This Organization Is Dis-Organization

Lars Kolind, the leader of Oticon Holding A/S, is sidled up to one of his company's sleek coffee bars, talking about revolution. Oticon makes hearing aids -- hardly the sort of business where you'd expect to find a genuine corporate radical. But over the last eight years, Kolind and his Danish colleagues, working from an elegant, three-tier loft space in an old Tuborg soda factory just north of Copenhagen, have built a business model so daring -- and so successful -- that they've conquered new markets and captured the imagination of business innovators around the world.

"Hearing aids are not the core of what this company is about," Kolind says. "It's about something more fundamental. It's about the way people perceive work. We give people the freedom to do what they want."

At first glance, Oticon seems less than revolutionary. Its 150-person headquarters has an oddly deserted feel. There are plenty of workstations, but no one is sitting at them. In fact, hardly anyone is sitting anywhere. Listen closely, though, and the sounds of subversion begin to register: the quiet chirping of the company's "internal" mobile telephones; footsteps tapping up and down a three-story circular staircase; the rumble of wheels on hardwood, a signal that employees are moving their "offices" -- standard-issue caddies with room for 30 hanging folders, a few binders, perhaps a family photo -- and forming new self-managed teams.

"There's a paradox here," Kolind says. "We're developing products twice as fast as anybody else. But when you look around, you see a very relaxed atmosphere. We're not fast on the surface; we're fast underneath."

Not to mention fast in the marketplace. The company is on a growth tear. The billion-dollar world market for hearing aids has been flat for the last five years, but Oticon (1995 revenues: $160 million) has more than doubled in size. Operating profits ($20 million in 1995) are nearly ten times their 1990 level. The company has introduced at least ten major product innovations -- including, recently, the world's first digital hearing aid. Oticon went public in May 1995; its shares now trade for $100 -- 50% above the IPO price.

Lars Kolind, 49, arrived at Oticon in 1988 to revive a deeply troubled company. He cut costs, increased productivity, and quickly steered the company back into the black. But he realized that incremental improvements would not be enough to prosper against diversified giants such as Sony, Siemens, and Philips. On New Year's Day 1990, Kolind released a four-page memo on reinventing the company. It amounted to a declaration of dis-organization.

Oticon needed breakthroughs, Kolind wrote, and breakthroughs "require the combination of technology with audiology, psychology, and imagination. The ability to `think the unthinkable' and make it happen." In organizations of the future, he continued, "staff would be liberated to grow, personally and professionally, and to become more creative, action-oriented, and efficient." What was the enemy of these new organizations? The organization itself.

So Kolind abolished the formal organization. Projects, not functions or departments, became the defining unit of work. Today at Oticon, teams form, disband, and form again as the work requires. Project leaders (basically, anyone with a compelling idea) compete to attract the resources and people to deliver results. Project owners (members of the company's 10-person management team) provide advice and support, but make few actual decisions. The company has a hundred or so projects at any one time, and most people work on several projects at once. It is, essentially, a free market in work.

"We want each project to feel like a company, and the project leader to feel like a CEO," Kolind says. "We allow a lot of freedom. We don't worry if we use more resources than planned. Deadlines are what really matter."

The company's physical space reflects its logic of work. All vestiges of hierarchy have disappeared. Oticon headquarters is an anti-paper anti-office with uniform mobile workstations consisting of desks without drawers and state-of-the-art networked computers. People are always on the move, their "office" nothing more than where they choose to park their caddie for the duration of a project -- anywhere from a few weeks to several months. It's an environment that maximizes walking, talking, and acting.

"The most important communication is face-to-face communication," says Torben Petersen, who led the development of Oticon's new information systems. "If you can't talk to someone because he's sitting behind a secretary and a potted plant, he'll never know what you know. People need to move around."