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Organizational Development and Change

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  • April 30, 2021
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  • 2020/2021
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ORGB 4871 STUDENT ID FIRST NAME LAST NAME CHANGE FINAL PROJECT


Introduction

The present paper examines the concept of change management using a case study of

Oticon Holding A/S. Herein, I will provide a background information about the company,

the major changes that the company intended to implement, how the members reacted to the

proposed interventions, strategies that could be adopted to minimize resistance levels, and

how the organization can create the capacity for continuous change and improvement in order

to cope with the future change initiatives. The entire discussion centers on assessing

resistance to change transition.


Overview

Oticon is a Danish multinational company that operates in the manufacture and sale of

hearing aids. The company was founded in 1904 by Hans Demant, whose wife was hearing

impaired (Gould, 1994; Jick & Peiperl, 2002). Headquartered at Hellerup, Copenhagen,

Oticon is classified among the world’s most successful companies in the audiology market.

The firm runs its operations in more than 100 countries across the world. It concentrates on

the manufacture and distribution of three main product lines, including the behind-the-ear

(BTE) hearing aids, in-the-ear (ITE) hearing aids, and systems that ease communication. BTE

hearing aids are used by patients with relatively severe hearing loss. These hearing aids are

produced in large series as standard products and are attached to the contour of the outer

(Gould, 1994; Jick & Peiperl, 2002). ITE hearing aids are used by those individuals with mild

to moderate hearing loss. They are designed by taking an impression of the client’s ear and

then fabricating a customized shell (Gould, 1994; Jick & Peiperl, 2002). The Multi-Focus, the

world’s first fully automatic hearing aid with no user controls, is an invention credited to

Oticon (Gould, 1994; Jick & Peiperl, 2002).Lastly, Oticon deals in the manufacture and sale

,of systems that ease communication at various public places and at home, including

loudspeaker systems and loop amplifiers.

Oticon’s operations have been guided by the values, mission, and vision established

by the founder. These principles have also been the basis for the company’s outstanding

performance. The mission, ‘commitment to people and hearing’, and vision, ‘the biggest, the

best, to do everything for everybody’ have been the criteria that guide behaviors and practices

of the organization. Evidently, Oticon’s mission and vision statements emphasis on the values

of social responsibility and devotion to promoting people’s lives. Organizations on the path

of pursuing competitive advantage or rationalizing their worldwide strategy incorporate

social responsibility as one of their core values.

Oticon follows a hierarchical management style. This organizational structure was

adopted in 1956 by Oticon’s second management after the company ceased from being a

family-operated enterprise. The major functional units comprise of manufacturing,

operations, marketing and sales, and finance. These units are led by directors, who jointly

constitute the executive board. The executive board is responsible for all strategic decisions,

and it reports to Oticon’s Foundation Board, which consist of Demant’s family and other

members outside the family. The second management proved its effectiveness by helping the

company to successfully venture to mass production of hearing aids. As a result, Oticon

assumed position one in the hearing aid market at the end of 1970s, with 15% of the world’s

market and sales in over 100 countries (Gould, 1994; Jick & Peiperl, 2002).

While Oticon’s second management was credited for helping the organization acquire

enormous success, it failed to look ahead and determine the threats and opportunities in the

market, and create the energy and focus to implement the appropriate response. The company

too often played to its traditional strengths and ignored key aspects of the environment it

aimed to lead. According to Peters and Young (2000), an organization should place more

, effort on understanding the environment in which it operates and on creating internal

capabilities to anticipate and align with the external forces. Oticon’s second management

ignored this fundamental truth and such ignorance resulted in depressing consequences. The

technological, economic, social, and political changes were rapid and persistent. Moreover,

entry of more companies into the hearing aid industry intensified the magnitude of

competition. Due to lack of counteractive measures, Oticon’s market share reduced from 15

to 7 percent and lost its position as a leader in hearing industry to Siemens Audiologische

Technik (Erlangen, Germany) and Starkey (Minneapolis, USA) companies by 1985 (Gould,

1994; Jick & Peiperl, 2002). Further, in 1986 and 1987, Oticon incurred losses which

amounted to approximately DKK 45 million (Gould, 1994; Jick & Peiperl, 2002). Under such

circumstances, Oticon’s Foundation Board decided that a new management was required to

address the crisis.

The third management was led by Lars Kolind, who managed the company between

the years 1990 and 1998. His appointment was unexpected since he had no previous

experience in the industry but his values, for most part, corresponded to those of the

Foundation’s Board Members (Gould, 1994; Jick & Peiperl, 2002). Kolind and his team

contemplated to pursue major changes that would see the company regain its position as a

global leader in the hearing industry. In January 1990, Kolind wrote a four-page memo that

descried the kind of an organization that would attain a long-term competitive advantage and

that would lead in creativity, innovation, and flexibility.

In his memo, Kolind considered the need to change the market focus since almost all

competitors were meeting the quality requirements. As such, concentrating on high-quality

no longer assured any company in the industry a sustainable competitive advantage. Instead,

Kolind thought of adjusting the internal processes and capabilities to fit the needs that arise

from level of in the environment. To achieve this goal, the CEO proposed three radical

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