Temporary Modes of Project-Based Organization within Evolving Organizational Forms: Insights from Oticon's Experiment with the Spaghetti Organization

Project-based organization (PBO) can serve as a temporary organizational form in response to uncertainty or turbulent environmental conditions. An updated retrospective study of the Danish hearing aids maker Oticon illustrates the role of PBO (the so-called spaghetti organization) in guiding the company through a specific period of industry turbulence and the company leader's search for a more effective structure to organize innovation within the company. The spaghetti organization was experimental in two distinct senses. First, the spaghetti organization tested the limits of decentralization, bottom-up self-organizing innovation, and PBO. Inspired by the experience of just how dysfunctional hierarchy could become, Oticon's spaghetti organization tested the limits of nonhierarchy. And unlike the failed Brook Farm utopia of the 1840s, the utopia of radical project-based organizing at Oticon proved highly successful as a means of promoting innovation even if the spaghetti organization was not sustainable in its original form and required subsequent modification. Second, Oticon was essentially a natural experiment testing and refuting the complementarities-based claim that intermediate forms of organization which include elements of both hierarchical organization and team (or project-based) organization are inherently unstable.