Reference no: EM131496424

Question: Oticon - the case continues - limiting risks

While the changes at Oticon had spurred creativity, the Board of the firm also became concerned about profitability in the early years, as the new structure was creating so many initiatives and new products that it was difficult to manage them all effectively. They therefore appointed Neils Jacobsen as co-chief executive in 1992, to place more emphasis on financial discipline and performance. Jacobsen took over from Kolind as chief executive in 1998. In 1996 more controls were introduced, to balance some of the risks of the new form. A Competence Centre was established which took over some of the rights previously held by project managers.

It alone now had the right to initiate projects and appoint project managers - thus restraining the earlier principle that anyone could start a project. It also took over the task of negotiating salaries which had initially been delegated to project managers. These changes were intended to overcome some of the costs associated with the radical structure. When there was no limit to the number of projects, nor to the number of projects on which a person could work, it had become hard to ensure completion: the most capable staff were spread over too many projects. There was also some concern that staff and teams were not always sharing knowledge as fully as expected. Despite these adjustments, the company remains a radically different form of organisation.