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April 18, 2009  [B&O] 

Product related creativity can have many possible dimensions; it could be expressed by
innovation, design, functionality, communication and many other factors. Implementation of
creative idea is always subject of big discussion, it takes time and effort to chose the right
amount of creativity for product , as too much creativity sometimes makes product and concept
non understandable and complicates use of the product oppositely, very little amount of
creativity does not cause customer interest and might kill product. B&O has a challenge ahead
to indicate right amount of creativity, re-define current products and concepts and meet market
needs by strengthening core competences.

B&O managers realized that the innovative design and usage of the premium class materials
becomes commodity for the consumer electric products and that puts B&O’s very existence
under threat. Company realized that because of dynamic changes in technology, innovations
became easily accessible by rival companies and B&O is on the edge of losing its biggest core
competences: design and functionality. During early days of consumer electric products design
and functionality was tightly related with each other, the better design in many cases meant
better functionality and was indicator of quality as well, but further development of software
solutions for consumer electric products (CEP) resulted re-definition of products and
reduction of weighted importance of design in products. B&O is also striving to find the right
amount of creative solutions for their products and meanwhile diversify this creativity in
design, quality, and functionality and add personalization points to its products.

For many years B&O was known as a unique brand providing for the premium segment
customers with unique products and concepts, company and its products always has been good
example of quality and very innovative concepts. The solutions that product designers and
manufacturing units where integrating in B&O products was always ahead of time and was
very hard to copy as B&O itself was the creator of technological concepts, that were not
applicable for overall industry. Thought years B&O managed to achieve customer loyalty and
customer advocacy because of its timeless quality and very dynamic development. Company
managed to obtain points of differences through the points of references, B&O was always able
to get into heads of customers and identify their initial needs for electric products. B&O
designers and R&D managers where often visiting houses of loyal customers, they were never
asking customers what they needed to have or what kind of product they wanted to have,
instead they were watching customer houses and identifying the possibilities how they could
make the same house more pleasant and comfortable.

1  CEU Business School|MBA20|Creativity Without Borders| Archil Kublashvili 

April 18, 2009  [B&O] 

In 2006 slightly after the Apple shocked the market with its I-Pod and presented to public
unique concept of product personalization, B&O realized that the consumer electric products
moved into new era of existence, where the design and functionality was not enough to keep
customers loyal and satisfied, but they also needed to create personalization points for their
products in order to achieve further engagement. This was the time when the company decided
to create Idea Lab for B&O, the part of the company that would have executed the R&D of new
and unique product concepts, development of personalized software solutions for the products.
B&O decided to re-define its products and achieve points of reference by integrating in
products 10 % design related and 90 % personalized software related innovation.

B&O knows that changes in approach and re-definition of product concepts is the same thing as
walking on a thin rope but they also realize that new concept that they have to present to
customers should be tangible, understandable, deliverable and defendable, in case if they fail to
achieve all these points they risk to lose business and in case if they don’t respond adequately
to market requirements they risk to lose business too.

2  CEU Business School|MBA20|Creativity Without Borders| Archil Kublashvili