Nokia Change Management Case Study
Nokia is a company that has undergone significant change over the years, transforming itself from a mobile phone manufacturer to a leading player in the telecommunications infrastructure market.
This transformation was driven by a range of factors, including changes in market conditions, advancements in technology, and shifting customer needs and preferences.
However, perhaps the most important factor in Nokia’s successful transformation was its approach to change management.
In this blog post of Nokia’s change management case study, we’ll examine key strategies and tactics that the company employed to drive its successful transformation.
By examining the lessons learned from Nokia’s experience, we can gain valuable insights into effective change management and the critical factors that are required for a successful organizational transformation.
Let’s start reading.
Brief History of Nokia Journey of Change
Nokia was a Finnish company that produced a wide range of products, including paper, rubber, and cables. It was not until the 1980s that Nokia started focusing on telecommunications equipment, but even then, it was still a relatively small player in the industry.
In the late 1990s, Nokia made a strategic decision to focus solely on mobile phones, which at the time were rapidly growing in popularity. Nokia recognized the potential of the mobile phone market early on and invested heavily in research and development to create innovative and user-friendly devices.
Nokia’s decision to focus on mobile phones paid off, and by the early 2000s, the company had become the world’s largest mobile phone manufacturer, with a dominant market share. Nokia’s success was due to its ability to offer a wide range of phones at different price points and to develop cutting-edge technology such as the first mobile phones with built-in cameras and internet connectivity.
However, Nokia’s dominance in the mobile phone market was short-lived. The company struggled to keep up with the rapid pace of technological innovation and the rise of new competitors, such as Apple and Samsung. As a result, Nokia’s market share declined sharply in the late 2000s and early 2010s, and the company eventually sold its mobile phone business to Microsoft in 2014.
Nokia refocused on telecommunications infrastructure and services. It was a again a success story. In 2015 Nokia acquires French telecommunications equipment company Alcatel-Lucent.
What are those external and internal factors that caused change?
There were several external and internal factors that led to Nokia’s change management and transformation from a mobile phone producer to a telecommunication infrastructure service provider. Here are some of the key factors:
- Increased competition: The rise of new competitors such as Apple and Samsung in the mobile phone market put pressure on Nokia’s mobile phone business, leading to declining market share and profits.
- Rapid technological change: The rapid pace of technological innovation in the mobile phone industry made it difficult for Nokia to keep up and remain competitive.
- Shift towards smartphones: The shift towards smartphones and the decline of feature phones also contributed to Nokia’s decline in the mobile phone market.
- Opportunities in telecommunication infrastructure: The growing demand for 5G networks and other telecommunications infrastructure services presented an opportunity for Nokia to diversify and expand its business.
- Strategic decision-making : Nokia’s leadership recognized the need to adapt to changing market conditions and made the strategic decision to shift its focus towards telecommunications infrastructure services.
- Strengths in telecommunications: Nokia had a strong history and expertise in the telecommunications industry, which gave it a foundation to build on in expanding its business.
- Investment in research and development: Nokia continued to invest in research and development, allowing it to develop new products and services in the telecommunications infrastructure market.
- Acquisitions and partnerships: Nokia made strategic acquisitions and partnerships to expand its capabilities in telecommunications infrastructure services, such as the acquisition of Alcatel-Lucent and the partnership with Xiaomi.
07 Key Drivers of successful change management of Nokia
The successful change management of Nokia from a mobile phone manufacturer to a telecommunications infrastructure provider was driven by several key factors. Here are some of the most important drivers:
1. Clear Strategic Direction
Nokia’s clear strategic direction helped guide decision-making at all levels of the organization, ensuring that all stakeholders were aligned towards common goals and objectives. This helped Nokia to allocate resources more effectively, ensuring that investments were directed towards initiatives that supported the company’s long-term goals.
The leadership and employees focused its efforts on key priorities, such as developing new products and services in the telecommunications infrastructure market, and helped to minimize distractions from other activities that were not aligned with the company’s strategic objectives.
2. Agility and Adaptability
Agility and adaptability are important characteristics for organizations looking to succeed in a rapidly changing market environment. Nokia’s ability to demonstrate both agility and adaptability was key to its successful transformation from a mobile phone manufacturer to a telecommunications infrastructure provider. Nokia was able to quickly recognize and respond to changing market conditions and pivot its business towards new opportunities, such as the growing demand for telecommunications infrastructure services.
3. Research and Development
Nokia’s continued investment in R&D played a critical role in its successful transformation from a mobile phone manufacturer to a telecommunications infrastructure provider. By investing in R&D, Nokia was able to develop new products and services in the telecommunications infrastructure market and stay ahead of its competitors. This allowed the company to offer innovative and cutting-edge solutions that met the evolving needs of its customers. Additionally, Nokia’s investment in R&D helped the company to build a strong intellectual property portfolio, which further strengthened its competitive advantage in the market.
4. Operational Excellence
Nokia’s focus on operational efficiency and continuous improvement was a critical factor in its successful transformation from a mobile phone manufacturer to a telecommunications infrastructure provider. By streamlining its operations and reducing costs, Nokia was able to improve its competitiveness and profitability in the highly competitive telecommunications infrastructure market. This focus on operational excellence helped the company to optimize its production processes, reduce waste, and improve product quality, which in turn helped it to deliver products and services to its customers more efficiently and at a lower cost.
5. Strong Leadership
Nokia’s success in transforming itself from a mobile phone manufacturer to a telecommunications infrastructure provider was due in part to the strong and experienced leadership of CEO Rajeev Suri, who played a key role in leading the company through the transformation process. Suri’s leadership was critical in rallying employees around the new strategic direction and ensuring that all stakeholders were aligned towards common goals and objectives. Suri also provided clear direction and guidance to the organization, helping to steer the company through the challenges and uncertainties of the transformation process.
6. Cultural Change
Nokia’s success in transformation is also due to cultural change. Nokia encouraged employees to be more innovative and agile in their work, fostering a culture of experimentation and continuous improvement. The company also emphasized the importance of collaboration and teamwork, encouraging employees to work together to solve complex problems and achieve common goals. Nokia invested in employee development and training, helping to foster a culture of continuous learning and development. This cultural shift helped to create a more flexible, innovative, and agile organization that was better able to adapt to changing market conditions and drive the company’s successful transformation.
7. Acquisition and Partnerships
Acquisitions and partnerships are critical tools that Nokia used to expand its capabilities and build a competitive advantage. By acquiring companies with complementary products and services, Nokia was able to expand its capabilities in telecommunications infrastructure services, giving the company a competitive advantage and helping it to build a comprehensive portfolio of products and services. Additionally, by partnering with other companies in the industry, Nokia was able to leverage the strengths of its partners to deliver innovative solutions that met the evolving needs of its customers.
Nokia’s successful transformation from a mobile phone manufacturer to a leading player in the telecommunications infrastructure market is a powerful case study in effective change management. By adopting a clear strategic direction, investing in research and development, focusing on operational excellence, fostering a culture of innovation and collaboration, and pursuing strategic acquisitions and partnerships, Nokia was able to adapt to changing market conditions and pivot its business towards new opportunities. Ultimately, Nokia’s transformation serves as a powerful example of how organizations can successfully adapt and evolve in response to changing market conditions, leveraging their strengths and capabilities to drive growth and success in new markets and industries.
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We didn't do anything wrong, but somehow, we lost." - Stephan Elop, ex-CEO of NokiaOnce a booming company, Nokia is considered as an example of 'change management failure'. So, why did Nokia fail to implement and manage change? What caused Nokia to fall behind its competitors? Let's take a look.Change is…
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Lerne mit deinen Freunden und bleibe auf dem richtigen Kurs mit deinen persönlichen Lernstatistiken
Nie wieder prokastinieren mit unseren Lernerinnerungen.
We didn't do anything wrong, but somehow, we lost."
- Stephan Elop, ex-CEO of Nokia
Once a booming company, Nokia is considered as an example of ' change management failure'. So, why did Nokia fail to implement and manage change? What caused Nokia to fall behind its competitors? Let's take a look.
Introduction to Nokia
Change is not a new thing for Finnish telecommunication giant Nokia. The company was founded in 1865 on the banks of the River Nokia, as a single paper mill operation and moved in different industrial sectors like rubber boots, cable, paper products, tires, televisions, and finally mobile phones. The company we see today that is focused on telecommunications began its journey in 1990.
The first GSM call was made in 1991 using Nokia equipment. By 1998, Nokia was the best-selling mobile phone brand in the world. In 2001, Nokia launched its first phone with a built-in camera, and by 2004, Nokia 3G phones could capture video, browse the web, download music, watch TV on the move, and more. In 2004 the Nokia corporation reduced the number of its business units to four. The change was made in a week. This was aimed at helping Nokia meet consumer needs.
The year 2007 can be termed as 'turning point' for Nokia. It is where its downfall began. No, it is not because Apple launched the iPhone, it is because the company recalled 46 million phones due to potentially faulty batteries. Nokia partnered with Microsoft in 2010 to compete with the iPhone but it did not claim Nokia its throne back. Finally, Microsoft bought Nokia's mobile manufacturing unit for £4.6 bn in 2013 just to sell it in 2016 to HMD and Foxconn.
With all these ups and downs, Nokia is far from a dead company. Nokia's phones returned to the market in 2016. Nokia is mainly concentrating its attention on telecommunication 5G equipment. In 2021, Nokia is hoping to expand its 5G network solutions in Europe and Western countries.
What is change management?
Strategic change is a change in a company's scope, resource planning, competitive advantages, and synergy. Changes can be incremental (gradual changes) or disruptive (sudden changes).
Change management is the process of managing responses to changes in the internal and external environment of a business.
It is the leadership 's responsibility to lead the company into a changing phase. The organisational culture plays a crucial role in implementing change. It is imperative to say that it is not the organisation that changes but each employee in the organisation does. The vision and ability of leadership to make fast decisions help smoothen the transition.
The Nokia change management failure is a great example of what can happen if leadership resists change.
Analysis of key drivers of change for Nokia
In the case of Nokia, external influences forced the company to change. The telecommunication market was developing fast and Nokia failed to keep up with it.
The external influences of the industry included:
The competitive environment
Nokia ignored the threat posed by Apple when it launched the iPhone in 2007. The iPhone did not use a QWERTY keypad but the touchscreen. The iPhone had better software compared to Nokia.
Google introduced Android in 2008. Other major players like Samsung, Huawei, and Motorola jumped on it but Nokia ignored it. Nokia did not accept android but rather started developing the Symbian operating system.
First-mover advantage refers to the benefits enjoyed by the firm as a consequence of its early entry into a new market.
Nokia missed an opportunity to launch android phones and touch screen phones as well. This opportunity was captured by Apple when it launched a full touch screen iPhone.
Nokia change management failure
In the year 1998, Nokia was the largest cell phone maker and overtook Motorola. This move shocked many business gurus back then. So what happened if Nokia was the market leader? Nokia failed because it resisted the change. Nokia clung to its fundamental ways and did not change with market developments. The reasons for Nokia's change management failure are as follows (see Figure 1 below).
Not accepting Android: Nokia leadership did not see the android operating system as an advancement. They believed that customers prefer QWERTY keypad phones over touch screen phones. At the same time, companies like Samsung and Motorola launched Android-based, cheap, and user-friendly phones. With the launch of Android and iPhones, the demand for touch screen smartphones increased exponentially. Nokia realized their mistake and they introduced the Symbian operating system. Symbian was inferior when launched compared to Android. By then, Samsung and Apple had made a strong impact on the smartphone market.
Shaking hands with Microsoft: Microsoft partnered with Nokia to launch Windows phones when Microsoft itself was making losses. In this case, two negatives did not make a positive. Windows phones were not successful because there was nothing new for customers to switch from their old phones. The lack of innovative features made the windows phone a failure. Nokia was on brink of bankruptcy due to huge losses. On the other hand, Apple and Samsung were innovating, launching new product lines, and taking over different markets.
Failed umbrella marketing strategy: Another factor that contributed to the downfall was the wrong marketing strategy.
Umbrella branding can be defined as when a company sells different products under the same brand name.
Samsung 'Galaxy' series is one such example of Umbrella branding. Nokia tried to do the same under the 'Lumia' series of phones but as there was no uniqueness as compared to its competitors, the Lumia series could not fetch any success for Nokia. Nokia faced problems with branding and distribution that led to practically no sales for Nokia mobile phones.
Not working enough on software: Anyone who has used Nokia phones will surely vouch for the sturdy hardware of the Nokia phone. But when it comes to software, Nokia has taken a back seat. Nokia did not try to change software innovatively and quickly enough, giving other major players an upper hand in business. Android had already gone through some iterations when the first version of Symbian was launched. Employees knew Symbian would take years to catch up with Android. Employees did not convey actual problems to management because they thought their efforts would go in vain and rigid management would not heed to it.
Nokia thought they were too big to fail: Nokia enjoyed customer loyalty when it was at its peak of success and believed it would still be the favorite option of mobile phone buyers. This did not happen (even when Nokia finally accepted Android). Nokia is still struggling to improve the software at its core.
Not innovating enough: Apple and Samsung launch at least one flagship phone every year with some innovative advancements. Nokia is far too behind to catch up.
Dysfunctional organisation: Nokia opted to be a matrix structured organization in 2004. It caused many conflicts as many managers had equal power. It led to the power struggle in some departments and complete dysfunction in others. Some executives left Nokia and many workers lost trust in management . Employees became insecure regarding their jobs and started to hide facts. Many employees knew Symbian was way behind the Android but engineers did not tell the truth to the higher management believing that it is of no use. The tagline of Nokia is 'Connecting people' but during those days it seems like employees failed to connect with each other.
Studying Nokia change management failures has helped many companies to avoid pitfalls. We can apply change management models and processes to understand what Nokia did wrong when external factors forced Nokia to change.
Change management Nokia example: Lewin's force field analysis
Kurt Lewin proposed a model, the Force Field Analysis , which provides an overview of the different factors and issues that influence change within an organization. If influencing and restraining forces are equal, then the organization is said to be in equilibrium. The state of equilibrium should be disturbed in order to bring out the change. If the analysis indicates that forces are unbalanced, then the organization should change itself.
Lewin's force field analysis is done to check whether Nokia should or should not have changed their business practices immediately in 2008 when Android was launched.
For scoring, we are using a Likert scale (1 = Weak, 5 = Strong). The forces are rated according to their influence on the company:
Table 1 - Lewin's Force Field Analysis Example for Nokia
The analysis shows that Nokia should have changed its strategy in 2008. The Nokia change failure cost Nokia its mobile phone business. The organizational culture was also toxic at that time. Leadership did not provide a way to pass information and communicate effectively among the organisation.
As change often comes with an attitude of resistance, Nokia faced resistance at every level of management .
Fear of the unknown: The leadership was not transparent about the vision or goals they wanted to achieve. This instilled the fear of the unknown in their employees.
Misunderstanding: No proper communication channels caused inter-departmental misunderstandings.
Organisational politics and self-interest: There was always a struggle for power in the organisation. Many either resisted the change to prove the decision 'wrong' or to hold their power longer.
Nokia change management plan
In order to change quickly according to internal or external influences, organizations have to be flexible. Nokia should have embraced the characteristics of a flexible organization and made a change management plan considering the characteristics of a flexible organization.
Figure 2 shows the characteristics of a flexible organisation.
A flexible workforce: this makes it easy to increase or decrease the workforce efficiently and quickly.
Information management : information management systems help share knowledge quickly at scale within the organization.
Research market trends: analyzing and predicting the market would have helped Nokia make the right decisions on time
Internal analysis: Nokia should have conducted a deep SWOT analysis. This would have made them aware of potential pitfalls.
Once Nokia becomes a flexible organization, it can overcome resistance by using a strategy based on Kotter and Schlesinger's Overcoming Resistance to Change Model. The model includes six ways for managing resistance:
Education: Nokia informs employees about changing processes by communicating effectively.
Participation: Nokia gives resisting employees a chance to speak their minds, get their inputs to develop new processes.
Facilitation: Nokia supports employees during the time of change.
Negotiation: Nokia compromises to make some changes rather than not addressing it with their employees.
Manipulation: In manipulation, employees are offered rewards to change. Nokia could have done that to make changes quicker.
Coercion: When other methods are not viable, Nokia has no choice but to transfer, terminate, or promote employees.
With all the above considerations, Nokia's change management plan might have worked better.
We have discussed what happened with Nokia in the past. But what is Nokia doing after the takeover by HMD and Foxconn? Will Nokia's change management plan be successful under the new leadership of CEO Pekka Lundmark? As per the report released by Nokia in March 2021, Nokia has announced plans to reduce costs and invest them back into R&D. The future areas of focus will be 5G, cloud, and digital infrastructure.
The mobile network business group aims to top in wireless mobile networks and associated services. Nokia owns many patents related to 5G standards. In October 2020, Nokia's research arm, Bell Labs, recorded a $14 million contract from NASA to install the first 4G network on the moon. The opportunities look promising for Nokia. However, Nokia will only be able to conquer this quest if it implements a change management plan successfully.
Nokia Change Management - Key takeaways
- Nokia ignored Apple as a potential competitor in the mobile market.
- Nokia took a steady approach towards innovation while other competitors were fierce in bringing out new technologies.
- Nokia did not accept Android.
- Nokia invested a lot of resources in developing the Symbian operating system, which was lacking when compared to Android and iOS (Apple).
- Nokia's work culture was toxic. Employees were always under the fear of losing their jobs.
- The untimely partnership with Microsoft did not work for any side.
- The higher management of Nokia thought Nokia was too big to fail.
- Nokia overestimated brand value and customer loyalty.
- Nokia had good hardware but the lack of efficient software cost Nokia its market position.
- Nokia resisted change due to rigid organizational structure, internal politics, and the power struggle between managers .
1. Lieberman, Marvin (2016). First mover advantage. 10.1057/978-1-349-94848-2_602-1.
2. Hofer, GW & Schendel, DE Strategy Formulation: Analytical Concepts, St. Paul, MN: West Pub. Inc., 1978.
3. Kotter, JP, & Schlesinger, LA (1979). Choosing strategies for change.
4. eWeek, https://www.eweek.com/mobile/10-reasons-microsoft-s-mobile-business-has-failed-to-take-off/
5. Satellite Today, https://www.satellitetoday.com/telecom/2021/01/04/bringing-lte-to-the-moon-nokia-exec-talks-nasa-tipping-point-contract/
Frequently Asked Questions about Nokia Change Management
--> why did nokia fail in its change management program.
Nokia failed in its change management program due to many reasons such as:
- Not accepting Android
- Partnering with Microsoft to launch Windows when Microsoft itself was making losses.
- Failed application of umbrella branding
- Not working enough on software
- Think they are too big to fail
- Not innovative enough
- Dysfunctional organisation
--> Why did Nokia fail - case study?
Nokia made many mistakes with its change management approach at times when competition in the mobile industry was most fierce. The company ignored Apple completely and overestimated its brand value and customer loyalty, which cost it a profitable business segment. Rigid organisational structure and wrong partnership also contributed to Nokia's failure.
--> What adjustments does Nokia's management need to make to its products?
Nokia should have adopted a flexible organisation system for its change management plan. A flexible organisation is made up of a flexible workforce, information management and accurate predictions of market trends for better decision-making.
--> How will Nokia's values help execute the change in business strategy?
Nowadays, Nokia is opting for values as the primary factor in driving business change. These values which include 'passion for innovation' and 'being human in daily practices ' bring employees together to deliver the best products to the customers.
--> What should Nokia have done differently?
The company should have been more responsive to change, not underestimated its competition, and developed technology that the public needed rather than what it thought was best.
Final Nokia Change Management Quiz
Nokia change management quiz - teste dein wissen.
Which country did Nokia originate from?
Nokia originated from Finland .
Which operating system did Nokia develop?
Nokia developed the Symbian operating system.
Name the operating system developed by Google that Nokia did not consider for its Phones.
Nokia ignored the Android operating system that was developed by Google.
With which company, Nokia’s partnership did not succeed?
Nokia - Microsoft partnership did not succeed.
In1865, Nokia started as
Which of the following industry sectors Nokia was not active ever?
Why the matrix organization structure did not work for Nokia?
Matrix organization structure arose many conflicts as many managers had equal power. It led to the power struggle in some departments and complete dysfunction in others. Some executives left Nokia and many workers lost trust in management. Employees became insecure regarding their jobs and started to hide facts.
How was Nokia's work culture back then which led to intercompany conflicts?
Nokia’s work culture was especially based on fear. There was little or no communication between employees and management. The company did not have a clear vision and change management plan in place.
To which company Microsoft sold Nokia’s mobile manufacturing unit in 2016?
Microsoft sold Nokia branded phone business to HMD global in 2016.
In Which sector Nokia is currently active along with mobile manufacturing?
Nokia is active in 5G network equipment manufacturing and installation.
Even though Nokia had good hardware for mobile phones, where did Nokia phones lack?
Nokia phones lacked user-centric software.
How did customers respond to relaunched Nokia phones in partnership with Microsoft?
Customers rejected the phones as Windows phones did not offer any innovative features as compared to their competitors.
Which of the following is NOT the reason for Nokia's fall?
NASA has granted Nokia to install the first-ever 4G network on the _____.
What is the name of Nokia’s research arm?
When was Nokia founded?
___ change is a change in a company's scope, resource planning, competitive advantages, and synergy.
Incremental changes are also called...
Disruptive changes are also called...
___ is the process of managing responses to changes in the internal and external environment of a business.
___ refers to the benefits enjoyed by the firm as a consequence of its early entry into a new market.
___ can be defined as when a company sells different products under the same brand name.
___ provides an overview of the different factors and issues that influence change within an organization.
Force Field Analysis
Nokia accepted Android.
Nokia is considered as an example of 'change management failure'.
Nokia used to be the largest cell phone maker.
___ force field analysis is done to check whether Nokia should or should not have changed their business practices immediately in 2008 when Android was launched.
In Lewin's force field analysis, there were more forces for Nokia to change than against change.
Nokia should have embraced the characteristics of a ___ organization.
Nokia does not exist anymore.
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The Strategic Decisions That Caused Nokia’s Failure
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In less than a decade, Nokia emerged from Finland to lead the mobile phone revolution. It rapidly grew to have one of the most recognisable and valuable brands in the world. At its height Nokia commanded a global market share in mobile phones of over 40 percent. While its journey to the top was swift, its decline was equally so, culminating in the sale of its mobile phone business to Microsoft in 2013.
It is tempting to lay the blame for Nokia’s demise at the doors of Apple, Google and Samsung. But as I argue in my latest book, “ Ringtone: Exploring the Rise and Fall of Nokia in Mobile Phones ” , this ignores one very important fact: Nokia had begun to collapse from within well before any of these companies entered the mobile communications market. In these times of technological advancement, rapid market change and growing complexity, analysing the story of Nokia provides salutary lessons for any company wanting to either forge or maintain a leading position in their industry.
With a young, united and energetic leadership team at the helm, Nokia’s early success was primarily the result of visionary and courageous management choices that leveraged the firm’s innovative technologies as digitalisation and deregulation of telecom networks quickly spread across Europe. But in the mid-1990s, the near collapse of its supply chain meant Nokia was on the precipice of being a victim of its success. In response, disciplined systems and processes were put in place, which enabled Nokia to become extremely efficient and further scale up production and sales much faster than its competitors.
Between 1996 and 2000, the headcount at Nokia Mobile Phones (NMP) increased 150 percent to 27,353, while revenues over the period were up 503 percent. This rapid growth came at a cost. And that cost was that managers at Nokia’s main development centres found themselves under ever increasing short-term performance pressure and were unable to dedicate time and resources to innovation.
While the core business focused on incremental improvements, Nokia’s relatively small data group took up the innovation mantle. In 1996, it launched the world’s first smartphone, the Communicator, and was also responsible for Nokia’s first camera phone in 2001 and its second-generation smartphone, the innovative 7650.
The search for an elusive third leg
Nokia’s leaders were aware of the importance of finding what they called a “third leg” – a new growth area to complement the hugely successful mobile phone and network businesses. Their efforts began in 1995 with the New Venture Board but this failed to gain traction as the core businesses ran their own venturing activities and executives were too absorbed with managing growth in existing areas to focus on finding new growth.
A renewed effort to find the third leg was launched with the Nokia Ventures Organisation (NVO) under the leadership of one of Nokia’s top management team. This visionary programme absorbed all existing ventures and sought out new technologies. It was successful in the sense that it nurtured a number of critical projects which were transferred to the core businesses. In fact, many opportunities NVO identified were too far ahead of their time; for instance, NVO correctly identified “the internet of things” and found opportunities in multimedia health management – a current growth area. But it ultimately failed due to an inherent contradiction between the long-term nature of its activities and the short-term performance requirements imposed on it.
Reorganising for agility
Although Nokia’s results were strong, the share price high and customers around the world satisfied and loyal, Nokia’s CEO Jorma Ollila was increasingly concerned that rapid growth had brought about a loss of agility and entrepreneurialism. Between 2001 and 2005, a number of decisions were made to attempt to rekindle Nokia’s earlier drive and energy but, far from reinvigorating Nokia, they actually set up the beginning of the decline.
Key amongst these decisions was the reallocation of important leadership roles and the poorly implemented 2004 reorganisation into a matrix structure. This led to the departure of vital members of the executive team, which led to the deterioration of strategic thinking.
Tensions within matrix organisations are common as different groups with different priorities and performance criteria are required to work collaboratively. At Nokia,which had been acccustomed to decentralised initiatives, this new way of working proved an anathema. Mid-level executives had neither the experience nor training in the subtle integrative negotiations fundamental in a successful matrix.
As I explain in my book, process trumps structure in reorganisations . And so reorganisations will be ineffective without paying attention to resource allocation processes, product policy and product management, sales priorities and providing the right incentives for well-prepared managers to support these processes. Unfortunately, this did not happen at Nokia.
NMP became locked into an increasingly conflicted product development matrix between product line executives with P&L responsibility and common “horizontal resource platforms” whose managers were struggling to allocate scarce resources. They had to meet the various and growing demands of increasingly numerous and disparate product development programmes without sufficient software architecture development and software project management skills. This conflictual way of working slowed decision-making and seriously dented morale, while the wear and tear of extraordinary growth combined with an abrasive CEO personality also began to take their toll. Many managers left.
Beyond 2004, top management was no longer sufficiently technologically savvy or strategically integrative to set priorities and resolve conflicts arising in the new matrix. Increased cost reduction pressures rendered Nokia’s strategy of product differentiation through market segmentation ineffective and resulted in a proliferation of poorer quality products.
The swift decline
The following years marked a period of infighting and strategic stasis that successive reorganisations did nothing to alleviate. By this stage, Nokia was trapped by a reliance on its unwieldy operating system called Symbian. While Symbian had given Nokia an early advantage, it was a device-centric system in what was becoming a platform- and application-centric world. To make matters worse, Symbian exacerbated delays in new phone launches as whole new sets of code had to be developed and tested for each phone model. By 2009, Nokia was using 57 different and incompatible versions of its operating system.
While Nokia posted some of its best financial results in the late 2000s, the management team was struggling to find a response to a changing environment: Software was taking precedence over hardware as the critical competitive feature in the industry. At the same time, the importance of application ecosystems was becoming apparent, but as dominant industry leader Nokia lacked the skills, and inclination to engage with this new way of working.
By 2010, the limitations of Symbian had become painfully obvious and it was clear Nokia had missed the shift toward apps pioneered by Apple. Not only did Nokia’s strategic options seem limited, but none were particularly attractive. In the mobile phone market, Nokia had become a sitting duck to growing competitive forces and accelerating market changes. The game was lost, and it was left to a new CEO Stephen Elop and new Chairman Risto Siilasmaa to draw from the lessons and successfully disengage Nokia from mobile phones to refocus the company on its other core business, network infrastructure equipment.
What can we learn from Nokia
Nokia’s decline in mobile phones cannot be explained by a single, simple answer: Management decisions, dysfunctional organisational structures, growing bureaucracy and deep internal rivalries all played a part in preventing Nokia from recognising the shift from product-based competition to one based on platforms.
Nokia’s mobile phone story exemplifies a common trait we see in mature, successful companies: Success breeds conservatism and hubris which, over time, results in a decline of the strategy processes leading to poor strategic decisions. Where once companies embraced new ideas and experimentation to spur growth, with success they become risk averse and less innovative. Such considerations will be crucial for companies that want to grow and avoid one of the biggest disruptive threats to their future – their own success.
About the author(s)
Yves L. Doz
is an Emeritus Professor of Strategic Management and the Solvay Chaired Professor of Technological Innovation, Emeritus at INSEAD.
About the series
Corporate governance, share this post, view comments.
16/03/2022, 10.44 am
Nokia is the one of the oldest phone and also it is existed until now
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17/09/2021, 07.41 pm
Why does Nokia fail
26/06/2021, 09.54 pm
Someone really should dig into the tale of Nokia Music, that of OD2, a successful independent company bought by Nokia in 2007. In less than four years through marketing bodges, strategic failures, interference from gormless management in the USA, and even more nepotistic and mostly incompetent management in the UK, a profitable company with numerous high profile corporate customers was brought to its knees by talent free people who should never have been promoted into the positions they were in. Well worth digging into, just don't interview the management or you will never get to the truth.
03/06/2021, 01.56 am
As I read through many of these comments, the word "dillusional" kept coming to mind. For starters, Windows OS was as good as either Android or iOS. The main thing lacking were just a few more core apps. That was really it.
Sure, they could easily have run Andoid, and as soon as that idea was floated, Microft instantly shuttered their offices.
The fact that Nadella had his trojan horse Elop do the deal on Friday and hand everyone their walking papers on Monday is proof positive that Microsoft never had any good intentions for Nokia.
MS could have easily thrown one of their legions of Devs onto the task of writing apps. which would have solved the app. store issue in a hurry.
Instead, Nadella destroyed Microfts own eco-system by loosing that lucrative and Crucial market sector. A permanent wound that still haunts them to this day, and showcased Nadella as being far Inferior to Ballmer as well as Gates.
While my first inclination is to assume some nefarious reason for this, I do have to acknowledge however the old addage: "Don't attribute to maclice, what can easily be explained by stupidity"
30/10/2020, 04.23 pm
Why only Nokia there are a number of business world wide which have failed because of its own Founders/CEO/COO lapses some of the reasons which I contribute are as follows.... 1. Lack of vision future 2. Innovation in new age computing revolution 3. High Salary package 4. Founders cannot be pushed out or replaced easily. 5. Management Decisions 6. Dysfunctional Hierarchy 7. Growing Bureaucracy 8. Internal rivalry
21/01/2018, 12.17 am
Captain of the ship knows how to sink the boat. Stephen (the first non Finnish CEO in history of Nokia) joined in 2010 from Microsoft and made a deal to use Windows only despite the fact that Android was growing and already captured huge market share. There was a lot of pressure from Nokia employees to move to Android but he ignored all. He fired a lot of people. It was famous in Nokia Espo office (H/Q) that he is a Trojan Horse. He later sold Nokia mobile business to Microsoft and earned millions of dollars in the deal. Later, he joined Microsoft again. Looks like the plan was to promote Windows Mobile at the cost of Nokia (that failed badly)
13/01/2018, 04.20 am
If the company is at crises, what should the managers do? Could it be one of the option go for advices from top management consulting firms or any other third parties that can help to formulate better strategies to save the company? Assuming they went for consulting firms, then the firms were failed to help Nokia as well?
22/12/2017, 02.34 am
I would love to also see something similar about Blackberry. They were the prime brand for many early adopters and business users of cellular phones here in the USA. Similar to Nokia they also had/have secure network platform. I wonder if their demise was also due to strategic mistakes, and if similar to Nokia they also got bogged down with tactical activities and lost sight of overall strategy.
21/12/2017, 05.00 am
I agree with everyone, broadly. Nonetheless we should NEVER FORGET that Nokia would be far far better (as a Smartphone maker), than it is today.
Another illustration of a North American Corporation that did so well from its foundational years in the 19th Century and well into its first centenary is NORTEL Networks... I read a book about the rise, growth and maturity of NORTEL and it became one great role model for me... Unfortunately, NORTEL failed to go the length any longer than the beginning of the 21st Century; NORTEL collapsed for reasons that are too embarrassing to speak openly abbout - or even in privacy!
I'm working on to establish a Corporate and Product Branding Consultancy in town (Accra, Ghana), and this article on Nokia, like others, is what I've been looking out for, to help learn and know how to start and grow an enterprise and keep it growing and succeeding decade after decade, century after century!
17/12/2017, 07.59 pm
"While Symbian had given Nokia an early advantage, it was a device-centric system in what was becoming a platform- and application-centric world." Well, actually Nokia pioneered the app-centric world. Go check. Only it's User Interface didn't keep up with the emerging competition.
07/12/2017, 05.51 am
Nokia is still alive... and much more than a mobile phone manufacturer. Nokia is the biggest network equipment maker in the world, employees +100k people and ~25 billion € in revenue in 2016...
30/11/2017, 05.40 pm
Good article. Thanks.
Interesting side note: While working in Japan around 2002, I heard "on the street" that Nokia ran a research center in Japan. Intended to tap the vast and growing Japanese mobile market. They saw everything that was coming in the Western world. Good cameras. Apps. Cost effective mobile internet & services. Mobile email messaging on a mass scale. Multi media devices. Long before the iPhone was invented. Nokia deemed the Japanese market too challenging and closed their research center. Turned a blind eye. The competition was already too far ahead.
28/11/2017, 03.21 am
Another consideration is that Nokia stayed committed to hardware-based human-computer factors as differentiation far longer than it should have: optical strip for scrolling, buttons for menus, buttons for navigation, etc. What the iPhone showed is that software-based UX was the more flexible and powerful approach.
26/11/2017, 04.40 pm
Just imagine, if Nokia had seen the future and adopted Android operating systems before 2009-10, perhaps the horizons of the mobile Eco system would have been very different today. Similarly, Blackberry also failed to see the shift in the mobile market from a communicating device to a multi Media device. Phones transcended the mere communication and functional level to take control of our social lives and presence. The social sites and e commerce growth were trends and changes that both these behemoths failed to see or gauge. They still remain extremely hardware centred, building very physically robust devices but perhaps falling short on the imagination part. I think this is entirely a matter of leadership vision and imagination.
25/11/2017, 12.00 am
Unless I am misremembering, I am sure I had a Samsung phone in the early 2000s. It was nothing like the Samsung mobiles of today. It was not user friendly, the operating system was a mess and I soon went back to Nokia but it's not true to say that Samsung hadn't entered the mobile communications market, they just hadn't entered the smart phone market. (Not that I don't agree with the thrust of the article - Nokia's downfall was very much of its own making).
24/11/2017, 11.53 pm
I think a similar story can be told about Microsoft under Ballmer. What Symbian was for Nokia, Windows was for Microsoft at one time. Nadella came in just at the right time to lift the company out of that slumber and made it take a leap of faith in the Cloud world. The results are evident. Microsoft is sailing at its lifetime best share prices. On the contrary, when we look at Apple, they seem to be following the footsteps of Nokia. Slowly but surely they are becoming a victim of their own success.
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Organisational behaviour, change management and motivation seen in the case study of Nokia and organisation-wide changes like mergers and acquisitions, employee psycholigical contract (ADKAR, Maslow, Hertzberg, Pink)
MBA student, chichester University Addressing the individual's relationship to change and motivation can allow us to significantly reduce the impact of structural organisation-wide change on the individual worker, through this their associated teams, departments and the organisation as a whole. Applying this to real workforce situations within Nokia, where poignant situations have arisen resulting in increased change resistance due to not addressing awareness and desire creation, change fatigue and failure to address the people side of change.
Journal of Marketing Management and Consumer Behavior
Change is the only constant thing both in our personal lives and in every organization. A number of factors are usually considered when deciding when and what level of change should be introduced in any organization, as a result, if these changes are not properly blended into the organizational system, it causes resistance from the people who are expected to effect these changes i.e. the employees, hence, the reasons why employee resist changes being introduced in an organization. While carrying out this study, various literatures were consulted to understand the proper foundation and perspectives of change, resistance to change and how better management can harmonize these changes in their organization if they want the continued success of their organization. The method of data collection in this study are from both primary and secondary sources which will be tabulated in simple percentage table analyses and interpreted. The major findings for this study indicates that employee resist changes because of poor communication of the required change, lack of proper motivation and encouragement to effect such changes and the inhuman nature of the changes being introduced by the management. Conclusively, the conclusion deduced from this study shows that the change management process in Airtel Networks Limited failed, the employees were not properly communicated to as the changes were being introduced, and the management did not put the hazardous nature of the job into conclusion before introducing such changes. It is therefore recommended that employees should be informed about the nature of the changes being introduced in the organization and proper due process should be followed as well as adequate motivation and inventive packages..
Karyn S Krawford
Introduction This case study focuses on a fast growing online business services startup platform in Australia. It operates as its own functioning business unit under the umbrella of News Ltd, who own a cluster of individual digital companies also known as Rupert Murdoch’s News Corporation, one of the world’s largest global media companies. This case study examines a change that occurred when almost the entire senior management staff level was replaced including the CEO two years ago. Organisational change is something that occurs throughout an organisation’s life cycle and effects the entire organisation rather than one part of it. Employing a new person is one example. Change is increasing due to a number of forces including globalisation led by rapidly advancing technologies, cultural diversity, environmental resources and the economy; therefore the ability to recognise the need for change as well as implement change strategies effectively, in a proactive response to internal and external pressures is essential to organisational performance. Internal changes can include organisational structure, process and HR requirements and external changes involve government legislation, competitor movements and customer demand (Wood et al, 2010). Change does not need to be a painful process, as it may seem when observing the amount of failed change management initiatives with reports as low as 10% of researched success rates (Oakland & Tanner, 2007), when successful change management strategies are utilised and planned, including effective communication strategies, operational alignment, readiness to change and implementation, which all lower and overcome resistance (Wood et al, 2010). There is a great amount of literature on the negative aspects and difficult management with employees resisting change, however Wood et al (2010) challenge this notion by questioning the change management process as people do not resist change itself but aspects of the change that affects them personally such as fear of the unknown, status, remuneration and comfort. Resistance to these changes is a healthy reaction and can be managed effectively in the beginning by ensuring communication and using one of the change initiatives described here .
Leadership & Organization Development Journal
For any organisation to remain afloat, it must always position itself to competitively struggle for the limited resources from the ever changing and dynamic environment; by not only responding to change but looking out for change. Organisational Change, change management and resistance to change; are tripartite concepts in which no one can be conveniently treated singularly without mentioning the other ones. The methodology adopted in the study is exploratory approach. It examined the literature to present how change management determines the level of change resistance and the eventual organisational change. The paper commenced with the conceptual literature, to the theoretical literature, empirical literature, findings from the literature, the conceptual framework, and the conclusion. Recommendations were made for organisations to avail themselves of the services of experts in human capital management, to handle change implementation programmes for them. Keywords: Organisationa...
This paper presents a literature review on change management. Change management has been defined as ‘the process of continually renewing an organisation’s direction, structure, and capabilities to serve the ever-changing needs of external and internal customers (Moran & Brightman 2000). Kanter (1992) contends that we live in a constantly changing world, and change has an impact on the individuals and the organisation as a whole. In this context, organisations have to look into the future to find new advantages. New technologies, new products, new competitors, new regulations, and new people with new values and experience is the order of the modern organisation. Nevertheless, theories and approaches to change management are often conflicting, lacking in empirical evidence and based on unchallenged assumptions about the nature of modern organisational change management. This paper looks at some of the main theories and approaches to organisational change management as an important fir...
Revista de Științe Politice/ Revue des Sciences Politiques
The study of change is a major concern at present in all fields of science. Traditionally, in philosophy and socio-human sciences, the concept of change was approached as opposed to that of stability, with intense debates about the desirability and importance of order and stability vs. the unpredictability of change. While in classical approaches to organizational change the conceptions that favoured order, stability, and routine prevailed, modern approaches recognize the decisive role of accepting change for the development and progress of organizations. In the field of organization development and organizational becoming nowadays strategies are sought and devised in order to align the organizations not only with their rapid inner changing, but also with the external multiple, complex, and dynamic environments. Starting from an outline of the factors of change and of the term of change as it has been conceptualized in sociology, the present paper aims to delineate a general framework for addressing organizational change. In this regard, after discussing the relationship between organizational change and the social and economic environment and delineating the main areas and agents of change in an organization, the various types of change in the organization and the models of their approach are addressed. Furthermore, since the resistance to change is a common and omnipresent human and social phenomenon, including at the level of groups and organizations, the paper approaches also the causes and manifestations of change resistance, as well as the possible measures for combating this phenomenon, in situations where the change is beneficial and necessary.
Int. J. Teaching and Case Studies, Vol. 8, No. 1, 2017
Management’s role in the management of executing change is a critical issue for successful outcomes of strategic initiatives. The purpose of this case study is to examine how an organisational justice framework can be used to explore employees’ perceptions of trust, fairness, and the management of change during a period of strategic changes for a media organisation in Cyprus, and the role of leadership in these changes. A multiple-case study research design contributed to this qualitative case study in the interest of advancing organisational justice theory regarding fairness, trust, and the management of change from an employee perspective. The research design also produced valuable information and knowledge, since which management could more effectively implement organisational changes during times of strategic change.
Organizations that are aiming to successfully implement change needs the support and acceptance of employees who are their key stakeholder. This study analyses the influence of Employees` attitude towards organization change. The research also aims at evaluating the influence of employees’ attitude towards commitment to organization and job after the introduction of change in the organization. The study was conducted among 300 employees who belonged to executive and managerial category from different star rated hotels in Chennai, Tamil Nadu, India which are currently embracing organization changes. The findings indicate that employees of the study demonstrate a positive approach towards the change management in their organization. The observations also project that a positive approach by employees towards changes, is a very good indication for organizations to know that their workforce is committed towards the organizational goals. Hence with the support of change agents, adequate c...
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Change Management at Nokia Corporation
Nokia Company was established in Finland and was renowned for being the first company to generate a cellular network making it a global leader in mobile phones. Nokia established itself as a market leader in the production of mobile phones. Nokia has its presence in over 130 nations. Initially, the organization was divided into four business units including mobile telephone, multimedia, company services, and networks. However, when new market entrants such as Samsung and Apple posed stiff competition, the company was forced to implement change. The company merged its phone production with Microsoft to produce Windows-based operating system phones. In addition, the company also moved its operation to focus on telecommunication infrastructure.
Nokia was a market leader in mobile manufacturing and captured up to 30% of the global market share. Newmarket entrants such as Apple and Samsung, which introduced Android-based software and iOS, captured the customers’ needs creating the urgency for Nokia to implement change. These companies changed the traditional mobiles to smartphones and led the world towards globalization. As a result, Nokia experienced a drastic drop in sales from over 100 billion euros to only around 15 billion euros annually (Yi et al., 2017). The firm came up with a booster program that was referred to as the Nokia Booster Program which was implemented in 2008. The program aimed at consolidating both the firm’s strategic growth and its internet clientele. The company established this elaborate plan to keep up with the pressure of exploiting the global market. As a result, the management strategy focused on evaluating the ever-changing needs of consumers and the need for the organization to develop top-notch technology among its competitors. Nokia needed to establish a single point of interaction with both its international clientele and consumers. As a consequence, the company restructured its nine divisions into four integrated departments. Hence, all the production processes and manufacturing were made into three horizontal business units to speed up both innovation and production.
The business used a communication framework to transmit data from top management to employees through a range of senior personnel before the program. Such a system of communication was slow (Aspara et al., 2011). The business, therefore, needed a communication framework capable of keeping pace with the modern market. The Booster program has been established as a daunting program for Nokia on organizational change. In just one week, this program was implemented with 100 new employment. With the start of new jobs, the old Nokia staff have been saved, and other jobs have not changed. The only shift encountered by these workers was the reconfiguration of their teams. With a view to competent and quickly reconfiguring its human resources to address ever-changing client requirements and requests, this team reconfiguration is carried out.
The firm has been driven over two decades by Nokia’s mission statement, “Connecting People,” The firm is focused on connecting individuals via telephones and the Internet. Nokia attempts to link individuals and create an experience to satisfy their consumers ‘ requirements in ways that work for them. Some methods are by maintaining the expenses of information low and enabling individuals to communicate in a multitude of ways through social media. To Nokia, it also implies that we keep the data of their clients private. The firm is dedicated to protecting the privacy and integrity of information (Bugubayeva et al., 2017). Nokia’s vision is a world that can be attached to all. To guarantee that 5 billion individuals are linked at every stage and to guarantee 100 times more network traffic. Nokia’s working principles include enhancing technological people’s life, environmental safeguards, company with completeness, change taking place together, and in all they do, respecting individuals.
Nokia likely experienced various risks and challenges in the process of implementing organizational change. One of the dangers is resistance from the employees. The implementation of the change may lead to a review of the reporting process, the change of departments, and duties. If the employees oppose the decisions, it would be risky to implement the changes. It is crucial to explain how the change will be implemented to avoid fear among employees and mitigate the risk (Lamberg et al., 2019). Employees at all levels should clearly understand the details of the change, including the timelines and how each department will be affected. Another potential risk is the lack of leadership skills that would have enabled leaders in various departments to execute the changes. If the leaders are not efficient in managing change, it might fail. There is a need to train the leaders on the strategies of change and how to deal with the challenges of change to overcome the risks. The training can be carried out on the heads of every department and the top management. The disruption of the ongoing projects to pave the way for the changes is another possible risk. To mitigate the disruption, the company should choose an appropriate time that would be effective for change.
When the firm announced Lumia’s phone-based production of windows, thousands of workers protested because of their shock at the loss of their employment. They also argue that Nokia’s Lumia phone cannot customize various equipment. With that choice, the president, the Vice President, and the CTO have resigned. In addition to Nokia staff, the industry and clients also saw opposition to Microsoft and its products. They did not like it. Network providers also opposed the Windows Phone because they were concerned with the Windows Phone function Skype that could put their global calling company in danger. The investors were also resistant because the share price decreased dramatically by 10%. The changes should be made in a friendly and fair way for all concerned parties and stakeholders (William, 2016). In case of any layoffs, they should be communicated earlier, and proper compensation agreed upon. Other changes, such as reporting processes that may be changed, should be communicated effectively. Effective communication will be necessary to avoid any backlash and negative comments from the employees or the media. The employees should be made to understand that the changes are essential to building a competitive company. Further, the change process in Nokia should involve more research and development. The researchers should focus on the future of smartphones and the demands of the clients. When the researchers find out what the customers want now and in the future, they will use the information to inform the developers on what to create.
Nokia manages challenges through different approaches. It could have informed employees about the shift and clarified why and how it is crucial. The personnel could support their managers who inform them of the change and help them overcome their anxiety and fear. After the changes were implemented, resignations could have been regulated by providing incentives and advantages. If staff are not prepared to create changes, they must take the shift strongly and threaten to lose employment. Nokia should have used change management theories or models like the PROSCI model when handling change (Hussain et al., 2018). To give an example, they would have utilized the PROSCI methodology that consists of key stages that the company would have embraced. The model is widely acknowledged and accepted as its offers are well-organized procedures to focus on change management-related problems. If the PROSCI method had been applied successfully in the case of Nokia, it would have offered the company more strength and various makeover options. The PROSCI method is made up of three main phases that a project manager or a company’s change manager would choose to focus their attention on. In particular, the approach offers the company with research-based evaluations and models that help in each stage as well as recommendations that prepare for change, manage change, reinforce growth, and assist the management team in decision-making for the company.
Ian Gee and Maximilian Kammerer started the booster program with a design team. The design team emphasized that it would be challenging for the firm to attain its goals with the existing old-fashioned communication framework. The business, therefore, needed a platform to assist all of its players in pursuing organizational goals. The company has conducted workshops in various towns worldwide. At least one hundred change leaders attended every workshop. Following the workshops, respondents returned to their organizations to employ them in procedures of change. The online community has become the focus of change management. The mixture of traditional communication processes and new relationships has given rise to a grown enthusiasm. The booster resulted in opening discussions of problems that affect the business between front-line employees, community members, and executives. The online community provided staff with data about future modifications that could help them initiate innovations.
In conclusion, it is crucial for organizations first to define why the change should take place. There are various individuals in an organization whose thinking and risk-taking differ. They have creative thoughts, and brainstorming sessions occur when ideas become inadequate. Thus, we can claim that organizational modifications are useful if they are correctly scheduled, managed, and implemented by the organization. Firms should always be prepared for whatsoever circumstances to implement proper procedures while giving ample time and training for the managers and all the employees while trying to retain all the skilled ones. The changes that are to be implemented at any company should focus on achieving a considerable market share and being friendly to the employees. One of the ways of making the approach friendly is to ensure the employees are informed of the changes that will be implemented.
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Hussain, S. T., Lei, S., Akram, T., Haider, M. J., Hussain, S. H., & Ali, M. (2018). Kurt Lewin’s change model: A critical review of the role of leadership and employee involvement in organizational change . Journal of Innovation & Knowledge , 3 (3), 123–127. Web.
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Change Management in Nokia Company: A Case Study
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Change Management and Information Technology: Nokia Company Case Study
Due to rapid growth in global trade and market, the organization needs to implement various changes quickly to meet the customers demand and compete favorably. The growth of global standards in quality business quality production and business processes as rapidly increased hence bringing up the need for change to meet the new requirements. Technology is the best tool to use to accomplish all this at a fast and convenient rate (Anderson, 2016). Technology assist organizations in managing changes in various sectors like production, operation, human resource and many others. Organizational changes are meant to improve the performance of the organization by implementing new strategies. According to Charles Darwin, the strongest and intelligent species that survive in the universe are those responsive to change. Similarly, the most successful organizations are those that adopt to changes and new concepts of performance (Benn, Edwards& Williams, 2014).
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Change within a company is influenced by external factors like change in social technology changes and internal factors like decision making, interpersonal relations, communication, and management. Managers need to have a good perception of change to ensure that they get the support of the employees and other stakeholders. Change management is essential as it smoothens the transition and makes each team take part and responsibility for the change. More so, it established a common background and goals to be achieved by the teams (Burke, 2017). Change management involves setting and managing objectives to link to the vision and purpose of the intended change, planning and gathering details on the required resources, implement the set plans through frequent monitoring. Also, the process of change management oversee the adjustments of the set plans to modify the actions and supervise change implementation for easier achievements of the set objectives. Change management pay attention to organizational culture, resistance to change and various stakeholders who participate in the process. It is during this process that the best technology to use during the process is chosen and implemented (Doppelt, 2017).
Nokia Company is one of the organizations that has adapted change through the help of technology. In the year 2010 to 2012, Nokia was one of the world largest supplier of mobile devices with large shares. Later in 2012, Apple Company emerged in the market and began manufacturing iPhone becoming the leaders in the smartphone revolution. The sales and of Nokia went down drastically hence had to invent new changes to oversee its success and survival in the market. Among the changes implemented were changed in management through hiring a new CEO and new team management. The management decided to sell the company to Microsoft. Currently, Nokia Company is building networks and mapping technologies to ensure its survival in the growing technological world.
Strategies used to execute the change
Currently, Nokia is among the leading network building companies regarding technology worldwide. All this was achieved through the well-planned change management adopted in the year 2012. The company designed its strategies based on content, people and the change process itself. Various approaches were used to ensure the success of the change (Giachetti & Marchi, 2017).
First, the organization identified the issue at hand, analyzed it and saw the reason for implementing change.At this stage, the management spoke to various stakeholders including the employees to gather their ideas and views concerning the situation. After speaking to employees and shareholders, the management came to an agreement that change was essential for the future of the company. The senior staff met and decided on the areas to consider in the change management. After going through the Nokia mission, vision and goals, the management saw the management agreed to change the company's CEO and select an anew team to oversee the improvement of the firm. At this stage, a team to run the entire change process is selected. Additionally, the team will be responsible for improving and creating a strong foundation for ease, clarity and successful implementation of the desired changes (Hayes, 2014).
Second, the company presented the case to the stakeholders who directly contribute to the company's success and who will be affected by the change. The outcome of the change process relies on various factors among them been stakeholders contributions. The groups support changes that they view to be of positive impact. Investors need to be informed of the planned change and their ideas and contributions to the change considered. Investors risk their money and resources to the company hence need to be assured of the company' structure. In case the investors view the expected change to have a negative impact to the future of the company, they are likely to withdraw their shares and money from the firm (Holten & Brenner, 2015). The employees are also an integral part of any organization. They support changes that assure a good future of the company. Although many employees dislike change, they also consider their future in the organization. In case the change is deemed to improve the performance, the employees put more effort to oversee its success. After presenting the case to the Nokia stakeholder's, the group agreed on the make some changes return the company to its performance. The teams decided to change the chief executive officer and restructure the management. Also, they supported the idea of selling the company to Microsoft.
The third strategy was planning for the change. The step includes the roadmap that identifies the route to be taken until the change is implemented and become successful. Various resources to be used during the transition are identified and gathered during this stage. Issues like finance and the team to carry out the changes are selected at this step putting into consideration the desired return and the time frame. Technology to be used to aid in the change management is selected. The use of information technology in change management is vital as it eases the process and reduces barriers caused by human error. During planning, Nokia Company gathered data from the company and from its competitors to analyze the anticipated change. Information gathered also provided insights on the future of mobile phones and the anticipated changes in the industry due to rapid technological advancements (Shockley, 2014).
Once the planning, data collection and analysis is completed, the team took a step further to communicate the changes to the stakeholders and other concerned parties. Major mistake done by most change management leaders is believing that other people understand the issue hence do not communicate often. Communication flow at all levels keep the stakeholders informed and give them a chance to provide feedback and input (Cushman, 2016). Communication offers transparency and two-way communication designed to praise and change the structures that are not working. The success of the Nokia change management in 2012 was made possible by their excellent communication which runs through the entire process. Thee employees felt like an integral part of the company and were ready to support the change of management and also to work under Microsoft management (Giachett & Marchi, 2017).
The last strategy used by Nokia change management team was monitoring the change process, managing resistance and other financial risk and reviewing the situations for continuous improvement. Resistance to change is inevitable, and the success of the change depends on how the resistance is addressed and handled. During the change process, most resistance came from the employees and investors who were uncertain of the investment risk they were undertaking (Cameron & Green, 2015). Selling the company to Microsoft was risking their money and resources. Employees too were afraid to risk their future and jobs when Microsoft take over the company. Again, been under new management brought fear of been retrenched. Through frequent communication, guide and advice, the team leaders were able to win the support of the resisting team thus making the process successful. Even after celebrating the success of the project, the team carried out numerous reviews to make some adjustments to the project. After changing the CEO and selling the company to the Microsoft, Nokia continued to review the project and bring further changes to oversee the success of the company seen through the Current reforms aimed at building networks and mapping technologies to ensure its survival in the growing technological world.
Concept used to execute the change
During The change management process, Nokia Company applied Kurt Lewin's idea of change. The change management leaders used the three-step of unfreezing, changing and refreezing to oversee a smooth transition. The concept was selected since it provides the best criteria for overcoming the resistance imposed on the project.
Unfreezing step is the initial stage of change management that is encountered. During this stage, the selected change leaders created awareness concerning the issue at hand and the current status of Nokia Company. During this stage, the leaders revealed the situation of the company in the world market, the high competition it was facing from Apple Company leading to reduced profit experienced in that year. More so, the team explained the danger that might arise due to the emergence of smartphones that would ultimately replace their mobile phones in the coming few years. There was a need for change which would benefit all stakeholders and see a better long performance of Nokia and maintain the competitive advantage. The unfreezing stage acted as a communication step whereby the public gets to know the desired change and provide their views and feedback concerning the issue. It served as a breakthrough towards the success of the change management (Rosemann & vom, 2015).
Changing process involves transition into the new state. It is the time when the organization has fully implemented the change, and people are struggling with new reality. This period is marked with uncertain and fear of the reality (Pugh, 2016). More so stakeholders start adapting to the new behaviors to make it successful. For Nokia Company, the period between 2012 and 2013 was the changing stage as the company struggled to work under new CEO and the management of the Microsoft. The company was uncertain of the result of the change hence hoped for a good return.
Refereeing is the final stage of the changing concept which symbolizes the stabilizing, reinforcing and solidifying to the new state. At this stage, the stakeholders have already settled with the changes and the operation of the company goes back to normal. The refreezing process is essential to keep the company on track and prevent revering into old ways of performing. From the year 2014, Nokia Company was in Refreezing stage having accepted to work entirely under Microsoft. Mores it is during refreezing that the company looks for other possible changes that may take the company to a higher level. The idea of Nokia Company is building networks and mapping technologies to ensure its survival in the growing technological world emerged during this stage of refreezing. Application of Lewin three-step model in bringing change in Nokia Company led to its success and full change transition.
The use of technology to drive the change process
Most organization have adopted the use of technology in change management process. The use of technology in change reduces the cost by examining various business processes and eliminating actions that are less valuable i...
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Nokia Company Case Study Report
Advancement in technology has facilitated the growth of mobile and telecommunication industry. The sector is dominated by leading world producers who depend on their operational management decision to remain afloat in the competitive industry; some of international companies in the industry include Samsung, Nokia, Sony-Ericson, Apples, and Google Android-powered phones.
Nokia has been a leader in the industry in innovation, sales, and market share, however the increased competition has triggered for strategic decisions to be made by the company.
Decisions are the driving force in any organization. The quality of decision that managers make give their organization direction and focus. The growth and competitiveness of an organization is influenced by the quality as well as acceptability of decisions made by managers at all levels (Zi-Lin, Kwanghui and Pho-Kam, 2006). This paper analysis the strategic direction taken by Nokia Phone Company, will also undertake a strength and weakness analysis of the company.
Brief history of the company
Nokia is an international phone company, with its headquarters in Finland; according to the company’s website, the company currently enjoys a market share of about 37% and aims at increasing the market share to over 40% by the end of 2011. It has a strong brand all over the world, the companies positioning statement is “technology connecting people”. The company’s headquarters are located in Keilaniemi, Espoo.
Currently it has a total number of employees over 123,000 distributed in various countries. It has it presence as a selling point of full branch in over 120 countries. In the year 2009, the company was able to make a profit of €1.2 billion this was over 10% than what it had recorded the previous year. The idea of the company was started in 1865 however; it became a telecommunication company in 1960’s (Nokia Official website, 2010).
Nokia Vision, Mission, Purpose and value of its marketing materials
Nokia is one international company that has a simple and straightforward mission statement as “Connecting People”. Its vision statement is “Our strategic intent is to build great mobile products” (Nokia Official website, 2010), this vision statement has more focus on the phone section of the company as the main business segment that the company has. The main purpose of the company is “Our job is to enable billions of people everywhere to get more of life’s opportunities through mobile” (Nokia Official website, 2010).
To ensure that the company fulfils its vision, mission and purpose, it operates under marketing values and principles; they include innovation, products development, respect for the people and respect for research and development projects (Nokia Official website, 2010).
The current electronic market is fiancé and competitive, there are number of players in the industry that calls for Nokia to keep changing its operating policies and strategies. It has to keep changing its approach to ensure that it remains competitive. The main competitors of the company include Samsung, Apple, and Sony-Ericson.
To fight the competition, Nokia has engaged in a number of collaborations with other likeminded companies to ensure that it remains competitive. One of the recent strategic alliances that the company has made is strategic partnership with Microsoft to offer the company with the right software to compete effectively. The drive to remain competitive and offer high returns to the company has made the management to develop new strategies that will see it succeed (Reid, Plank and Richard, 2004).
Review marketing performance
Nokia has been a leader in the electronic industry however current innovations and venture of other international companies have hindered the companies continued leadership; the companies strength and innovativeness has made it world’s largest manufacturer of mobile phones.
In the first three quarter of 2010, the company enjoyed a market share of approximately 31% on average; however, the market share reduced to 30% in the last quarter of the year. The drop of the market share can be attributed to aggressive marketing and selling approaches adopted by its competitors mostly Apple Inc and Google Android-powered phones.
The company is also diversifying rapidly in laptops, IPods and I phone to enable it share a large market in the electronic industry. The results of 2010, were lower to those recorded in 2009 of 35% in the fourth quarter; so far, the marketing approach that the company has adopted is doing well in the markets however, the trend is alarming and calling for something extra to be done if the company has to remain in the forefront of the market.
Nokia has a positioning statement as “connecting people”, the statement is deeply rooted in the people who’s the company aims at serving through its products. The positioning statement with a single grasp describes what the company is up to and what it aims at offering.
One of the major weaknesses that the companies marketing campaigns have had is that they have been only inclined to advertising and selling of phones; however, the company has more products that it can use to increase its market, revenue as well as sales.
Another problem that can be seen with its structure is the presence of its research and development plants; the last quarter of 2010 say the company have research and development outlets in only 16 countries from its present countries of about 120. The representation of the research and development team is thus not a representative of the company’s total presence (John and Mowen, 2004).
Nokia strength is ventured in its strong brand name that is internationally recognized. There is a wide recognition of these products in all parts of the world. The strength of the company is undoubtedly be engineered by its internal managerial mechanisms. In order to have a competitive edge in selling its product and services, it will be advisable for the company to take advantage of its ability to compete favorably with equal players in the market.
The company’s products are fitted with different features and yet they are sold at an affordable cost (Sadler, 2003). One weakness that Nokia is having is having a slow rate of products development; in the near past, the company has been producing products after other companies have invented them. It has become a company of copying technology instead of being a leader in developing the technologies (Ketels, 2006).
With globalization, the company has the chance of targeting international markets, it can expand its market share in other countries and improve its products to attain customer loyalty and retain it as well. The major threat facing the company is competition from other companies in the industry who seem to be more aggressive and are having consumer-targeted products. This has made the company shed some markets to these competitors (Peter, 2006).
Scope marketing opportunities
Opportunities are positives that a company can utilize for its benefits, one of the most outstanding opportunities that the company has is growth in globalization. Opportunities for the company are dependent on both the internal and external assessment criteria of the company’s profile of operation (Kotler & Armstrong, 2001). Some of the underlying opportunities for this company about the macro environment are the diversification of its activities.
When operating in more than one country, the company should ensure it well understands the marketing approach that it should implement for its success. Different countries call for different marketing approach depending with the people living in the area. There are some green markets or some markets that have not been fully utilized that the company should think of diversifying to, some of these are in developing countries who may be in need of basic phones (Hooley and Saunders, 1993).
With changes in markets and economic situation, different people are having different tastes; the company should aim at establishing niche markets with the available markets. For instance, the growth of the youthful population can have a niche to have highly integrated phones that can perform different tasks; this should be in the areas that the company should be going. It should not shy off to take challenge from its competitors like Apple and Androids who are driving the market through innovations (Michael 1997).
When the above opportunities have been seen and well ventured, the company is likely to have a growing profit gain as sales are likely to grow; on the other hand, when the company develops new products with times and aim at fulfilling consumer needs, it will likely win consumer confidence that grows loyalty with the company’s products. The viability of a new venture is dependent on how well the opportunity has been seen, tapped, and structures to venture in it have been developed (Earl, 1996).
Other products that Nokia should consider
Although the market is saturated with customer-focused products, Nokia still can come up with other innovative products to grow its portfolio. An area that seems green and still not ventured in is solar charged laptops: many people today are using laptops in their day-to-day activities, however they are limited by the life of their batteries. Laptops are electronic gadget, which must depend with a reliable source of electricity to be recharged. The company should think of coming up with policies and develop the products.
The innovation of solar-based laptops should target countries with high potential in laptop markets and they experience large spells of solar energy. They should be fitted with photoelectric cells that allow self-charging when exposed to solar energy. When such products are developed, the company is likely to remain competitive in the electronic gadgets industry.
Caribbean and African countries have not been fully utilized, the company can still venture in the markets and dominate them; in most of these countries, the company should look into low income earners thus it should provide phones and other electronic gadgets that fit these markets.
Diversification to solar laptops and venturing more aggressively in Caribbean and African countries is in line with the company’s mission, vision, purpose, objective as well as positioning statement. It will lead to an increased sales, increased profits , as well as customer base; the net result is dominance in the electronic industry.
Earl, P. 1996. Management, Marketing and the Competitive Process. Williston: American International Distribution Corporation.
Hooley J., Saunders, J. 1993. Competitive Strategy: the Key to Marketing Strategy. New York: Prentice Hall.
John, C. and Mowen, M., 2004. Consumer Behavior-A Framework. Beijing: Tsinghua University Press.
Ketels, C., 2006. Michael Porter’s Competitiveness Framework: Recent Learnings and New Research Priorities. Journal of Industry, Competition and Trade. 6(2),pp. 115-136.
Kotler, P. and Armstrong, G. 2001. Principles of marketing, 9th edn., Prentice Hall, London.
Michael P. ,1997. Competitive Advantage: Creating and Sustaining Superior Performance. Beijing: Hua Xia Press.
Nokia Official website ., 2011. Nokia. Web.
Peter, D.,2006. Marketing Management and Strategy . London: Post & Telecom Press.
Reid, A. Plank, R. and Richard, E. ,2004. Fundamentals of Business Marketing Research. New York: Best Business Books.
Sadler, P., 2003. Strategic Management . Binghamton: New Down Press.
Zi-Lin, L. , Kwanghui and Pho-Kam, W., 2006. Entry and Competitive Dynamics in the Mobile Telecommunications Market. Research Policy. 35(8), pp. 1147-1165.
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"nokia and the new mobile ecosystem: competing in the age of internet mobile convergence change management analysis & solution, hbr change management solutions, strategy & execution case study | chen wei-ru, javier gimeno, . workiewicz, jose de la torre, case study description.
Nokia has dominated the mobile handset business for over 20 years. But as mobile technologies evolves and the consumer focus shiftsfrom handset design towards software and content platforms, it creates an opportunity for new players, such as RIM, Apple and Google, to enter the market and challenge Nokia's position. This case examines the competitive situation in the mobile ecosystem and Nokia's attempt to redefine itself as an 'internet company' in 2008.
Change Management, Strategy & Execution , Case Study Solution, Term Papers
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What is Change Management Definition & Process? Why transformation efforts fail? What are the Change Management Issues in "Nokia and the New Mobile Ecosystem: Competing in the Age of Internet Mobile Convergence case study?
According to John P. Kotter – Change Management efforts are the major initiatives an organization undertakes to either boost productivity, increase product quality, improve the organizational culture, or reverse the present downward spiral that the company is going through. Sooner or later every organization requires change management efforts because without reinventing itself organization tends to lose out in the competitive market environment. The competitors catch up with it in products and service delivery, disruptors take away the lucrative and niche market positioning, or management ends up sitting on its own laurels thus missing out on the new trends, opportunities and developments in the industry.
What are the John P. Kotter - 8 Steps of Change Management?
Eight Steps of Kotter's Change Management Execution are -
- 1. Establish a Sense of Urgency
- 2. Form a Powerful Guiding Coalition
- 3. Create a Vision
- 4. Communicate the Vision
- 5. Empower Others to Act on the Vision
- 6. Plan for and Create Short Term Wins
- 7. Consolidate Improvements and Produce More Change
- 8. Institutionalize New Approaches
Are Change Management efforts easy to implement? What are the challenges in implementing change management processes?
According to authorlist Change management efforts are absolutely essential for the surviving and thriving of the organization but they are also extremely difficult to implement. Some of the biggest obstacles in implementing change efforts are –
- Change efforts are often targeted at making fundamental aspects in the business – operations and culture. Change management disrupts are status quo thus face opposition from both within and outside the organization.
- Change efforts are often made by new leaders because they are chosen by board to do so. These leaders often have less trust among the workforce compare to the people with whom they were already working with over the years.
- Change management efforts are made when the organization is in dire need and have fewer resources. This creates silos protection mentality within the organization.
- Change efforts create an environment of uncertainty in the organization that impacts not only the productivity in the organization but also the level of trust in the organization.
- Change management is often a lengthy, time consuming, and resource consuming process. Managements try to avoid them because they reflect negatively on the short term financial balance sheet of the organization.
"Nokia and the New Mobile Ecosystem: Competing in the Age of Internet Mobile Convergence SWOT Analysis, SWOT Matrix, Weighted SWOT Case Study Solution & Analysis
How you can apply Change Management Principles to "Nokia and the New Mobile Ecosystem: Competing in the Age of Internet Mobile Convergence case study?
Leaders can implement Change Management efforts in the organization by following the “Eight Steps Method of Change Management” by John P. Kotter.
Step 1 - Establish a sense of urgency
What are areas that require urgent change management efforts in the “ "Nokia and the New Mobile Ecosystem: Competing in the Age of Internet Mobile Convergence “ case study. Some of the areas that require urgent changes are – organizing sales force to meet competitive realities, building new organizational structure to enter new markets or explore new opportunities. The leader needs to convince the managers that the status quo is far more dangerous than the change efforts.
Step 2 - Form a powerful guiding coalition
As mentioned earlier in the paper, most change efforts are undertaken by new management which has far less trust in the bank compare to the people with whom the organization staff has worked for long period of time. New leaders need to tap in the talent of the existing managers and integrate them in the change management efforts . This will for a powerful guiding coalition that not only understands the urgency of the situation but also has the trust of the employees in the organization. If the team able to explain at the grass roots level what went wrong, why organization need change, and what will be the outcomes of the change efforts then there will be a far more positive sentiment about change efforts among the rank and file.
Step 3 - Create a vision
The most critical role of the leader who is leading the change efforts is – creating and communicating a vision that can have a broader buy-in among employees throughout the organization. The vision should not only talk about broader objectives but also about how every little change can add up to the improvement in the overall organization.
Step 4 - Communicating the vision
Leaders need to use every vehicle to communicate the desired outcomes of the change efforts and how each employee impacted by it can contribute to achieve the desired change. Secondly the communication efforts need to answer a simple question for employees – “What it is in for the them”. If the vision doesn’t provide answer to this question then the change efforts are bound to fail because it won’t have buy-in from the required stakeholders of the organization.
Step 5 -Empower other to act on the vision
Once the vision is set and communicated, change management leadership should empower people at every level to take decisions regarding the change efforts. The empowerment should follow two key principles – it shouldn’t be too structured that it takes away improvisation capabilities of the managers who are working on the fronts. Secondly it shouldn’t be too loosely defined that people at the execution level can take it away from the desired vision and objectives.
"Nokia and the New Mobile Ecosystem: Competing in the Age of Internet Mobile Convergence PESTEL / PEST / STEP & Porter Five Forces Analysis
Step 6 - Plan for and create short term wins
Initially the change efforts will bring more disruption then positive change because it is transforming the status quo. For example new training to increase productivity initially will lead to decrease in level of current productivity because workers are learning new skills and way of doing things. It can demotivate the employees regarding change efforts. To overcome such scenarios the change management leadership should focus on short term wins within the long term transformation. They should carefully craft short term goals, reward employees for achieving short term wins, and provide a comprehensive understanding of how these short term wins fit into the overall vision and objectives of the change management efforts.
Step 7 - Consolidate improvements and produce more change
Short term wins lead to renewed enthusiasm among the employees to implement change efforts. Management should go ahead to put a framework where the improvements made so far are consolidated and more change efforts can be built on the top of the present change efforts.
Step 8 - Institutionalize new approaches
Once the improvements are consolidated, leadership needs to take steps to institutionalize the processes and changes that are made. It needs to stress how the change efforts have delivered success in the desired manner. It should highlight the connection between corporate success and new behaviour. Finally organization management needs to create organizational structure, leadership, and performance plans consistent with the new approach.
Is change management a process or event?
What many leaders and managers at the Mobile Handset fails to recognize is that – Change Management is a deliberate and detail oriented process rather than an event where the management declares that the changes it needs to make in the organization to thrive. Change management not only impact the operational processes of the organization but also the cultural and integral values of the organization.
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