In a rare and exclusive interview with PSNEurope, Phil Ward sits down with Audio-Technica CEO Robert Morgan-Males to reflect on his career in pro audio to date and to discuss the company’s European strategy for this year and beyond…
A familiar figure in UK and European pro audio and hi-tech MI, Robert Morgan-Males joined Audio-Technica in September 2013, having discussed a possible position since January that year. Initially the job title was marketing director for Europe, but it has just been confirmed that he is now CEO.
Latterly he had been nursing investments and travelling – working for Foster Electric in Japan and Australia on a consultancy basis that stretched from an initial six months to five years. The relationship was deep: Foster had merged with Fostex in 2003, and Fostex is still one of the brands handled in the UK by SCV Distribution. While under the earlier guise of SCV London, a branch of erstwhile French distributor SCV Audio now trading as Freevox, Morgan-Males represented Fostex and many other brands for eight years in the 1990s.
He had also been financial and operations director of pan-EU distributor Sonic8, and sat on the board of directors of Digigram hi-tech spin-off Auvitran. His resettlement in the UK reconnected him with Richard Garrido, who had already been president of Audio-Technica Europe for several years and was a founder of SCV Audio in Paris. As Morgan-Males puts it, Audio-Technica was “poised for the next growth phase” – and all the signs are that a significant phase of growth has happened. To get there, Morgan-Males has applied all of this experience to handsome effect.
He steps into deeply respected shoes. Audio-Technica was formed in 1962 by Hideo Matsushita, a magnetic cartridge pioneer with an averred goal to make excellent sound quality available to everyone. This meant finding pricing structures that would support the mass market, and the degree of altruism evident then seems to have been nurtured down the years.
The first headphones were produced in 1974, and first microphone in 1978 – transducers being at the heart of operations all along. As an organisation it has become one of the model pro audio/consumer crossover multinationals, with an equally established presence in Asia, Europe and the Americas: the main hubs are Audio-Technica Ltd, for Europe; Audio-Technica US, for all the Americas; Audio-Technica Greater China, including Hong Kong; Audio-Technica Taiwan; Audio-Technica India; Audio-Technica Singapore for the rest of Asia; and of course Audio-Technica Japan, which also supports Australia, New Zealand and South Korea. Japan presides over market-leading headphone sales in the domestic market, as well as a strong pro install performance for industry and commerce.
Europe has been a steady ship with a strong UK role since 1978 – established in Leeds because that’s where the original UK distributor was based, a firm that was acquired by in order to turn it into Audio-Technica Ltd.
About 15 years ago, according to Morgan-Males, a new focus on the B2B channels emerged by recognising the integration of the signal chain, applying the right economies of scale and bolstering distribution effort. This meant handling complementary brands in strategic territories, taking the mic-to-speaker model as the basis of integrated distribution, specification and support. Naturally this transformed those centres involved into the more sophisticated, quasi-consultancy-based operations of installation and pro audio reselling today, leaving behind the box-shifting mentality of a bygone era. “There are pure distributors, who try to have complementary brands but inevitably compromise on the lines they can obtain, and there are pure manufacturers locked into their own brand,” Morgan-Males says. “Then there are the hybrids, which is probably a model more suited to microphone brands like ourselves because we are, after all, at the start of the signal chain.”
Accordingly, France and Germany became direct markets, while a joint venture called Audio-Technica Central Europe was set up in Budapest. “It was with our distributor there,” he adds, “now responsible for our business in that region with the exception of Russia and Poland, which continue to be handled from the UK.”
Another factor, more obliquely, was the pole position of A-T as a consumer brand in Japan. “At Board level,” reveals Morgan-Males, “it was a strategic decision to recruit in preparation for the next drive behind this success, backed by sustained success at home. Like other Japanese companies we have three-to-five year plans with strong growth targets: the five-year plan for this started in 2013. So I was part of this willingness to recruit at the outset of this plan, which I’m very pleased to say we’ve been able to achieve.”
Time at Foster Electric in Tokyo had given Morgan-Males a solid grounding in the native business culture, something that has to help if your brief is then to interpret elsewhere on behalf of that culture. To some extent, Morgan-Males and his overseas peers report back to Tokyo as its ambassadors but, he points out, the organisation is intrinsically global.
“Audio-Technica is truly multicultural,” he says, “and regionally autonomous in its approach. What I like most about our president’s modus operandi – he’s the son of the founder – is his commitment to keeping local people in his regional offices who can understand their markets. They vary, so he likes the idea of running a global and a regional plan alongside, and he likes us to find the ways that they can meld together.
“It means a lot of exchange, a lot of internal meetings. We have product managers for each of our regional operations who will be in Japan a minimum of five times a year, guiding the development of the products.”
Interpreting is by definition a two-way process, though, and Europe needs quite a bit of… well, interpreting. “There’s a distinct practical issue. You could have centralised governance, which some would see as centralised control, or you can establish various R&D centres around the world and hope that they will take the regional differences and apply them to a coherent end product. But it’s not all about those regional differences any more. The way that customers behave is more homogenised.
“I don’t think manufacturers should combine consumer and professional sales simply for economies of scale, but you have to understand the growing similarities between B2B and B2C customers. They use the same online methods to learn about and experience the products and solutions available to them and the results that they require. Information exchange is across continents and instantaneous.
“Audio-Technica needs to be closer to our customers and closer to the market, and that’s what we’ve been driving in Europe by creating those direct markets and dedicated product managers. It’s remarkably cohesive, despite the reality that Europe is multicultural and has many different views of itself. Explaining these issues in Japan can be challenging, but the process is open-minded, constructive and positive. The common goal is the best product for our customers’ needs, B2B or B2C.”
A good example is the development of the ATUC-50 Digital Discussion System, which needed an internal team drawn from around the world rather than relying on a singular vision. “Globally we end up with the right product, which is a result of the mix of people within Audio-Technica,” Morgan-Males confirms.
Not only do B2B customers in Sydney and LA face the same challenges and appreciate broadly the same solutions, they talk to each more easily and more immediately today than ever before. “That’s why we are on those communication platforms,” Morgan-Males says. “For any brand today it’s about being part of those conversations, because they are many-to-many and no longer one-to-many. The traditional marketing I knew when I started is over. If you can be seen as a credible commentator and content contributor you are giving your manufacturing brand the best possible profile. You can’t dictate – perhaps you never could.
“It’s especially true of the professional sector. We were always hungry for information – you would delve into manuals and there would be word of mouth – but now those synapses connect so much more quickly. You have to be genuine, and the peer analysis is ruthless.”
The “calm base”, in Morgan-Males’ words, of Audio-Technica laid down in 1962 has been particularly helpful recently as the UK-Europe axis so well defined by Garrido’s tenure as president has been plunged into Brexit. Cometh the hour…
“It’s all about longevity. We all take long, considered views and there is a solid foundation of wisdom – don’t forget that this is a second-generation family business, and the sense of continuity is palpable. I’m very confident that it will go to the third and fourth generations. Part of my job on the board is to report back to Japan five times a year, and everything we’ve learned about Brexit has been measured against our own structure as it has unfolded. And we’re very comfortable with what we’ve been building in Europe.
“When I joined the company, we put measures in place to take effect over the following five years. To get closer to the market, we acquired our distribution partner in the Netherlands. We also acquired our partner in Spain. Now our direct markets have increased – Netherlands handles Belgium and Luxembourg, Spain handles Portugal – added to the ones I described earlier. Furthermore, we had a plan to extend warehousing from over-stretched Leeds to Utrecht – which now looks prescient but was in the pipeline all along. We’ve always been ‘pan-European’, and we’ll stay that way.”