Essay on OTICON

Content Page

Introduction_____________ 3

Literature Review_________ 4

Hierarchical Management___ 4

Spaghetti Management____ 5

Matrix Management______ 6

Pure Project Management__ 7

Organisational Analysis______ 8

Strengths and Weaknesses of the Oticon Company__ 9

Conclusion_________ 12

Recommendations and Action Plan________ 13

Appendix 1 – Timescale_________ 17

Appendix 2 – Kubler Ross’ Change Management Curve Diagram____ 18

Essay on OTICON


This paper is a discussion about the hearing aid company, Oticon, focusing on their business practice: how the company evolved from a hierarchical management to a spaghetti management. The first section of this essay will see the definitions of both Spaghetti and Hierarchical managements, but also an insight of Matrix and Pure Project Management will be provided. A literary review will be presented in which the opinions of multiple authors will be explained, along with a list of what they believe are the pros, cons, and risks of the different types of managements. This paper, though, will concentrate mainly on the Spaghetti Organisation adopted – and created – by the Oticon Company. There will be a discussion about the advantages and disadvantages of this type of organisation within the company. A comparison to the other managements explored in the essay will be carried out, in order to state the validity and success of this new management style. The issues taken into consideration will be the fact that, in order to successfully carry out a spaghetti management, a strong leader is needed. After a historical background of the company, the strengths and weaknesses of Oticon will be listed as a further analysis of the outcome of the Spaghetti Management on the company’s performance, carried out through a SWOT analysis. The conclusion will reveal the outcome of the analysis: is the spaghetti management a good choice? Lastly, recommendations and action plans will be presented for the Oticon Company for ways of improvement. The methodology used for this paper is a qualitative one, based on a case study and other credible sources from reports, websites, books, and articles.

Essay on OTICON

Literature Review

Hierarchical Management

“A hierarchical business structure would mean that the chain of command looks like a pyramid, with a large base of workers, who are directly supervised by the smaller level above them, who are in turn supervised by the level above them, continuing on to the top ranking officer such as the company President or CEO”(“What is hierarchical? definition and meaning”, 2018).

In other words, Hierarchical Management is a workplace leadership structure in which the authority is assigned in ranks and employees take directions from their superiors. (Saez, 2017)

Oticon, when it was funded in 1904, it had adopted a Hierarchical Management, which is also the most common type of management that is established in the majority of companies around the world.

Essay on OTICON

The main advantage is that everyone knows what to do. In an Hierarchical Company, everyone has their role, and that role is the only thing they have to concentrate on, so they can efficiently complete their task. Moreover, collaboration within the company can function only with the relations between the managers and the employees is strong and encouraging in both directions (Saez, 2017).  There is also a chance for improvement and escalation of rank within the company – although this is not necessarily a positive aspect for the company, as people might be placed doing a different job to what they were used to and now don’t know what to do, reaching the so-called ‘Level of Incompetence’, as explains Laurence Johnson Peter (Peter & Hull, 1970).

Another significant disadvantage is the risk of creating  inequity, and a feeling of inferiority which, along with the static formation, are factors that have been said to not engage the maximum productivity of a company. A discriminating and stressful working environment leads to lower productivity and scarce outcomes.

Essay on OTICON

As regarding to the Oticon company, for the time period that it was functioning under a hierarchical management, the company seemed to be prosperous at first, but quickly reached a downfall, which almost led them to failure. This is because the power came from one person on the vertex, thus limiting the options the company had in order to carry on a successful strategy. It has restricted the exploration of new technologies, since it preferred to be stuck on the known and the routine, which is what has led the company to seek a new managerial method.

Spaghetti Management

“Spaghetti Organisation refers to a flat, loosely coupled, project based organisation characterised by ambiguous job boundaries and extensive delegation of task and project responsibilities to autonomous teams” (Benegal, 2018).

Essay on OTICON

Patent by Lars Kolind when he first became president of the Oticon Company, the  Spaghetti Management is a management practice born in the late 1980s. (“Hearing aids, information on hearing loss and tinnitus | Oticon”, 2018)
The idea was to  create an environment in which everyone could contribute in the decision-making and development of the company, picking up as many different projects as wanted, with the only requirement of picking up new skills too along the way. In fact, Spaghetti Management is based on the principals of: eliminating hierarchical-ranking boundaries, replaced by group-work led by a mere coordinator which ensures  that the project runs smoothly from start to finish; greater and direct communication between the staff, face-to-face rather than emails and memo notes; eliminating single and cramped offices and opting for an open space; collective brainstorming so that everyone can contribute and, at the same time, learn new things.

Essay on OTICON

There are many advantages in getting rid of the hierarchy: first of all, it is a very quick solution to the inferiority and inequity issue. Employees are now all on the same level, and have the same responsibilities. Another advantage is the productivity that comes with an agreeable working environment. The more stress-free the environment is, the higher is the quality and the productivity in the job.

There are obviously also some disadvantages that come with the Spaghetti Management: like the fact that an open space does not necessarily mean that the ideas are rightfully shared, or that it will amplify the communication between employees. Also, there is the need of a strong leader that knows how to motivate the team into working hard and channelling all their efforts in the job. Fortunately for Oticon, Kolind did an extraordinary job at successfully applying this management within the company.
Although, as reported by The Guardian in an article written in 2012, a Spaghetti Organisation is very similar to the organisation used by the Al-Qaida terrorist group to achieve their goal, and thus might be dangerous if applied in the wrong field (Meek, 2001).

Matrix Management

“A Matrix Management is a multiple command-and-control structure in which some employees have dual responsibilities and dual bosses. These employee report to one boss (a project manager, for example) for day to day operations, and to another boss (the departmental head, for example) for functional responsibilities. This approach is most suited to situations with fluctuating workloads, such as managing large projects or product development processes.” (“What is matrix management? definition and meaning”, 2018).

A Matrix Management is a structure that facilitates the horizontal flow of skills and information. This means that the employee has more than one responsibility, but also more than one boss. The structure is less pyramidal than a hierarchical one, but there are still many different ranks within the company, which leads to the same issues: inequity and discrimination.

Obviously there are advantages into adopting this type of management: the share of talent and skills. One of the most common scenarios for matrix management is when a group of individuals from different functions organise under a project manager to create something new and unique (Reh, 2017).

Essay on OTICON

Although this organisation might seem closer to a Hierarchical one due to its still-quite-standard structure, it resembles the Spaghetti Management on many aspects: the communication isn’t written anymore – even if it is not face-to-fact as in the Spaghetti organisation – it is through individual, one-on-one phone calls; projects are divided per teams composed by people with different skills; and it makes sure that everyone is understanding of the working method and its importance (Bradt, 2017).

Essay on OTICON

Pure Project Management

“A Pure Project Organisation is a model of a business where project managers have total control over the project they oversee. Central control at the managerial level must be weak for this to occur. Put simply, a Pure Project Organisation might also be termed a “task force.” In the case of a “pure project,” the leader of this task force would have to be given total authority for a limited period to solve a particular problem” (Johnson, 2018).

In other words, a Pure Project Management is nothing other than channelling the responsibility of a limited project to a person, who has complete control over the job from its start to its end. This person is who employees will be looking up to for directions throughout the period of the project.

Essay on OTICON

The advantages of a Pure Project Management are: a project manager has full authority over the project; team members report to one boss, opposing to the Matrix were there are multiple bosses and the situation might become confusing; lines of communication are shortened and decisions are made quickly, which is a step closer to the Spaghetti organisation; team pride, motivation, and commitment are high, this is another factor shared with the Spaghetti organisation. Team work and motivation are greatly recommended features to have within a company in order to obtain favourable outcomes. (“Project Management- Pure, Functional, And Matrix Project; Statement Of Work & Work Breakdown Structure”, 2012).

On the other hand, the disadvantages of a Pure Project Management are: the duplication of resources; organisational goals and policies are ignored, as there is no more structure that must be followed; the lack of new technology transfer due to weakened functional divisions; team members have no functional area home.

Essay on OTICON

Organisational Analysis

The Oticon company has transitioned from a Hierarchical to a Spaghetti Management. The Hierarchical management within the Oticon company was a regular one, it included the different ranks that compose the pyramid-like levels. But when the business was on the verge of failure, the new president Lars Kolind had decided to change the management instead of the sales strategy, or any other variation he could have adopted in order to restore the company’s economic stability. What worked best was a Spaghetti management, in fact, Oticon was the founder of this type of management. Lars Kolind had the idea of revolutionising the idea of management, in order to create a more stress-free environment and giving birth to a larger collaboration and communication between the employees.

Essay on OTICON

A similar approach can be found in the Matrix Management, which sees the people communicating directly with each other, instead of passing formal written communication which are a waste of time and blocks the creation of relationships within the workplace. Meanwhile, it is also very similar to a Pure Project Management for the fact that, in a Spaghetti management, although there are no different ranks, there is always a person that counts as a project manager, who’s task is to make sure that every project is running smoothly, while in the Pure Project Management there is a project manager who has complete control over the project they are overseeing.

Essay on OTICON

Henrik Holt Larsen, a professor of HRM at the Institute of Organisation and  Industrial Sociology has claimed many times that Oticon’s “Spaghetti Management” is just a hierarchical organisation and has nothing special, revolutionary or “unthinkable”. He believes that there still are managers and some sort of hierarchy within the company, they just call it in a different way (Larsen, 2002). What Larsen is probably trying to say is that Oticon might have adopted a different type of management, and has not created a new one. Nonetheless, the outcome of this new approach to management has resulted in an extraordinary outcome, with sales rising each year and with a staff satisfied with the workplace.

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