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Organizational Development and Change
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- Thompson River University (TRU )
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ORGB 4871 STUDENT ID FIRST NAME LAST NAME CHANGE FINAL PROJECTIntroduction
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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