Official Blog of Center10 Consulting

How Audio Giant Harman Broke Down Silos to Spark Innovation

on Wednesday, July 27, 2016
Noted turnaround specialist Dinesh Paliwal is transforming Harman International, an audio solutions company behind such iconic brands as Harman/Kardon, JBL and others. As Harman’s chairman, president and CEO, his mission in the digital age has been to transform the company from a founder-run, top-down culture to one that is customer-centric and driven by innovation. Paliwal has instituted major changes, including breaking down silos, adopting elements of a startup culture and setting up internal crowdsourcing — all with a relentless focus on reinventing the business. Innovation, he says, is not just about breakthrough scientific ideas. It’s about processes, too, such as making customer service better and running projects more efficiently in a new way.
recently interviewed Paliwal  on behalf of Knowledge@Wharton to talk about Harman’s transformation. What follows is an edited version of that conversation.
This interview appeared in K@W on June 14, 2016. You'll see me showing up as "Knowledge@wharton."

Knowledge@Wharton: Tell us a bit about Harman. When you came in, this was a very different company. You have really made a transformation happen. So talk to us a little bit about what it was, where it is today and where you see it going.
Dinesh Paliwal: In the past eight years, Harman has totally changed. I joined the company eight-and-a-half years ago and it had excellent brands like Harman/Kardon, JBL and many others. However, innovation had completely stalled, and there was nothing happening. We had about 1,700 patents, but they were also getting dated and there was nothing new coming out. You cannot [rest] on your laurels. After a while, those patents and brands [become less] relevant. To keep our business relevant and also to understand where the technology was going, we needed to do something. We were known as an audio company. I still get introduced as the CEO of Harman Kardon, which is not correct. We are Harman. Audio is only $3 billion out of the $7 billion of the company’s revenue.
So what did we do? I said the first thing we need to do is to create a structure where people can talk. I always believed if you cannot collaborate around your ideas, you cannot create. That means communication has to be, first and foremost, the platform. We had nothing but silos. Each brand was a company. They were so silo-driven that they had no standard email exchange. Different business cards, different email service. It was like the United Nations — the countries didn’t talk. United of nothing.
The first thing we said was destroy the silos. Put [everyone on] one unified email and communication network. I started writing letters to every employee, every week: a company-wide letter to bring them up to speed on what we were doing. I told them how bad certain things were. I also gave them respect for the company’s legacy. The No. 1 thing I said was this: if we don’t innovate, you can cut costs and live for another two or three years, but you will die because cost [reduction as a strategy] has a limit. In the end, it’s innovation [that will propel us forward].

From Personal Pain, The Motivation For Business Innovation…. Aetna’s CEO Mark Bertolini, on remaking the healthcare system

on Tuesday, January 26, 2016
From Personal Pain, The Motivation For Business Innovation….
Aetna’s CEO Mark Bertolini, on remaking the healthcare system

I had the chance to connect with Mark Bertolini at the WOBI World Business Conference in New York City and get his insights on how he is driving change in the industry.
The conversation was published in two parts in the Knowledge@Wharton website. See Part I & Part II here.

Roopa: So I am here today with Mark Bertolini, the CEO of Aetna which is now poised to be the biggest healthcare company in the U.S..

Mark Bertolini: Well, it depends on -- yeah, but we'll be close.

Roopa: Well, you're close.

Bertolini: We'll be big.

Roopa: You will be very big.

Bertolini: We'll be a Fortune 20 and a FTSE 30 company. So yeah.

Roopa: Fantastic. It's a nice place to start from.

Bertolini: It is.

Roopa: So you've been called many thing including "Healthcare's Mr. Fix-it."

Bertolini: Sure.

Roopa: And how do wear that mantle given that you've been in this healthcare economy for a while now? You've seen it from your perspective in the trauma care center when you were working there and now you're a CEO. How is it evolving?

Bertolini: Yeah. Well, I think, you know, through all of my experiences, in a level one trauma center as an EMT, Emergency Department Coordinator and, working in the hospital industry, working in the early days of managed care back in the 80's and then my own personal experiences with my son and myself in the healthcare system -- I realized that it wasn't getting any better. And actually in the late 80's and early 90's I had a set of these acetates. Remember when we used to have overhead projectors with acetates?

Roopa: Right.

Bertolini: And I pulled them out and I was talking about the stuff back then and it's nice to see, you know, almost 25 years later we're finally getting around to it and I think the issue is that we define health the wrong way and it became incredibly apparently to me when my son battled with cancer for quite some time and when I had my ski injury where I broke my neck the system wanted to fix the medical issue but wasn't at all concerned about the individual they put back into society. And so for me it was my pain and my limitations, my physical limitations trying to get my life back which you never really do. For my son, you know, it was his whole journey for a year-and-a-half, two years with cancer and then, you know, I gave him a kidney in 2007. It was just this whole journey where they just wanted to get rid of the cancer and once the cancer was gone they were done with him.

Roopa: Right.

Bertolini: And so I came to this conclusion that were a whole lot of things wrong with that but probably the most important thing was -- what do we define as success? And success is really healthy individuals are productive, productive individuals are economically, culturally, socially and spiritually viable and viable people are happy. And if we can do that individual by individual and community by community we'd have a much better world. And so how do we a design a system around that is really the point, right?

Roopa: Right. And how does that change how you think of Aetna's products and services?

Bertolini: So one of the things -- when I put my son into hospice in July 2003, July of 2002 -- July 15, 2002 -- I had to admit he was going to die in six months and he couldn't get curative services anymore. And when I got out and he was home and he graduated from hospice and today, you know, he's 30 and a productive human being in society, I was working at Aetna and I went to -- I was working with Jack Rowe and I said to Jack, "You know, we should change the way our end of life care program works. And let's waive the requirement that you have to admit you're going to die and let's allow people to get curative services while they're in hospice." And when we did that, we did a study for two years with self-funded customers because we weren't sure what -- we weren't sure if it was going to be a run on the bank and what we found was that instead of 25 percent of the people dying at home, 75 percent of the people died at home and we saw an 89 percent reduction in inpatient bed days and we saw 75 percent reduction in costs. And the families and the feedback we got on the program was, "This is incredible."