Strategy and businesses

Two years ago, we introduced Phonakʼs groundbreaking Marvel platform: the result was two years of clear market leadership, with an industry-record number of instruments sold and every form factor marking significant sales growth over its predecessor. Even in 2020, Marvel remained the top-ranked hearing aid among hearing care professionals.

This year, we took Marvel to the next level with the launch of Phonak Audéo Paradise, which combines an entirely new sound processing chip with a motion sensor and allows for multiple simultaneous Bluetooth® connections. Paradise provides unrivaled sound quality, with adaptive speech enhancement, dynamic noise cancellation, and motion sensor hearing, which self-adjusts for conversations on-the-go. Multiple connectivity provides even greater ease-of-use and access to a wide range of digital apps and services, controllable by a tap of the finger on the ear. The motion sensor does not just contribute to hearing performance and easy handling: it opens up a path to add further capabilities and benefits through sensor technology in the future.

In 2021, our Cochlear Implants business launched two breakthrough sound processors founded on Marvelʼs leading technology and market reputation: the Naída™ CI Marvel for adults, and the Sky CI™ Marvel: the worldʼs first dedicated sound processor specifically designed for children. The benefits that these bring to recipients – self-adjusting sound programs, hands-free calling, direct no-hassle enjoyment of music and television, and compact wireless communication, all without the need for additional connection devices – can transform lives, and are currently unique to our cochlear implant solutions. Marvel technology is now also available to “bimodal” recipients, who have a sound processor on one ear and a hearing aid on the other, thereby providing state-of-the art solutions for all cochlear implant wearers.

The powerful market performance of these advanced technologies, along with the continuously increasing customer satisfaction and penetration that Sonova has seen over the past decade, suggest that an excellent hearing experience still remains vital to consumers, and that there are ample opportunities to further advance through even better performance and additional functionalities. We know that we are far from having achieved our solutionsʼ full potential – and therefore from any “commoditization” in our business.

An omni-channel strategy gives us a flexible and agile method of approaching consumers who have different preferences about where and how they want to engage with us and our hearing solutions, by providing our sales people with multiple points of contact and influence. Success in this strategy relies on having access to a broad set of sales and lead generation channels, paired with a systematic, process-driven approach to define and track the indicators that mark new opportunities.

We have applied this approach in our Audiological Care business, not just in its day-to-day operations, but also in opening up new markets. This year, we established a presence in China (where over 90 million people are affected by hearing loss) through partnerships with Tencent and its WeChat app, the largest social media platform in China, and Alibaba Health, part of the worldʼs largest eCommerce platform. These are backed by agreements with two major retail networks to provide fitting services, which give consumers the choice of an all-online or partially in-store experience. This is just the first step in our omni-channel approach to the Chinese market, but it has already brought success: within three months of launch, we were Chinaʼs leading hearing aid manufacturer in terms of online share. We have taken the same systematic approach to eCommerce, acquiring or launching new eShops in a targeted way to gain new consumers, enter new markets, or extend existing consumer connections.

Across Sonova, we have increased our focus on systematic lead generation, gaining in-house consumer understanding at the early pre-sales stage. This benefits not just our Audiological Care business, but all our sales activities, as it allows us to establish strong direct-to-consumer connections that can extend throughout their hearing journey.

The process improvement and structural optimization programs that we announced over the past two years are well on track – indeed, we accelerated them during the period when the COVID pandemic focused our attention on cost. We have already seen a positive effect on profitability – while continuing to invest in our growth initiatives – and we expect them to generate an attractive ROI. Sonova will emerge from the pandemic in a much stronger position.

Cost savings and efficiency are less than half the story, however. By far the most important improvements we can make are those that generate growth, both during the post-COVID market rebound and beyond. We see this with the commercial excellence initiative in our Hearing Instruments business: through a systematic approach to territory design, market segmentation, and targeting, we are able to reduce non-value-adding tasks. This increased productive use of time and enabled us to allocate resources to more competitive accounts with higher growth potential, thereby raising sales productivity by 20%, with an equivalent sales growth in the targeted areas. These improvements are not one-off cost savings, but a source of yearly contributions to the bottom line.

Elsewhere in Sonova, our regular “Kaizen” cooperative operational improvement events – more than 100 this year in production functions alone, with over 50 in other functions – continue to generate substantial productivity improvements. Our labor productivity has risen by over 10% in the last 12 months; our working capital position has improved significantly over two years – and all during a period when the business has grown and increased its market share.