Change Management in Nokia

2013

MOUMITA ROY

ROLL- HRM/12/16

PGDM IN HRM

CHANGE MANAGEMENT IN NOKIA


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By

MOUMITA ROY

ROLL

HRM/12/16

DEPARTMENT

POST GRADUATE DIPLOMA

IN

HUMAN RESOURSE MANAGEMENT

UNDER

Prof.Roma Puri

COURSE COORDINATOR ASHIS MITRA

SITE

NOKIA


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ACKNO

ACKNOWLEDGEMENT

• ABSTRUCT

• INTRODUCTION

• LITERATURE REVIEW

• OBJECTIVE

• METHODOLOGY

ØANALYSIS

• NOKIA

• CONCLUSION

• LIMITATION

• REFERENCE

THANK YOU


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I AM GRATEFUL TO OUR TEACHERS PROF. ROMA PURI & COURSE

CO-ORDINATOR ASHIS MITRA WHO HAD CONSTANTLY GUIDED ME THROUGH OUT

THE WHOLE PROJECT, WITHOUT WHOM THE PROJECT WOULD NOT BE

SUCCESSFUL.

I ALSO EXPRESS MY THANKS TO THE NOKIA WEBSITE TO COMPLETE THIS WORK.

I ALSO EXPRESS MY THANKS TO THE LIBRARY STAFFS OF COLLEGE FOR THEIR VARIOUS SERVICES

TO COMPLETE THIS WORK.

I EXPRESS MY SINCERE THANKS TO MY FRIENDS FOR THEIR CO-OPERATION AND SUPPORT IN THE

COMPLETION OF THIS WORK.


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ABSTRACT

To understand what organizational change is & how to diagnose & predict

organizational change, I am doing this individual project on “CHANGE

MANAGEMENT IN NOKIA” & also wants to explain the resistance to change

at both the individual & organization level. It was tough job to talk about one

company that did everything as effectively & as well as Nokia did & try to

take it toward where the world was going. To complete this project, I am

illustrating here many of the external & internal forces for change that affect

those organizations. In this project I am going to describes environmental &

internal forces involved in organizational change, identifying of those change

agents & also discussing about forces for change & how those changes were

resisted, & also wants to describe several processes by which those

organizations can be changed. Next, I am going to be introduced how the

processes to diagnose & predict organizational changes & then go on to

examine organizational downsizing & business reengineering. Finally I

discuss the nature of organizational development that was achieved by these

companies.

INTRODUCTION

Way back when, senior executives in large companies had a simple goal for

themselves and their organizations: stability. Shareholders wanted little

more than predictable earnings growth. Because so many markets were

either closed or undeveloped, leaders could deliver on those expectations

through annual exercises that offered only modest modifications to the

strategic plan. Prices stayed in check; people stayed in their jobs; life was

good.

Market transparency, labor mobility, global capital flows, and instantaneous

communications have blown that comfortable scenario to smithereens. In

most industries and in almost all companies, from giants on down heightened

global competition has concentrated management’s collective mind on

something that, in the past, it happily avoided: change. Successful

companies, as Harvard Business School professor Rosabeth Moss Kanter

told in 1999, “a culture that just keeps moving all the time.”

This presents most senior executives with an unfamiliar challenge. In major

transformations of large enterprises, they and their advisors conventionally

focus their attention on devising the best strategic and tactical plans. But to


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succeed, they also must have an intimate understanding of the human side of

change management the alignment of the company’s culture, values, people,

and behaviors to encourage the desired results. Plans themselves do not

capture value; value is realized only through the sustained, collective actions

of the thousands perhaps the tens of thousands of employees who are

responsible for designing, executing, and living with the changed

environment.

Long-term structural transformation has four characteristics:

1. Scale (the change affects all or most of the organization).

2. Magnitude (it involves significant alterations of the status quo).

3. Duration (it lasts for months, if not years).

4. Strategic importance. Yet companies will reap the rewards only when

change occurs at the level of the individual employee.

Many senior executives know this and worry about it. When asked what

keeps them up at night, CEOs involved in transformation often say they are

concerned about how the work force will react, how they can get their team

to work together, and how they will be able to lead their people. They also

worry about retaining their company’s unique values and sense of identity

and about creating a culture of commitment and performance. Leadership

teams that fail to plan for the human side of change often find themselves

wondering why their best-laid plans have gone awry.

No single methodology fits every company, but there is a set of practices,

tools, and techniques that can be adapted to a variety of situations. By using

some tools in a systematic way, executives can understand what to expect,

how to manage their own personal change, and how to engage the entire

organization in the process.

Any significant transformation creates “people issues.” New leaders will be

asked to step up, jobs will be changed, new skills and capabilities must be

developed, and employees will be uncertain and resistant. Dealing with these

issues on a reactive, case-by-case basis puts speed, morale, and results at

risk. A formal approach for managing change beginning with the leadership

team and then engaging key stakeholders and leaders should be developed

early, and adapted often as change moves through the organization. This

demands as much data collection and analysis, planning, and implementation

discipline as does a redesign of strategy, systems, or processes. The change-

management approach should be fully integrated into program design and

decision making, both informing and enabling strategic direction. It should be


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based on a realistic assessment of the organization’s history, readiness, and

capacity to change.

Change management requires both an individual and an organizational

perspective

Individual change management Organizational change

management

Understanding how one person

makes a change successfully

Understanding what tools we

have to help

individuals make changes

successfully

Organizations don't change,

individuals do. No matter how large

of a project we are taking on, the

success of that project ultimately

lies with each employee doing their

work differently, multiplied across

all of the employees impacted by

the change. Effective change

management requires an

understanding for and appreciation

of how one person makes a change

successfully. Without an individual

perspective, we are left with

activities but no idea of the goal or

outcome that we are trying to

achieve.

While change happens one person

at a time, there are processes and

tools that can be used to facilitate

this change. Tools like

communication and training are

often the only activities when no

structured approach is applied.

When there is an organizational

change management perspective, a

process emerges for how to scale

change management activities and

how to use the complete set of

tools available for project leaders

and business managers.

An easy-to-use model for individual change

The first step in managing any type of organizational change is understands

how to manage change with a single individual. In essence, to make a

change successfully an individual needs:

• Awareness of the need for change

• Desire to participate and support the change

• Knowledge on how to change

• Ability to implement required skills and behaviors


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• Reinforcement to sustain the change

• Planning change management activities

• Diagnosing gaps

• Developing corrective actions

• Supporting managers and supervisors

When an organization undertakes an initiative, that change only happens

when the employees who have to do their jobs differently can say with

confidence, "I have the Awareness, Desire, Knowledge, Ability and

Reinforcement to make this change happen.

The 3-phase process gives structure to the steps project teams should take

PHASE 1 - PREPARING FOR

CHANGE

• Change characteristics profile

• Organizational attributes

profile

• Change management strategy

• Change management team

structure

• Sponsor assessment, structure

and roles

PHASE 2 - MANAGING CHANGE

• Communication plan

• Sponsor roadmap

• Training plan

• Coaching plan

• Resistance management plan


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PHASE 3 - REINFORCING CHANGE

• Reinforcement mechanisms

• Compliance audit reports

• Corrective action plans

• Individual and group

recognition approaches

• Success celebrations

• After action review

After discussing above mentioned theory, I can’t think of a better case study

than Nokia. For me research is an essential part of to know about their

advanced business. Nokia is a global brand, a market leader and a firm rich

in heritage. But it is now battling for survival in a strategic crisis caused by

a range of external and internal factors that are core to A2 and similar

business strategy specifications. In this study I have outlined some of the

main strategic issues facing Nokia and linked to recent supporting resources

which I want to mention in this case study.

THE SAD CASE OF NOKIA

Nokia suddenly noticed that they didn’t grasp this shift in power in the

marketplace, & they started to notice that they were steadily making less

money: they found making money more and more difficult. Even market

leaders found it more and more difficult to maintain their leadership position

in the marketplace.

v In 2004, Nokia was the world’s leading maker of mobile phones. They

were powerful. They were rich. They were impregnable. And here they

were living in this marvelous glass castle in their impregnable power

position.

Now a funny thing happened in 2004. A couple of Nokia workers made a

presentation to senior management of Nokia. They said, “We have an

interesting idea. We’ve come up with a new kind of phone. Unlike Nokia’s


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existing phones, it has a big bright color screen. It connects to the Internet

and it doesn’t have a keyboard like Nokia’s current phones. You operate the

phone with your fingers on a touch-screen. We think this could be a really big

idea.”

Nokia’s management looked at this prototype and they said: “That’s

interesting but this would be hugely disruptive to all of our big marketing and

product development plans. Everyone in the organization would object if we

disrupted those plans. And this is risky: it might not even work. So we’re

going to put this on a backburner, and we’ll continue with our big marketing

and product development plans.” And that’s what happened.

And so for the next three years, it looked as though Nokia had made the right

decision. For three years, Nokia and the top executives personally made a

ton of money.

v Then in 2007, something happened.

Out of nowhere, a firm that had never been in the mobile phone market,

Apple produced tith iPhone, a phone precisely the features that Nokia’s

management had opted not to pursue.

It thrilled customers around the world and devastated Nokia’s market share.

And it devastated the share value of Nokia. Since 2004, it has lost 80 percent

of its market capitalization. A catastrophic result.

Now the managers who made that decision in 2004 and some 25,000

employees of Nokia who have lost, or will soon lose their jobs.

This is a bad news for Nokia. So we see that the resistance to change gave

them a great trouble. Let see how can overcome such resistance & become

world’s 2nd largest mobile phone maker through this case study analysis that

I have done in this individual project.

LITERATURE REVIEW

KATRIN SIMO´ N-ELORZ, MIKEL OLAZARAN & ENEKA ALBIZU were worked

on The Reengineering and Organizational Change in Irizar S. Co-op which

describes that the management of change is one of the most frequent

situations for companies. The keys to success or failure are related to

organizational change managerial tools, organizational structure or

leadership and communication. They analyses the management of the


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change made by Irizar. Charismatic leadership and the workers’ commitment

in the project explain the evolution from financial problems to Business

Excellence in 10 years.

Qi Hao, Weiming Shen, Joseph Neelamkavil, Russ Thomas (Institute for

Research in Construction; National Research Council Canada; London,

Ontario) had done a thesis on CHANGE MANAGEMENT IN CONSTRUCTION

PROJECTS to described that how Decisions are made every day in

construction processes based on incomplete information, assumptions and

the personal experience of the construction professionals. In this project

they showed that Project changes and/or adjustments are inevitable as they

are a fact-of-life at all stages of a project’s life cycle. Managing changes

effectively is crucial to the success of a construction project.

They also showed that how Change management in construction requires an

integrated solution to discipline and coordinate the process, as a example

they gives , documentation, drawing, process, flow, information, cost,

schedule and personnel. The construction industrial needs an effective

construction change management process. This paper summarizes various

aspects of the existing construction change management processes.

OBJECTIVE

The purpose of this study is that organizations exist in ever-changing, turbulent

environments and are perpetually confronted by uncertainty. Organizational change

is necessary. However, it still remains the following problems.

• The organization always been forced to change to deal with the environmental

uncertainty.

• Organization, which might also change to survive, cannot continue.

• And also To know the Organizational Change Management and how it work in

an mobile phone manufacturing company & also in a same company which

already exist in every hand of India as well as world i.e., Nokia.

• Organizational Change Management tools are discussed here.

• Explain Organizational Change Management with its force & resistance.

Through this project, we see, how can they move with rapidly changing

times. From Rio de Janeiro to Nairobi, Berlin to Mumbai, mobile technology

is changing their world. How can they make the most of the opportunities in

their everyday lives? How can they keep a sense of identity as societies,

economies and governments change all around the world? They found people

everywhere connected by a shared excitement for its potential.


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METHODOLOGY

From various theory of change management, we can say that there is a close

relationship between organizational changes & development. Even

organizational development is totally depends on the implementation of

necessary theory of change management. Let me give you a case studies as

examples. The total studies are based on secondary data getting from

different website & journal & books of different authors.

So please forgive me if there is any wrong information about the focused

organization.

ANALYSIS

WHY DID NOKIA NEED TO CHANGE?

• Almost everyone who understands the challenges facing Nokia agrees

that change is unavoidable

• Nokia had missed the major change in its market - the Smartphone

revolution

• Nokia had continued to focus on mobile phone devices (hardware)

rather than mobile phone applications (software)

• The product life cycle of Nokia’s products had shortened dramatically

as others (Apple, Google Android) developed Smartphone platforms and


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an associated “ecosystem” of apps. The consumer transition from

traditional mobile phones to smart phones has been dramatic, and

caught Nokia off-guard

• Nokia has faced intense competition from mobile phone producers in

emerging markets who can make fast, cheap handsets at the lower

end of the mobile phone market

• Many in Nokia regret that the business had become too product-led

rather than customer-led; a missed opportunity

• Poor leadership and complacency (bred from success in non smart-

phones)

• The wrong culture over-consensual; lacking innovation and

entrepreneurial spirit

• Complex, overly-bureaucratic organizational structure with poor

accountability

• Nokia had become “clogged with bureaucracy”

• Decisions being made within the firm were often cancelling each other

out!

• A series of committees, boards and cross-functional meetings held-up

decisions

CHANGE MANAGEMENT IN NOKIA CORPORATION

TypeJulkinen osakeyhtiö

(Public)

Traded as• OMX: NOK1V

• NYSE: NOK

Industry

Telecommunications

equipment

Internet

Computer software

Founded Tampere, Grand Duchy of


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Finland (1865)

incorporated in Nokia

(1871)

Founder(s)• Fredrik Idestam

• Leo Mechelin

Headquarters Helsinki, Finland

Area served Worldwide

Key people

• Risto Siilasmaa

(Chairman)

• Stephen Elop

(President & CEO)

Products

• Mobile phones

• Smartphones

• Mobile computers

• Networks

Services

Maps and navigation,

music, messaging and

media

Software solutions

Revenue €30.176 billion (2012)

Operating

income€ 2.303 billion (2012)

Net income €3.106 billion (2012)

Total assets €29.949 billion (2012)

Total equity €8.061 billion (2012)


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Employees 97,798 (2012)

Divisions

Mobile Solutions

Mobile Phones

Markets

Subsidiaries

Nokia Siemens Networks

(50.1%)

Navteq

Website Nokia.com

Nokia Corporation is a multinational communications and information

technology corporation founded in the United States that is headquartered in

Los Angeles, California, United States. Its principal products are mobile

telephones and portable IT devices. It also offers Internet services including

applications, games, music, media and messaging, and free-of-charge digital

map information and navigation services through its wholly owned subsidiary

Navteq. Nokia has a joint venture with Siemens, Nokia Siemens Networks,

which provides telecommunications network equipment and services.

THE NOKIA HOUSE, NOKIA'S HEAD OFFICE LOCATED BY THE GULF OF FINLAND IN KEILANIEMI,

ESPOO, WAS CONSTRUCTED BETWEEN 1995 AND 1997. IT IS THE WORKPLACE OF MORE THAN

1,000 NOKIA EMPLOYEES

At Nokia, They are committed to connecting people. They combine advanced

technology with personalized services that enable people to stay close to

what matters to them. Every day, more than 1.3 billion people connect to one

another with a Nokia device - from mobile phones to advanced smart phones

and high-performance mobile computers. Today, Nokia is integrating its


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devices with innovative services through Ovi (http://www.ovi.com/), including

music, maps, apps, email and more. Nokia's NAVTEQ is a leader in

comprehensive digital mapping and navigation services, while Nokia

Siemens Networks provides equipment, services and solutions for

communications networks globally.

Nokia has around 97,798 employees across 120 countries, sales in more than

150 countries and annual revenues of around €30 billion. It is the world's

second-largest mobile phone maker by 2012 unit sales (after Samsung), with

a global market share of 22.5% in the first quarter of that year. Nokia is a

public limited-liability company listed on the Helsinki Stock Exchange and

New York Stock Exchange. It is the world's 143rd-largest company measured

by 2011 revenues according to the Fortune Global 500.

Nokia was the world's largest vendor of mobile phones from 1998 to 2012.

However, over the past five years it has suffered a declining market share as

a result of the growing use of smart phones from other vendors, principally

the Apple iPhone and devices running on Google's Android operating system.

As a result, its share price has fallen from a high of US$40 in late 2007 to

under US$2 in mid-2012. Since February 2011, Nokia has had a strategic

partnership with Microsoft, as part of which all Nokia smart phones will

incorporate Microsoft's Windows Phone operating system (replacing

Symbian). Nokia unveiled its first Windows Phone handsets, the Lumia 710

and 800, in October 2011. After this move, sales were not impressive and

Nokia made 6-consecutive loss-making quarters from Q2 2011 to Q3 2012.

The Q4 2012 results saw Nokia return to profit generated mostly by Nokia

Siemens Network and helped by the sale of real-estate and the Vertu

business unit. Smartphone sales are still low with only 4.4 million Lumia and

2.2 Symbian sales and the smart devices business unit is still loss making

with a contribution of -264 million Euro to the total operating profit 439

million Euro.

THEIR VISION AND STRATEGY

Nokia’s mission is simple: Connecting People. Their goal is to build great

mobile products that enable billions of people worldwide to enjoy more of

what life has to offer. Their challenge is to achieve this in an increasingly

dynamic and competitive environment.


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Ideas, Energy, Excitement, Opportunities. In today's mobile world, it feels

like anything is possible - and that's what inspires them to get out of bed

every day.

FORWARD-LOOKINGSTATEMENTS

It should be noted that certain statements herein which are not historical

facts are forward-looking statements, including, without limitation, those

regarding:

A) The intention to form a strategic partnership with Microsoft to combine

complementary assets and expertise to form a global mobile ecosystem and

to adopt Windows Phone as their primary Smartphone platform, including the

expected plans and benefits of such partnership;

B) The timing and expected benefits of their new strategy, including

expected operational and financial benefits and targets as well as changes

in leadership and operation structure;

C) The timing of the deliveries of their products and services and their

combinations;

D) Their ability to develop, implement and commercialize new technologies,

products and services and their combinations;

E) Expectations regarding market developments and structural changes;

F) Expectations and targets regarding their industry volumes, market share,

prices, net sales and margins of products and services;

G) Expectations and targets regarding their operational priorities and results

of operations;

H) The outcome of pending and threatened litigation;

I) Expectations regarding the successful completion of acquisitions or

restructurings on a timely basis and their ability to achieve the financial and

operational targets set in connection with any such acquisition or

restructuring; and

J) Statements preceded by "believe," "expect," "anticipate," "foresee,"

"target," "estimate," "designed," "plans," "will" or similar expressions.

These statements are based on management's best assumptions and beliefs

in light of the information currently available to it. Because they involve risks

and uncertainties, actual results may differ materially from the results that

they currently expect.


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THE NEED FOR CHANGE

• Market changes (growth, competitors)

• Political & legal environment

• New business ownership (e.g. after an acquisition)

• New management or leadership (e.g. a new CEO)

• Economic conditions (e.g. downturn)

Identifying the need for cultural change is one thing – actually achieving it is

quite different! There is lots of evidence that changing a business culture is

one of the toughest management challenges.

CHANGES STILL NOW

ALWAYS ADAPTING

v Over the past 150 years, Nokia has evolved from a riverside paper mill

in south-western Finland to a global telecommunications leader

connecting over 1.3 billion people. During that time, we’ve made rubber

boots and car tyres. We’ve generated electricity.

We’ve even manufactured TVs. Changing with the times, disrupting the

status quo – it’s what we’ve always done. And we fully intend to keep doing

it.

THE STORY SO FAR

v In 1865, mining engineer Fredrik Idestam sets up his first wood pulp

mill at the Tammerkoski Rapids in south-western Finland.


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v A few years later he opens a second mill on the banks of the

Nokianvirta River, which inspires him to name his company Nokia Ab in

1871.

How apt that Nokia begins by making paper – one of the most influential

communications technologies in history.

THE GALOSHES REVOLUTION

v But in 1898, Eduard Polón founds Finnish Rubber Works, which later

becomes Nokia’s rubber business, making everything from galoshes to tyres.

Nokia rubber boots become a bona fide design classic, still on sale to this

day – though they no longer make them.

ELECTRONICS GO BOOM

v In 1912, Arvid Wickström sets up Finnish Cable Works, the foundation

of Nokia’s cable and electronics business.

v By the 1960s, Finnish Cable Works – already working closely with

Nokia Ab and Finnish Rubber Works – starts branching out into

electronics. In 1962, it makes its first electronic device in-house: a

pulse analyzer for use in nuclear power plants.

v In 1963, it starts developing radio telephones for the army and

emergency services – Nokia’s first foray into telecommunications. In

time, the company’s MikroMikko becomes the best known computer

brand in Finland. And by 1987, Nokia is the third largest TV

manufacturer in Europe.

THREE BECOME ONE

v Having been jointly owned since 1922, Nokia Ab, Finnish Cable Works

and Finnish Rubber Works officially merge in 1967. The new Nokia

Corporation has five businesses: rubber, cable, forestry, electronics

and power generation. But as the 1980s come into view, it’s an entirely

new industry that makes Nokia a household name around the

world.


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v By the late 1970s and early 1980s it seems everything – from Tom

Selleck’s moustache to JR Ewing’s list of enemies – is seriously big.

And as the mobile communications revolution starts to gather

momentum, the early handsets continue the trend.

The new Nokia Corporation is ideally placed to take a pioneering role in this

new industry, leading the way with some iconic – and by today’s standards,

very large – products.

THE MOBILE ERA BEGINS

v Nokia sets the ball rolling in 1979, creating radio telephone company

Mobira Oy as a joint venture with leading Finnish TV maker Salora.

1981 then sees the launch of the Nordic Mobile Telephone (NMT)

service, the world’s first international cellular network and the first to

allow international roaming.

v The NMT standard catches on fast and the mobile phone industry

begins to expand rapidly. In 1982, Nokia introduces the first car phone

– the Mobira Senator – to the network. That same year, the Nokia

DX200, the company’s first digital telephone switch, goes into

operation.

GOOD ENOUGH FOR GORBACHEV

v In 1984, Nokia launches the Mobira Talkman portable car phone.

Resembling a military field telephone, it’s a fairly cumbersome piece of

kit – but it’s a start.

v Then in 1987, Nokia introduces the Mobira Cityman, the first handheld

mobile phone for NMT networks. Despite weighing in at 800 grams and

a price tag of 24,000 Finnish Marks (around EUR 4,560), it goes on to

become a classic. The City man even earns a nickname, the “Gorba”,

after Soviet leader Mikhail Gorbachev is pictured using one to make a

call from Helsinki to his communications minister in Moscow.

Over the next decade, millions of consumers worldwide enjoy their very own

Gorbachev moment as the mobile revolution takes hold.

v In 1987, GSM (Global System for Mobile communications) is adopted as

the European standard for digital mobile technology. With its high-


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quality voice calls, international roaming and support for text

messages, GSM ignites a global mobile revolution.

As a key player in developing this new technology, Nokia is able to take full

advantage.

A NEW DIRECTION

v On July 1, 1991, Finnish Prime Minister Harri Holkeri makes the world’s

first GSM call, using Nokia equipment.

v And in 1992, Nokia launches its first digital handheld GSM phone, the

Nokia 1011.

That same year, new Nokia President and CEO Jorma Ollila make a crucial

strategic decision: to focus exclusively on manufacturing mobile phones and

telecommunications systems. Nokia’s rubber, cable and consumer

electronics divisions are gradually sold off.

NAME THAT TUNE

v In 1994, Nokia launches the 2100 series, the first phones to feature the

Nokia Tune ringtone. Based on Gran Vals, a classical guitar piece

composed by Francisco Tarrega in the 19th century, it is probably one

of the most frequently played pieces of music in the world. The Nokia

2100 series goes on to sell 20 million phones worldwide. Nokia’s target

had been 400,000.

v 1994 also sees the world’s first satellite call, made using a Nokia GSM

handset.

Hear Gran Vals, the inspiration for the Nokia Tune.

POINT TO BE NOTED

SNAKE BITES

v In 1997, everybody knows their Snake high score. An instant classic,

the addictive game is launched on the Nokia 6110 and by 2010 its

successors are available on an estimated 350 million mobile phones.


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ON TOP OF THE WORLD

v By 1998, Nokia is the world leader in mobile phones. The strategic

decision to focus on telecommunications, plus early investment in

GSM, has paid off.

v Between 1996 and 2001, Nokia’s turnover increases almost fivefold

from EUR 6.5 billion to EUR 31 billion.

And with the new millennium comes a host of new possibilities as the

internet goes mobile…

As the new millennium dawns, everything changes. New technology enables

the internet to go mobile, opening up a world of possibilities for mobile users.

No longer are phones just for phone calls.

MULTI-TASKING MOBILES

v In 1999, Nokia launches the Nokia 7110, a phone capable of

rudimentary web-based functions, including email. Then in November

2001 Nokia launches its first phone with a built-in camera, the Nokia

7650, and in September 2002 its first video capture phone, the Nokia

3650.

v However, it’s when Nokia launches its first 3G phone (third generation),

the Nokia 6650, in 2002 that things really take off. With 3G technology,

phones can now be used to browse the web, download music, watch

TV on the move, and more.

Mobiles will never be the same again.

ONE BILLION AND COUNTING

v In 2005, Nokia sells its billionth phone – a Nokia 1100 – in Nigeria, and

global mobile phone subscriptions pass 2 billion. Two years later,

Nokia is recognized as the 5th most valued brand in the world.

Things have come a long way since Fredrik Idestam opened his paper mill.


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TREADING LIGHTLY

v For years, Nokia has been working to make its business practices and

products as environmentally and socially responsible as possible –

from creating eco friendly handsets and establishing phone recycling

schemes to bringing the benefits of mobility to emerging markets. This

commitment to sustainability is recognized in a number of prestigious

rankings. For example, in 2009 and 2010, the Dow Jones Indexes ranks

Nokia as the world’s most sustainable technology company.

In contrast, Nokia’s position in the mobile market faces its toughest

challenge to date as competition intensifies in the burgeoning Smartphone

segment. Once again, the company’s ability to adapt is put to the test…

v By 2010, having dominated the mobile world for over a decade, Nokia

no longer has things all its own way. In the all-important Smartphone

market, competitors such as the iPhone and Android-based devices

now pose a serious challenge. Clearly, it’s time for a rethink…

The good news is this is nothing new for Nokia. Adapting and transforming

the business, finding innovative ideas and solutions, rolling up their sleeves

and getting on with things: it’s in the company’s DNA.

A FRESH FACE AT THE HELM

v In September 2010, Nokia appoints Stephen Elop as President and

CEO. Formerly head of Microsoft’s business division, following roles at

Juniper Networks and Adobe Systems Inc., Elop has a strong software

background and proven record in change management.

A MEETING OF MINDS

v In February 2011, Nokia announces it is joining forces with Microsoft to

strengthen its position in the Smartphone market. The strategic

partnership sees Nokia smart phones adopting the new Windows 7

operating system, with the Symbian platform gradually being sidelined.

The goal is to establish a third ecosystem to rival iOS and Android.


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“The industry has shifted from a battle of devices to a war of ecosystems.”

Stephen Elop, President and CEO, Nokia

LET BATTLE COMMENCE

v Nokia launches its first Nokia with Windows phones, the Nokia Lumia

800 and the Nokia Lumia 710, in October 2011

KEY CHANGES OF NOKIA

• Finnish conglomerate turned itself into the world’s leading mobile

phone company in the 1990s. So Nokia has already been through one

(successful) change programme, turning itself from an unfocused

conglomerate into a focused mobile phone producer. Can it change

again?

• Global market leader in mobile phones - but not smart phones.

• Still profitable, but revenues under pressure.

• September 2010: Appointed new CEO - Stephen Elop - to drive strategic

change.

PRESIDENT AND CEO OF NOKIA CORPORATION. MEMBER OF THE BOARD OF DIRECTORS

OF NOKIA CORPORATION. NOKIA LEADERSHIP TEAM MEMBER AND CHAIRMAN SINCE

2010. JOINED NOKIA 2010

• February 2011 - Elop issued the famous “burning platform” memo

bluntly explaining the serious strategic challenges facing Nokia.


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• Elop outlined results of his strategic review on Feb 11, 2011 - making it

clear that Nokia had to undergo a substantial programme of change.

• Elop announced a strategic partnership with Microsoft in March 2011

to jointly develop smart phones using the Windows mobile platform

ditching Nokia’s previous investment in its homegrown Symbian

platform..

• Elop has swept away many elements of Nokia’s previous

organizational structure - a significant process of delay ring.

• Elop has refocused the business on leadership (managers taking

decisions and responsibility) and markets (innovation driven by people

competing in key mobile phone segments).

• Decision-making has been delegated to local/national teams rather

than relying on decisions by an overly-centralized senior management

team.

• Goals and incentives for the senior leadership team are now more

transparent.

• The new strategy brings clarity and a sense of direction to Nokia - but

will it be enough to achieve a successful turnaround?

• During 2012, Nokia has continued to pursue a retrenchment strategy in

the face of rapid declines in sales.

• February 2012, Nokia announced it was laying off 4000 employees to

move manufacturing from Europe and Mexico to Asia.

• March 2012, Nokia announced it was laying off 1000 employees from

its Salo, Finland factory to focus on software.

• June 2012: 10,000 further job losses announced and the closure of

facilities in Finland, Germany and Canada. Job cuts amount to a fifth of

the total employees remaining at Nokia.

• By June 2012, Nokia had lost more than $88bn in market value since

Apple introduced the iPhone in 2007.

CHANGE IN LOGOS

• Nokia Company logo. Founded in Tampere in 1865, incorporated in

Nokia in 1871.


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• Nokia Company logo from 1965.

• The brand logo of Finnish Rubber Works, founded in Helsinki in 1898.

Logo from 1965 to 1966.

• The Nokia Corporation "arrows" logo, used before the "Connecting

People" logo. Used from 1967 until 1991.

• Nokia introduced its "Connecting People" advertising slogan, coined by

Ove Strandberg and used since 1992.

• This earlier version of the slogan used Times Roman SC (Small Caps)

font.

• Nokia's current logo used since 2006, with the redesigned

"Connecting People" slogan.

• This slogan originally used Nokia's proprietary 'Nokia Sans' font,

designed by Erik Spiekermann. This was replaced in 2011 with the

'Nokia Pure' font designed by Dalton Maag.


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• The Nokia Siemens Networks logo since 2007

• Since 2010

CHANGE IN PHONE MODEL

• REDUCTION IN SIZE OF NOKIA MOBILE PHONES


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• THE NOKIA 3310 SOLD BETWEEN 2000 AND 2003,

IS ARGUABLY ONE OF THE BEST KNOWN MOBILE

PHONES

• THE NOKIA N95 SMARTPHONE RELEASED IN MARCH 2007 WAS HUGELY POPULAR

IN ITS DAY. IT IS CONSIDERED AS ONE OF THE BEST-KNOWN SYMBIAN SMARTPHONES.

IT CONTAINS A 5 MEGAPIXEL CAMERA AND SLIDING MULTIMEDIA KEYS. (S60 3RD)

• THE NOKIA N97 SMARTPHONE RELEASED IN JUNE 2009 CONTAINS A SLIDING

QWERTY. (S60 5TH)


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• THE NOKIA N8 SMARTPHONE RELEASED IN SEPTEMBER 2010 IS THE WORLD’S FIRST

SYMBIAN^3 DEVICE, AND THE FIRST NOKIA SMARTPHONE TO FEATURE A 12

MEGAPIXEL AUTOFOCUS LENS. (SYMBIAN^3)

• THE NOKIA 808 PUREVIEW, RELEASED IN FEBRUARY 2012 AS THE LAST SYMBIAN

SMARTPHONE, FEATURES A 41 MEGAPIXEL CAMERA AND A 1.3 GHZ CPU.

• THE NOKIA LUMIA 920, NOKIA'S 2013 CURRENT FLAGSHIP DEVICE.


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• THE NOKIA E55 FROM THE BUSINESS SEGMENT OF THE ESERIES RANGE

• THE NOKIA N900, A MAEMO 5 LINUX BASED MOBILE INTERNET DEVICE AND

TOUCHSCREEN SMARTPHONE FROM NOKIA'S NSERIES PORTFOLIO.

• THE NOKIA LUMIA 920 USING INDUCTIVE CHARGING

STRATEGIC CHANGES

v Build a new winning mobile ecosystem in partnership with Microsoft.


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v Bring the next billion online in developing growth markets.

v Invest in next-generation disruptive technologies.

v Increase our focus on speed, results and accountability.

OPERATIONAL CHANGES

Balancing its investment priorities, Nokia plans to rescale the company by

making additional reductions in Devices & Services. Nokia plans to pursue a

range of planned measures including:

• Reductions within certain research and development projects,

resulting in the planned closure of its facilities in Ulm, Germany and

Burnaby, Canada;

• Consolidation of certain manufacturing operations, resulting in the

planned closure of its manufacturing facility in Salo, Finland. Research

and Development efforts in Salo to continue;

• Focusing of marketing and sales activities, including prioritizing key

markets;

• Streamlining of IT, corporate and support functions; and

• Reductions related to non-core assets, including possible divestments.

Nokia adopted its current operational structure during 2011 and has three

businesses: Devices & Services, Location & Commerce and Nokia Siemens

Networks. As of April 1, 2011, Nokia’s Devices & Services business includes

two operating and reportable segments – Smart Devices, which focuses on

Smart phones and Mobile Phones, which focuses on mass market feature

phones – as well as Devices & Services Other. Devices & Services Other

includes net sales of Nokia’s luxury phone business Virtue, spare parts and

related cost of sales and operating expenses, as well as intellectual property

related royalty income and common research and development expenses.

Location & Commerce focuses on the development of location-based

services and local commerce. NAVTEQ, which Nokia acquired in July 2008,

was a separate reportable segment of Nokia from the third quarter 2008 until

the end of the third quarter of 2011. As of October 1, 2011, the Location &

Commerce business was formed as a new operating and reportable segment

by combining NAVTEQ and Nokia’s Devices & Services social location

services operations. For IFRS financial reporting purposes, Nokia has four

operating and reportable segments: Smart Devices and Mobile Phones within

Devices & Services, Location & Commerce and Nokia Siemens Networks.

Prior period results have been regrouped and recast for comparability


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purposes according to the new reporting format that became effective on

April 1, 2011 and October 1, 2011, respectively.

As a result of the planned changes announcement, Nokia plans to reduce up

to 10,000 positions globally by the end of 2013. Nokia is beginning the

process of engaging with employee representatives in accordance with

country-specific legal requirements.

According to Elop ----------

"These planned reductions are a difficult consequence of the intended

actions they believe we must take to ensure Nokia's long-term competitive

strength, we do not make plans that may impact our employees lightly, and

as a company we will work tirelessly to ensure that those at risk are offered

the support, options and advice necessary to find new opportunities."

Taking into account these planned measures the company now targets to

reduce its Devices & Services non-IFRS operating expenses to an annualized

run rate of approximately EUR 3.0 billion by the end of 2013. This is an

update to Nokia's target to reduce Devices & Services non-IFRS operating

expenses by more than EUR 1.0 billion for the full year 2013, compared to the

full year 2010 Devices & Services non-IFRS operating expenses of EUR 5.35

billion. This means that in addition to the already achieved annualized run

rate saving of approximately EUR 700 million at the end of first quarter 2012,

the company targets to implement approximately EUR 1.6 billion of

additional cost reductions by the end of 2013.

As part of these planned changes, Nokia will closely assess the future of

certain non-core assets.

DRIVING CHANGE

“Our new strategy is supported by changes in Nokia’s leadership, operational

structure and approach. The renewed governance will expedite decision-

making and improve time-to-market of products and innovations, placing a

heavy focus on results, speed and accountability.

Nokia’s strategy is about investing in and ensuring Nokia’s future. “I have

incredible optimism,” said Stephen Elop, Nokia President and CEO, “because

I can see fresh opportunity for us to innovate, to differentiate, to build great

mobile products, like never before, and at a speed that will surpass what we

have accomplished in the past.


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ISSUES FOR FAILURE

1. Is Elop’s strategic change too late? Will Apple and Google (Android)

have gained too much market share before Nokia can make a success

of its strategic partnership with Microsoft

2. Elop’s background - he is the first non-Finn to run the company in its

145 years of existence (a source of cultural conflict, or an advantage?).

3. Is the crisis at Nokia sufficiently serious / grave to ensure that all

necessary changes (including to the firm’s culture) are made in time?

4. Whether definitive agreements can be entered into with Microsoft for

the potential partnership in a timely manner, or at all, and on terms

beneficial to them.

5. Their ability to continue to innovate and maintain the vibrancy of their

Symbian-based smart phones during the negotiation of the

Microsoft partnership and thereafter.

6. The negotiation and implementation of the Microsoft partnership will

require significant time, attention and resources of their senior

management and others within the company potentially diverting their

attention from other aspects of their business.

7. In choosing to negotiate a partnership with Microsoft and utilize

Windows Phone as their primary Smartphone platform, they may forego

more competitive alternatives achieving greater acceptance and

profitability in the Smartphone market.

8. The Microsoft Windows Phone Smartphone platform may not be

preferred by application developers, content providers and other

partners impairing their ability to build a sufficiently competitive

ecosystem for their smart phones.

9. The Microsoft partnership may not achieve the stated goal of

producing smart phones which are differentiated from those of their


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competitors and preferred by their customers and consumers in the

expected timeframe, or at all.

10. Their ability to change their business model, way of working and

culture sufficiently to work effectively and efficiently with Microsoft in

order to realize the stated benefits of the partnership in a timely

manner, or at all.

11. Their ability to effectively and smoothly implement their new

leadership and operational structure and to realize the anticipated

benefits in a timely manner.

12. The implementation of the Microsoft partnership and the new

operational structure may cause disruption and dissatisfaction among

employees potentially reducing focus and productivity in some or all

areas of their business; as well as the risk factors specified on pages

11-32 of Nokia's annual report Form 20-F for the year ended December

31, 2009 under Item 3D.

Risk Factors ------- Other unknown or unpredictable factors or underlying

assumptions subsequently proving to be incorrect could cause actual results

to differ materially from those in the forward-looking statements. Nokia does

not undertake any obligation to publicly update or revise forward-looking

statements, whether as a result of new information, future events or

otherwise, except to the extent legally required.

BARRIERS TO CHANGE

Barriers to Change

Traditional and set ways of doing

things

Fear

Loyalty to existing relationships

Failure to accept the need for change

Insecurity

Preference for the existing

arrangements

Different person ambitions

Loss of power

Loss of skills

Loss of income

The unknown

Inability to perform as well in the new

situation

Break up of work groups


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CHALLENGES FOR CHANGE MANAGEMENT

The nature of the change, coupled with the complexity of the corporate

services implementation, give rise to a range of change management

challenges, including:

• Lack of visible sponsorship. The change is not perceived to be

important or even happening.

• Unclear, ineffective decision-making process. Reduced pace of

implementation; additional cost: time + rework; lack of vision, direction

and focus. Lack of buy-in; other priorities will be made.

• The right people aren't involved. Delayed decision making; no sense of

urgency; rework required by additional resources.

• Failure to remove organizational barriers. Project delays and could

ultimately fail.

• Not anticipating and pro-actively managing people issues. Increased

resistance; attrition; employee relations issues.

• Skills for new/changed jobs or roles are assumed and not

tested/assessed. Training effort insufficient additional effort

required/reduced service level; unmanaged staff expectations.

• Planned organizational rationalization is not achieved. Staffs are

retained without a real need.

• Finance/HR resistant to "letting go" of certain current responsibilities

which may in future be no longer theirs.


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• Reluctance to change behavior. "Temporary" double effort; benefits

aren't reached (as quickly). Underestimating the time and effort

required to "make the change stick."

• Lack of baseline/metrics/system to measure progress (how far have we

got, how far we still need to go?). No clear sense of how much has

been achieved; lack of momentum; project fatigue.

FAIL TO CHANGE IN NOKIA

• New leadership (internal causes of change): an outsider arrives to

shake up the way Nokia does business!

• Retrenchment (closing down Symbian): followed by strategic

partnership with Microsoft (another major internal cause of change)

• Strategic decision-making / corporate planning: Nokia’s decision-

making had become ineffective - too slow; inconsistent

• Technology (Smartphone ecosystems) as a source of change:

consumers no longer buying a handset; they are buying apps that run

on phones

• Culture as a constraint on change management: will Nokia’s

conservative, bureaucratic culture get in the way of rapid, fundamental

change?

• Changes in strategic direction: the change from a focus on products

(phones) to software applications (phone “ecosystems)

• Impact of competition from emerging markets: the effect of faster,

cheaper competitors

• Globalization of markets: Nokia’s new objective of supply “the next 1

billion mobile phone handsets” resulting from rapid demand growth in

emerging economies

• Business and the competitive environment: emergence of stronger,

more successful competitors (Apple, Samsung, RIM, Google, LG)

HOW TO MAKE CHANGE SUCCESSFUL?

Many of these may seem generic, but they have implications for managing a

corporate services initiative.

These include:

• Managing the effective planning of the potential redeployment,

relocation and release of staff.


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• Scheduling change to minimize the impact on the business units to

enable maintenance of business as usual.

• Ensuring effective transition of individual business units to a new

structure.

• Engaging with impacted staff to involve them in the process of

transition.

• Managing effective two-way communication with all stakeholders

during the change.

• Embedding the cultural change and ways of working associated with a

shift to a more customer-focused support service.

CONCLUSION

The prevailing culture in a business is often challenged by change. Change

may, in fact, be a requirement in order to address:

• Improved business performance

• Declining profits and sales

• Inadequate returns on investment

• Low quality or standards of customer service

PROCESS OF INTEGRATION

• Identify different employee who require training.

• Conduct training needs assessment and skill gap analysis.

• Document requirements for the training team.

• Training development schedule.

• Customized Coaching Plan.

• Prepare managers and supervisors to coach their employees through the

change.

Management

• Initiation

• Planning

• Executing

• Controlling


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• Closing

•

Reinforcing Changes

• Managing Change-Planning

• Managing Change-Execute

• Preparing for Change

• Closing/Monitoring Change

Fig: implementation of successful factors


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LIMITATIONS

As stated in the above, the conclusions of this study cannot be generalized

to all industries or corporate sectors & all the data collected from individual

websites of given organization. So the results are restricted to the secondary

data only

REFERENCE

v Organization behavior of Stephen P. Robbins, Timothy A. Judge, Seema

Sanghi, 13th edition.

v Lee, Kenneth (1998). Trouncing the Dow: A value-based method for

making huge profits. McGraw-Hill.

v "Materials and substances". Nokia Corporation.

http://www.nokia.com/environment/we-create/materials-and-

substances. Retrieved 12 August 2010.


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v "Eco declarations". Nokia Corporation.

http://www.nokia.com/environment/we-create/devices-and-

accessories/eco-declarations. Retrieved 27 July 2009.

v "Nokia Remade Concept Phone goes Green". Mobiletor. 9 April 2008.

http://www.mobiletor.com/2008/04/09/nokia-remade-concept-phone-

goes-green/. Retrieved 14 May 2008.

v "Provision of Lawful Intercept capability in Iran" (Press release). Nokia

Siemens Networks. 22 June 2009.

http://www.nokiasiemensnetworks.com/global/Press/Press+releases/ne

ws-archive/Provision+of+Lawful+Intercept+capability+in+Iran.htm.

Retrieved 14 July 2009.

v Kamali Dehghan, Saeed (14 July 2009). "Iranian consumers boycott

Nokia for 'collaboration'". The Guardian (London: Guardian News and

Media Limited). http://www.guardian.co.uk/world/2009/jul/14/nokia-

boycott-iran-election-protests. Retrieved 27 July 2009.

v http://www.hs.fi/talous/Lex+Nokian+käytöstä+ilmoitettiin+ensimmäistä

+kertaa/a1361762941046 .

v Virki, Tarmo (18 January 2010). "SCENARIOS-What lies ahead in Nokia

vs Apple legal battle". Reuters.

http://www.reuters.com/article/idUSLDE60H05R20100118?type=market

sNews. Retrieved 25 January 2010.

v "The war of the Smartphones: Nokia's new patent suit against Apple".

Snartphone Reviews. 6 January 2010. http://pda-phone-

reviews.in/latest-news/nokias-new-patent-suit-against-apple/. Retrieved

25 January 2010.

v "Nokia's Patent Settlement With Apple Won't Help Much". 14 June

2011. http://www.informationweek.com/news/personal-tech/smart-

phones/230600172. Retrieved 29 June 2011.

v Nokia: Is A Slimmed-Down, More Agile Business Starting to Sing? [25

Feb 2013].


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v Nokia and Strategic Change - the Essential A2 Business Case [14 Jun

2012].


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Documents

Change Management in Nokia