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.
I 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].