Change management: Oticon
- Presentation of the company.
- Change processes and systems.
This assignment is a case study of a small Danish company called Oticon and shows how changes in the organization environment and personnel completely revolutionized the company. I have chosen this company because we have studied it in a previous course in November (Human Resources with Professor Alice Peinado) and this case has attracted my attention. Throughout the 1970's Oticon was the top hearing aid manufacturer in the world. However, in the 1980's, with the advent of digital technology and the entry of top electronic companies such as Sony and Phillips into the market, Oticon was losing money. In the late 1980's the company appointed a new President who decided it was time for change. Instead of trying to compete by improving the technology of their product, the new President looked at other factors including their customers, for ideas on how to improve their products and services. He decided that the company would provide a specialist customer care program that would fine-tune the hearing aid to suit each individual and the environment in which they lived and worked.
[...] III/ Change processes and systems What did Oticon do? Four types of organizational changes were initiated in order to reduce overhead costs and to create a more flexible and innovative organization: Elimination of the traditional departments Instead of organizing the company into traditional departments, the head- office was turned into one large department, and all work was organized as projects in order to highlight their temporary nature. This discourages the departments from attending to their own interests instead of those of the full company. [...]
[...] Culture A massive change of the type that took place at Oticon requires an egalitarian culture because so much is being asked of workers. The old Oticon was elitist. As an example, there were five classes of company cars depending on a person's managerial level. When Kolind joined the company, he was offered a royal-blue Jaguar XJ Sovereign with leather seats and mahogany-panels, which had been driven by the former CEO. He thanked them and said that his old Saab would be good enough. [...]
[...] This gave Oticon a loose intertwined structure that had the potential of self-structuring whenever necessary. In the communication context, everything becomes connected to each other with no boundaries. The aim was an ever-changing project driven knowledge based organisation. Oticon's employees not only participate in several projects simultaneously but have different roles in each project. Individual employees have multiple jobs. People are encouraged to take on tasks they feel they can and are willing to do. This increases enthusiasm and motivation increasing creativity It is recognised that communication is critical for effective product development. [...]