The spaghetti organization (oticon case)

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The Spaghetti Organization


I) Oticon’s crisis

a. The new organization of Oticon

b. The benefits of this new organization

II) The leadership at Oticon

a. What is Leadership

b. The leadership within the company

III) Human Resources development

a. HR & Spaghetti Organization

b. New HR development at Oticon

IV) Myown opinion about the company




Oticon was created in 1904 in Danemark by Hans Demant who began importing hearing aids. His wife had severe hearing loss and he wanted to help her (and other bad hearing people). The creator of the company died in 1910, and William, his son decided to take over the business of the family.

William had the exclusivedistribution for his hearing aids products in the Nortic Area countries but when the World War II began, it had been difficult to get supplies, so he had the idea to produce his own hearing products. Oticon TA became the leader of the hearing aids market in 1946 and opened its own (and independent) research center in Danemark (which one allowed the company to innovate and to keep its competitiveadvantage towards its competitors).

But in the 70’s, Oticon suffered of a huge crisis because of its management and its retard in term of technology (they were not able to produce ITE products yet) and their market share decreased from 15% to only 7%. They were not leaders anymore, and moreover, lost almost 40 million of DKK (Danish Crowns) between 1986 and 1987!

The company decided to changeits management to be competitive again and hire a new CEO (Lars Kolind) who has involved new young managers, but also all the employees into new working methods and also a new organization : the Spaghetti organization.

All over this paper we are going to figure out what is this “Spaghetti Organization”, how Human Resources are involved in, what changes are going to be implemented in thecorporate, and how those changes had been possible to achieve (because this project was not easy and everybody was not in agreement with this Spaghetti Organization).

I) Oticon’s crisis

1987 had been a terrible year for the company. They had a lot of losses and the board decided to put on a brand new management to overcome the crisis.

Lars Kolind had been hired to be the new CEO (even ifhe had not an industrial background) and this one wanted to change the working methods of this conservative company by liberating the individual capacity of the employees and create a real change at Oticon. The project was not easy at all, nevertheless, he believed his vision was the best one to make the company overcome the crisis and he invested more than DKK 25 million.

The neworganization of Oticon

Progressive change of structure

Firstly, Oticon was named “Oticon Holding A/S”, but since the 90’s, Oticon had been restructured into a Group Management company to make the development of the company faster and also easier. Oticon developed many subsidiaries in 13 countries and independent distributors in 85 countries, to be able to cooperate closely with professional hearingaids dealers, improve end-user satisfaction and be competitive in terms of structural development.

Oticon Holding A/S was a conservative company where its directors (who composed the executive group in charge of the strategic decisions) were the leaders in every department (research, development, marketing, purchasing and production departments).

Staff & work environment

The new CEO (L.Kolind) thought about a new way to improve the productivity of the company, and moreover, he had the objective to reach +30% of the productivity in 3 years only through his project called : Project 330.

This project is based on collective work and polyvalence of all the employees (even if they needed training to improve their skills). But first of all, he wanted more “freedom” in the work space...
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