Models of extremism: Tom Peters On Excellence

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 has been optically scanned into the specially designed Hewlett Packard workstation network on which all Oticoners communicate with each other.

Paper is out, by edict, at Oticon. So are a lot of other things. On 8 Aug 1991, at 8am, a new Oticon was born. 'We removed the entire formal organisation,' explains Lars Kolind, chief of 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 organisation, project teams form on their own initiative, then gather where they wish (workstations are ubiquitous) and get down to work. (Although 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 napping, was introduced in half the normal time. Has this strange organisation, which Kolind callsthe 'spaghetti model', made all this possible? 'Absolutely,' Kolind snaps.

But then he issues a stern warning. You must, he says, 'change everything at once' - organisation structure, culture, physical setting and the 'very nature of work itself'.

Unlike Oticon, VeriFone, the world leader in credit-card authorisation systems, got it right from the start. 'Distribute organisational resources as near the customer as possible, then add tight, fast information feedback loops' - that's the clinical way chief executive Hatim Tyabji puts it. In the vernacular, he calls it the 'blueberry pancake model, very flat, with all blueberries equal'. (And no - repeat, no - corporate headquarters; and no secretaries; and no P-mail, that is, paper mail, allowed).

The electronic network, through which all employees have access to all information, and in which all chat with all constantly, ties it together. But the electronics work only because of the carefully nurtured 'culture of urgency' that Tyabji demonstrates by logging a harrowing 400,000 miles a year on the road.

Success can be measured by the bottom line and the stunning speed with which the global firm brings 1,800 brains to bear on any customer situation anywhere, anytime.

Any company in any industry can follow this route, Tyabji says optimistically, but then adds,'There is no half-way.'

Andy Grove's Intel is an order of magnitude bigger than Oticon or VeriFone. But Grove keeps his monster company moving much as Tyabji does. 'Businesses that have pervasive use of electronic mail operate differently,' Grove told Business Week; they are 'much faster, much less hierarchical . . . (E-mail) squeezes all the slack out of the system. It also gives you the opportunity to course-correct rapidly.'

But Grove insists that you can only do it if the bossshows the way, which isn't easy: 'From the moment you do it yourself, you're available to anybody and everybody. The elimination of the screening process in my e- mail . . . tends to lead to a more democratic way of operating.'

The game is the same as VeriFone's. So, too, Grove's unvarnished warning: 'There are two companies - one that operates this way and one that doesn't - competing with each other. How long will the one that doesn't compete stick around? Somebody is going to do it, and therefore you're either going to do it or you disappear.'

All this leaves me queasy. The Oticon, VeriFone and Intel models are extreme. But what happens to you, as Grove reminded us, if someone 'Oticons' your company? In short, you are history - and quickly.

Kolind first exposed me to the Chinese proverb: 'It is very dangerous to try to leap a chasm in two bounds.' All too many firms - in their TQM, re-engineering, learning-organisation programmes - are gingerly embracing change. Most are trying to leap the damn chasm in three or four, or five or 10 bounds. It's not working.

Copyright TPG Communications