Freedom, Inc_ - Brian M. Carney [74]
Kolind soon learned that since its founding in 1904, this family-owned company had had only two CEOs. In order to ensure that Kolind became fully immersed in the company’s traditions, the board of directors wanted him to serve as CEO-in-waiting for six months. Kolind didn’t think tradition and the old ways were exactly what Oticon needed, so he managed to talk the board down to a one-month transition. And on his way home, he took down the sign that marked his parking spot.
Oticon was in trouble when it brought Kolind in. In 1987, the company had lost $7 million on $52 million in revenue. It was the high-cost manufacturer in its market and yet was still churning out outdated products. Its competitors—Sony, 3M, Philips, Siemens, and others—were quickly moving to digital hearing-aid technology while Oticon was stuck in the analog age. According to Kolind, Oticon’s people viewed themselves as the BMW of the industry, but their products looked more like old Volkswagen Beetles in the marketplace. This state of denial was a serious problem, but it wasn’t the only one. Oticon’s corporate culture was “steeply hierarchical, conservative, and almost aristocratic, with a strong resistance to change,” as Kolind described it.
Yet Kolind had come to Oticon to change it. He’d become exasperated with the bureaucratic cultures of other places he’d worked and believed that a company could be rebuilt along radically free lines. He’d vowed to realize his vision if he ever got the opportunity, and this was that opportunity. But first, Oticon had to stop losing money. So, on October 1, 1988, his first day as full-fledged CEO, he announced that all future expenditures—expense reports or any financial commitment besides planned buying of necessary manufacturing supplies—would have to be personally approved by him. Not exactly a liberating first step, to be sure, but even while taking this draconian measure, he added a twist: If he didn’t deny an expenditure request within twenty-four hours, it would automatically be approved. In this way, he tried to bring costs under control without creating a huge bureaucratic backlog—the onus would be on him to clamp down on unnecessary expenditures. Even with this liberalizing proviso, the order quickly had an effect. The requirement to apply to the CEO for new spending, together with a few denied requests, produced enough discipline on costs to turn the negative cash flow positive before the year was out.
Simultaneously, Kolind visited audiologists and hearing-aid dispensers to get insight about Oticon’s bad image and misguided products. On November 18, 1988, he called a two-day management seminar to devise a new company vision. The old “Leader in hearing technology” turned into “Helping people (with impaired hearing) to live as they wish with the hearing they have.” This new vision—admittedly not very inspirational—nevertheless helped refocus the company, leading to the closing of several departments and the laying off of 10 percent of the staff. Sales soon started to grow, the company returned to profitability, and both the board and employees seemed to be happy. But not Kolind.
He performed a thorough analysis of the company’s operations, which confirmed his initial intuition: Oticon’s “rule-based, departmentalized, hierarchical engineering culture” had to be changed. Kolind wanted a self-directing, innovative company that would stun the world with world-class products.
So, on Christmas Eve 1989, he sent out a four-page memo titled “Think the Unthinkable!” His managers thought it was a joke. But Kolind was serious.