Competitive requirements of Oticon in the audiology industry

Oticon was figure one in market portions of 15 % in world-wide hearing AIDSs merchandises in the terminal of the 70 ‘ because their engineering promotion in miniaturisation enabled them for the mass production of hearing AIDSs. This place was challenged by the innovation of

the ITE ( in the ear hearing poses device ) that was a better technological replacement than the

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BTE which dominated by Oticon. The market portion of Oticon dropped from 15 % to 7 %

by 1987 since the debut of the ITE. Missing the economic systems of graduated table from BTE,

Oticon became the figure three hearing AIDSs behind Siemens Audiologische Technik

( Erlangen, Germany ) and Starkey ( Minneapolis, USA ) . With these conditions, we can

address the competitory demands of Oticon in the audiometry industry. Being figure

three is really hard to prolong any profitable concern because it can non vie with

the market leaders in fiscal resources, selling, trade name equity, every bit good as engineering

creative activity with the companies like Siemens and Starkey. To last they need to better

from their current strengths of high quality and high cost maker to agile company

with extremely selected client focal point since quality hearing AIDSs is the criterion of regular


The strategic program for accomplishing competitory advantage in this industry can be

addressed utilizing 1 ) engineering advancement 2 ) economic systems of scale 3 ) clients 4 )

organisation invention. The breakthrough innovation of ITE that eroded the market portion

of BTE is the best manner for any company to derive the competitory advantage. The know-

how on how the mass produce the needful hearing AIDSs can recognize the economic systems of

graduated tables for the new innovation like ITE. Targeting specific market section for the best

ROI every bit good as doing a company more agile are besides valid method to accomplish

competitory advantage in audiometry industry.

After Lars Kolind assumed the place of Oticon ‘s CEO, he cut 10-15 % of

corporate employees and loss-money concerns. He besides realized that the company can

non vie with two bigger rivals in engineering, selling and gross revenues because of

the fiscal resources. With these restraints, he could merely seek to concentrate on clients

and organisation invention. Oticon was aiming the costly section of the market

every bit good as stressing to about 5000 cardinal hearing assistance dispensers and hearing clinics. In

the organisational alteration to do Oticon more agile, he thought if he wanted to vie

with large company like Siemens, he could non merely do 10 % alteration and expected to crush

Mhos. This alteration has to be extremist, the extremist new organisation will non hold

formal hierarchal describing relationships but with a resource allotment system construct

around self-organized undertaking squads.

2. What are the characteristics of Lars Kolind ‘s proposed revolution, and is this concern

procedure reengineering or merely a cloaked cost-cutting plan? Identify the critical

issues refering the debut of “ Think the Unthinkable ” and Lars Kolind ‘s attempts

in garnering sufficient impulse for acceptance of these new thoughts.

With the globalisation of the hearing assistance productions and the monetary value force per unit area from

the competition, the best production in the industry is non good plenty as the foundation

to prolong the concern for Oticon. For Oticon to last and to win in this industry, it

will necessitate to cut down entire cost of carry oning the concern by 30 % . With this figure set as

the ultimate end, a undertaking for Oticon was formed as undertaking 330 to accomplish 30 % concern

disbursal decrease in 3 twelvemonth. To carry through this end, the current organisation construction

needed to be overhauled. Sustainable competitory advantage can merely be achieved with

an organisation that is originative, advanced every bit good as flexible. Two touchable actable stairss:

“ Dialogue ” and “ Action ” can be used to back up this conceptual route map to build

this new organisation. This organisation should be alone and fast moving every bit good as

extremely efficient. The basic features of this new organisation are ( 1 ) self-defined

function ( employee can originate, take part and piece a undertaking to finish for proper

support ) ( 2 ) multi-level function ( every employee should take part at least 3 undertakings, in

different Fieldss ) ( 3 ) transparence ( cognition is shared organisation wise ) . This new

organisation would be a team-based ( project-based ) organisation without formal construction.

Two cardinal inhibitors needed to be removed for this new organisation: ( 1 ) paper, the

papers that circulates around offices and ( 2 ) wall, the divider among offices. The

“ duologue ” and “ action ” is a more efficient manner for communicating. With the purpose to

disband the old, formal hierarchal construction of Oticon A/S, the procedure to set up a

new organisation is genuinely a revolution in concern reengineering.

After the cost film editing and tweaking the company, Lars Kolind started to turn the

company about by bring forthing net income of DKK 22 million in 1989. He knew this concern

theoretical account was non sustainable. He needed to utilize a extremist attack for reorganisation to happen

a sustainable concern theoretical account. On January 1, 1990, Kolind wrote a 4-page memo ( asked

all Oticon employees to “ believe the unthinkable ” ) for alteration, it was the revolution needed

for the organisation alteration in Oticon. Two critical issues of making an nimble squad of

150 employees in head one-fourth could be identified from this instance survey

( 1 ) The dissension among “ old ” and “ immature ” employees on this changing

procedure, “ old ” – directors and older employees and “ immature ” – newer employees

that felt the demand for the alteration.

( 2 ) Culture barrier in Oticon ‘s functional sections that located in different

metropoliss, R/D versus Corporate disposal. To make this cross-functional team-

based organisation, he need to breakdown the barrier among internal functional

divisions. He felt it would be a catastrophe to unify these two distinct sections

with different civilizations. He proposed to hold every section to 3rd topographic point to

get down a trade name new corporate civilization.

To garnering sufficient impulse for acceptance of these new thoughts, Kolind devoted

himself to fixing employees to travel to this new caput one-fourth. He hired Sten

Davidsen to pull off the alteration procedure. Davidsen prepared a one-page “ map ” of the

alteration procedure to informed the advancement and stairss for employees to follow. Three groups

were involved in this altering procedure ( 1 ) one group worked straight with the designers

and applied scientists as they designed the new edifices for the new caput one-fourth ( 2 ) one group

edited and published “ jutting 330, ” the newssheet to maintain every employee posted on

the advancement ( 3 ) one group was formed with 13 people to develop other employee to utilize the

new IT system. Monthly meetings were aid to maintain every employee with the construct of

new organisation every bit good as the new concern theoretical account.

3. Assess and rede whether or non Lars Kolind should continue with the proposed new

organisation ( un ) construction, and whether this scheme is equal to the competitory and

fabrication demands you identified in the 2 inquiries above.

Without the production of new advanced ITE, Oticon slipped to figure three

market portion in the planetary market. Although the tweaking of the concern by cutting 10-

15 % corporation employees and some money-loss concern to turn the company about

with net income. This cut and cut concern theoretical account is non sustainable. Bing figure three, the

Oticon lacked the fiscal resources to vie with Siemens in every concern facets

from R/D passing for new engineering, selling, stigmatization, even distribution channels

or aiming specific client section. The lone manner to finish with Siemens and

Starr were to make an nimble organisation that can non be replicated. The idea of

non-replicated organisation was the chief ground for the “ think the unthinkable ”

pronunciamentos written by him on January 1, 1990. As discussed on inquiry 1 and inquiry 2,

the lone manner to vie and last is to make a entire different organisation that is nimble

and competent. As a CEO, Kolind had done plenty to fix his military personnels to process to the

field for the flight. It is ever the internal inactiveness of the “ old ” that prevents this

promotion. The perceptual experience of the company was performed OK created a false

feeling the alteration was non needed, to see a CEO full charged for this extremist alteration

was viewed as trouble-some by a batch of “ old ” employees.

The end was clear, and the route map for this alteration was shown to every

employee in the company, right stairss were taken, the lone concern was the stone-wall of

the “ old ” employees. This route map provides the stairss to the end but it was unclear

for who will be making what? For the “ immature ” it is non job for them to specify the route

in forepart of them, undertakings to originate, assemble, and take part. It is a grating chances

for the “ immature ” to follow and larn and derive. But for the “ old ” and established, this non-

organisational construction will destruct their authorization and utility as a director. Without

the construction and authorization, there is non necessitate for such place to be, and these director

might non hold proper accomplishment to take on three undertakings and be the participant to be lead by

one of their subordinator. To cut down the abrasion of these “ old ” employee to prolong the

royalty of this good civilization of Oticon company, the pre-arrangement is needed to reassure

and reassignment these “ old ” employees to some proper places like fabrication

places, or undertaking funding/allocation tester. With the “ immature ” basking the

disputing procedure and the “ old ” would hold a more touchable place, this alteration

initiated by Kolind would be a great success.

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