The Company That Lost its Way

James Curran

This is the last part of “An Audiologist in the Wilderness” series of posts by James Curran, one of the first audiologists in the hearing aid industry. 

Unbeknownst to us, Maico was reeling under a number of recent marketing and managing mistakes, and they continued to make them after we joined. The company had changed ownership a few times, first becoming a subsidiary of Schaeffer Pen, and recently had been purchased by Criton, a mini-conglomerate of the time. Criton was extremely successful, and was looking for a cash cow to go along with its main business of re-fitting aged airliners. The Criton executives were formidable graduates of the best business schools, and would totally dazzle me as they spent the day filling whiteboards with exotic formulas and mathematical theorems discussing (what I thought) was a simple matter such as setting the price of our next new product. Along with so many in the business world, they thought that it did not make any difference what was being manufactured or sold, all businesses were the same, and by adhering to standard business principles a good executive could be successful in any company.

So Bill and I found ourselves yanked out of the cozy, small time atmosphere of Qualitone and exposed to the bright light of Big Business Thinking. We really had no idea what we were getting into. Criton was based in Seattle, so its day-to-day relationship to Maico was at arms length. Few of their decisions turned out to be of material benefit. Uninformed decisions followed one after the other. I concluded the idea that all businesses were the same was not true for the hearing aid industry, which was based on interpersonal relationships that had developed over several years of trust and shared history, and functioned on a kind of unsophisticated, good old boy, mom and pop basis. Although Maico had a core of loyal, extremely bright and skillful businessmen dealers, they were treated as if they just didn’t understand what was good for them

The dealer organization was in shambles, as after 25 years of being an exclusive protected territory company, the Criton management decided to sell to all dealers, ala Qualitone and Audiotone. This demoralized one of the most loyal and solid dealer networks in the industry and had far reaching effects down the line, one that I didn’t fully realize at the time, for the company was never able to replace the sales they lost when great numbers of disaffected dealers stopped using their products. Some simply abandoned the company and formed one of the very first buying groups in the industry that still exists to this day

Schaeffer Pen had compensated their executives according to how well they met financial goals. Consequently, there was a lot of manufacturing and engineering infrastructure that needed attention, as investment in these areas had been sacrificed as management wrestled with profit goals. Early on I remember spotting an ancient ohmmeter in the engineering department that clearly was left over from WWII, still being used. Engineering was just stripped bare, and did not have the necessary equipment or facilities, with the exception of a beautiful anechoic chamber that was installed years ago by the far-seeing Leland Watson, the founder of Maico. The one thing that Maico had going for it was they had introduced the first directional hearing aids in the US. Otherwise, we thought the product line was also in shambles, with too large, outdated and clumsy looking, poor performing aids.

Bob Ilfeld, who was appointed President shortly before our arrival was a former professor at the Wharton School of Business at Pennsylvania and had managed his family’s business before it was sold. He had all the credentials, but little of the moxie the job required. A nice, well meaning guy, but not easy to know and unable to socialize easily with dealers. He could cook up wonderful strategems on paper that just didn’t pan out.

A case in point. Those days, dealers were accustomed to sending aids that needed repair directly back to the manufacturer. Until Bill Austin set up his successful all-make repair facility, dealers had the mindset to rely on the manufacturer to properly repair their aids. At Qualitone, repair prices were deliberately kept low, and the repair department was used as a loss leader to encourage dealers to do keep doing business with Qualitone. This was not an unusual practice in the industry and most companies broke even or endured the losses to build loyalty. But Ilfeld and the geniuses at Criton were determined to make the repair department a profit center or close it down. So repair prices were increased dramatically. And then I overheard Ilfeld remarking that Starkey’s all make repair was a Godsend to Maico; soon after he sent out a letter encouraging Maico dealers to send their repairs to Starkey instead of back to us. One more nail in the coffin.

Another example of how off Criton’s understanding of the market was is related here. We once were making a choice between two products to invest in and bring to market. One was a power behind the ear aid, which Bill and I knew was crucial as ours was pitiful. The other was a tinnitus masker. Ilfeld and the Criton boys bought the argument of the head finance guy(!) that the growth potential for the latter was out of sight because so many people had tinnitus, and it would cost less to develop. The two of us argued to no avail that a successful high power instrument immediately gave us traction and respect for our line in the marketplace. We lost the argument and Maico dumped even more dollars down a rathole.

We should have been disheartened, but we weren’t. We revamped the line as best we could and slowly began to see increases in sales, including the VA. Bill started hiring and purchasing new equipment. It was the dawn of the change from analog to digital technology, so the engineers, production executives and I attended evening courses at U of Minnesota to get an idea of what was in store. I took over the advertising and some of the marketing functions, and had a wonderful time preparing ads, marketing materials, and developing six and eight page specification sheets chock full of technical and audiological information. Despite a truckload of difficulties we plowed ahead and began to experience tangible signs of growth.

And then real disaster struck. I received a phone call at 6:00 AM one Saturday morning and learned that Bill had died unexpectedly during the night. A brilliant mind, everybody’s friend, a wonderful engineer, the heir apparent to Sam Lybarger’s mantle in industry affairs, and my partner in crime and close confidant for nearly 12 years: I was devastated. He shared my vision and was my shield and advocate when I was in a challenging mode with Criton, as I frequently was. I knew that without him, the jig was up. I moped around for a few months after his death and then turned in my resignation.

Sailing on smoother seas.

Bill Ely’s death meant the end of the fun. I felt I no longer was able to function in the same way   so I took a six month sabbatical, my first real time away from the hearing aid world in 20 years. Refreshed, I joined Starkey in 1982, without a title and without being given specific responsibilities. In those days, you were expected to carve out your own niche at Starkey. Bill Austin’s style is to let people find and follow their passion, and not stand in the way. If you ask him if you should do something, he’ll never give a yes or no. It’s up to you to do it if you feel strongly enough about it. Which is difficult for some people to handle, but it fitted me to a T. With all the experience I had, I was able to make myself useful in a number of areas. Our sales to the VA were down, so I began visiting the various clinics in the country, and sales began to grow. I found myself making presentations all over the US and received many invitations to speak overseas, for Starkey had factories in over 20 countries. I especially focused on the Far East, and spent months in China, Korea and other countries in Asia traveling and speaking. I became active in product development and collaborated in writing chapters in texts and articles for the journals. I collaborated with Earl Harford in developing an extremely successful internship program at the company for graduate students in audiology, where they received a stipend and spent six weeks learning about hearing aids from the ground up.

As he years passed, the changes in audiology that I had hoped for were reaching fruition.T he idea of audiologists dispensing had become completely acceptable in the profession. There remained a few last struggles; the first was to divorce audiology from the American Speech and Hearing Association. With that in mind, several farseeing leaders in the field founded the American Academy of Audiology, and about the same time, the Academy of Dispending Audiology was born. The latter group was in the forefront of pushing for a professional doctorate, the other impediment to audiology becoming truly autonomous. Starkey encouraged me to become very actively involved in these professional groups, and generously supported the AAA and ADA as they grew, as well as the American Auditory Society. I served on the boards of professional societies, and with that, the journey I had began in the Sixties as an outcast in the profession ended in a personally fulfilling way, for I was no longer considered unethical. I have to laugh at that, for I knew I never was, anyway.

I retired in 2000, having been involved in the fray from 1967, and now watch with fascination and green-eyed envy the wonderful products and assistive fitting devices today’s audiologists have at their disposal. In the day, we sat behind our one and a half channel audiometers, trying to guess what instrument to fit, doing our darndest to provide patients with the performance and fitting comfort that we knew they needed, but it was often impossible with the technology at our disposal. We’d have killed for today’s products, if we could have had them. I never have doubted that all dispensers, no matter their background, have always wanted to be able to provide efficacious amplification for their patients.

I suppose the conclusion to all this is that I and the other few audiologists who started in the industry about the same time as I did were just born a couple of generations too soon.