Revolution at Oticon A/S: The Spaghetti Organization (Condensed) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Revolution at Oticon A/S: The Spaghetti Organization (Condensed)
In the mid-1985s, Oticon A/S, a Danish manufacturer of high-quality hearing aids, begins to experience significant losses. Lars Kolind, newly named CEO, introduces a vision for company headquarters that would entail a fundamental restructuring and transformation of the organization. Management and employees revolt and refuse a planned move of company headquarters. Should the CEO proceed with the proposed radical change, or has a recent turnaround been sufficient to restore Oticon to its No. 1 market position? In 1990, Kolind decides to abandon his plan to move Oticon headquarters, but insists on the pursuit of his vision for what he now calls the spaghetti organization--so named because of its relative lack of structure. Shortly after implementation, the company suffers further financial losses. A new managing director, brought in by Kolind, begins to address the financial dynamics of Oticon A/S, and within six months, profitability is restored. By 1993, the company enjoys its greatest profit since it was founded in 1904. Has Kolind achieved the competitive advantage he sought? How can it be sustained in the years to come? A 1994 EFMD award winner.
Authors :: R. Morgan Gould, Michael Stanford, Kate Blackmon
Swot Analysis of "Revolution at Oticon A/S: The Spaghetti Organization (Condensed)" written by R. Morgan Gould, Michael Stanford, Kate Blackmon includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Oticon Kolind facing as an external strategic factors. Some of the topics covered in Revolution at Oticon A/S: The Spaghetti Organization (Condensed) case study are - Strategic Management Strategies, Competitive strategy, Manufacturing, Motivating people, Organizational structure, Reorganization and Organizational Development.
Some of the macro environment factors that can be used to understand the Revolution at Oticon A/S: The Spaghetti Organization (Condensed) casestudy better are - – central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, there is increasing trade war between United States & China, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels,
cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Revolution at Oticon A/S: The Spaghetti Organization (Condensed)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Revolution at Oticon A/S: The Spaghetti Organization (Condensed) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Oticon Kolind, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Oticon Kolind operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Revolution at Oticon A/S: The Spaghetti Organization (Condensed) can be done for the following purposes –
1. Strategic planning using facts provided in Revolution at Oticon A/S: The Spaghetti Organization (Condensed) case study
2. Improving business portfolio management of Oticon Kolind
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Oticon Kolind
Strengths Revolution at Oticon A/S: The Spaghetti Organization (Condensed) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Oticon Kolind in Revolution at Oticon A/S: The Spaghetti Organization (Condensed) Harvard Business Review case study are -
Analytics focus
– Oticon Kolind is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by R. Morgan Gould, Michael Stanford, Kate Blackmon can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to lead change in Organizational Development field
– Oticon Kolind is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Oticon Kolind in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Oticon Kolind is one of the leading recruiters in the industry. Managers in the Revolution at Oticon A/S: The Spaghetti Organization (Condensed) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Oticon Kolind has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Highly skilled collaborators
– Oticon Kolind has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Revolution at Oticon A/S: The Spaghetti Organization (Condensed) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Oticon Kolind in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Oticon Kolind has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Oticon Kolind to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Oticon Kolind has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Oticon Kolind is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Oticon Kolind is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Revolution at Oticon A/S: The Spaghetti Organization (Condensed) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Oticon Kolind is present in almost all the verticals within the industry. This has provided firm in Revolution at Oticon A/S: The Spaghetti Organization (Condensed) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Low bargaining power of suppliers
– Suppliers of Oticon Kolind in the sector have low bargaining power. Revolution at Oticon A/S: The Spaghetti Organization (Condensed) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Oticon Kolind to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Oticon Kolind digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Oticon Kolind has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses Revolution at Oticon A/S: The Spaghetti Organization (Condensed) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Revolution at Oticon A/S: The Spaghetti Organization (Condensed) are -
Capital Spending Reduction
– Even during the low interest decade, Oticon Kolind has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed), is just above the industry average. Oticon Kolind needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Products dominated business model
– Even though Oticon Kolind has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Revolution at Oticon A/S: The Spaghetti Organization (Condensed) should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Oticon Kolind has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Lack of clear differentiation of Oticon Kolind products
– To increase the profitability and margins on the products, Oticon Kolind needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Revolution at Oticon A/S: The Spaghetti Organization (Condensed) can leverage the sales team experience to cultivate customer relationships as Oticon Kolind is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Revolution at Oticon A/S: The Spaghetti Organization (Condensed) HBR case study mentions - Oticon Kolind takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed), it seems that the employees of Oticon Kolind don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Oticon Kolind is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed), it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Need for greater diversity
– Oticon Kolind has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Revolution at Oticon A/S: The Spaghetti Organization (Condensed) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed) are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Oticon Kolind can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Revolution at Oticon A/S: The Spaghetti Organization (Condensed), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Oticon Kolind can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Oticon Kolind can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Oticon Kolind is facing challenges because of the dominance of functional experts in the organization. Revolution at Oticon A/S: The Spaghetti Organization (Condensed) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Oticon Kolind to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Oticon Kolind to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Oticon Kolind can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Learning at scale
– Online learning technologies has now opened space for Oticon Kolind to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Oticon Kolind can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Oticon Kolind can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Revolution at Oticon A/S: The Spaghetti Organization (Condensed) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Oticon Kolind in the consumer business. Now Oticon Kolind can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Oticon Kolind to increase its market reach. Oticon Kolind will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Using analytics as competitive advantage
– Oticon Kolind has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Oticon Kolind to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Oticon Kolind can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats Revolution at Oticon A/S: The Spaghetti Organization (Condensed) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed) are -
Consumer confidence and its impact on Oticon Kolind demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Environmental challenges
– Oticon Kolind needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Oticon Kolind can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Oticon Kolind in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Shortening product life cycle
– it is one of the major threat that Oticon Kolind is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Oticon Kolind business can come under increasing regulations regarding data privacy, data security, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Oticon Kolind will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing wage structure of Oticon Kolind
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Oticon Kolind.
Technology acceleration in Forth Industrial Revolution
– Oticon Kolind has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Oticon Kolind needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High dependence on third party suppliers
– Oticon Kolind high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Stagnating economy with rate increase
– Oticon Kolind can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Oticon Kolind can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Oticon Kolind in the Organizational Development sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Revolution at Oticon A/S: The Spaghetti Organization (Condensed) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Revolution at Oticon A/S: The Spaghetti Organization (Condensed) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Oticon Kolind needs to make to build a sustainable competitive advantage.