In Company Reorganizations, There Is No Halfway

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! ERROR ! UNBALANCED BEGIN END STRIP BRACKETS }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," explained Lars Kolind, chief or 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 snapped.

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. …