No-Cubicle Culture

Hearing-aid maker Oticon removed all office boundariesand has flourished by learning which ones it needs

It sounds like the corporate paradise of the future. Workers organize themselves, coalescing around natural leaders and gravitating to the most exciting projects. There are no middle managers, no hierarchies, no fixed assignments.

At Oticon, a midsize Danish maker of hearing aids, the future started back in 1991. That's when its chief executive, Lars Kolind, turned traditional notions of the workplace upside down. Kolind, a corporate renegade trained as a mathematician, swept away old structures. Workers were suddenly free to concentrate on any project and join any team.

Kolind's radical idea was to transform the company's once-stodgy culture into a free marketplace of ideas. He moved headquarters to a new location where none of the 150 employees had a permanent desk or office, only filing cabinets on wheels that they pushed from project to project. Meeting areas had no tables or chairs. He called it the spaghetti organization, because the place had no fixed structure yet somehow held together. Ideas bubbled up and turned into hits such as a new hearing aid that required less adjustment. Sales and profits soared. The company became a model for management creativity. Even CNN showed up to tape a segment. Yet as the company grew and went public, many of the old structures crept back.

Kolind eventually left, and these days there's not much talk about his spaghetti revolution. Still, its spirit survives. None of the 500 head-office employees at Oticon has even a cubicle. The latest headquarters features few interior walls. Workers sit around the perimeter of the building at simple desks. They attend meetings on sofas in the middle of each floor.

The relaxed atmosphere helps retain top engineers, keeping Oticon at the forefront of innovation. Its unobtrusive Delta hearing aid has been a success. Sales of parent William Demant Holding Group, of which Oticon is the largest business, have grown 36% since 2002, to $927 million, while operating profit has risen 57%, to $232 million.

But some things have clearly changed. Everyone has a boss to whom they report and they no longer have total freedom to choose projects. That seems to suit people fine. A degree of freedom sparks creativity, but workers also crave leadership. The trick is striking the right balance. Says Mads Kamp, Oticon's director of human resources: "People want to be led."

By Jack Ewing

    Before it's here, it's on the Bloomberg Terminal.