The Oticon Case

The Spaghetti Organisation

The Spaghetti organisation was the result of a radical change that undergo the danish hearing manufacturer Oticon. When in 1988 Lars Kolind took over as the CEO, the market share of the company had dropped dramatically. That situation called for a revolution in the company in order to remain competitive. Back then, the company was up against big companies like Siemens, Philips, Sony, M3 and AT&T. It was impossible to compete against them on financial resources, technology or marketing. The only way to remain competitive was to create something that they big companies would never be able to replicate: an innovative fast-moving organisation. The program of that change was extremely complex due to the numerous parts, interactions and the behaviours produced as a result of those interactions. Therefore, it was crucial a strong leadership in order to create clear directions and ensure effective communication to speed up the "sense-making process".

“It was at that point that we reached a sort of breakpoint. I realised the competitive situation was extremely difficult because we were up against all the big boys you can imagine – Siemens, Philips, Sony, 3M, and AT&T. My analysis was that we could never beat them in financial resources; we could never beat them at marketing or on brand because they all had fantastic brands. We could never beat them on technology, so we had to find something that we could do in a unique fashion. That led me to believe that if we could design a uniquely innovative, fast moving, efficient organisation, then this is something they could never replicate.”

This article aims to analyse the leadership in the Spagetti organization from a portfolio management point of view. The Spagetti organization was the result of a radical change that undergo Oticon, a danish hearing manufacturer, during the 90s. The success of such revolution significantly relied on the leadership of Lars Kolind, the CEO at that time.

Oticon is a danish hearing manufacturer that undergo a radical change during the 90s. The