OTICON the Disorganized Organization

7/31/2019 OTICON the Disorganized Organization

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OTICON;The Disorganized Organization


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Learning Objectives

Understand how real life organizationsdevelop and implement strategy

Describe how organizations canreinvent themselves

Discuss the traps that organizations can

fall into when seeking to bring aboutstrategic change


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Background

Oticon, Danish company founded in 1904, firsthearing instrument company in the world

In 1970-1980 worlds number one manufacturer

of behind the ear hearing aids.In 1987, Oticon lost half of its equity.

The basic problem :

Very traditionalDepartmentalized

Slow moving company


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Start To Change

Began to change with the appointment of LarsKolind as President in 1988.

He change situation with pared the company

down, cut staff and increased efficiency andreduce the price of hearing aid by 20%.

In 1990, Oticon made a profit of some 16million Pound.

He had been searching for a sustainablecompetitive advantage for Oticon : I lookedat technology, audiology


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Oticon have to move from technologicalto a knowledge-based service business.

They had to build a learning organization.

Kolind began by redefining himself asCEO, instead of seeing himself as thecaptain, he saw himself as the naval

architect who designs it.


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The StrategyKolind new disorganized organization would be

founded on 4 principles:

1. Departments and job title would disappear

2. Job will be redesigned into fluid and uniquecombinations of functions to suit eachemployees needs and capabilities

3. All vestiges of the formal offices would be

eradicated and replaced by open space4. Informal, face to face dialogue would

replace memos etc.

Therefore, Oticon got rid of departments, other

managerial and supervisory positions.


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Company realized to success the change, therewere 2 elements it needed to get right :

1. DirectionThey need to have a clear direction which

everyone understood and believed in. Thisachieve by discussed and debated the newstrategy for the company.

2. Human valuesThe were summed up at one sentences :

we build this company on the assumptionthat we only employ adults, and everything

we do will rest on that assumption


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Implementing StrategyOticon now operates on a project basis.

Its employee job to find something useful todo-either by starting a project or by joining one

Communication is the center of this newapproach. Partly facilitated by computer.

New structureless structure is the workplace.

Requires everyone to have access to and be

able to use a computer.Kolind anticipated resistance and sought byinvolving staff in planning the transformation ofthe company


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Sustaining & ExtendingChange

The change started at 8 am on 8 August 1991.At the beginning, all was chaos. It tookmonths before everyone understood their newroles.

However by 1994, the result were impressive :

1. 15 new product had been launced2. New product lead time had been halved

3. The companys sale were growing at20%/annum4. Market share increased from 8 % in 1990 to

12 % in 1993.


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In 1995 Oticon launced the worlds firstdigital hearing aids, the DigiFocus.

Oticon developed partnership-style

arrangements with both its componentsuppliers and the 5000 or so hearingcare centers.

In 1998, after 10 years as President,Lars Kolind decided it was time to moveon. His leaving was very amicable.


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SummaryOticon success appears in 7 factors :

1. Changing the rules of the game2. Moving to a project type structure which fits

the strategy and vision of the business3. Creating a whole hearted commitment formeveryone to working co-operatively andproactively

4. Creating a learning organizations5. Leadership6. Consistent vision7. Societal values

OTICON the Disorganized Organization

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