contracts and so on. So your original question was what should we be doing to grow the market, and the answer is to pursue excellence in all aspects of business and clinical practice, and understand, meet and exceed the wants and desires of the consumers and patients we serve.
AO/Beck: Paul, if you look into your crystal ball, where do you see the industry in 3 to 5 years?
Erickson: Within five years, I think everything will be digital. Once you spend the money for R&D, you maximize that investment by applying and spreading that investment across as many hearing aids as is possible. In other words, as we develop the technology in hearing instruments, hardware and software, the greatest flexibility and the least cost per unit is obtained by maximizing the knowledge across the entire product line. Even though digital technology right now is more expensive per unit, it will decrease as the R&D costs are absorbed across the product line and as more units are produced.
In addition, I think the dispensing model will probably change a little too. We are already building hearing aid shells using biocompatible, rapid prototyping technology. We call this LasR and we showed this new technology at the last AAA Convention in April. With LasR, we make 3D scans of ear impressions and send that 3D scan file to a machine that makes a highly accurate reproduction, or shell, from that file. We have also started offering e-ordering, where a Hearing Health Care Professional can create an order for a custom hearing aid online at our Online@SHI e-business Web site. Our customer gets immediate feedback about whether or not there is any missing information, or whether he has requested, for example, incompatible options. He gets immediate approval on the order specifications. So there are fewer errors when the online order arrives in the factory, as opposed to an order that is filled out by hand.
In the not-to-distant future, the next step will be to combine the scanning and creation of the e-shells we are already producing with the e-ordering that we are already offering. Essentially, the Hearing Health Care Professional will have his own in-office 3D scanner and will be able to send us an order with a file containing a 3D scan that includes the point cloud detail of each impression. His order will be shipped the same day. The next slightly more challenging step will then be to develop the technology to directly scan the ear. The technology isn't quite there yet, but it's going to happen.
AO/Beck: Paul, thank you for your time and expertise this evening. I'll look forward to the new products and development and I thank you for sharing a little about your history and your visions for the future.
Erickson: Thanks Doug. I appreciate your fine work at Audiology Online.
Click here to visit the Siemens Hearing Instruments website.
