JKR

Sennheiser

Already managed by its second and third generation family members, Sennheiser employs over 2,000 people in 15 countries. There are familiar lessons to draw from its solid growth. One lesson is how well-designed products and relentless pursuit of technical innovation allow European manufacturers to overcome the disadvantage of high-wage labour. Another is how expansion into adjacent territories can be an enduring source of growth.

Strategists talk much about cross-category leapfrogging by organisations like Apple. Although noteworthy, such examples are the exception, not the rule. Sennheiser’s more cautious entry into parallel markets such as professional recording microphones, the barely visible earphones worn by stage performers, wireless amplifiers and surround-sound speakers have combined to secure steady growth.

Perhaps the most valuable lesson we can take from this German champion is to invest in our future. Sennheiser is one of the ‘Mittelstand’, the medium-sized family firms that make up such a sizeable portion of Germany’s thriving industry. Much of its success can be credited to the founder’s philosophy of putting customer value before short-term profit. It is also down to investment in mechanisation, using capital lent by state owned banks in a long-term partnership model now uncommon among Anglo-Saxon counterparts.

Above all, perhaps Sennheiser teaches us to rethink equity-based financing and a banking culture that favours selling off successful enterprises to the highest bidder at the earliest opportunity.

By Andy Knowles, Chairman, jkr. For the full article, see this week's copy of Marketing magazine.