Analysis of the Case

Oticon Using the

Culture Metaphor

Karlstad Business School

Handelshögskolan vid Karlstads Universitet

Course code: FEAD51

Course name: Competence and Leadership

Title: Analysis of the Case Oticon Using the Culture Metaphor

Date of Submission: 2013-02-11

Family name Given name

Shurrab Hafez

El Bouassami Mohammed

Name of the teacher: Markus Fellesson and Sofia Molander

Name of the administrator: Frania Johansson

I

TABLE OF CONTENTS

TABLE OF CONTENTS ............................................................................................................ I

1. INTRODUCTION ..........................................................................................................- 1 -

2. BACKGROUND ............................................................................................................- 1 -

3. THEORY ........................................................................................................................- 1 -

4. ANALYSIS .....................................................................................................................- 2 -

4.1. Oticon as Cultural Phenomenon ..............................................................................- 2 -

4.2. Oticon and Cultural Context ....................................................................................- 2 -

4.3. Corporate Culture and Subculture in Oticon ...........................................................- 2 -

4.4. How Could Oticon Change Culture? .......................................................................- 3 -

4.5. Strengths of the Culture Metaphor ..........................................................................- 4 -

5. CONCLUSIONS .............................................................................................................- 5 -

6. REFERENCES ...............................................................................................................- 6 -

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1. INTRODUCTION

The metaphors of organizations and management have been discussed by Gareth Morgan

in his book “Images of Organizations” (Morgan, 2006). Morgan exposed eight metaphorical

images of organizations including machine, organism, brain, culture, political system, psychic

prison, flux and transformation, and instrument of domination. Each one of these metaphors

creates insight, but also obscures some corners. They have both pros and cons. They enable

seeing, but also not seeing. No one of them is said to be correct and right.

2. BACKGROUND

Oticon is a Danish company, located in Copenhagen. They used to be one of the best in

market for global hearing aid industry. The evolution and advancement of the other

competitors, such as Siemens and Starkey, put Oticon in a critical slippery position in the

market, especially the global one, where Oticon export the majority of its products to. To

rectify the situation, the board brought in Lars Kolind, who had great history of science-

oriented solutions despite his youngness (30 years old). Kolind analyzed the strengths and

weaknesses of Oticon and compared it with the competitors. He found out that no strengths

Oticon had to compete with. On the other hand, Kolind found out that the inflexibility and

low responsiveness the competitors had could be a drawback in comparing with Oticon.

Therefore, he decided to set a new plan to turn the organization into learning responsive

organization. He sought improving this advantage to capture larger market share, especially

globally, and gain higher profit margins. In this report, the case is analyzed using the culture

metaphor. In other words, it discusses what we could see and reflect when projecting the

plane Kolind set and applied on the other principles and approaches of the culture metaphor.

3. THEORY

When we talk about culture we are usually referring to the patter of development

reflected in a society’s system of knowledge, ideology, values, laws, and day-to-day ritual

(Morgan, 1997). Political scientist Robert Presthus has suggested that we now live in an

“organizational society”. This kind of societies has distinctive aspects lay generally in groups

of people build their lives around distinct concepts of work and leisure, follow rigid routines

five or six days a week, live in one place and work in another, wear uniforms, defer to

authority, and spend so much time in a single spot performing a single set of activities

(Presthus, 1978). Organizations could follow different behaviours due their cultural contexts.

In other words, some social behaviour could be accepted within a certain cultural context, but

maybe inapplicable for other contexts. For instance, the Japanese organizational behaviour

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may not differ from the western organizational one significantly. But Japanese culture was

more fertile to do much work while keeping the positive spirit (Maruyama, 1982).

Organizational culture is the collective behaviour of humans who are part of an organization

and the meanings that the people attach to their actions (Smircich, 1983). Corporate culture is

the total sum of the values, customs, traditions, and meanings that make a company unique.

Corporate culture is often called "the character of an organization", since it embodies the

vision of the company's founders. The values of a corporate culture influence the ethical

standards within a corporation, as well as managerial behaviour (Montana, 2008). Cultural

rule following could be described as the adherence to social norms and customs, while

cultural enactment emphasises that we must root out understanding of organization in the

processes that produce systems of shared meaning (Morgan, 2006).

4. ANALYSIS

4.1. Oticon as Cultural Phenomenon

Many European countries, as well as Denmark, started to turn into organizational

countries after the industrial revolution during the 18th

century (Johansen 2002). Oticon was

founded in 1904 by Hans Demant, which means that Oticon, as well as other Danish

organizations, had been regarded as cultural phenomena that time. From the case, there are

many reflections that confirm the similarities between Danish organizational culture and other

European cultures. That may include working hours, quality standards, organizational

structures, and other aspects of any organizational culture.

4.2. Oticon and Cultural Context

After entering Kolind to the organization, there were many indicators that could draw to

which context Oticon had been functioning in. Kolind proposed a new plan with many vital

changes that could move the company toward decentralized style. That was accepted by the

team management, but not warmly welcomed and seen as a new risky style. This indicates

that the organizational context in Denmark were generally hierarchal. Kolind seemed as if he

had been influenced by the Japanese developing style that time. He had studied the cultural

context in Oticon, and tried to explore where some positive aspects of the Japanese style

could be built in.

4.3. Corporate Culture and Subculture in Oticon

Before Kolind’s age, the corporate culture of Oticon could be characterized by

aristocratism, where Demant family had exclusively been owned the company for decades.

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But after the company had lost its position in the global market, Kolind has been brought in to

retrieve Oticon’s position, while preserve its corporate values and culture. The board showed

Kolind powerful support for his new proposal, which reflects a gradual change in corporate

culture. Kolind would have never stepped forward without such support that kept even the

management team away from complaining him, despite their steady reluctance to the new

proposal. Moreover, what could be seen as a significant change in corporate culture is the way

Kolind resorted to for financing the new plan. He asked the bank to acquire 17% of the

company, and some of his colleagues to acquire 3-4%. He also offered the employees shares

at a good price under certain criterion. That reflects a significant change in corporate culture.

Kolind has created a great deal when he hired the enthusiastic employee, Helle, to be part

of what he called the interior design team. This team had the responsibility of opinion leaders.

There were six opinion leaders; none of them had been occupying managerial position.

Kolind called the team with that name so that not to threaten anyone in the management team.

This reflects how Kolind was well-conscious of dominant culture. This team has grown

gradually and was a nucleus that multiplies within the organization. It is a great supporting

power that Kolind planted to reduce the resistant potentials of the management team.

4.4. How Could Oticon Change Culture?

In our opinion, the first change Oticon did was changing people. This started by hiring

Lars Kolind, who disturbed the flow radically. He might be one person, but very important

one. In point of fact, Oticon became totally different after brining in Kolind. It was in reality a

historical limestone for Oticon. What Kolind has done to apply strategic changes in Oticon’s

culture could be highlighted by some specific and progressive steps. Logically, he had to

understand the processes within Oticon very well. Then, he diagnosed the strategic change

needs to investigate the extent of change and identify barriers. That led him to consider

changes in styles of management, organizational routines, symbolic activities, and political

activities (Mintzberg & Quinn, 1996). That all contributed eventually in the enactment of a

shared realities. Changing places is one of the tactics Kolind has applied. Instead of separated

classical offices, Kolind turned the company into a very big open office for everybody. The

employees were free to choose their places. By applying that, Kolind could change the

traditional frame of working places within the organization, and probably in Denmark.

Moreover, Kolind needed to change a set of people’s beliefs and attitudes to accept and adopt

his plan. He could manage to do that as discussed earlier by creating the interior design team,

convincing the board to accept some strategic changes, and imposing fait accompli on the

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team manage. Kolind tried to create the core idea based of what we can call “Let´s work

together”. This idea helped to develop a corporate culture that spreads values and principles in

all part of the organization. Kolind has also dedicated scientific knowledge concerning with

role models to change Oticon’s reality. Spaghetti model is a clear evidence for that. He

destroyed the departmentalization by involving different employees in many different

projects, to perform different roles in each project. There were 100 projects, every project was

owned by somebody on the management team. But ownership there was like being chairman

of the board. The job of project owner was to support and open doors, while the project

manager ran the show. These were not common changes for any employee to adapt with. But

by training them to play different roles within their teams, Kolind added a new criterion to the

future employees, who are willing to work at Oticon. Kolind blew up the departmental

structure and rebuilt a new structure. Kolind has also presented collateral technological

changes to the structure changes. Kolind enhanced the principle of continuous improvement,

and that could be very clear from the way he dealt with project E36. The world witnessed then

the first fully automatic hearing aid named MultiFocus and ranked by the company as the

most advanced hearing aid that had ever been made. The product was a device offered a

genuine advanced to the user with much more comfortable sound delivered by a fully

automatic system. In order to be a customer service oriented company, Oticon’s strategy had

been based on having its own distributors in order to be in direct contact with their customers

so that to provide them with original knowledge quantity and quality. Kolind also encouraged

all employees to have their own computers by offering very low prices for them. Besides, he

imposed the increase of oral and e-based communication instead of paper communication.

That was very helpful for employees to merge within the organization and understand the new

style quickly. For instance, if any employee inquires about a matter, s/he would find it very

simple to ask anyone around, which means a more productive flow of work. Finally, and as

discussed earlier, the corporate image of Oticon has been totally changed in Kolind’s age. He

could add a positive social value by increasing the public share in the company significantly.

4.5. Strengths of the Culture Metaphor

Undoubtedly, the culture metaphor has several strengths, among these strengths is that it

directs attention to the symbolic significance of almost every aspect of organizational life

(Morgan et al. 1983). That can be seen in Oticon’s case when there was a focus on each

detailed aspect that makes the working flow of the organization understandable through the

structures, rules, routines, and hierarchies what are necessary for its daily based functionality.

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Changing corporate culture is not always easy due the resistance against change, because

in most cases organizations are very structured hierarchically and power oriented (Morgan et

al. 1983). In Oticon the management team were extremely negative. Kolind was clear when

thought that department should work in more integrated fashion, by creating a multi-

functional organization, where everyone does more than one thing. Therefore, the concept of

a head department didn’t make sense anymore. As a result, Kolind did his best to introduce

the idea that the times have changed, and the traditional way managers had used to work with

became obsolete. The third strength of the culture metaphor is that it supports the relation

between the organization and its environment (Morgan, 2006). Reflecting this on Oticon, we

have noticed that Kolind has based his decision making strategy by taking advantages over

other competitor’s weaknesses due to their heavy reaction and departmentalized structures.

Furthermore, the way to understand the organizational change can be also strength. Besides

changing technologies, structures, and employees motivation; change should also cover the

images and values that frame this change (Morgan, 2006). Even though there was sort of

resistance for the change within Oticon, Kolind has managed to setup a bunch of values to

regulate the new way of how to achieve goals and targets. No matter which method to adopt,

it had to be characterized by values such as fairness and transparency.

5. CONCLUSIONS

The culture metaphor provides a revolutionary way of thinking about organizations. In

order to create a new organizational structure, the biggest challenge would be cultural change.

When Oticon faced difficulties, there was a need to react to adapt with the global

environment. The first step taken by the board was to change the reality of the company being

ruled by a family, hiring a new leader from outside (Kolind). Even though it was not a real

cultural change, but what corporate culture wanted him to create. Kolind accelerated the

introduction of several cultural changes in the organization. He introduced a new culture of

thinking (thinking the unthinkable) based on his analysis results. He managed to create a new

structure of the organization and developed a new roadmap based on the company future

visions and goals. Besides, Kolind introduced new shareholders to the company capital,

shifting Oticon toward public corporation. He also moved the management and decision

making style of Oticon from being centralized to be more decentralized. he also managed to

create a shared systems of meaning that are accepted, acted and reachable at all levels of the

organization, since this metaphor is meant to be built around people rather than techniques.

However, the failure on such tasks can threaten any attempt to introduce a cultural change.

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6. REFERENCES

Johansen, Hans Chr. (2002). Danish Population History, 1600-1939. Odense: University

Press of Southern Denmark.

Presthus, R. (1978). The Organizational Society. New York: St. Martin’s.

Maruyama, M. (1982). “Mindscapes, Management, Business Policy, and Public Policy.”

Academy of Management Review.

Mintzberg, B. and Quinn, B. (1996). " Leadership is intertwined with culture formation." The

Strategy Process. Prentice-Hall.

Montana, P. and Charnov, B. (2008) Management (4th ed.), Barrons Educational Series,

Hauppauge: NY.

Morgan, G. P. Frost, and L, Pondy. (1983). “Organizational Symbolism.” Greenwich, CT: JAI

Press.

Morgan. G. (2006). Image of organization. Schulich School of business, Toronto.

Smircich, L. (1983). “Concepts of Culture and Organizational Analysis.” Administrative

Science Quarterly.

Wiener, N. (1967) The human use of human beings. Boston: Houghton Mifflin.