Bold 'spaghetti' model nourishes Danish firm

ON EXCELLENCE

August 08, 1994|By TOM PETERS

It's coffee-break time at Oticon, a world leader in hearing-aid production. As you munch on a tasty snack, you're distracted by a flutter in the clear plastic tube that runs through the room, connecting the mailroom above to the trash disposal below.

The disturbance is shredded paper, probably the day's mail being discarded after it's been optically scanned into the specially designed Hewlett-Packard workstation network by which all Oticoners communicate with each other, all the time.

Paper is out, by edict, at Oticon. So are a lot of other things. On Aug. 8, 1991, at 8 a.m., a new Oticon was born. "We removed the entire formal organization," explains Lars Kolind, chief of the Danish company. "We took away all departments. We took away all managers' titles. And with them went the red tape. There are no secretaries to protect us."

In place of old-fashioned desks, each employee now has a cart. In this ultimate self-designing organization, project teams form on their own initiative, then gather where they wish (workstations are ubiquitous) and get down to work. (Though a signed-off sheet of paper eventually certifies a team's existence, Kolind flatly insists that he has no idea how many teams there are at any one time.)

To Kolind's surprise, almost everyone took a shine to this strange new way of working -- and exactly one month after the start, in a symbolic move, the company auctioned off all the old office furniture to employees.

More to the point, the firm awoke from several years of slumber. Profits and market share are soaring, and a new world-beating product, which caught competitors (such as formidable Philips) napping, was introduced in half the normal time.

Has this strange organization, which Kolind calls the "spaghetti model," made all this possible? "Absolutely," Kolind snaps.

But then he issues a stern warning. You must, he says, "change everything at once" -- organization structure, culture, physical setting and the "very nature of work itself."

Unlike Oticon, VeriFone, the world leader in credit-card authorization systems, got it right from the start. "Distribute organizational resources as near the customer as possible, then add tight, fast information feedback loops" -- that's the clinical way that CEO Hatim Tyabji puts it. In the vernacular, he calls it the "blueberry pancake model, very flat, with all blueberries equal." (And no -- repeat, no -- corporate headquarters; and no secretaries; and no P-mail, that is, paper mail, allowed.)

The electronic network, by which all employees have access to all information and in which all chat with all constantly (the word all is not used loosely), ties it together. But the electronics work only because of the carefully nurtured "culture of urgency" that Tyabji demonstrates by logging a harrowing 400,000 miles a year on the road.

Success can be measured by the bottom line and the stunning speed with which the global firm brings 1,800 brains to bear on any customer situation, anywhere, anytime.

Any company in any industry can follow this route, Tyabji says optimistically, but then adds, "There is no halfway."

Andy Grove's Intel is an order of magnitude bigger than Oticon or VeriFone. But Grove keeps his monster firm moving much as Tyabji does. "Businesses that have pervasive use of electronic mail operate differently," Grove told Business Week; they are "much faster, much less hierarchical. (E-mail) squeezes all the slack out of the system. It also gives you the opportunity to course-correct . . . rapidly."

But, also shades of VeriFone, Grove insists that you can only do it if the boss shows the way, which isn't easy: "From the moment you do it yourself, you're available to anybody and everybody. The elimination of the screening process in my E-mail . . . tends to lead to a . . . more democratic way of operating."

The game is the same as VeriFone's. So, too, Grove's unvarnished warning: "There are two companies -- one that operates this way and one that doesn't -- competing with each other. How long will the one that doesn't compete stick around? Somebody is going to do it, and therefore you're either going to do it or you disappear."

All this leaves me queasy. The Oticon, VeriFone and Intel models are extreme. But what happens to you, as Grove reminded us, if someone "Oticons" your company? In short, you are history -- and quickly.

Kolind first exposed me to the Chinese proverb: "It is very dangerous to try to leap a chasm in two bounds." All too many firms -- in their TQM, re-engineering, learning-organization programs -- are gingerly embracing change.

Most are trying to leap the chasm in three or four, or five or 10 bounds. It's not working.

Tom Peters is a syndicated columnist. Write to him at Tribune Media Services Inc., 720 N. Orange Ave., Orlando, Fla. 32801; (407) 420-8200.

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