What Happens if the Spaghetti Gets Cold?
In September 1996, Oticon, the Danish hearing aid manufacturing company, launched something which was considered no less than a sensation in the world of hearing aids. Oticon had produced the world's first fully automatic hearing instrument, based on a revolutionary new microchip. This microchip had the same processing power as a 486 PC, weighed only 4 grams, was smaller than a little finger nail and used only five thousandths of the energy used by a conventional hearing aid chip. Oticon had built the microchip into Digifocus, which the company claimed to be the world's smallest hearing aid, with a sound reproduction quality so far unprecedented.
The Digifocus was not the first thing about Oticon to catch the public's eyes. Ever since 1991, when Oticon restructured its head office into what the company's CEO, Lars Kolind calls a spaghetti organization, Oticon has received world wide attention because of its untraditional organizational structure and management style.
Kolind's Management Style
"Obviously Lars' management style has been very visible. Lars' strength is that he is dazzling at..., he has been dazzlingly good at selling the company. And that is one of the reasons that he has so much penetration power in the organization, because everybody wants to be where he ...you hear a lot about how interesting Oticon is, right..., and that is why everybody wants to be where he is, also internally I mean. There is no doubt his personality means a lot to Oticon, it definitely does" (Torben Petersen).
Lars Kolind managed Oticon in a somewhat untraditional way. This was accentuated in December 1995. Just after the introduction of Digifocus, Lars Kolind did something that, seen from an outsider's perspective, was rather unusual. On the other hand, what he did only went to show that Oticon's untraditional management style was not all talk. Kolind relocated all the former Digifocus project groups, based on the time horizon of their new projects: "I exploded the organization" "It was total chaos - within three hours, over a hundred people had moved. To keep a company alive, one of the jobs of top management is to keep it disorganized" (Lars Kolind).
Questions for Consideration
1. Oticon wants to avoid being hierarchical. What actions did they take? Is it a good idea?
2. Describe Oticon's project management style.
3. Discuss Oticon's incentive scheme. How does this fit with organizational structure?
References
Morsing, M. 1995. Omstigning til Paradis?, Copenhagen: Handelshøjskolens Forlag.
Poulsen, P.T. 1993. Tænk det Utænkelige - Revolutionen i Oticon. J.H. Schultz A/S
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