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 - – talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, increasing government debt because of Covid-19 spendings, geopolitical disruptions,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, 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 -
Operational resilience
– The operational resilience strategy in the Revolution at Oticon A/S: The Spaghetti Organization (Condensed) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
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.
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 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.
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.
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.
Organizational Resilience of Oticon Kolind
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Oticon Kolind does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
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.
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 -
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.
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.
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Revolution at Oticon A/S: The Spaghetti Organization (Condensed), in the dynamic environment Oticon Kolind has struggled to respond to the nimble upstart competition. Oticon Kolind has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
Interest costs
– Compare to the competition, Oticon Kolind has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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.
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.
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.
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.
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 -
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Oticon Kolind can use these opportunities to build new business models that can help the communities that Oticon Kolind operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
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.
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.
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.
Loyalty marketing
– Oticon Kolind has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Oticon Kolind to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
Leveraging digital technologies
– Oticon Kolind can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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) .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Oticon Kolind needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
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.
Regulatory challenges
– Oticon Kolind needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
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.