Dynamic of change
marlon0510
octicon3.docxCEO’s and Executive teams have the task of trying to create a vision of change. Identifying certain areas in the organization that change is most needed; change can be in several forms and ways.
The integrated change agenda is an umbrella that comes in all the elements of the change effort. They may include the organization's purpose, strategy, values, operating environment, talent and skills. The CEO that takes over the company includes his agenda and how he plans on incorporating the changes that he thinks is best for the company.
Kolind received some opposition and negative feedback to his memo because he wanted the company to go green and Lars Kolind quoted that Oticon would be a company that is going to be the biggest part of what we are doing and be the best at what that do and enjoy doing. He went on to say that the employees love working for a company that inspires them to be a part of what they are creating and motivates them to be the best at it.
Kolind received some opposition and negative feedback to his memo. Utilizing Nadler’s change agenda—values, governance, operating environment, operational performance, organization, strategy—an analysis of Lars Kolind’s change effort will be made, along with a recommendation on how Lars should proceed with the given resistance. Lars Kolind came in and fixed the money problems for Oticon by lowering their overhead cost and deleting items that was killing their shelf live. 10 up to 15% of the employees lost their jobs. It was time for a change within the company so he gave the employees charge, Mr. Kolind believed that the best strategy would be to create a work environment that gave the employees power therefore he believed he would achieve his goals.
1979, Oticon faced a financial crisis, 1986 they lost 4 million dollars, 1987 the lost was 44 million. The foundation Board made the choice to get a new management team. “Lars Kolind was not the first choice for CEO because he had no previous experience his experience was producing scientific instruments. Mr. Kolind’s aim was to develop and maintain customer satisfaction.
He promoted younger managers who had been working in middle management, their responsibility was to make sure the company survive the transition. it was clear that Kolind’s vision was the right choice for Oticon. In today workplaces, employees take ownership and will make their own decisions. When it comes to productivity and performance Mr. Kolind’s expectations were relayed to management, and it was up to them to make sure the task was completed in a timely and productive manner.
Kolind is known for his financial turnaround of Orticon in 1988-1990. He changed the company by his so called “Spaghetti Organization”.
Kolind’s re-organizational skills for Orticon has been featured as one of the first knowledge-based paperless organizations in the world. By 1987, the company's market share had dropped from 15% to 7% and it started to lose money.
This period lasted for about 2 years and was successful. In 1990, Oticon's revenues added up to $ 80 million with a profit of $ 2 million.
Even though the approach of Lars' first years were successful, he knew this leadership style wasn't going to move Oticon forward from there. He felt it was time for another type of leadership to further grow Oticon's business.
My take on Lars Kolind:
It seems that his profession is to rebuild companies that are facing financial crisis. His way may seem unorthodox to people, but it seems to work for the company. His specialty is getting companies out the red and back into the black numbers. I think he should continue to proceed in the manner that he thinks is best. He has a proven track record to show that his method works and gets results. Change is uncomfortable for a lot of companies but success is the main goal of all companies. Those that are resisting may have to compromise, if things are not working the way they are going right now then changes are necessary. The ones that are resisting can be offered the option to compromise or resign.
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1998: |
Upon Kolind's departure from Oticon, Professor Mette Morsing from the Copenhagen Business School co-edited the book Managing the Unmanageable for a Decade (with Kristian Eiberg) in 1998, which also discusses Kolind's works. |
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2000: |
In 2000 Kolind co-founded The National Council for Children and Culture. |
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2006: |
In 2006, Kolind wrote The Second Cycle–Winning the War against Bureaucracy. |
https://corporate-rebels.com/lars-kolind/
*****Extra information*****
The Building Phase
The change Lars made in both his leadership style and within the organization are remarkable. What he did during the 'Cost Cutting Phase' was the opposite of what he did during the 'Building Phase'. During this second phase, he adopted a new leadership style. A leadership style to stimulate creativity, innovation, and initiative. In the next 5 steps, we'll discuss how he changed Oticon into a radically different organization.
Lars Kolind: “When I started at Oticon I felt a huge desire and need to design an innovative, fast moving and efficient organization. And that is what I did.”
1. Start with a vision
Soon he realized that the hearing aid industry was completely technology driven. Lars, however, believed that Oticon was not solely a manufacturer of hearing aid devices. It was in the business of 'making people smile'. He realizes that Oticon should not only understand the technology but needs to gain knowledge about people's lifestyle as well.
In 1990, Lars reveals his vision on the new style Oticon to his employees in a manifesto. This 6-page memo was presented under the heading "Think the Unthinkable" and mainly embodied his vision. The objective of the vision was to create an increase in profitability by 30% over the next three years. For this to happen Lars believed the company should have a strong customer orientation. Oticon needed to move from a purely manufacturing company producing traditional high-quality standard hearing aid devices to a first-class service firm with products developed and fitted individually for customers.
Lars understood that they needed to have a clear direction which everyone understood and believed in. He therefore introduced a new mission statement that captured his vision: "To help people with hearing difficulties to live life as they wish, with the hearing they have".
2. Redesign the rules of the game
In the same manifesto he describes his view on organizational design and management called, the ‘spaghetti organization’. It turns out to be a model based on human values. Lars wants to build the organization on the assumption that they only employ adults. And everything else they do is based on that believe. He tries hard to stimulate a bottom up change within the organization to renew itself and therefore puts a few new ground rules in places:
· All departments, managerial positions and formal job titles are removed, all employees become associates.
· All personal desks and offices are replaced by an open space.
· Associates are not anymore assigned to certain projects but can take up as many different projects as they want.
· Associates are constantly encouraged to learn new skills along the way.
· Communication becomes the center of the new approach. The rise of the computer (note: this is 1990) plays an important role. Everyone gets access to a computer. But Lars believes that conversation is better than email. Offices are therefore designed to improve face-to-face dialogue between employees.
· Running a project should feel like running a company, with a project leader feeling like the CEO. However, this 'CEO' should not be a traditional commanding boss, but rather a supporting and servant leader.
The power of symbols
"In order to symbolically underscore the fundamental transformation of Oticon, the headquarters moved, at 8 am on 8 august 1991, to a completely new location. All the furniture of the old headquarters was auctioned off. In the new building all the desks were paced in huge, open office spaces. Coffee bars were strategically located around the building to stimulate and encourage discussion, and central spiral staircase that was wide enough to permit chance encounters and dialogue, replaced the elevators in the building." (source: MIT)
3. Teams in charge
But that's not all. Lars seems to be highly inspired by the global scouting movement in the way he runs the company. In the new style Oticon, teams are encouraged to take up projects from start to finish all by themselves. It is an employee's job to either find something useful to do by joining an existing project or to start a complete new one by themselves. They enjoy lots of freedom in the process and don’t have to worry much about resource planning. If the deadlines are respected, that is all that counts at new style Oticon.
Lars Kolind: “I see most companies as a waste of resources. In contrast, when I look at the scouting movement, I see a strong volunteer aspect. When scouts come together, they cooperate effectively without hierarchy, like a family brought together through common goals. That’s why the scouting movement is accomplishing loads of remarkable things with limited resources.”
The Spaghetti Organization
"So how does the spaghetti organization work? Any individual who comes up with a good idea is free to assemble a team and act as project leader. Each project, however, then must compete with all the other projects trying to get off the ground at any time. In true Darwinian fashion, an employee must attract enough resources and support for his or her project or it will perish. At times, there are up to 100 projects on the go, forming and disbanding as tasks are started or completed. Individuals invariably contribute to more than one project at a time. Key to freeing up the way people think, and work is Oticon’s mobile office system. Employees carry their office with them wherever they go at Oticon’s headquarters." (Source: Management Lab)
4. Built to perform
Till now it all sounds quite familiar to some of the pioneering organizations we've been visiting over the last year. However, the interesting thing is that Lars' approach to break free from the hierarchical structures’ dates to 25 years ago. He designed it to perform, and it worked surprisingly well.
It took months before everyone understood their new way of working. But with the introduction of the ‘spaghetti organization’ Lars was able to significantly grow Oticon's business. The amount of staff reduced, efficiency increased, and the price of their hearing aids dropped by 20%. Moreover, the new product lead time has been reduced by 50% while plenty of new products were launched, including the world's first digital hearing aid in 1995.
In 1995, it published figures showing revenues of $160 million and operating profits of $20 million – an increase of 100 per cent on revenue and a ten-fold increase in profits on the figures for 1990. (source: Management Lab)
In 1998, after serving for 10 years as CEO, Lars decides to step down and move on. But the introduction of the innovative management style has proven its success in the long-term as well. Although the 'spaghetti organization' has evolved over time, Oticon is reported to be still an unusually relaxed and empowered organization. Nowadays, Oticon is the world’s second largest hearing aid manufacturer.
5. Scale and prove your vision
After stepping down as CEO of Oticon, Lars became a serial entrepreneur. Till now he started over 20 different companies around the world, with a strong focus on impacts that the companies can bring to society. He started companies in all kinds of fields, but they must always have a strong 'why'.
Quote from Lars Kolind:
Lars Kolind: “*The fact that all of this works has nothing to do with a certain industry, it has everything to do with the people. And it is neither a cultural thing, but a fundamental human thing. *I don’t like to talk about my vision all the time. I prefer to put the vision in practice and show the realization of such a vision by examples of successful businesses in real-life.”
