Oticon:
The Rise & Fall of Design Thinking at Oticon

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In 2007, top management of hearing aid manufacturer Oticon boldly established a working group dedicated to a rather new and odd thing called design thinking. Three years later, the group was dissolved. This is the story of a tragic misunderstanding and untapped potential.

We talked to a former Oticon employee who decided to go to Denmark in 2007. At first it was difficult for him to find a job there. Even with a degree in mechanical engineering from one of the best universities in the US and a lot of work experience with his own consulting company it seemed difficult to get hired. Then a recruiter took a special interest in him, and the result was a job offer at Oticon, one of the world’s leading hearing aid manufacturers. They made a surprising proposal: “We’re just starting a new group called Centre for Design Thinking (CDT). You would be perfect for it.”

At that time, Oticon was taking a courageous step in a new direction. The top management decided to invest in a completely new group with an uncertain outcome a group that would “invent things.” The leader of this innovation group decided to embrace a relatively unorthodox idea called design thinking, and top management soon came to support the philosophy.

 

New Working Styles

Our interviewee’s first day at work was CDT’s first day as a department at Oticon. The Centre consisted of a multidisciplinary team with people from business, audiology and engineering. Our engineer was the only new employee in the team, as everybody else was chosen from within the organization. How did the team proceed?

The manager of CDT gave us the freedom to work in our own way, which was quite unusual at Oticon or any other company.” Everybody could work with everybody. The big advantage of this was that after a very short time our interview partner got to know the products, people and processes at Oticon very well.

The job of the CDT team was to create insights about both the users and the people who sell hearing aids. It would of course be necessary to figure out how these insights could lead to new products and services. Directly talking to users was a novel approach at Oticon, as was bringing in external knowledge: “We also worked with different consultants. That was something my manager as well as I did. It was important for him to bring in external expertise, whether from other companies, universities, or other places.

 

A Fresh & Simple Perspective

When the CDT team talked to users they heard a lot of complaints. These rumblings of displeasure were not fully known in the organization. One thing CDT members heard was that the speaker units that go inside in the ear canal in receiver-in-the-ear-canal (RITE) hearing devices were not very comfortable. CDT set out to measure ear canal geometry from many people and provided the rest of the organization with guidelines for more ergonomically shaped speaker units.

Our interviewee recalls: “As an engineer, if you develop a smartphone chances are you are the user yourself. But as a hearing aid developer you are most likely to be very far away from the concrete experience of actually wearing a hearing aid. That’s why it was not surprising that a lot of people we talked to complained about it. Based on simple things like listening to people who said it wasn’t comfortable and doing measurements we were able to show that the design could be improved. The hearing aid was then actually redesigned and works much better now. 

 

Lack of Respect

Unfortunately, members of the CDT often felt that they were not taken seriously by other departments. The situation grew more serious when the management was also not able to understand the group’s contribution to the company.

Our interviewee remembers: “We had a lot of problems convincing people that we were doing useful work. People in other parts of the organization even laughed at the name ‘design thinking.’ There were so many jokes with ‘thinking,’ such as, ‘Oh, are you guys the ones who do all the thinking?’

Unfortunately, for too many other stakeholders they became perceived as a threat more than a help – e.g. within marketing and sales. They very often stumbled into that barrier.

 

Clouds on the Horizon

The team had a “terrible time” trying to spread their insight to the rest of the organization. But even when people listened to them, it was often already too late: “People would say something like, ’decisions have already been made.’ There was always an excuse for why our work could not be incorporated into the design. That was frustrating.

Our interviewee tells us that even physical space became the source of trouble. As a Scandinavian company, Oticon placed a high emphasis on order and neatness. “Things had to look really nice and clean. There was no culture of being messy and creative.” But when you are doing design work the process is often messy. “You might have drawings or half completed prototypes or post-its, sketches, or just about anything else,” the former CDT member explains. “But at that time it was forbidden to have anything that looked remotely messy. There was no space.”

The team ended up buying whiteboards with wheels, which they could wheel into a corner for the sake of neatness. Nevertheless, the CDT team felt as if they just did not fit into the rest of the organization. Soon people perceived them as a disruptive factor.

These physical space problems combined with the lack of awareness about the team’s achievements led to final decisions being made concerning the CDT in 2010.

 

Dissolution of Design Thinking

After three years, the decision to dissolve CDT came from the very top. There was the financial crisis of 2008-2009, and there was this CDT-group that was perceived as “just sitting around, talking to other people and hiring experts” without bringing in money in a visible way.

One day in 2010 the then head of R & D came into a CDT meeting. He said that he had looked at the organizational chart, “and CDT is not on it.” Our interview partner recalls: “That was his way of telling us that we had been closed down. His second sentence was: ‘Your boss is no longer an employee of the company.’ We were shocked.

Within one year the mantra went from “innovation and efficiency” into “quality and efficiency”. While many will agree that in difficult times you should sharpen your innovative abilities, in daily operation it became increasingly difficult to defend this position, resulting in an organization chart without the CDT.

Shortly after this, four members of the CDT team left the company for new assignments. It took the management and the R & D department years to understand the value of CDT.

Afterwards, the CDT team’s job of talking to the user and getting new insights was shifted to marketing. Our interviewee remembers: “I just thought, this is a disaster. The marketing guys are trained to sell stuff; they’re not trained to listen to customers and identify unmet user needs.”

His intuition was right. The marketing employees still just kept reading press releases of other companies instead of talking to hearing aid users.

Oticon learned from their mistakes. Today they have a “discovery team”, basically doing the job of the CDT but doing projects in collaboration with numerous internal stakeholders. “Hopefully they are guys who are more integrated into the company,” says our interview partner.

Perhaps CDT’s most notable contribution was their study and suggestions related to dispensers (the audiologists and other professionals that actually sell the hearing aids). The people of CDT can take full credit for Oticon’s strategy on engaging with dispensers, which ironically was launched by marketing in the weeks after CDT was closed down.

What Oticon has learned from the #failure of its skunk works #designthinking #innovation unit. Click To Tweet

 

About Oticon

Oticon is the world’s second largest hearing aid manufacturer. It is situated in Denmark and it was founded in 1904 by Hans Demant. It has has more than 3,000 employees worldwide. In the management literature Oticon is known for its change processes (called „Spaghetti organization“).


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Image Sources

  • Oticon Hearing Devices – Header Collage: Courtesy of Oticon | © Traditional Copyright

The Authors

Eva Köppen

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2 Comments

  1. How to use “design thinking” to solve this kind of problems ?

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    • It’s a hen-egg problem. Design thinking never comes alone. For the methodology to thrive it is advisable to parallely establish a whole vector of measures. Simply put the most important are changes in leadership and the building of ‘innovation capabilities’. Companies who managed to do so were able to sustain design thinking over the years. Some of those measures are described here and here (see the tabs). Such measures can be seen as ‘interventions’ addressing the organization design. As they are heavily context-dependent they have to be developed individually (and derived from internal empathy building) within every organization, which in itself becomes a creative act at a certain point of time. This is why design thinking sometimes gets applied to build innovation capabilities, which shall enable its diffusion thereafter. And who knows? Maybe this might have helped here as well … ?

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