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Design Strategy

Medicom Is Making It on Its Own

The audio device is sleek and sophisticated looking, accented with shiny metallic details; its earphones have state-of-the-art sound quality, with the capability of reducing 85% of unwanted background noise. It's what you'd expect from Danish electronics maker Bang & Olufsen (BOb.CO), known for its high-end, high-design stereo equipment. Only it isn't an MP3 player—it's a new stethoscope.

The Littmann E3100 and E3200 electronic stethoscopes, released by 3M (MMM) last April, were created by industrial designer Medicom, a 20-year-old outfit that was spun off from Bang & Olufsen two years ago.

Though Medicom is on its own, it retains the Bang & Olufsen touch as it helps design products for medical devices and pharmaceutical companies. Rather than keep designers on staff, for instance, Medicom contracts them to work on specific consulting projects, just as Bang & Olufsen does. On the 3M assignment, the designers were even welcome to use any of the acoustic, sound-sensor, and other engineering technology that Bang & Olufsen had developed for consumer speakers, headphones, or stereos.

Medicom has changed in other ways, however. Medicom Chief Executive Henrik Kagenow pared down the staff, retaining engineers and biochemists, but dismissing manual production workers. In essence, he has turned the company, based in Struer, Denmark, into an innovation and design consultancy that focuses on health-care devices for other companies, rather than a maker of these products. "The first chapter in Medicom's history was to be a simple supplier with a production capacity," says Kagenow. "So we decided to become a device manufacturer with design capabilities."

The Bang & Olufsen Edge The new emphasis makes Medicom more like IDEO, Continuum, or Smart Design—firms that also design medical devices for big clients. The big difference: Medicom has direct access to its former parent company's renowned research, enabling it to move faster and incorporate high-end technology, such as Bluetooth capability, in the new Littmann stethoscopes. This means doctors can record and transmit heart beats directly into files for electronic medical records.

The stethoscopes also repurposed noise-reduction technology used in Bang & Olufsen's headphones. And then there's the physical design advantage—the Littmann stethoscopes look chic, not clinical. The tip used to listen to a patient's chest, for instance, has elegant lines and simple buttons with graphic icons that help practitioners easily switch frequencies for more detailed listening of difficult-to-detect heart murmurs and abnormal lung sounds.

At the time of Medicom's spinoff, Bang & Olufsen was struggling. While known for its beautiful products, from MP3 players and phones to stereo systems, sold at premium prices, its sales suffered as other design-conscious electronics makers, notably Apple, won over customers who wanted sexy-looking MP3 players and phones. In addition, new computers could house music collections, eliminating the need for complex and expensive stereo systems.

Apple's prices were cheaper, too. A Bang & Olufsen Serene cell phone went on the market for a hefty $1,275 in 2007. Apple's iPhone, which debuted the same year to widespread complaints of high prices, cost half that much. Bang & Olufsen needed to make some decisions to help its bottom line.

Changing Course Medicom was then basically a large-scale manufacturing company within Bang & Olufsen, which the company's leaders realized was not part of the core business of the overall corporation. "Think about it: Having a manual-production company in a country like Denmark doesn't make much sense," Kagenow says. "We couldn't compete in manufacturing wages. We realized a company like ours needed to focus on innovation and concept development."

Plus, Kagenow says, "we wanted structure, and we wanted focus. We wanted to create extraordinary design, to use the history of Bang & Olufsen. So we decided to become a B2B company."

Besides stethoscopes for 3M, Medicom has created a blister-pack of pills for such drug companies as Bayer (BAYGn.DE) and Sweden's Nycomed. The package is slightly curved, to fit more comfortably in a patient's hand, and echoes the shape of Bang & Olufsen's BeoCom cordless phones.

Medicom is developing a minimalist, slightly rectangular auto-injection device, which is meant as an alternative to scary-looking syringes, for an undisclosed partner. The company is also working on an egg-shaped drug inhaler for another undisclosed company. The device unfolds gracefully to reveal the inhalation pipe, but closes into a smooth, rounded object that could fit neatly and discreetly into a purse or briefcase.

On Oct. 8, Bang & Olufsen reported smaller-than-forecast losses for the first quarter of its 2010 fiscal year, suggesting the decision to set Medicom free might be paying off. Medicom seems better off as well. Kagenow won't disclose any financial figures, but he says: "We are growing in terms of selling services in industrial design."
Jana is the Innovation Dept. editor for BusinessWeek.

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