Ritical Success factors in Oticons Transformation - Case Study Example

 Сritical Success factors in Oticon’s Transformation In the case study, Oticon, a Danish company, was absolutely and totally refreshed by its leader Lars Kolind. Oticon, in its recent incarnation, is a success story of Change Management planned, applied and successfully executed. Change management deals with three principal sections: self, team and larger system and in Oticon, all three sections are applied. Heralding and managing change refer to making of changes in a planned and systematic fashion aiming to implement new methods and systems in a regularly running organisation. Its ultimate aim is evolving out a totally new and altered organisational environment. Change management process content is drawn from sociology, psychology, business administration, systems engineering, economics, industrial engineering and study of human and organisational behaviour. The changing process is called “unfreezing, changing and defreezing” based on http://home.att.net/~nickols/change.htm Oticon has employed models like ‘Problem solving and problem finding’ depending on the principle that change management, always mirrors the managing mindset and in this case, it was the mindset of only one person, Kolind. He has drawn from all skills, including political, analytical, people, business and system skills. There are four basic Change Management strategies (given below) regularly employed in a situation like Oticon, and it shows the capability of Kolind that he could use all of them with complete success: 1. Empirical-rational, which understands people as inquisitive, rational, but self-interested and self-serving; 2. Normative and reeducative, believing that people care for norms and values and could be educated all over again, and again and they would be reciprocative to such educations; 3. Power – coercive, which believes that people are interested in power, obedient to it, attached to achievement and success and could be coerced into them with proper guidance; 4. Environmental – adaptive and this reiterates that people are environmentally adaptive to new situations, however distasteful they might look at first glance, people would go to a great extent to adapt themselves to new situations, which brings us to memories of evolution theory, where Darwin said adaptation to new situation is the key of human existence on earth and it all goes to prove the immense adaptation power inherent in humans. There is no doubt that at Oticon, all the principles and models mentioned were adapted with understanding, persuasion, goading, challenging, invigorating and even threatening. Kolind also took into consideration the factors influencing in selecting a change strategy. They are degree of resistance, target population, the stakes, the timeframe, expertise and dependency. (Based on http://home.att.net/~nickols/change.htm) Kolind adapted Professor Albert Mehrabian’s Communication Model that argues for face-to-face conversation. According to this Model, there is no better way of getting substantial change introduced into a company other than actually talking and discussing, valuing, assessing the situation with the employees and superiors or managers. Kolind has reduced all paper work, introduced stand coffee bars where staff could any time assemble and discuss matters and on the whole, encouraged discussions and more discussions in Oticon. Looking at the results, it is definite that this model has paid off by creating immense profit, 100% turnover and as many as fifteen discoveries and innovations. Another model that has inspired the revolution in Oticon is Ken Blanchard’s Gung Ho model. Gung Ho mainly talks about inspiring and motivating employees at all levels and taking them with the fast evolving organisation. Kolind had not left a single employee behind. He has cajoled them, lulled, encouraged and even threatened them to fall into line with him in broadening the horizons of the company and obviously he had been tremendously successful. He also depended on Sharon Morgan’s Decision-making Template, with facilitative questions for personal and organisational innovation and change. We can see from the case study that Kolind has always been asking questions, demanding answers not only from others, but also interrogating himself about the future of the company. He was dissatisfied even after the company has taken a complete focus towards a much better future. This continuous question and answer method is the main focus-creating exercise on which the entire change management hinges. Other theories that have been applied by Kolind were: The Theory of Planned Behaviour of Ajzen (1988), which called for absolutely planned behaviour of all concerned. Kolind wisely did not interpret the theory in planned behaviour of people. He rightly interpreted it as planned targets made clear to all concerned and left to their best decision for blameless execution. He treated every employee as an ‘adult’ and instead of coaching their every move, left to their judgement and discretion how best they could cope and bring impressive results and this again, worked very well. Another applied theory is Appreciative enquiry of Cooperrinder (1986), which combines enquiry, evaluation and results. Oticon had a mature application of this theory throughout and every move was evaluated, assessed, either discarded as the wrong one, or held up in appreciation and continued to be applied as the appropriate move. Oticon also tacked the theory of Resistance to change, Kotton (1979), comprising of six reasons for resistance to change: education and communication, participation and involvement, facilitation and support, negotiation and agreement, manipulation and co-option, explicit and implicit coersion, and Otigon met all these resistances squarely with complete success. Periferal applications of Dimensions of change of Pettigrew and Whipp (1991) could be seen along with its five change factors of environmental assessment, treating human resources as assets and liabilities, linking strategic and operational change, leading the change to overall coherence. Where employee involvement is concerned, Change model of Bechard and Harris (1987) has been applied and Kolind had been able to pull it off with tremendous employee involvement. Change Management Iceberg model of Wilfreid Kruger too has touched Oticon. This includes people involved in change management. They are of four kinds: opponents, promoters(with positive generic attitude) hidden opponents, potential promoters. Today Oticon has become a knowledge based knowledge serving organisation. It is more of a brain and not much of a machine. Kolind had really designed the ship of changed organisation in Oticon. “He wanted to create the ‘spaghetti organisation’ – a chaotic tangle of relationships and interactions that would force the abandonment of preconceived ideas and barriers to innovation and competitiveness,” and he did exactly that. Now the company operates on project basis and anybody can join these projects and it is the responsibility of the individuals to fill their days usefully. Giving unending orders and instructions has become a thing of past. Written memos and correspondence are not in vogue any more. Even email had been reduced in favour of face to face communication and the staff, who used to work in isolated splendour earlier, have become close and friendly with one another. Staff that was unused to teamwork, are finding it difficult now without co-operation from others. The new self-adjusting digital hearing aid has become their star product and Oticon is one of the three best companies in the world with a product of this kind. 15 new products have been launched with halved new product lead time. Sales are growing at 20% per year and the company’s market share has increased from 8% to 12% in three years. Sometimes even if the management and staff struggle hard to bring in the desired change in the organisation, many undesirable and unpleasant situations combine together and connive to halt the changing process. Oticon is free of such oppressive problems and achieved the desired end. We come across many companies with strong Union culture that go immediately into the agitating mode to stop the change and difference. Some employees feel threatened by the unprecendented changes being made by the comparatively unfamiliar President. Unions immediately respond in a very negative way and this would lead to an unpleasant situation of employer-employee confrontation, where the company’s future could be at risk. Change will be too distant a topic; even the day today work of the organisation comes to an unfortunate standstill. In many organisations such situations are manipulated and changing intentions of the management had to be abandoned. Luckily for Oticon and its President, such a situation did not crop up in this Organisation, and all the plans went through execution smoothly. Kolind’s perpetual effort ‘to set the standrd for the knowledge-based sales company of the future through the concept of a flat organisation, which stimulates openness, flexibility and informal communication,’ goes on jubiliantly. Question 2: Identify the strengths and limitations of Oticon’s structure and culture. How could these limitations be either eliminated or minimised? The Company being old in structure and culture was ‘traditional, departmentalised, slow moving’. It had a dignified past, but a small and limited present, with uncertain future. It lacked the resources needed for effective competition with bigger players in the field. It had a comfortable set up of 15 sites, 95 distributorships, and a conventional head office with 145 people, highest compared to other offices. It was a technologically strong company, and especially so in analogue technology. In recent years, the most important strength it possessed was its President, Lars Kolind, who could think the unthinkable, revolutionalise the entire set up and aim at a knowledge-based organisation. Under his guidance, the Company stood on a firm business position and could compete well, was ready to take risks, and this gave the courage to its Present to venture into completely holistic customer care instead of continuing as conventional and old fashioned hearing aid makers. ‘They had to build a learning organisation where experts put aside their expertise and work as a team to ‘make people smile’. This became the motto of change. The company had departments, departmental heads, managers and supervisors in a time-honoured hierarchical order. Along with these, it also had job descriptions and titles, which acted as barriers between employees. A highly conventional organisation with all age-old trappings and budgets, stiff staff that worked in their own compartments and cubicles, stuck to their own corridors and derived work satisfaction. From this situation, the employees had to be liberated by their CEO. He wanted the staff starting from secretaries to technological experts to work as closely as possible together with faster and much more creativity than ever thought possible to be generated in Oticon. The company was suffering from lack of modern technological excellence, lack of capital and lack of resources, which Kolind had noticed as soon as he arrived. It was a formal organisation and this had to be revamped to create his ‘disorganised organisation’. He thought that formal structures, policies and job descriptions were the main barriers against teamwork, innovation and co-operation and he wanted to start his disorganised organisation on change management principles. He created informal groups of interested people to execute projects and with this decision, departments and job titles disappeared. He had cut across the departmental lines. New, unique and fluidly redesigned combinations were created. The formal offices were replaced by open space full of workstations that could be used by anybody. People did not have their own spaces, seats and work desks any more. Earlier memo system vanished and informal conversations took over. He aimed at a learning organisation, which eventually made people smile. A former factory in Copenhagen was given a state of the art electronic infrastructure and the Head Office moved into it. It now only needed direction and human values, and Kolind strived hard to provide both. By sheer discussion the leader and the followers created a new strategy and clear direction for their goals. A consensus was created by day today discussions. Oticon treated everyone as adults and constant pulling up or pointing out the obvious vanished from the work culture. There are no demarcations and anybody could do any work by discussing the matter with the project manager. It took years to popularise this method in other sites and Kolind had to overcome stiff resistance and reluctance both. All staff was trained with IT skills now and were given at work and home PCs. Staff who still remained reluctant were also given the ultimatums to either accept the change or leave the organisation. The Company was working like a machine and Kolind wanted it work like a human brain. Company was earlier too technologically focussed with unchanged outlook for years and years. Now all walls, cubicles, corridors are taken off and everybody works in the open place. Everyone is a given a filing cabinet on wheels that could be shifted anywhere. Stand up coffee bars are all over to encourage and harmonise discussions. Entire business is transparent. It took a long time for the company to adjust to the radical ways of working and thinking. Managers are new project leaders and are forced to compete for the best staff available instead of the submissive subordinates of yore. One of the memorable and immediate outcomes was the automatic, self-adjusting hearing aid. Company had the distinction of eventually launching the world’s first digital hearing aid, ‘digifocus’ which had a four-gram computer in it. Company’s turnover has increased by 100% now. Kolind had to liberate the staff from its traditional trappings and budgets. Staff were stiff and worked in their own compartments without much creativity or imagination. All attended diligently to their duties and work process. They were conscientious and painstaking. They abided by rules and regulations and hardly ever questioned ‘why’ or ‘why not?’ But President’s ideas were different and scandalizing. He wanted staff starting from secretaries to technological experts to work as closely as possible together. He aimed at a learning organisation, which eventually made people smile. From a profit-making organisation, Oticon went on to become a socially conscious and ethically reciprocating organisation, with awareness and responsibility towards its social duties. With a duty to perform towards humanity and disabled people, Oticon has moved higher than being just a business and money-making organisation. While making the organisation go through the Change Management, it has to take environment unendingly into consideration. Of all the external elements, environment, political, economical, social, or cultural, compels the organisations to change for a more adaptable posture so that the new challenges could be faced effectively. “The task of successful organizational change and development thus often hinges on bringing variables into closer alignment so that the organization can meet the challenges and opportunities posed by the environment,” Morgan (1997, p.60). Organizational changes are inevitable for the simple reason that environments keep changing and organizations keep responding to the changed environment. They are not static and rigid, but lucid and subject to changes. “The organization is much more like a fluid networth of interaction than a bureaucratic structure. The teams are powerful, exciting, and dynamic entities. There is frequent cross-fertilization of ideas and a regular exchange of information, especially between team leaders and the senior management group,” says Morgan (1997, p, 166). There are many key elements that allow the change process to succeed. Connected people have to understanding the process and recognise the advantages inherent in it. “The main ingredient of success is the ability resilient people have to understand and use to their advantage the principles underlying basic human patterns that operate during change,” according to Conner (1992, p. 57). At the same time, it is always not easy to usher in a sea change in any organisation, even though Oticon is one of those companies that has boldly went for a total change. “In almost every large organization, there are stories of successful initiatives that have been closed down because they challenge existing power structures and cultural and institutional norms. As a result, when the choice boils down to killing a successful new initiative, or managing the discomfort, turbulence, and change created by its success, those with power often choose the former path,” says Morgan (1993, p.139). Human nature always, invariably, rebels against any kind of changes or upheavals. This being so, the initial resistance and non-co-operation in any organisation are definitely expected. Overcoming the initial hostility is not always easy. There are many impressive organizations, who at the last moment, backtracked, or decided to change partially and wait for the result so that they could proceed cautiously. Oticon, mainly due to Kolind, overcame all uncertainties and completed its travel triumphantly towards the changed and energised atmosphere. Question 3: Critically analyse the range of management/leadership skills that you would need to possess in the environment that Oticon currently operates. One needs exceptionally motivated leadership (the kind provided by Kolind) with creativity, determination and imagination to manage the present Oticon atmosphere. Oticon is a changed, modernized, totally organised and reorganised company today and from the end part of the case study, we presume that its dynamic leader, Kolind is already disorganising it again, working on the principle that disorganisation is the key towards organisation. If a new leader has to assume office today from Kolind, he should be sensitive to what Kolind has achieved in a short span of time and Kolind should be his model achiever. Understanding and getting smart to employee resistance to change, increasing employee commitment, managing resistance to change, managing tension in organisational climate and eventually overcoming resistance should be the motto of his work strategy, because Kolind, after all the achievements, was not free of fear that Oticon might wallow in the luxury of its laurels and might sink back to its traditional and comfortable ways. Revamping the system every now and then naturally should become part of the work culture, even according to Kolind. The leader should adapt many tips of change like a blueprint for change, for a beginning. Such a blue print should possess models of appreciative enquiry, leading to many revelations and surprises. He should also possess a survivor’s guide to organisational redesign, without which he would not see where he is heading. This is the most essential part of planning a change. Initial survivor’s guide will be useful even midway through the changing process. He should have a ‘whole-person/systematic’ approach to Organisation Change Management. The approach should be ethical and means based, balancing top down or top bottom change processes. It is imperative to build successful teams in the midst of transition, which would make the task easier and retain the changed atmosphere. Change management strategies for successful enterprise include resource planning, implementation, taking into consideration cultural aspects of systematic change management, defusing downsizing and mainly, discarding structural inertia, (based on http://www.themanager.org/Knowledgebase/Management/Change.htm The present leader should realise that everything in Change management Principles is important to retain the change. A system means the combined forces of environment, processes, culture, relationships, behaviours, company culture etc. and this relates at personal and organisational levels both. Differentiating between self and organisation could be a practical, down to earth and humble way of leading. Self-perception with unassuming terms like what exactly is being expected by the person, who has taken charge of the situation. Planning of development through changes with achievable and measurable stages from this standpoint is important. The need to involve others in the whole range of plans is essential in the first stage of the change. “Communicate, involve, enable and facilitate involvement from people, as early and openly and as fully as is possible.” http://www.businessballs.com/changemanagement.htm The leadership should have certain key concepts to run the present Oticon. These are the well-known concepts on which Change Management practice is rooted. The leadership should promote Theme Centred Interactions advocated by Ruth Cohn. All interactions and conversations should be around the main theme of work of the day, or the work immediately on hand. Every transaction should end in a Transactional Analysis. Systems thinking and the Family Therapy upheld by Virginia Satir and recent thinkers like Hellinger and Simon should be encouraged as one of the main models. Neurolinguistic Programming argued by Bandler and Grinder should be taken care of. There are very few programmings that could match this programming that has proved immensely worthwhile. Communication Theory of Watzlawik could be followed in addition to the earlier mentioned model. Communication perhaps is one of the most important requirements of a healthy organisation leading towards a change. Harrison Owen put forth another important model called Whole Systems Change. All these models need an effective and understanding Human Resource Development. Also it needs a topmost quality management that is determined to alter the looks of an organisation sensibly and sympathetically. Management ethics has to be taken care of at this stage. Recently we hear a lot of accusations, especially from developing countries, that Multi National organizations, which undergo a hurried change management, to adapt themselves to the changed business circumstances after globalisation, hardly adhere to the work ethics or the business ethics of the international business community. Instead they evolve their own rules and regulations, and do not hesitate to take advantage of the poor countries, from whole regions they have started operating. This does not create a highly conducive atmosphere for the companies and host nations both. Hence, work ethics should never be ignored during change management. Fact also remains that companies can not find Kolinds every day and it would take a long time for any company to find another leader of such a flourishing far sight. In any organisation, machines, organisms, brains, political systems, cultures, psychic prisons, and flux and transformations are very important. At the same time, as the driving force behind all the above instruments of dominations are necessary to see that all work towards a common goal and this instrument is one leader or an effective group of leaders. This particular personality would be responsible for all decisions, organisational behaviours, work ethics, and the overall culture of the organisation. They will process a balancing of all the best qualities and make relevant observations, and pave the way to a brilliant future. In today’s globalised business world, it would be naïve to expect any business to be stagnant and limited. To survive and compete every company has to spread its wings to the unknown vista and this is the core of the Change Management. Unless a leadership could provide that kind of distant vision, it would be difficult for the company to expand and it would remain stagnant and murky. Business organisations have to depend on the prevailing environment that would force them to change according to the prevailing conditions. “The business organisation is an open system. There is continual interaction with the broader environment of which it is part. The systems approach views organisation within its total environment and emphasises the importance of multiple channels of interaction,” says Mullings (2005, p.83). In an organisation like present Orticon, leader has to serve as an ambassador, figurehead, and representative and mainly as the role model to the staff. “The leader may serve as a role model for the organization’s staff, embodying the values, culture, and purpose of the institution. The leader may constitute the benchmark for what the enterprise (i) wants its staff to emulate and (ii) to put into practice in daily work and interpersonal inter-relationships,” Morden (2004, p. 236). Hence, the manager who would occupy the place of Oticon President Lars Kolind should have all these attributes to continue the policies and changes introduced and initiated by Kolind in Oticon, to retain them in place, so that the organization would not slip back into inertia all over again. Though it would not easy to step into the shoes of such a leader, Oticon would go on evolving according to the circumstances and environments. Change management, which was considered to be a remote management area some twenty years ago, has become a highly sought after branch of management theories and practices today, mainly owing to the globalisation of business world. BIBLIOGRAPHY: 1. Conner, Daryl R. (1992), Managing at the Speed of Change, John Wiley & Sons, New York. 2. Morgan, Gareth (1993), Imaginization, The Art of Creative Management, Sage Publications, London. 3. Morgan, Gareth (1997), Imagin.i.zation, New Mindsets for Seeing, Organizing and Managing, Berrett-Koehler Publishers, Inc., San Franncisco. 4. Gareth Morgan (1997), Images of Organization, Sage Publications, London. 5. Morden, Tony (2004), Principles of Management, 2nd edn., Ashgate, Aldershot. 6. Mullins, Laurie J. (2005), Management and Organisational Behaviour, 7th edn., Prentice Hall, Harlow. 7. Stewart, Valerie (1983), Change: The Challenge for Management, McGRAW-HILL Book Company UK Limited, London. ONLINE SOURCES: 1. http://www.themanager.org/Knowledgebase/Management/Change.htm 2. http://home.att.net/~nickols/change.htm Read More