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OTICON; The Disorganized Organization

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The Disorganized Organization
Learning Objectives
  Understand how real life organizations
  develop and implement strategy
  Describe how organizations can
  reinvent themselves
  Discuss the traps that organizations can
  fall into when seeking to bring about
  strategic change
Oticon, Danish company founded in 1904, first
  hearing instrument company in the world
In 1970-1980 world‟s number one manufacturer
  of „behind the ear‟ hearing aids.
In 1987, Oticon lost half of its equity.
The basic problem :
  Very traditional
  Slow moving company
Start To Change
Began to change with the appointment of Lars
  Kolind as President in 1988.
He change situation with pared the company
  down, cut staff and increased efficiency and
  reduce the price of hearing aid by 20%.
In 1990, Oticon made a profit of some 16
  million Pound.
He had been searching for a sustainable
  competitive advantage for Oticon : “I looked
  at technology, audiology”
The Vision
Kolind realized that the industry totally
  technology-focused and the main trust was to
  make hearing aids smaller.
He believed Oticon was not in the hearing aid
  business per se; the were in the business of
  „making people smile‟
New mission statement :
  To help people with hearing difficulties to live
  life as they wish, with the hearing they have.
To achieve this statement requires a knowledge
  of people‟s lifestyle and how it affects them.
Oticon have to move from technological
 to a knowledge-based service business.
They had to build a learning organization.
Kolind began by redefining himself as
 CEO, instead of seeing himself as the
 captain, he saw himself as the naval
 architect who designs it.
The Strategy
Kolind new disorganized organization would be
    founded on 4 principles:
1. Departments and job title would disappear
2. Job will be redesigned into fluid and unique
    combinations of functions to suit each
    employee‟s needs and capabilities
3. All vestiges of the formal offices would be
    eradicated and replaced by open space
4. Informal, face to face dialogue would
    replace memos etc.
Therefore, Oticon got rid of departments, other
    managerial and supervisory positions.
Company realized to success the change, there
   were 2 elements it needed to get right :
1. Direction
   They need to have a clear direction which
   everyone understood and believed in. This
   achieve by discussed and debated the new
   strategy for the company.
2. Human values
   The were summed up at one sentences :
   “we build this company on the assumption
   that we only employ adults, and everything
   we do will rest on that assumption”
Implementing Strategy
 Oticon now operates on a project basis.
 It‟s employee job to find something useful to
 do-either by starting a project or by joining one
 Communication is the center of this new
 approach. 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 by
 involving staff in planning the transformation of
 the company
Sustaining & Extending
     The change started at 8 am on 8 August 1991.
     At the beginning, all was chaos. It took
     months before everyone understood their new
     However by 1994, the result were impressive :
1.   15 new product had been launced
2.   New product lead time had been halved
3.   The company‟s sale were growing at
4.   Market share increased from 8 % in 1990 to
     12 % in 1993.
In 1995 Oticon launced the world‟s first
digital hearing aids, the DigiFocus.
Oticon developed partnership-style
arrangements with both its component
suppliers and the 5000 or so hearing
care centers.
In 1998, after 10 years as President,
Lars Kolind decided it was time to move
on. His leaving was very amicable.
Oticon success appears in 7 factors :
1. Changing the rules of the game
2. Moving to a project type structure which fits
    the strategy and vision of the business
3. Creating a whole hearted commitment form
    everyone to working co-operatively and
4. Creating a learning organizations
5. Leadership
6. Consistent vision
7. Societal values

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