The dramatic turnaround of GN Store Nord

(Photo: GN Store Nord)

By Claus Rosenkrantz Hansen, CBS Library

When Norwegian Per Wold-Olsen arrived as the new GN Store Nord chairman of the board in 2009, the company was in the throes of a deep crisis. As early as 2007 the company’s very existence was threatened, the unsuccessful sale of the GN Resound subsidiary leaving C.F. Tietgen’s long-standing company, established in 1869, depleted and on the verge of being dissolved.

But like a dazed boxer about to be knocked out, GN Store Nord fought back, turning the fight to culminate last year in 907 m euro in turnover, a profit margin of 19%, and a remarkable partnership with Apple full of promise.

Associate Professor Martin Jes-Iversen’s book, Turnaround: The Battle for GN Store Nord, tells the tale of GN Store Nord’s struggle to once again become a viable global company.

Tightening its belt
While working on the book Jes-Iversen had unique access to the company’s archives, which allowed him to look over management’s shoulder and provided him with the opportunity to see what happened at meetings where difficult but necessary decisions about the company’s future were made.

“The basis for GN Store Nord’s turnaround is that they looked back at a time when the company was doing well. They identified the company’s core competencies, because without them there was nothing to build further on,” explains Jes-Iversen.

“The next challenge was cutting down on costs. Adjusting the level of expenditures was something Per Wold-Olsen greatly emphasised from the beginning. There were no excuses – everything had to be under control.”

Melding smartphones and hearing aids
With corporate costs under control, GN Store Nord could take the next step. They could build on what they had. Jes-Iversen believes that this is where companies truly get tested. Most companies can implement a drastic remedy and follow it, but if they are to really move up the ranks and become big, then they have to invest.

“This is when you need to know where your competences lie. But it’s also here that you have to identify what’s missing. GN Store Nord stood strong in terms of developing new technology, but they had difficulty selling it because they had failed to ask customers what they needed. This meant that the new technology stood alone. It wasn’t connected to the right customer groups,” clarifies Jes-Iversen.

GN Store Nord’s engineers, in other words, were scrambling to develop new technology, but they were fumbling in the dark. That needed to change. Per Wold-Olsen wanted the commercialisation of innovation.

A breakthrough came when the world’s first wireless 2.4 GHz hearing aid was launched in 2010, which in a later version in collaboration with Apple could be linked to music events, podcasts and mobile phone conversations.

This turned out to be a leap forward. Moving GN Store Nord from being down for the count to developing into a power house in the hearing aid industry, with its competitors, companies like Oticon, Widex and Siemens, standing groggily by on the sidelines.

No universal solutions
GN Store Nord is not alone in having to make changes after years of poor performance. Vestas, Lego, Danske Bank and Danfoss have also been in the same position.

No one magic, universal solution exists for a successful turnaround. In that way, all companies are different.

“Solving a company’s problems can’t be boiled down to a single empirical approach. Every company has a unique history. There is, however, one particular move that all companies must make. Like GN Store Nord they must focus on defining their competences as a prerequisite for transforming a downturn into success.”