Nowadays, successful business innovations and creative activities are increasingly recognized as key drivers of economic development. Creativity takes difference forms at different times and in different places. From vision to create new products, business models or process to recognition system for teams to take experiment, or even as simple as free expression and acceptance of different points of view, can contribute to successful growth driven business innovations.
Take Oticon’s case for example, the change of company direction and structure, the redefinition of company human value and result from the implementation of the strategy are the essential keys to its success.
Furthermore, this essay is going to discuss the possibility of success when approach is introduced to organizations from different cultural background, followed by discussion on insights and learning derived from the case study as well as the challenges to meet in real life.
It took more than determination and courageousness when Kolind drafted plans to transform Oticon to ‘the spaghetti organization’.
In fact, it is his clear vision and understanding of the necessity of Oticon as an organization to ‘design a new way of running businesses’ that made him want to create a ‘disorganized organization’.
This change completely shifted the company from its attachment to tradition to a more creative, faster and more cost-effective organization type. To understand Oticon’s organizational creativity, it is essential to identify the creative process, the creative situation, the creative outcome and the way in which each of these components interacts with the others. The elimination of departments, managerial & supervisory positions, and the concept of ‘budgets’, was the first step to implement the strategy for change as well as to meet the new vision of the organization.
Without the traditional job titles and descriptions, employees are encouraged to join different projects with more degree of freedom. The mix of expertise is to move the organization from technological orientation to a knowledge orientation so that it would help transforming the business to knowledge-based service business. IBM’s successful transform from a technology based manufacturing company to today’s knowledge-based service business would be another good example of business innovations. However, even the best innovation takes time to show significant result.
At the beginning of Oticon’s transform, employees did not welcome the loss of routine and clear authority relationships or find the resultant uncertainty easy to adjust. Managers had difficulties to accept the loss of power base, information monopoly and status symbols. Moreover, in order to maintain project leader’ positions, managers now need to compete for the best staff. For some employees, they also had difficulties to find a role in the project team. Adults do not have to be told when to come to work and go home, or to be constantly reminded of the fact on about company rules or practices.
Employees would feel more belonged, respected, recognized, and show more willingness to participate with company activities. Employees are more dedicated and efficient. The best of all is that employees are able to see the new arrangements worked better than the old ones. In 1991, Oticon launched the revolutionary new hearing aid MultiFocus which was sunk back in the 1980s due to technical and communication problems. With the redefinition of company human value, communication becomes the center of the new approach to work.
Face to Face dialogue replaced memos as the acceptable mode of communications whereas computers are for the purpose of information sharing. The project-based approach is to change the way people perceive work. No more corridors or individual offices, no more paper files where everyone has the access to projects information, salaries or even company financial stats. The efficient teamwork and project management skills are therefore enhanced. Since the transformation started at 8am on 8 August 1991, it only took the company 3 years to show some real results.
By 1994, Oticon’s market share increased from 8% in 1990 to 12% in 1993. 15 new products have been launched, sales increased by 20% when the market had begun shrinking by 5% per year. Such success is by no accident. Before the implementation of this new approach, Oticon divided work into divisions/departments which fragmented its view of the customer. Also, the company intended to comfortably continue investing into the direction that has been proven to be right in the past. However, Kolind realized the need to learn and accept the fact that no longer the company is in charge, but the customer.
He seeks for the opportunities and sees it and grasped. After the huge success in 1995, Kolind sensed the danger of the company to slip back into a traditional departmental organizational form. He ‘exploded the organization’ uncharacteristically, again, as he believes ‘to keep a company alive, one of the jobs of top management is to keep it disorganized’. And time proves Kolind is right again. In the following few years, not only the subsidiaries but many supplies have replicated the arrangements in headquarter.
Even after Kolind’s resignation, the company operates better than ever. Oticon’s approach can certainly be replicated in Beijing, or any other places in the world. However, it should not be blind to cultural sensitivity. The Chinese economy has been shifting quickly from a predominantly industrial agricultural model of production, to one where the services sector is more in evidence. Nonetheless, China’s overall economic status and global positioning remains in debate.
As the capital of China, Beijing has been the political center of China over centuries. The theories of creativity – personality is more popular in China hence not everybody would be open to creative acts. People value the organization hierarchy and believe it is the most efficient way to run a business. Employees would have a more difficult time with adjusting the loss of routine and clear authority relationships. With the high pressure to achieve and do more for less, it is possible that one may fail to get the support of key personnel in the organization.
Furthermore, when it comes to dealing with external parties, the disorganization may slow down the communication as external parties would not know who would be the best person to liaison. With the high labor turnover rate in Beijing, it would not be in the best interest of shareholders to openly share company information such as financial stats or project details. Innovation and creativity is more than curiosity. It also takes skills, freedom of expression, collaborative effort and knowledge to succeed.
Technology based companies such as Apple, Google, YouTube, motor vehicle giant BMW, as well as traditional insurance company Allianz are all pioneers when it comes to innovation and being creative. Google adapted the same ‘spaghetti’ organization style and ‘toss against wall, see if sticks’ strategy when it comes to product development. Google encourages its engineers to spend one fifths of their time on new ideas. With the launch of their new social media Google Plus, it becomes more and more important mainly because of the implications of social search.
If someone looks for a review on the Canon camera the first search results that show up are of people sharing a review on G+. In 2006, Google decided to acquire YouTube which was the vision to create a Video download service for free. The intense focus on providing the best and most comprehensive experience for users interested in uploading, watching and sharing videos. By the time Google finalized the purchase, Youtube has created key partnerships with various Music and Broadcast players in the industry. As mentioned earlier, Beijing is a city respect the value of tradition and more adaptable to organization hierarchy.
Instead of changing the business entirely, it is recommended for companies to adapt innovation approach that would increase growth more suitable and appropriated. Insurance business is an old and traditional business, particularly the personal liability insurance business; there was the feeling that there were no innovations possible. The reframing the opportunity space is what Allianz chose to challenge. The personal liability business was a major sector of Allianz business, which made Allianz far the leader in the insurance market with significant price remium.
Competitors intend to gain more market share by lower prices and cheapened services through telesales and outsourcing arrangements in low-cost countries. Such behavior forced the market into the wrong direction. What Allianz chose to do is to rethink the market segment by looking at the demand landscape in new ways. For business in China, particular in Beijing, the innovation is not necessarily be as dramatic as in Oticon’s case, but more importantly should be able to meet business requirements and needs.
To understand the demand landscape The success of BMW is how it goes far beyond its habitual technology domain and into brand management, design, and new business models. BMW has developed a strategic blueprint for action of cars ranging from the BMW brand, the MINI brand to the Land Rover brand to meet its market demand. The blueprint described is the company’s world-class brand management system, i. e: how the company adopted an entire new model of branding for the MINI than the success model it used for the BMW brand. They targeted different market segment for the MINI brand than for the BMW brands.
This is another good example where innovation does not necessarily come from technology but the brand management and perfectly applicable to traditional business without changing the business throughout. Finally, I would like to use Apple as an example to discuss more on innovation and creativities. When iPod was initially introduced in 2001, Steve Jobs combined the innovative design, easy-to-use interface, excellent performance and made the iPod experience one of a kind. In the following ten years’ time, the introduction of Nano, Shuffle, iTouch, iPhone has proved the legendary innovation Steven Job and people around him manifested.
Apple’s innovation is well known as ‘first and foremost driven by inner conviction’. This conviction is about changing how consumers live around music or entertainment. Before the introduce of iPod and iTune, we listen to music on the radio, watch music videos on TV, purchase CDs and cassette tape which is played on Walkman or stereos. However, the iPod phenomenon has changed the way we find out about music, the way we select music, purchase music, listen to music, store music and discard music. How we manage music in our daily life has been completely changed.
Similar to Oticon’s case, in order to fulfill the fundamental customer needs and satisfactory, Apple decided to develop a notion to change consumer landscape. Back in 2001, there were innovators who started download music from Napster. Apple saw the potential with internet along with how music demand is changing and develop their own idea how to transform the entire experience for consumers. Apple did not stop with the success of iPod, they continued introducing revolutionary products such as Nano or iTouch to market in order to ‘maximize user experience’ with matching technology and product quality.
Apple now is one of the largest music retailers in the US. In the process, Steve Jobs reframes Apple from a computer company, to a music company. With the introduction of iPhone, Apple dominated the mobile phone market with its innovative design, easy-to-use interface, and excellent performance product. Do you remember what the second or the third bestselling mobile phones were when iPhone was introduced? According to Erich Joachimsthaler’s explanation, when you achieve ‘customer advantage’, the comparison is irrelevant.
People have absorbed and assimilated the iPod into their lives. ’ it is not about how much the product is different from competitors. It is how your product fits into the everyday life of consumers. With the shift of management of existing large, vertically-integrated enterprises towards the need to be innovative, entrepreneurial and creative to fit in the global business environment, it is essential to understand the concept of innovation and creative activities and apply with the consideration of culture differences.
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