Do some messages at this site seem way out? So why not suggest that you can make millions by eliminating offices, paper, even desks and privacy in your business! Now this really sounds crazy. Right? Yet this is how one shrewd businessman made $50 million.
One of the great rewards gained from speaking at investment seminars is getting to meet some stunningly bright investors and business people who share the podium. This especially seems to be the case at Jyske Bank conferences. Each time I speak in Copenhagen I learn something that changes the entire way I think.
Enter Lars Kolind, a speaker at Jyske's last seminar, the man who turned a sleepy Danish hearing aid company Otikon into a global leader and made many millions (50 million I am told) in the process.
Otikon had sales of 432.8 million Danish kroner in 1988 when Lars Kolind came aboard as its managing director. When he left in 1997 that had grown to over a billion DKK 1413.4! More importantly, profits moved from a DKK 6.5 million kroner loss to a substantial DKK 160.8 million profit. Profit margin grew to 13.8%. The company went public and its market capitalization was around DKK 4.9 Billion when Lars left.
This record is memorable enough, yet it is the way Lars and Otikon achieved this success that can teach us so much. We looked in previous messages about how society is evolving and how business will change because of this evolution. As societies mature, progressive societies move through an acquisitive stage and learn that just having stuff is not enough. People begin to place more emphasis on values instead of just value. Memories, service and events begin to outweigh things. People for example will pay more for organic milk (though it costs twice as much) because of the values of better health. Drivers will buy cars that are slower, smaller and more expensive for the values of clean air. More does not become better.
In this process the traditional distinctions within business become blurred. The separation between management, workers, investors and consumers is reduced.
Lars Kolind was a leader in making this happen at Otikon. He began by turning the management style of the business totally upside down. He changed it from being a hierarchical-technologically based to knowledge based. All job titles and descriptions were lost. Otikon implemented a barter economy as its organizing principle. “Continuous Negotiated Order” became the key concept. Every transaction, any task, any exchange was the subject of negotiation.
The challenge Otikon faced was to reduce its overheads 10% per annum to survive increasingly difficult global competition. To do this they needed an entirely new form of management. So the firm took on the task of using a new way to look at every job. They eliminated all bosses in a hierarchical form and created two types of managers, the first being project managers (all work within the firm was turned into projects). The second was a personal manager who had about ten to fifteen employees. This manager's job (along with whatever projects he or she was involved in) was to advise and support 10 to 15 employees.
The firm did away with 95% of its paper. Otikon set up a system, which scanned and then shredded all incoming mail (with the exception of most important legal documents). Each item was logged in with a common filing code so it was easily accessed by anyone in the firm. Memos were replaced with dialogue.
Next all walls and partitions were taken down. Otikon bought about 1,000 plants on wheels, some high, some low, some loosely planted, some dense. These plants acted as portioned and were easily moved. If a peaceful workplace was needed temporarily, a person or project could find a corner and a dozen or so plants.This created an atmosphere where the 150 staff was surrounded by greenery and flowers as they worked on 500 to 1,000 tasks.
Can't work in all circumstances, you might say. Remember Lars the overriding rule of “Continuous Negotiated Order”. If there was a special circumstance, it could be discussed and adaptations made. Lars was open to negotiation and persuasion. He was willing to listen to others, accept criticism, and was not afraid to change his mind. All employees were expected to be creative, self-motivated, autonomous, responsible and to cooperate in a multi-disciplined environment. No organization charts or titles pinned down employees. Assignment of tasks and employees was always the subject of negotiation.
This is called a spaghetti organization, moving all the time to meet circumstance, never the same, everything is tangled up and yet it is possible to follow any element all the way through! Many thought this would be a flash in the pan, but Oticon and Lars Kolind proved that this works. I predict we'll see much more of the same in the years ahead. Here are a few of the Changes the firm made in developing its spaghetti organization.
Before AfterStrategies Unclear Clear Organizational platform Function/tasks Tasks/people Organizational unit Departments Project groupsOrganizational form Hierarchy SpaghettiPersonal status Level in hierarchy CompetenceCommunication Memos DialogueManagement tools Control, decision making Motivation, empowermentAccess to information Limited ExtensiveEfficiency measures Faster work routines New work processesRationale for IT system Improve work routines Support teamworkInfluence on decision making Little LargeWork place Fixed MobileSearch for information Difficult EasyJob Mobility Poor GoodFlexibility of Organization Little LargeAccess to management Difficult EasyInternal service level High LowRespect for colleagues work Little Large
The source of this chart is from the book “Managing the Unmanageable for a Decade” which is a collection of articles about Otikon's transformation.
Anyone who has or is thinking about having his own business should take note of the lessons we can learn from this. We stand on the threshold of such exciting opportunity yet most companies stand with their heads in the sane. Those of us who can think the unthinkable and who have the courage to act on this thought can be the leaders in the generation ahead.
We hope to help you put this “unthinkable” thinking into practice as well. We continue to get business ideas from readers that may help us all to transform. In a recent message we showed how you can get in business marketing silver reproductions from Ecuador (see https://www.garyascott.com/makingwealth/631/), in another how to sell fresh roses direct from the Andes (see http://affiliates.garyascott.com/roses.html and now we have found a source of the best neckties in the world from Italy! (see http://www.saladinltd.ie/ or email firstname.lastname@example.org.
We do not know when one of these ideas will work for you, but are happy to pass them along so you can review them and see. Perhaps you will be inspired as I was after meeting and hearing Lars! Maybe not inspired to do the same thing but perhaps to think the “unthinkable”!
In each case the factor that each of these products has in common is that each represents the best in its range, the ties are of the purest silk, the roses are three to five days fresh from the plantation to the home and Ecuador silversmiths are the best in the world. These are products that you can develop stories around that touch on values that our modern society desires.I have no way of knowing if any of these contacts are of value to you, but here is a little challenge for you that could be worth $499!
My upcoming course on International Business and Investing in Orlando, November 15-17 will contain the following new sessions. The first is on how to copy write (to sell). But this session has one extremely invaluable addition…it covers how to copy write for the Internet. This session alone can recoup the costs of this course many, many times over. Another new session is on how to use publishing (and Internet publishing) in business. The final new session is how to use seminars in business and how to use the Internet to develop seminars.
Pick any of the three subjects above (silk ties, rose or silver reproductions) and write a story (90 lines or less) that sells one of them or both or all three. Email it to me at email@example.com and I'll give the writer whose copy I like the most a scholarship for $499 to attend that course. I will read every submission and also give you a critique.
If you have an international business idea, please send email it to me and if possible I'll share it with readers in upcoming International Business Made EZ columns.
Until next message, may all your business be good!