Oticon A/S: Spaghetti Organization and Beyond

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Case Details:

Case Code : BSTR318
Case Length : 23 Pages
Period : 1988-2008
Pub Date : 2009
Teaching Note :Not Available
Organization : Oticon A/S
Industry : Hearing aid
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Hearing aids are not the core of what this company is about. It's about something more fundamental. It's about the way people perceive work. We give people the freedom to do what they want."1

- Lars Kolind, CEO (1988 - 1998), Oticon A/S

"It sounds like the corporate paradise of the future. Workers organize themselves, coalescing around natural leaders and gravitating to the most exciting projects. There are no middle managers, no hierarchies, no fixed assignments…. But some things have clearly changed. Everyone has a boss to whom they report and they no longer have total freedom to choose projects… A degree of freedom sparks creativity, but workers also crave leadership."2

- BusinessWeek3, August 20, 2007

Putting People First

In late 2008, Denmark-based Oticon A/S (Oticon), one of the world's foremost developers, manufacturers, and wholesalers of hearing aids, was faced with some tough market conditions worsened by the economic downturn.

The holding company, William Demant Holding A/S4 , noted, "[W]e estimate that the global financial crisis and the intensified competition amongst the manufacturers have led to slightly declining average selling prices in the hearing aid industry.

In the third quarter, the market was characterized by unfavorable mix shifts in relation to products, distribution channels, and countries."5

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1] Polly Labarre, "This Organization Is Dis-Organization,"www.fastcompany.com, September 11, 2008.
2] "No-Cubicle Culture,"www.businessweek.com, August 20, 2007.
3] BusinessWeek is one of the world's leading financial magazines.
4] William Demant Holding A/S, founded by Hans Demant in 1904, is one of the world's leading healthcare companies headquartered in Smørum, Denmark. As of 2008, it comprised six business units in the Hearing Aids (Oticon, Bernafon), Diagnostic Instruments (Maico Diagnostics, Interacoustics) and Personal Communication (Phonic Ear, Sennheiser Communications) sectors.
5] "Company Announcement No 2008-12,"www.demant.com, November 5, 2008.

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