Scouts are more Attractive
Lars Kolind, was originally employed at Oticon to make a traditional cold, turnaround: an axeman responsible for trimming down the organization, but also saving Oticon. Lars Kolind managed the turnaround in the first year. Supported by very positive feedback from colleagues and employees, who acknowledged his first year result - he decided to completely reorganize the whole company. The result is well known: Oticon shook the world by introducing the spaghetti organization.
Ten years later, Lars Kolind still has surprises: On December 3, 1997 Lars Kolind decided to retire from business as he wished to devote more time and energy to his private life. Lars Kolind's decision to leave Oticon was purely out of personal reasons; he leaves no sinking ship behind. Based on a forecast of a DKK 1.4 billion revenue, a profit of DKK 205-210 million before tax is expected for 1997
Lars Kolind had started playing with the idea of leaving Oticon in October 1997, after a long 27 day trip abroad, in countries such as New Zealand, North and South America and Japan. He thought carefully about the idea, and finally made his decision in late November 1997: "During the last ten years I have spend so incredibly many hours working for Oticon that I think that I have worked for almost twenty years. I have also traveled almost 100 days a year. That is difficult to combine with a wife and four children between eight and eighteen. I think the price has been very high - but it has been worth paying. But I must say that it will not be worth paying for the next ten years."
The stock market's response to Kolind's decision was unambiguous: a vertical dive in the price of shares from 340 to DKK 305, meaning a total drop in the company's market value of DKK 571 million.
Whereas most of Lars Kolind's colleagues have shown great sympathy with his decision, a great number of others find his withdrawal too sudden. But, Lars Kolind argues: "There are lots of examples of directors who reduce working hours and start playing more golf during the last ten years of their CEO tenure...But I don't think that is good enough for Oticon. A CEO of such a dynamic firm must drive with a 120 km an hour - also around the corners."
Questions for Consideration
1. How will the change in management change Oticon?
2. Discuss strategic misfits.
3. Is the stock market reaction appropriate?
4. Which management style would be most inappropriate?
5. ‘Discuss the development of Oticon in the context of a company's life cycle.
References Morsing,
M. 1995. Omstigning til Paradis?, Copenhagen: Handelshøjskolens Forlag.
Poulsen, P.T. 1993. Tænk det Utænkelige - Revolutionen i Oticon. J.H. Schultz A/S
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