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 - – increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, there is backlash against globalization, geopolitical disruptions,
increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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 -
Innovation driven organization
– Oticon Kolind is one of the most innovative firm in sector. Manager in Revolution at Oticon A/S: The Spaghetti Organization (Condensed) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Successful track record of launching new products
– Oticon Kolind has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Oticon Kolind has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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.
Sustainable margins compare to other players in Organizational Development industry
– Revolution at Oticon A/S: The Spaghetti Organization (Condensed) firm has clearly differentiated products in the market place. This has enabled Oticon Kolind to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Oticon Kolind to invest into research and development (R&D) and innovation.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Oticon Kolind are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Strong track record of project management
– Oticon Kolind is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
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 -
High operating costs
– Compare to the competitors, firm in the HBR case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Oticon Kolind 's lucrative customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Oticon Kolind supply chain. Even after few cautionary changes mentioned in the HBR case study - Revolution at Oticon A/S: The Spaghetti Organization (Condensed), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Oticon Kolind vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Oticon Kolind is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Oticon Kolind needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Oticon Kolind to focus more on services rather than just following the product oriented approach.
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.
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.
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.
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.
High cash cycle compare to competitors
Oticon Kolind has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Workers concerns about automation
– As automation is fast increasing in the segment, Oticon Kolind needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
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.
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Oticon Kolind can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Oticon Kolind can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Oticon Kolind in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
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.
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.
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.
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.
Creating value in data economy
– The success of analytics program of Oticon Kolind has opened avenues for new revenue streams for the organization in the industry. This can help Oticon Kolind to build a more holistic ecosystem as suggested in the Revolution at Oticon A/S: The Spaghetti Organization (Condensed) case study. Oticon Kolind can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
Developing new processes and practices
– Oticon Kolind can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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.
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.
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.
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.
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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Oticon Kolind.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Oticon Kolind with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Oticon Kolind can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed) .
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.
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.
