The over 100-year-old Japanese-based company Olympus is still known by many primarily for its camera business. The fact that Olympus today is a successful medtech business and global market leader in the field of endoscopy is less familiar to the masses. J-BIG spoke with Dr. Harald Dremel, Regional Managing Director of the DACH Region, about how the company developed from a general imaging company into a global medical technology specialist, how the German business started in Hamburg and how the product and service businesses are positioned today. We also talked about what we can expect from the future German CEO Stefan Kaufmann in Japan. Oh yes, and we also talked about soy sauce.
J-BIG: How did it start with Olympus over 100 years ago?
Harald Dremel: Olympus was founded on October 12th, 1919. Under the name “Takachiho Seisakusho”, the Japanese mountain Takachiho, which according to mythology is inhabited by many deities. The brand “Olympus” was then introduced in 1921, initially for microscopes, which we specialized in at that time. After the Second World War, the entire company was renamed Olympus – a clear sign that we wanted to take the idea of a mountain of the gods to the international level. Speaking of products: Microscopes were followed by thermometers – and then we made the step into the field of lenses. So, from the very beginning, our focus was on optics, the bundling of image information and the imaging of optical content; and that is also a major reason why we later grew so strong in certain areas with this core expertise.
A root cause for the company’s further development was the widespread occurrence of stomach cancer in Japan. This was presumably associated with the high consumption of soy sauce. In the 1960s, this social health problem was to be tackled – and so medical professionals and the country’s industry joined forces. Among those involved were engineers from Olympus who tried to find a solution to this very Japanese health problem.
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By means of endoscopy, the stomach is comparatively easy to reach because a straight stretch leads from the throat into the stomach cavity. So, we came up with the idea of building a flexible tube with a camera, which was inserted and then the pictures were initially taken blindly. At that time, these were actually small microfilms in a camera that fit through the esophagus. That’s how it started with gastrocameras in Japan. Back then it was a bit like a lottery. You triggered the camera and looked afterwards to see if there was anything in the image that could help the doctors make a diagnosis. In the next step we said, “There must be a way to make this work better.” And at this point Olympus’ affinity with optics played a major role. The solution to bring light into the darkness was the fiber optic cable. For this, you take a fiber optic bundle, send light into one side and it exits the other side. Olympus managed to do this relatively quickly and well. So, if you will, the Japanese consumption of soy sauce can be considered the beginning of our success in endoscopy.
J-BIG: So it took the Japanese innovative spirit to solve a social problem that is very closely related to a topic the Japanese love, namely food. To start with, there was a health issue and you looked at how you could solve it technologically. But Olympus did not invent endoscopy per se. What exactly has been Olympus’ role in the general development?
Harald Dremel: True. At that time, we were not the only ones actively engaged in research and development in endoscopy. But what we invented worked very well. Olympus made a great effort very early on to push the gastrocameras to perfection. When we launched the product, our competitors were stunned, as the solution was outstanding, reproducing it was not easy. Nevertheless, our endoscopes were well received, and we were able to set quite a milestone. The medical field was still a niche for Olympus, along with many other optical applications.
J-BIG: Tell us something about the company’s start in Germany.
Harald Dremel: In the mid-1960s, we set off for Germany, Hamburg, to be precise. The decisive factors were the overall close cooperation between Japan and Germany in medicine as well as Hamburg as an international port location. This also had to do with Japan historically being strongly oriented towards German medicine. The structure of university studies and the training of young doctors were based very much on the German model. Then, as endoscopy progressed in Japan, the first centers specialized in the field appeared in Germany as well. Coincidentally, a company in Hamburg, the Winter & Ibe GmbH, built rigid endoscopes for urology. Cooperation was established, which added rigid endoscopy to our existing portfolio of flexible endoscopy. In 1975 we signed a cooperation agreement with Winter & Ibe, and in 1979 Olympus took over the majority of the company.
J-BIG: Did the endoscopy unit of the company play a relatively minor role compared to the already existing camera business at first?
Harald Dremel: It existed in parallel. Cameras were always the flagship of Olympus. We had a range of products that sold well. There was the so-called OM-D, a single-lens reflex camera, that was used a lot in the professional field. There were rather small μ [mju:] cameras for private use, which were in great demand worldwide. We were also at the forefront of the development of digital cameras. But the competition in the camera market with increasingly competitive offerings of mobile phones required us to think about alternative market approaches that still matched our corporate culture. This was the start of our transformation journey, based on our successful product portfolio and expert knowledge in the field of microscopy and medicine. We’ve done so very successfully, as we are on a successful journey of transforming into a truly, 100% medtech company today. The business with cameras and microscopes for private and industrial use was spun off into independent companies in the meantime.
Olympus has consistently had a leading market share in endoscopy, especially flexible endoscopy, of more than 70 percent for the last 40 years. Seven out of ten hospitals in DACH are equipped by us. But although endoscopy has always been a strong backbone of the company: the average citizen and 2C-customer still perceives us as a camera manufacturer. In a hospital, a patient obviously has other concerns to deal with than occupying oneself with the manufacturer of medical equipment. This explains why Olympus’ association with cameras is still so strong.
J-BIG: How is Olympus positioned worldwide?
Harald Dremel: Our global headquarters are in the Shinjuku business district of Tokyo. In Japan, we have development departments, various service facilities, and still literally manufactories. Globally, we are divided into five global regions with their corporate headquarters with active business in 108 countries worldwide. In America, we have the headquarters for North and South America. Then there is a strong field for Asia-Pacific, which consists of quite a hodgepodge of different large and small markets, and there is a strong branch in China. The headquarters for the region Europe, Middle East and Africa (EMEA) is based in Hamburg, we just moved into our brand-new Olympus Campus in 2020.
We employ a total of over 31,000 people worldwide. At the headquarters in Hamburg and in the 31 countries within the EMEA region, there are 7,800 employees. Longstanding trustworthy relationships with our customers pay off. “Olympus” is a code word to open doors. We get access thanks to continuously fostering customer engagement. Our people are clearly committed to Olympus’ purpose of making people’s live healthier, safer and more fulfilling. That is really something that makes our employees very proud.
J-BIG: What functions do employees in Germany fulfill in this global setup?
Harald Dremel: There are 1,200 employees here at our headquarters and 1,300 at our production site, so a total of 2,500 employees who primarily work for the German market or are responsible for German business. As Hamburg is both the European headquarters and Deutschland GmbH, our employees often fulfill a variety of roles. The European headquarters is responsible for some global aspects, like strategy, business development and implementation across EMEA. Europe, in turn, is divided into different clusters. Germany, Austria and Switzerland form one cluster. For this so-called DACH region, 560 colleagues are on the road. The DACH team adapts the strategy from the goals and guidelines of the product area in such a way that the maximum and optimum is achieved for Germany, Austria, and Switzerland. And Deutschland GmbH is there to ensure that we bring our products to market successfully in Germany.
The global production of rigid endoscopes happens here in the east of Hamburg – so they are made in Germany. The flexible endoscopes, which make up the lion’s share of the products we sell overall, stem from Japan. Most of the accessories come from England.
J-BIG: Is the development of rigid endoscopes also in Germany or in Japan?
Harald Dremel: Meanwhile, R&D is organized in a very decentralized way. There is an area that takes care of imaging, video processors, and endoscopes, and there is an area that takes care of everything that turns quickly, e.g. biopsy forceps, needles, and snares. The latter has been relocated near Boston in America. The colleagues think about what accessories or products are needed in therapy. The department is called TSD, short for Therapeutic Solutions Division. And in Japan, we have a division called Endoscopic Solutions, or ESD. We have tried to cluster a little bit by the business characteristics of the products.
J-BIG: Looking again at Olympus’ product range: Your main theme is endoscopy, but surely not all 31,000 employees are involved in endoscopy?
Harald Dremel: In a broader sense, they are. We have developed our business model and purpose in dealing completely with rigid and flexible endoscopy. However, the two areas are quite different. In medical endoscopy, the endoscope is built flexibly so that it adapts to the body. As for the product range: on the one hand, we have everything to do with gastrointestinal endoscopy and respiratory. Then there is a section for the reprocessing of endoscopes. After all, the endoscopes are used repeatedly and hence have to be reprocessed. This happens with a kind of washer, only a lot more optimal and professional. Rigid endoscopy, on the other hand, serves other applications. Of course, our products cover imaging as such and include the devices necessary for the medical procedure. Thanks to our broad expertise in rigid endoscopes, we are very well positioned in the field of urology and gynecology, as through the flexible endoscopes in the gastrological field. We also have a large area for minimally invasive surgery, such as laparoscopy through the abdominal wall. And then we have products for ear, nose and throat. And here, again, at the end of the day, it is optics, imaging, which was the starting point of our company, and which is still important for all these product areas. So today, we at Olympus provide versatile medical devices, not only endoscopes but also endotherapy devices and surgical devices, helping healthcare professionals to treat round about 100 diseases or conditions. Also, we provide devices that help healthcare professionals treat the top four highest incidences of cancer.
It is also very important to us that we do not run a spot business: we do not only sell our products, but also offer an extensive service portfolio around them. Metaphorically speaking, the endoscopes we sell may be similar to cars. They must be serviced and repaired.
When we entered the field of endoscopy, our products were intended for purely diagnostic purposes. Today, we are also firmly positioned in therapy. We want to develop more products for this area – preferably for minimally invasive applications, which means maximally gentle. If the patient can safely go home after the examination or therapy, our products have served their purpose.
Olympus also strives to provide intensive training opportunities for our customers. The training of doctors and healthcare professionals has been a focus for decades, which we also owe to the Japanese long-term view. The aim is to offer all users of Olympus equipment the opportunity to familiarize themselves with endoscopes at an early stage. To this end, we have integrated a training center at our Olympus Campus in Hamburg.
J-BIG: So, what is next? Are there any new fields that you have not yet occupied? What is the strategic direction of Olympus?
Harald Dremel: It is foreseeable that we will not run out of patients in our field of business any time soon. Considering the demographic development, life expectancy is increasing, which means that people are getting older on average and at some point, most of them will need an endoscopic examination – and most likely an Olympus endoscope from Olympus will be used. With the quality of our products and the hurdle of replicating them, we originally managed to achieve a large market share and thus a strong market presence relatively quickly. That means we are on a stable footing. One must not forget: Endoscopy products as such are complex to build and even nowadays a big part of the manufacturing is made by hand. Thus, our high-quality products are really not easy to substitute.
However, the market is becoming more competitive – and not just because there are more producers. The leap from fiberscopes to video endoscopy was a technological progress that meant that it was no longer just the doctor who could look inside the body. In the past, there was no controlling unit. By way of video endoscopy, a monitor was added through which the medical staff present can observe. But the downside, one could say, is that a videoscope is easier to build than a fiberscope. You need a flexible tube, insert now a chip in front of it and then you already have a videoscope. Because of the further development, the market becomes increasingly attractive for businesses from diverse backgrounds. Many suppliers are also producing in low-wage countries.
And then there is a whole new area: artificial intelligence. Through new state-of-the-art software, doctors have a support system, a kind of insurance that runs in the background and which assists, alerts and supports them. New technology obviously brings new players onto the market. So far, we have managed to assert ourselves with the quality and usability of our products.
J-BIG: What are the key factors for the quality of an endoscope?
Harald Dremel: The resolution of the image is very important. Because the sharper you see something, the better it is displayed, the better and more helpful it is for the healthcare professional. You have to adapt to the different parts of the body. The esophagus is relatively easy – you take a small tube. As soon as you get into the stomach, it’s not so easy, because you have to illuminate the large stomach cavity. At this point you must take it to the next level. You need a light source that brings both the small areas and the “big halls” into the picture. Even though this has always been a challenge, nowadays you can do it much better with LEDs. It’s no use if one part is overlit or in the dark and you can’t see anything. Olympus has always understood the value of the imaging.
A second crucial factor is the maneuverability of the devices since the human body has relatively delicate and difficult areas. You want to look at exactly where there is a feature that you might want to characterize. For example, you go from the stomach into the small intestine and can then turn into the bile duct to look for stones, or you can also look into the pancreas. These are the supreme disciplines. And Olympus has always been extremely good at getting the handling right for each application scenario. We have set standards in many of these areas.
J-BIG: So a significant factor is also the Japanese culture, which is known for always paying very close attention to ensuring that the customer is 100 percent satisfied?
Harald Dremel: Certainly that is a key to our sustainable success. You can see that in the close cooperation between our R&D departments and healthcare professionals. What’s more, our corporate culture is based on five global core values – unity, empathy, integrity, agility and long-term view – which we hold very high, grow and celebrate with our employees. The practice of monozukuri, manufacturing, is known in many sites outside Japan.
But I think there is something else that is particularly important for Europe. We have always had a strong European or even German focus and sales approach, which has ensured we obtain feedback from our customers instantly and pass it on that way. In addition, we encourage and enable international career paths, cultural exchange and learning from each other. For example, Japanese employees usually come to Germany for as long as approximately five years and help to lift efficiency and cultural gains by becoming part of our team and then bringing the knowledge back to Japan – and vice versa. This global activity makes us strong and differentiates our corporate culture from many competitors.
J-BIG: Surely gamification – as in video games – which people grow up with in Japan, also has an influence on the usability of products?
Harald Dremel: Yes, absolutely! But that also presented us Europeans with a challenge: For the Japanese, it is important that there are as many buttons as possible on the devices with great different functions. In Germany, doctors want less complex products where the buttons with the most important functions are directly recognizable. We have always fought to make the devices simpler and more intuitive for our customers in Europe and to bring these cultural differences together. Certainly that is a key to our sustainable success. You can see that in the close cooperation between our R&D departments and healthcare professionals. What’s more, our corporate culture is based on five global core values – unity, empathy, integrity, agility and long-term view – which we hold very high, grow and celebrate with our employees. The practice of monozukuri, manufacturing, is known in many sites outside Japan.
J-BIG: Because Olympus Europe has been around for a very long time, you are quite independent of Japan in many aspects. Where are the closest connections in the cooperation with the headquarters in Tokyo?
Harald Dremel: Before the Corona pandemic, there were many international meetings for which the European and American representatives met in Japan with headquarters representatives and discussed numerous topics. As a learning from the pandemic, which we luckily coped with very well, we now organize these meetings more via video conferences. This can be a challenge for an all-day meeting due to different time zones for our people working around the globe, which always comes with early starts or late hours for some of our regions. However, we introduced a meeting policy to maintain a reasonable work-life-balance and established creative ways of working together in intercultural teams and across time zones.
The basis of trust is also important when working with Japan. Trust is something that slowly grows and has to be fostered carefully. Informal meetings are also crucial. In the evening, over a nice drink or meal, you have the opportunity to exchange information that won’t fit into formal meetings. That helps a lot. I’ve been with Olympus for almost 27 years now, and many of my colleagues have also been there for a long time. In Japan, you traditionally start working for a company after university and many retire in the same company. That’s why trust and long working relationships play an important role.
In addition, we now have a number of European managers that have gone to the top management in Japan. Of course, this helps us to react better and faster to different business developments outside Japan, and opens up new possibilities for us to bring across the European view. So far, Japanese colleagues have been very strongly influenced by Japanese customers. Obviously, the regional teams know their respective customers best, not least due to language barriers. That is what the new leadership understands very well. The success of our transformation to a great part is the merit of our global CEO in the last few years, Yasuo Takeuchi, who has managed to reshape the company from scratch.
J-BIG: From April 2023, there will be a German CEO at the Japanese headquarters. That could certainly cast a very special spotlight on Germany for Olympus on a global level, couldn’t it?
Harald Dremel: Some of the colleagues who will join the management floor in April were already part of the board – like Stefan Kaufmann, who will soon become the new CEO for our global corporation. Stefan definitely has a vision for this company and I am excited to see how we will develop over the next few years. So we have a good relationship of trust and I think that will help us in the future. Of course, we will remain a and grow as a global company. In the end, we are one medtech company and all of us have their role and significant part in pursuing our global purpose.
J-BIG: How should Olympus develop in the future?
Harald Dremel: We have long been a global company with many locations worldwide, but until now we were very regionally driven. Each region had its own approach and did what was good for the region. And since we have been growing steadily and sales have been good, that has been fine. Even though we are the world leaders in endoscopy, the competition has become stronger and stronger in recent years and many new players have come in. That’s why it’s important that we position ourselves sustainably. This means that we want to globally standardize the processes and systems that were previously handled differently by each division. That doesn’t mean “synchronizing the whole business”, because we will continue to offer different products depending on the location. But the processes must be the same. We are a global company and employer.
At the very beginning of the transformation, no one could have imagined that we would ever break away from the camera business, as it was once our face to the outside world. Especially in Japan, traditions and origins are cherished. A large part of the company is based on the camera business, so quitting was a difficult decision. However, this step was also important – because smartphones have changed the demand for cameras.
Fair to say, our global transformation has been a huge and well thought-through step for our organization. This is also noticeable in the generation change: there are now visible changes in the top management, the average age is decreasing. A lot of our traditional and intercultural challenges are tackled. We keep an eye on sustainability and future success and look for successors in good time.
Despite the changes, we will continue to have a strong connection with our customers and intensively cultivate business relationships. Our service will continue to play a central role and we will never cease to put our customers and their patients first, that way serving our purpose of making people’s lives healthier, safer and more fulfilling. I believe that with unified processes, together we will be even better and stronger in the future. Making the company truly global is, I believe, a huge task. However, furtheron embracing change by way of steadily transforming our business to customer needs will surely enable us to successfully kick off the next 100 years.