Oticon, a Danish company founded in 1904 was the first company in the world to invent an instrument to help the hearing impaired. In the 1970's, Oticon was the world's number one manufacturer of the "behind the ear" hearing aids. During the 1970's and 1980's as the market for "in the ear" hearing aid grew, Oticon's fortune suddenly declined and they lost money and market share. The main problem for all of this was that Oticon was a very traditional, departmentalized and slow-moving company. Even though Oticon had 15 sites and 95 distributorships around the world, Oticon was operating in a market dominated by Siemens, Phillips, Sony, 3M and Panasonic and most importantly, Oticon manufactured the "behind the ear" hearing aid but its customers preferred the "in the ear" product. Oticon also specialized in analogue technology whilst its customers were moving towards digital technology.
In 1988, a new President of Oticon was appointed, Lars Kolind. With his appointment, he worked hard to turn the situation of Oticon around. Kolind implemented cost-cutting measures; he pared the company down, cut staff and increased efficiency, and reduced the price of a hearing aid by 20%. Nevertheless, this still did not achieve the results he wanted. He never gave up. He had been searching for a sustainable competitive advantage for Oticon. He wanted to create a new way of running a business. One that could be more creative, faster and cost effective and also compensate for technological excellence, capital and general resources which Oticon lacked.
Kolind believed that Oticon could no longer compete with its technologically advanced competitors. By reinventing itself, Oticon showed that it could. Oticon drastically changed its organizational structure, ways of working and culture to let loose the human potential of the company. Kolind created a...