Niels Jacobsen, who joined Oticon in 1992 and became its president and CEO in 1998, is only the fifth president of the company since Hans Jørgen Demant began distributing hearing aids in 1904.

Although Oticon and its parent company, William Demant Holding A/S (WDH), are celebrating their 100th anniversary this year, the company’s leadership leaves no question that its focus and enthusiasm is firmly on the present and future. In June, more than 700 guests from 35 countries—including about 300 dispensing professionals from North America—converged on Copenhagen for a week of celebration and education. The event featured tours of the Oticon’s Danish facilities, samples of Copenhagen’s rich historical and cultural sites with a particular emphasis on Danish design concepts, and theme dinners sponsored by the company. A full day of educational seminars was also presented that featured presentations from author Tor Nørretranders, brain expert Hans M. Borchegrevink, marketing researcher Lindsay Zaltman, Oticon researcher Claus Elberling, and the National Acoustics Laboratories’ Harvey Dillon.

Oticon Director of Sales Steen Bindslev, Director of Marketing Vibeka Willumsen, and President of Oticon Inc Mikael Worning.

Oticon is the second-largest hearing aid manufacturer in the world. Although the company declines to discuss unit volume and market share figures, HR estimates that Oticon and sister-company Bernafon have a worldwide market share of about 17% compared to Siemens Hearing Instruments’ 23% market share. Hearing aid sales represent close to 90% of the WDH’s total worldwide revenues (about $630 million), with the remainder coming predominantly from test instrument manufacturers Maico Diagnostics and Interacoustics, as well as the company’s Personal Communications Division which includes of Phonic Ear, Logia, and Sennheiser Communications.

Oticon was one of the first truly international hearing aid companies, developing a robust distribution network in the early half of the 20th century. “Oticon has established itself through the internationalization of its business,” says President and CEO Niels Jacobsen. “This company started with offices outside Denmark [in Norway and Sweden] in 1911, then in St. Petersburg and Helsinki in 1914, just prior to World War I. It has been the leader in the globalization of hearing aids. We have about 4300 employees, with more than 3000 employed outside of Denmark. We have our main production facility in Denmark, but we also have offices located in 22 countries around the world and sell hearing aids in 120 countries.”

Oticon has established itself during the last two decades as a technology leader with a reputation for developing audiologically-based products that acknowledge the “human link” between the product and the individual patient. Research and development at the company represents an impressive 8% of its gross revenues. Oticon employs over 60 audiologists at its US headquarters in Somerset, NJ, in addition to another 300 staff members.

The Demant Family in 1902. Hans Demant started distributing Acousticon hearing aids on June 8, 1904, the result of assisting his wife Camilla Louisa Demant with her hearing loss. Upon his death in 1910, his son William (far left) took over the family business.

Jacobsen—who is only the fifth company president after Hans Jørgen Demant began distributing hearing aids in 1904—attributes much of the company’s success to the talent and experience of his staff. Many of Oticon’s employees have been with the company for over 20 years. “Having a lot of history means that you’ve tried a lot of things and, hopefully, made a lot of progress while minimizing the mistakes,” says Jacobsen. “Being focused on continuity and having the same people in the company for many years means there is a wealth of knowledge about what has been tried, what has been developed, what works, and what does not work. I believe this continuity, stability, and unity in direction means that we make fewer mistakes.

“On the other hand,” continues Jacobsen, “with older companies, there is always a risk of losing that necessary vitality to engineer and implement new ideas. We believe that our role in the hearing industry is very much driven by long-term research—the starting point for all of our products—and transforming this knowledge into excellent products and good relationships with hearing care professionals. No matter how you look at it, the end result always has to be measured in terms of user benefits: good fittings through the hearing care professionals in all of the different global markets.”

Mikael Worning, president of Oticon US agrees. “The interesting thing that I noticed is how Oticon uses its knowledge to guide product innovations,” says Worning. “In the last 15 years, this industry has become extremely knowledge-based and is increasingly moving toward scientific solutions based on our knowledge of the auditory system. Combining knowledge with experience is how you reach wisdom. I think we do an excellent job of combining this wisdom with the vitality of the organization. And this makes for an extremely powerful combination.

“It’s true that you have to have a respect for the legacy and the wealth of experience obtained by being in business for 100 years,” continues Worning, “but you also have to maintain a dynamic and innovative environment. This has been done very effectively and consciously at Oticon.”

People First: Oticon and Hearing Industry History
In some ways, the “People First” theme that pervades everything Oticon actually originated with the company’s founder, Hans Jørgen Demant, who inherited his late uncle’s sewing machine and bicycle factory, called H. Demant, in 1897. Hans’ wife, Camille Louisa Demant, began to experience severe hearing problems at age 42 which, in those days, essentially meant becoming totally isolated from the world. The Demant’s were well-known members of Danish society, and Hans was determined to help his wife.

A young William Demant. The photo was shot on Broadway during a trip to New York in which he persuaded General Acoustic Co to continue its business relationship after his father’s death.

The coronation of Queen Alexandra in 1902 unexpectedly changed the course of the Demant family—and, ultimately, the hearing industry. Princess Alexandra suffered from otosclerosis. The young Miller Reese Hutchinson, who had followed Alexander Graham Bell’s invention of the hearing aid with one of the world’s first commercially available electronic hearing aids—called the “Akoulallion”—was summoned to the Court of St. James to demonstrate his new device. Princess Alexandra used the Akoulallion with success and much fanfare during her coronation, prompting Demant to travel to London to buy one of the aids for Camilla. Upon his return and Camilla’s use of the device, a number of people in Denmark began to ask him if he would import more of the devices. As their son, William Demant, would later recount, “All [my father] wanted to do was buy one instrument for my mother, but that one instrument started an avalanche.”

On June 8, 1904, Hans Jørgen Demant signed a contract with General Acoustic Co of New York City, making him the sole agent for Acousticon hearing aids in Denmark. Demant was officially in the hearing aid business. In ensuing years, he obtained more distribution rights to the device in Denmark, Norway, and Sweden, and advertised the products in newspapers with great success. He began to amass a small fortune, but he died in 1910 after a long struggle with diabetes.

His sons, William and Jørgen, inherited the family business. At the time of Hans’ death, the boys were attending Copenhagen Dental College. Initially, they were simply going to sell off the surplus hearing aids. However, they were so successful—and had so much fun traveling around and selling the devices (and spending much of the proceeds)—that William decided to continue the business.

One of William Demant’s earliest successes was to install hearing aid systems in Danish churches, a project initiated by his father. By 1923, 70 churches had Acousticon systems. These were carbon hearing aids that generally featured a double microphone and four earpieces. In later years, the systems would be widely installed in theaters and playhouses.

World War I and the Great Depression had predictable financial effects on the company. However, this period brought with it a number of new innovations, such as a bone-conduction component to the devices and the switch from carbon to vacuum-tube hearing aids. It also prompted new production agreements for the company. Imported parts from the company’s US supplier, Dictograph Products of New York City, were classified as radio components by the government and were therefore becoming prohibitively expensive. With the outbreak of World War II and the Nazi occupation of Denmark, Demant found it impossible to keep shipping components from the US, so he began to produce his own.

Demant despised the Nazis and their occupation of Denmark. At one point, he placed his life in peril during a failed attempt to help four Jewish men escape deportation to a concentration camp. The plan went awry when someone outside of the group informed on them. Unfortunately, the Jewish men were sent away to the camps (only one survived). In retribution for the escape plot, the Gestapo ransacked Demant’s home and as a warning burned in the street one shoe from every pair in the house.

With the end of the war, Demant joined Charles Lehmann who was a former president of Dictograph Products. This began a long, powerful partnership that would culminate in a vacuum-tube hearing aid called the “Oticon” and the establishment of the American Danish Oticon Co. The company continued selling hearing aids in Scandinavia, as well as exporting hearing aids to the US. It also reestablished its exports to Russia.

In 1951, the Danish government, following Britain’s lead, included the provision of hearing aids in their government health care system. The result was a financial windfall for the two Danish hearing aid manufacturers, Oticon and Danavox. Competition for the contracts was fierce. When Danavox won a contract for 1500 aids—about 1-year’s worth of production at the time—Oticon turned largely to its export business to make up for the lost sales. This would prove to be a pivotal move, providing the company with an impetus to concentrate on international distribution. (The winner-take-all contract system consumed much of the R&D of the Danish hearing aid companies, and the contract aids were generally not suitable for commercial markets. At the suggestion of the Danish State Hearing Centers, OTWIDAN was formed in 1964 for Oticon, Widex, and Danavox to make joint offers on the contracts, thus dividing production more evenly.)

Hearing aids of the early-40s were large, vacuum-tube devices that were heavy and unwieldy. In 1945, the monopac hearing aid was introduced in America by Beltone Electronics, and it soon became the template for the rest of industry. In 1953, Oticon introduced its first transistor hearing aid—the Oticon T3—allowing hearing aids to move from body-worn to one-piece headworn devices.

About this same time, Oticon also unintentionally created a tough competitor. Two key employees, Christian Tøpholm and Erik Westermann, had a serious disagreement and parted ways with the willful Demant who gained a reputation for being increasingly demanding as he moved into his 70s. The two men left the company and started Widex in 1956. Today, Widex ranks with Oticon among the six largest hearing aid manufacturers in the world.

Bengt Danielsen, Bent Simonsen, Torben E. Nielsen, and Henning Mønsted Sørensen—the “Gang of Four”— managed the company for 30 years from 1957-1987.

The late 1950s and the 1960s brought a worldwide surge in sales and industrial prosperity. William Demant gradually withdrew from the everyday management of his company, although he technically remained at his post until 1968 (Demant died in 1979, 6 months after the company’s 75th anniversary). Succeeding him were Bent Simonsen, Bengt Danielsen, Torben Nielsen, and Henning Mønsted Sørensen—known internally and within the industry as the “Gang of Four.” The men would essentially run the company for 30 years from 1957-1987. The Gang of Four oversaw a “golden age” at Oticon, with a series of rapid expansions to the company’s production capabilities, as well as innovations like eyeglass hearing aids and the adoption of printed circuits.

The 1960s also saw continued growth in the company as Simonsen, Sørensen, and colleagues expanded and built distribution networks in countries like England, West Germany, Holland, Switzerland, Italy, Spain, Turkey, India, Mexico, Brazil, Canada, Australia, and the United States.

In 1965, Oticon opened its US office in New Jersey, and the company made fast inroads into American universities, the Veterans Administration, and even large retail outlets of the day like Sears & Roebuck. Total hearing industry sales in the United States during 1965 approached 400,000 hearing aids, with BTEs comprising 47% of the market, eyeglass aids 30%, body aids 17%, and ITEs 6%. The company began to foster a reputation as an information clearinghouse by sponsoring large “Oticongresses” during the late-60s and the early-70s that had as many as 500 dispensing professionals and ENTs participating in the events. It also established the Eriksholm Research Center (see sidebar). Oticon became a market leader and, according to the company, was the largest hearing aid manufacturer of the day. For most of the 1970s, the company prospered as a result of success in exports and BTE development.

However, in the late-70s, Starkey Laboratories introduced its ITE hearing aids along with a no-obligation trial period that almost immediately impacted the hearing industry. Starkey and other companies came to dominate the ITE market and make substantial inroads abroad. Oticon was slower to react to the ITE trend because it continued to place emphasis on what it perceived as the greater sound quality and features afforded by BTEs.

Hearing aid sales in the US surpassed 1-million units by 1983, and 49% of these aids were ITEs, while 47% were BTEs. Clearly, the tide had turned, as integrated circuits (ICs) and smaller hearing aid styles were revolutionizing the industry. Although Oticon continued to do well financially, its leadership position in the market began to erode, and some long-time employees assert that the company during this period had become a victim of its own success: it was starting to stagnate. By the end of the 1980s, Oticon supplied about 10% of the world’s hearing aids.

Oticon’s corporate headquarters are located in Copenhagen’s historic Tuborg Brewery mineral water factory.

Oticon’s “Modern Era”
The Gang of Four and other company leaders envisioned a radical change for Oticon when it selected Lars Kolind as CEO in 1988. Kolind ushered in what most at the company consider to be the “modern era” at Oticon by essentially revamping the entire organization. A skilled business manager with a strong idealistic streak, Kolind energized the company by bringing most of its departments under one roof inside a new headquarters (Copenhagen’s historic Tuborg Brewery building), establishing a “paperless” office that relied on email (a radical concept in 1990), devising a managerial system in which employees had rolling workstations that could be moved from one project group to another and virtually eliminating job titles. Although it was not without its problems, the system ultimately proved successful and remains largely intact.

In some ways, Kolind can also be credited with rediscovering the company’s “People First” history that dates back to Hans Jørgen & Camilla Louisa Demant. Throughout the early 1990s, Kolind would emphasize the concept of building technology geared to meet human needs. Kolind et al.’s mantra was that Oticon wanted to develop and manufacture products “to help people live the lives they want, with the hearing they have.” This laid the foundations for what would become known as Oticon’s Human Link program, a holistic rehabilitation system that recognizes hearing aids as only one part of a comprehensive hearing health care program.

Lars Kolind was president of Oticon from 1988-1998, ushering in what some see as the company’s modern era.

Although Kolind’s system for modernizing and breathing new life into the company was a success, the myriad projects he initiated were sapping the company of profits. Enter Niels Jacobsen in 1992. Jacobsen was an accomplished finance and operations manager who had helped run several large, worldwide companies like Atlas and Orion. As Kolind himself explains: “Niels was my diametric opposite, but he was the perfect choice for Oticon. He asked me right away: ‘Are you on some kind of 60s trip, or do you want to run a business?’”

Although Kolind and Jacobsen were almost surely at odds with each other from time to time, this unlikely management team made for an effective combination. Within a year of Jacobsen’s hiring, Oticon was back on solid financial ground, and by 1993 the company’s MultiFocus and PerSonic hearing aids were helping it gain market share. Oticon raised its operating profit by 61% in 1994, placing it in position to attain Kolind’s goal of regaining a leadership role in the industry through organic growth—and acquisitions.

In 1995, Oticon purchased the Swiss company Bernafon-Maico (Ascom Audisys AG), an acquisition which propelled it into close proximity with the unit volume numbers enjoyed by Siemens Hearing Instruments and Starkey Laboratories at that time. The purchase also provided it with the important test equipment manufacturer, Maico Diagnostics. Later that year, Oticon became a publicly-owned company and was listed on the Danish Stock Exchange as Oticon Holding A/S (later changed to William Demant Holding A/S). In 1997, WDH purchased Phonic Ear, a leader of wireless ALDs in educational settings. In total, WDH acquired nearly 40 companies from 1995 to the present, including Interacoustics and Dahlberg Sciences Ltd-Canada.

In fact, Oticon’s purchase of Bernafon can be seen as one of the key linchpins for a period of wild industry consolidation. Soon after, ReSound purchased 3M Hearing Health; Beltone Electronics purchased Philips Hearing Instruments; GN Danavox purchased ReSound, Beltone, and Danplex; Phonak purchased the recently merged Unitron, Argosy, and Lori-Medical group; and Starkey purchased Qualitone and MicroTech. “Economy of scale” was a frequently uttered phrase by industry leaders at the end of the century. And with good reason: the DSP race was on—and the DSP race is expensive.

Companies scrambled to place their first digital products on the market. Oticon helped launch the digital era in late-1995 when it introduced the first commercially available full digital BTE aid, DigiFocus (Editor’s Note: The Nicolet Phoenix was technically the first digital aid, but it was a pocket/BTE device and was never widely distributed). This was followed by several other digital product lines, including DigiFocus II, Adapto, Gaia, Atlas, Sumo, and Go.

Per Kokholm Sørensen (r, pictured with HR editor Karl Strom) is in charge of assessing existing technologies for their application in hearing aids and structuring research groups.

Syncro and Ongoing Product Development
In May 2004, Oticon launched Syncro—which the company views as the “next big step” in digital hearing aid development. Per Kokholm Sørensen, who is one of the two team managers of Oticon’s Technology Team and serves as the company’s resident futurist, says Syncro is the culmination of an “ecosystem” approach to product development, whereby different project groups continually research and develop new ideas within defined technology areas.

“If one could envision the landscape of an integrated circuit,” says Sørensen, “the chips consist of an ‘ecosystem’ of many different building blocks that control the functionality for microphones, amplifiers, filtering components, etc. Likewise, our Technology Team continually develops these building blocks in a kind of ecosystem of projects, so each of the IC building blocks represents one distinct research or project development group. Therefore, when it came time to develop Syncro, the product developers could pick and choose from a ‘super-library’ of these functionality blocks, depending on what they wanted to do within the product, rather than try to create everything from scratch. Essentially, what you see in Syncro is a culmination of many ideas and many generations of these functionality building blocks—some dating back in research 6-7 years while others being very recent.”

Jes Olsen, an engineer who was instrumental in developing open ear acoustics and is the “project owner” of Syncro, explains how the company researches and develops hearing aids.

Syncro has reportedly been designed with “artificial intelligence” and was inspired by the brain’s natural ability to detect and optimize speech while filtering out undesired sounds. “We were trying to find something that would be more robust and would make the right selections in more cases,” says engineer Jes Olsen, director of business and product development at Oticon and the “project owner” of Syncro. “What Syncro does differently than the other devices is that it doesn’t try to predict what might be the best processing algorithm for a particular acoustic environment—a difficult task due to the complexity of rapidly changing acoustic environments. Instead, we decided on a system where you allow ‘parallel processing’ of different versions of the signal to be manipulated in real time, then analyze the outcome of the signal at various stages in the processing. The instrument looks for which of the processed signals provides the best voice-over-noise ratio...You can think of it as if there are several hearing aids working on the same signal at the same time, and the user only listens to the best one.”

Syncro uses open ear acoustics, which was originally developed by Olsen and colleagues at Oticon. The product also employs in its processing new WDRC research which indicates that people who have sensorineural hearing loss may not have the same loudness-grading abilities perception as normal-hearing individuals.

Another unique feature of Syncro is its Multi-band Adaptive Directionality system which can maintain separate polar patterns for up to four different frequency bands. The system can attack multiple noise sources, as long as those noise sources are at different frequencies. Olsen also points out that the system provides new solutions for problems typically associated with directional microphones and low frequencies, like internal microphone noise at lower signal intensities and wind noise. (For a review of Syncro, see Mark Flynn’s article in the April 2004 HR.)

“I think there are many other ways to use the signals coming from two microphones,” says Olsen, “and I think you’ll see this research exploited in products of the future. We’ve really only seen the beginnings of digital technology. We have tons of ideas about how to apply even more processing than we are able to do under today’s [technical restrictions].”

The chips for Oticon products are manufactured at nearby DancoTech A/S, a state-of-the-art facility run by Technical Manager Jan Storgaard and Managing Director Torben Frantzolet.

The Technology and Business Teams also benefit from their close proximity to DancoTech A/S which makes the electronic chips used in Oticon products. Many members of Oticon’s R&D staff spend nearly half their time at DancoTech. Similarly, Oticon is one of the few manufacturers that has not moved their manufacturing facilities to Asia, and they say this allows them to introduce products faster and keep in better touch with production needs.

Although some industry experts point to a melding of hearing aids and wireless products, Sorensen believes that a leap to “total communication” devices is still a some years away. “Before the IT bubble burst in 2000, many thought that in 1-2 years everybody would be carrying around ‘total communication’ devices. But I think [the IT bubble] reinforces the idea that you really need to fulfill a genuine consumer need to succeed with a product. Only a few people will wear [headworn] devices just for the fun of it. Until it’s really fulfilling a genuine need, these products will occupy the status of gadgets.” Having said that, Sørensen also believes that total communication devices are inevitable: “I think [these devices] will come, but it may take more than 5 years. And, in another 10 years, I think we’ll have a completely different idea of what [wireless] devices look like and how they’ll be used.”

“The hearing industry is obviously related to communication equipment in general,” says Jacobsen, pointing out that most of the larger companies have headset and personal communication divisions. “We are all involved in different types of communication equipment, and the key here is: 1) Audiological knowledge and [miniature] electronic acoustical engineering is a prerequisite for the development of these products, and 2) There is a need for wireless technology in the hearing aid sector and in the headset sector. So, our emerging technologies and knowledge for product development can be re-used or adapted in both camps.”

Looking Forward, Not Backward
As shown by its history, Oticon has fostered a “People First” philosophy with a systematic R&D approach to recapture its leadership role in the hearing industry. A 1971 interview with William Demant says a lot about his vision for the future and coincides well with the company’s philosophy:

“There is no doubt that new technological developments will affect us...When we talk about development today, I think that two years sounds like a long time. But we are gaining greater insight into the psychological problems associated with hearing loss, and how we can alleviate these problems. One thing is certain: We should look at different aspects of hearing aid development so that hearing aids can be worn daily and become an integral part of people’s lives. From a manufacturing viewpoint, this requires gathering more knowledge about the challenges of hearing loss and hearing aids. In my opinion, our task is not just to sell hearing aids, but also to contribute to helping people win back some of their hearing—just like my father did for my mother.”¹

Jacobsen says that transforming advanced technology into actual human benefits so people can communicate and live the lives as they choose remains the driving force behind the company. “The thing that makes me the most happy every day going to work is the fact that we have a large group of employees and managers in Denmark and around the world who all understand in what direction we’re headed,” says Jacobsen. “This makes life easier and more fun. We don’t have arguments about what we’re doing; we have a common understanding and a willingness that drives the company.” w

Acknowledgements
The editor thanks Nancy Palmere and Melanie Kleinhammes at Oticon for their assistance in arranging the interviews and much of the photography for this article. Additionally, historical information was supplied by Claus Nielsen and Oticon’s official histories, Founded on Care and Eriksholm: The First 25 Years, as well as former HR editorial director Marjorie D. Skafte’s 50 Years of Hearing Healthcare.

Eriksholm Research Center Looks “Beyond the Audiogram” A few miles south of the imposing Kronborg Castle—where the paternal ghost of Shakespeare’s Hamlet haunts the turrets—is another old castle-like structure with an audiological history. Eriksholm was originally built as a manor house in 1862, and Eriksholm Research Center was established on the site by Oticon in 1977 to focus on audiological strategies that might help people hear better and enjoy their hearing aids more.7 Graham Naylor predicts that individual parameter adjustments will give way to more individualized fitting systems that consider a patient’s entire “auditory ecology.” “What you see in Oticon’s research is that we are committed to a comprehensive approach for solving hearing problems,” says Eriksholm Research Director Graham Naylor, PhD. “In days gone by, individuality of the patient was primarily determined by the audiogram—which is only one small part of a patient’s profile... Once you consider the full range of the ‘auditory ecology’ of the patient, the better chance you have at coming up with a right solution for a specific individual.” Claus Elberling Poul Erik Lyregaard The emphasis at Eriksholm has been to address the common, practical needs of hearing aid end-users. The late Poul Erik Lyregaard, who died last December, and Claus Elberling, PhD, were the driving forces during the 1970s and 1980s for establishing the center’s important research. Lyregaard started systematically using test panels comprised of challenging cases, work now continued by Audiology Technician Claus Nielsen. By using the results from these test populations, the Eriksholm team helped developed several new fitting strategies, and these ideas ultimately led to the underlying processing strategies found in most of Oticon’s high-end products. The Eriksholm team in the late-80s were reportedly the first to come up with the “open ear” concept, a system that avoids gain in the low frequencies and the introduction of noise. This research culminated in the introduction of the Personic 430 and is widely used in a variety of products on the market today. In the early 90s, Elberling forged close ties with Stig Arlinger, Thomas Lunner, and Johan Hellgren at the University of Linköping in Sweden. Many of their ideas were used in the JUMP-1 experimental digital hardware platform used by researchers worldwide. This research ultimately led to processing schemes such as Adaptive Speech Alignment (ASA) and the SKI rationale used for steeply sloping hearing losses. Eriksholm has also established collaborative research with many other prominent worldwide institutions, including the House Ear Institute, NAL, and the MRC Institute of Hearing Research. The Eriksholm Collection is an impressive hearing aid museum, with Audiology Technician Claus Nielsen serving as its curator. One important idea that came from Eriksholm research was the realization that there are few “across the board” solutions for hearing loss. Naylor cites Stuart Gatehouse’s work as showing how personal characteristics “beyond the audiogram” are providing ways to predict what kind of amplification should be applied for each individual. “We’ve experimented a great amount with individualized fittings where we’ve pushed the number of variables used to fit patients both within, and also outside of, the audiogram,” says Naylor. Mikael Worning sees this as the next logical step in hearing aid development, as evidenced by Syncro: “I think you will see more of this kind of interactive, multifactoral input by patients—which is why we pursued what we consider to be the next paradigm shift in hearing aids: artificial intelligence. We have to move away from fittings with individual trimmers and instead move toward a more holistic system that considers fitting the individual for his/her unique needs.”

Karl Strom is editor of The Hearing Review. Correspondence can be addressed to kstrom@medpubs.com.

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