change management case study nokia

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:

External 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.

Internal factors:

• 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.

Final Words 

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.

About The Author

Tahir Abbas

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Nokia Change Management Case Study

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Company background

Factors influencing organizational change, how organizational change unfolded, reference list.

Nokia Corporation is an international communication firm whose headquarters are situated in Espoo. The company is popular for manufacturing mobile phones. In addition, the company manufactures other consumer products like mobile networks, set-top boxes, and apparatus for broadband internet.

Moreover, Nokia Corporation supplies the motor industry with car speakers (Kautto 2009). Currently, the company dominates the mobile phone market with a market share of over 38.6 percent. In 2010, Nokia’s financial income was $2.6 billions. Engineer Fredrik Idestam established the company in 1965.

During this period, the company dealt with paper products, which it exported to Great Britain and Russia. In early 20 th century, the company concentrated on manufacture of wheelchair frames and rubber boots. Even today, some brands of bicycle tires bear the company’s name.

The modern Nokia Company was established in 1967. The management brought the former paper mill section and the rubber works together to establish a technological company. In 1981, a mobile network was launched in Scandinavian, prompting Nokia Corporation to manufacture its first car phones.

In 1987, the company manufactured its first mobile phone. At the same time, Nokia Corporation helped Finland, Germany, China, Poland, Italy, and Mexico to repair network for their entertainment industries (Ropponen 2008). In 2010, Stephen Elop joined the company’s management team.

Nokia Corporation merged with Siemens to form one of the biggest telecommunication networks dubbed Nokia Siemens Networks.

Currently, Nokia Corporation is among the companies that manufacture quality smart phones globally. The company continues coming up with novel inventions in line with the emerging technologies.

In 2004, Nokia Company started restructuring its operations as a way to satisfy customer aspirations. The company came up with a program dubbed “the Nokia Booster program”, which aimed at bringing together online customers and the company’s strategic development (Schienstock 2004).

A number of factors contributed to the restructuring process. Among them include desire to, attain global coverage, embrace employee empowerment, promote co-creation, and support the community.

One of the key factors that prompted Nokia Corporation to come up with the Nokia Booster program was the pressure to exploit the global market. The company was in need for establishing a single access point through which it could communicate with all its target consumers, and employees worldwide.

Prior to the program, the company relied on a communication structure where information was conveyed from the top management, down to the employees through a number of senior staff (Schienstock 2004).

Such a communication structure was slow. Consequently, the company required a communication structure that could keep pace with the contemporary marketplace.

To enhance its performance, Nokia Corporation required having a platform through which it could share its agendas with employees. Previously, employees made limited contribution to organizational policies (Krell 2000).

To make sure that employees backed the company’s agendas, Nokia Corporation had to come up with mechanisms that would captivate the employees. The company learnt that employees could be active if allowed to manage debates that fascinated them.

To achieve this, the company assigned different employees to different agendas and requested them to share the agenda with the public. This helped the company to gather information from the public, therefore, aligning its operations with customer needs.

The program helped the company to reach its target customers in remote areas where it was hard for employees to reach (Nonaka & Teece 2001).

Through the program, customers shared their views about the company and changes they wish the company to make, thus, spurring employee creativity. Indeed, the program led to numerous innovations in the company.

Management team in Nokia Corporation maintained that, for the company to perform, it required exploiting the vast experience and knowledge; its employees possessed. Nevertheless, it could hardly achieve this without fostering cooperation between the employees.

Senior managers came up with ideas concerning the innovations they would like to introduce into the company (Masalin 2003). The company then disseminated the ideas to employees and customers through the Nokia Booster program.

The program helped the company to establish a platform by which it could get opinions from all the stakeholders, therefore, coming up with products that meet all the desired specifications. Besides, the company needed to be sure that its employees are aware of the value of the projects the company initiates.

Nokia Corporation could achieve this by involving the employees in formulation and implementation of the projects (Masalin 2003). The Nokia Booster program acted as an avenue through which the company fostered cooperation between employees in different departments.

In a span of six months, the company had started witnessing inventions as employees seek to enhance organizational operations. In addition, employees shared ideas on changes they considered unfeasible, thus, helping the company pursue feasible goals only (Masalin 2003).

In 2004, Nokia Corporation made it public that it intended to begin organizational change, which aimed at helping the company meet changing consumer needs. The company reduced the number of its business units to four. It implemented the entire change within one week.

To implement the change, the company required a hundred employees taking new jobs. All the other employees retained their original jobs. Nokia Corporation reconstructed its initial modular teams (Ropponen 2008).

The company established a common platform through which all employees shared their ideas to help the company to address customer ambitions.

Ropponen posits, “The genesis of the Booster Programme, launched in late 2008, could be traced to the wide involvement of the strategy-planning process and to the flexibility and project orientation of the modular structure” (2008, p. 163).

The program started with a design team led by Ian Gee and Maximilian Kammerer. The design team argued that the traditional system of communication made it hard for the company to achieve its goals. Hence, the company required a platform that would help it involve all its stakeholders in pursuing organizational goals.

The design team resolved to organize a workshop “with team leaders followed by the much broader involvement of the whole community through an online social network community” (Masalin 2003, p. 69).

The corporation organized for workshops in different cities across the globe. At least a hundred change leaders participated in every workshop.

After the workshops, participants went back to their organizations, where they recruited employees into the adopted change processes. Online community took the centre stage in steering the changes.

This mishmash of traditional communication mechanisms and novel forms of relations established an upsurge of fervor (Masalin 2003). The Booster led to open discourse between frontline workers, community members, and managers about challenges affecting the company.

The online community furnished employees with information concerning potential changes that could benefit the company, therefore, helping them initiate innovations.

Kautto, P 2009, ‘Nokia as an environmental policy actor: Evolution of collaborative corporate political activity in a multinational company’, Journal of Common Market Studies , vol. 47 no. 1, pp. 103-125.

Krell, T 2000, ‘Organizational longevity and technological change’, Journal of Organizational Change Management , vol. 13 no. 1, pp. 8 – 14.

Masalin, L 2003, ‘Nokia leads change through continuous learning’, Academy of Management Learning & Education , vol. 2 no. 1, pp. 68-72.

Nonaka, I & Teece, D 2001, Managing Industrial Knowledge: Creation, Transfer and Utilization , SAGE Publications Ltd, London.

Ropponen, T 2008, ‘The Nokia story of using action learning’, Action Learning: Research and Practice , vol. 5 no. 2, pp. 161-165.

Schienstock, G 2004, Embracing the knowledge economy: the dynamic transformation of the Finnish Innovation System , Edward Elgar Publishing, Northampton.

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Five Case Studies of Transformation Excellence

November 03, 2014  By  Lars Fæste ,  Jim Hemerling ,  Perry Keenan , and  Martin Reeves

In a business environment characterized by greater volatility and more frequent disruptions, companies face a clear imperative: they must transform or fall behind. Yet most transformation efforts are highly complex initiatives that take years to implement. As a result, most fall short of their intended targets—in value, timing, or both. Based on client experience, The Boston Consulting Group has developed an approach to transformation that flips the odds in a company’s favor. What does that look like in the real world? Here are five company examples that show successful transformations, across a range of industries and locations.

VF’s Growth Transformation Creates Strong Value for Investors

Value creation is a powerful lens for identifying the initiatives that will have the greatest impact on a company’s transformation agenda and for understanding the potential value of the overall program for shareholders.

VF offers a compelling example of a company using a sharp focus on value creation to chart its transformation course. In the early 2000s, VF was a good company with strong management but limited organic growth. Its “jeanswear” and intimate-apparel businesses, although responsible for 80 percent of the company’s revenues, were mature, low-gross-margin segments. And the company’s cost-cutting initiatives were delivering diminishing returns. VF’s top line was essentially flat, at about $5 billion in annual revenues, with an unclear path to future growth. VF’s value creation had been driven by cost discipline and manufacturing efficiency, yet, to the frustration of management, VF had a lower valuation multiple than most of its peers.

With BCG’s help, VF assessed its options and identified key levers to drive stronger and more-sustainable value creation. The result was a multiyear transformation comprising four components:

• A Strong Commitment to Value Creation as the Company’s Focus. Initially, VF cut back its growth guidance to signal to investors that it would not pursue growth opportunities at the expense of profitability. And as a sign of management’s commitment to balanced value creation, the company increased its dividend by 90 percent.
• Relentless Cost Management. VF built on its long-known operational excellence to develop an operating model focused on leveraging scale and synergies across its businesses through initiatives in sourcing, supply chain processes, and offshoring.
• A Major Transformation of the Portfolio. To help fund its journey, VF divested product lines worth about $1 billion in revenues, including its namesake intimate-apparel business. It used those resources to acquire nearly $2 billion worth of higher-growth, higher-margin brands, such as Vans, Nautica, and Reef. Overall, this shifted the balance of its portfolio from 70 percent low-growth heritage brands to 65 percent higher-growth lifestyle brands.
• The Creation of a High-Performance Culture. VF has created an ownership mind-set in its management ranks. More than 200 managers across all key businesses and regions received training in the underlying principles of value creation, and the performance of every brand and business is assessed in terms of its value contribution. In addition, VF strengthened its management bench through a dedicated talent-management program and selective high-profile hires. (For an illustration of VF’s transformation roadmap, see the exhibit.)

The results of VF’s TSR-led transformation are apparent. 1 1 For a detailed description of the VF journey, see the 2013 Value Creators Report, Unlocking New Sources of Value Creation , BCG report, September 2013. Notes: 1 For a detailed description of the VF journey, see the 2013 Value Creators Report, Unlocking New Sources of Value Creation , BCG report, September 2013. The company’s revenues have grown from $7 billion in 2008 to more than $11 billion in 2013 (and revenues are projected to top $17 billion by 2017). At the same time, profitability has improved substantially, highlighted by a gross margin of 48 percent as of mid-2014. The company’s stock price quadrupled from $15 per share in 2005 to more than $65 per share in September 2014, while paying about 2 percent a year in dividends. As a result, the company has ranked in the top quintile of the S&P 500 in terms of TSR over the past ten years.

A Consumer-Packaged-Goods Company Uses Several Levers to Fund Its Transformation Journey

A leading consumer-packaged-goods (CPG) player was struggling to respond to challenging market dynamics, particularly in the value-based segments and at the price points where it was strongest. The near- and medium-term forecasts looked even worse, with likely contractions in sales volume and potentially even in revenues. A comprehensive transformation effort was needed.

To fund the journey, the company looked at several cost-reduction initiatives, including logistics. Previously, the company had worked with a large number of logistics providers, causing it to miss out on scale efficiencies.

To improve, it bundled all transportation spending, across the entire network (both inbound to production facilities and out-bound to its various distribution channels), and opened it to bidding through a request-for-proposal process. As a result, the company was able to save 10 percent on logistics in the first 12 months—a very fast gain for what is essentially a commodity service.

Similarly, the company addressed its marketing-agency spending. A benchmark analysis revealed that the company had been paying rates well above the market average and getting fewer hours per full-time equivalent each year than the market standard. By getting both rates and hours in line, the company managed to save more than 10 percent on its agency spending—and those savings were immediately reinvested to enable the launch of what became a highly successful brand.

Next, the company pivoted to growth mode in order to win in the medium term. The measure with the biggest impact was pricing. The company operates in a category that is highly segmented across product lines and highly localized. Products that sell well in one region often do poorly in a neighboring state. Accordingly, it sought to de-average its pricing approach across locations, brands, and pack sizes, driving a 2 percent increase in EBIT.

Similarly, it analyzed trade promotion effectiveness by gathering and compiling data on the roughly 150,000 promotions that the company had run across channels, locations, brands, and pack sizes. The result was a 2 terabyte database tracking the historical performance of all promotions.

Using that information, the company could make smarter decisions about which promotions should be scrapped, which should be tweaked, and which should merit a greater push. The result was another 2 percent increase in EBIT. Critically, this was a clear capability that the company built up internally, with the objective of continually strengthening its trade-promotion performance over time, and that has continued to pay annual dividends.

Finally, the company launched a significant initiative in targeted distribution. Before the transformation, the company’s distributors made decisions regarding product stocking in independent retail locations that were largely intuitive. To improve its distribution, the company leveraged big data to analyze historical sales performance for segments, brands, and individual SKUs within a roughly ten-mile radius of that retail location. On the basis of that analysis, the company was able to identify the five SKUs likely to sell best that were currently not in a particular store. The company put this tool on a mobile platform and is in the process of rolling it out to the distributor base. (Currently, approximately 60 percent of distributors, representing about 80 percent of sales volume, are rolling it out.) Without any changes to the product lineup, that measure has driven a 4 percent jump in gross sales.

Throughout the process, management had a strong change-management effort in place. For example, senior leaders communicated the goals of the transformation to employees through town hall meetings. Cognizant of how stressful transformations can be for employees—particularly during the early efforts to fund the journey, which often emphasize cost reductions—the company aggressively talked about how those savings were being reinvested into the business to drive growth (for example, investments into the most effective trade promotions and the brands that showed the greatest sales-growth potential).

In the aggregate, the transformation led to a much stronger EBIT performance, with increases of nearly $100 million in fiscal 2013 and far more anticipated in 2014 and 2015. The company’s premium products now make up a much bigger part of the portfolio. And the company is better positioned to compete in its market.

A Leading Bank Uses a Lean Approach to Transform Its Target Operating Model

A leading bank in Europe is in the process of a multiyear transformation of its operating model. Prior to this effort, a benchmarking analysis found that the bank was lagging behind its peers in several aspects. Branch employees handled fewer customers and sold fewer new products, and back-office processing times for new products were slow. Customer feedback was poor, and rework rates were high, especially at the interface between the front and back offices. Activities that could have been managed centrally were handled at local levels, increasing complexity and cost. Harmonization across borders—albeit a challenge given that the bank operates in many countries—was limited. However, the benchmark also highlighted many strengths that provided a basis for further improvement, such as common platforms and efficient product-administration processes.

To address the gaps, the company set the design principles for a target operating model for its operations and launched a lean program to get there. Using an end-to-end process approach, all the bank’s activities were broken down into roughly 250 processes, covering everything that a customer could potentially experience. Each process was then optimized from end to end using lean tools. This approach breaks down silos and increases collaboration and transparency across both functions and organization layers.

Employees from different functions took an active role in the process improvements, participating in employee workshops in which they analyzed processes from the perspective of the customer. For a mortgage, the process was broken down into discrete steps, from the moment the customer walks into a branch or goes to the company website, until the house has changed owners. In the front office, the system was improved to strengthen management, including clear performance targets, preparation of branch managers for coaching roles, and training in root-cause problem solving. This new way of working and approaching problems has directly boosted both productivity and morale.

The bank is making sizable gains in performance as the program rolls through the organization. For example, front-office processing time for a mortgage has decreased by 33 percent and the bank can get a final answer to customers 36 percent faster. The call centers had a significant increase in first-call resolution. Even more important, customer satisfaction scores are increasing, and rework rates have been halved. For each process the bank revamps, it achieves a consistent 15 to 25 percent increase in productivity.

And the bank isn’t done yet. It is focusing on permanently embedding a change mind-set into the organization so that continuous improvement becomes the norm. This change capability will be essential as the bank continues on its transformation journey.

A German Health Insurer Transforms Itself to Better Serve Customers

Barmer GEK, Germany’s largest public health insurer, has a successful history spanning 130 years and has been named one of the top 100 brands in Germany. When its new CEO, Dr. Christoph Straub, took office in 2011, he quickly realized the need for action despite the company’s relatively good financial health. The company was still dealing with the postmerger integration of Barmer and GEK in 2010 and needed to adapt to a fast-changing and increasingly competitive market. It was losing ground to competitors in both market share and key financial benchmarks. Barmer GEK was suffering from overhead structures that kept it from delivering market-leading customer service and being cost efficient, even as competitors were improving their service offerings in a market where prices are fixed. Facing this fundamental challenge, Barmer GEK decided to launch a major transformation effort.

The goal of the transformation was to fundamentally improve the customer experience, with customer satisfaction as a benchmark of success. At the same time, Barmer GEK needed to improve its cost position and make tough choices to align its operations to better meet customer needs. As part of the first step in the transformation, the company launched a delayering program that streamlined management layers, leading to significant savings and notable side benefits including enhanced accountability, better decision making, and an increased customer focus. Delayering laid the path to win in the medium term through fundamental changes to the company’s business and operating model in order to set up the company for long-term success.

The company launched ambitious efforts to change the way things were traditionally done:

• A Better Client-Service Model. Barmer GEK is reducing the number of its branches by 50 percent, while transitioning to larger and more attractive service centers throughout Germany. More than 90 percent of customers will still be able to reach a service center within 20 minutes. To reach rural areas, mobile branches that can visit homes were created.
• Improved Customer Access. Because Barmer GEK wanted to make it easier for customers to access the company, it invested significantly in online services and full-service call centers. This led to a direct reduction in the number of customers who need to visit branches while maintaining high levels of customer satisfaction.
• Organization Simplification. A pillar of Barmer GEK’s transformation is the centralization and specialization of claim processing. By moving from 80 regional hubs to 40 specialized processing centers, the company is now using specialized administrators—who are more effective and efficient than under the old staffing model—and increased sharing of best practices.

Although Barmer GEK has strategically reduced its workforce in some areas—through proven concepts such as specialization and centralization of core processes—it has invested heavily in areas that are aligned with delivering value to the customer, increasing the number of customer-facing employees across the board. These changes have made Barmer GEK competitive on cost, with expected annual savings exceeding €300 million, as the company continues on its journey to deliver exceptional value to customers. Beyond being described in the German press as a “bold move,” the transformation has laid the groundwork for the successful future of the company.

Nokia’s Leader-Driven Transformation Reinvents the Company (Again)

We all remember Nokia as the company that once dominated the mobile-phone industry but subsequently had to exit that business. What is easily forgotten is that Nokia has radically and successfully reinvented itself several times in its 150-year history. This makes Nokia a prime example of a “serial transformer.”

In 2014, Nokia embarked on perhaps the most radical transformation in its history. During that year, Nokia had to make a radical choice: continue massively investing in its mobile-device business (its largest) or reinvent itself. The device business had been moving toward a difficult stalemate, generating dissatisfactory results and requiring increasing amounts of capital, which Nokia no longer had. At the same time, the company was in a 50-50 joint venture with Siemens—called Nokia Siemens Networks (NSN)—that sold networking equipment. NSN had been undergoing a massive turnaround and cost-reduction program, steadily improving its results.

When Microsoft expressed interest in taking over Nokia’s device business, Nokia chairman Risto Siilasmaa took the initiative. Over the course of six months, he and the executive team evaluated several alternatives and shaped a deal that would radically change Nokia’s trajectory: selling the mobile business to Microsoft. In parallel, Nokia CFO Timo Ihamuotila orchestrated another deal to buy out Siemens from the NSN joint venture, giving Nokia 100 percent control over the unit and forming the cash-generating core of the new Nokia. These deals have proved essential for Nokia to fund the journey. They were well-timed, well-executed moves at the right terms.

Right after these radical announcements, Nokia embarked on a strategy-led design period to win in the medium term with new people and a new organization, with Risto Siilasmaa as chairman and interim CEO. Nokia set up a new portfolio strategy, corporate structure, capital structure, robust business plans, and management team with president and CEO Rajeev Suri in charge. Nokia focused on delivering excellent operational results across its portfolio of three businesses while planning its next move: a leading position in technologies for a world in which everyone and everything will be connected.

Nokia’s share price has steadily climbed. Its enterprise value has grown 12-fold since bottoming out in July 2012. The company has returned billions of dollars of cash to its shareholders and is once again the most valuable company in Finland. The next few years will demonstrate how this chapter in Nokia’s 150-year history of serial transformation will again reinvent the company.

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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.

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The Rise and Fall of Nokia

By julian birkinshaw , lisa duke.

The case describes Nokia’s spectacular rise and fall, shedding light on the combination of external factors and internal decisions that resulted in the company’s handset business being sold to Microsoft in 2010.During the successful period of growth (roughly 1990 through to 2006), Nokia’s focus on design and functionality gained it a worldwide reputation. It was acknowledged as the first smartphone manufacturer. Through the early-mid 2000s it was the undisputed leader in the global mobile phone business. The case traces the first signs of trouble and the company’s subsequent decline over the period 2005 to 2010. Pressure in the early 2000s from low-end competitors led to early signs of problems. Then of course the game changed in 2007 with Apple’s iPhone and a year later with phones powered by Google’s Android operating system from HTC, Samsung and others. Nokia was initially dismissive of these new offerings but its proprietary OS, Symbian, was ageing badly and its App store (Ovi) was no match for Apple’s. In September 2010 it was announced that American Stephen Elop, formerly of Microsoft, would become CEO. Not long afterwards a partnership with Microsoft was signed which subsequently led to Nokia’s handset business being sold to Microsoft.

Learning objectives

• Understand why good companies go bad; in other words, see how the assets that enable companies to succeed can also be liabilities when the market turns against them.
• Provide insight into the nature of disruption in an established industry and why incumbent firms struggle to adapt.
• Examine the different paths companies should take to respond to disruptive forces.
• Understand the leadership challenge for executives when their performance starts to decline2. To understand the dynamics of change in a fast-changing industry.
• Identify strategies companies can use to adapt quickly to disruptive changes.

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The Rise and Fall of Nokia

• Format: Print
• | Language: English
• | Pages: 26

About The Authors

Juan Alcacer

Tarun Khanna

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• November 2020

The Rise and Fall of Nokia (Abridged)

• The Rise and Fall of Nokia  By: Juan Alcácer
• The Rise and Fall of Nokia  By: Juan Alcacer, Tarun Khanna and Christine Snively
• The Rise and Fall of Nokia (Abridged)  By: Juan Alcácer and Tarun Khanna

Case Study 4: The Collapse of Nokia’s Mobile Phone Business

• First Online: 30 July 2018

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• Tuomo Peltonen 2  

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This chapter provides a wisdom-oriented reading of one of the most spectacular business failures of recent times: the collapse of Nokia mobile phones between 2007 and 2015. Using executive biographies and other published accounts of Nokia’s organisational patterns, the chapter attempts to offer a more balanced explanation of the processes behind Nokia’s inability to respond to the changing industry circumstances. The following analysis pays attention to the shaping of Nokia’s organisational culture. Company and its new leadership adopted a professional, no-nonsense approach in the aftermath of the problems of the late 1980s and early 1990s. The new generation of managers believed in a rational mindset supported by a bureaucratic organisational form. Leaning on a superior technological competence within the mobile phone sector, Nokia was capable of ultimately becoming the market leader. However, in 2007, with two major players, Apple and Google, joining the business, the established rules of competitive dynamics were irrevocably changed. Focus shifted to software and applications. Nokia’s risk-aversive and closed organisational culture could not respond in a situation where an open search for new innovations and a cooperative internal working mode were needed. An analysis of the development of Nokia’s organisational psyche following the emergence of a new generation of managers and executives highlights the role of local beliefs in using philosophical wisdom in critical circumstances. Nokia and its leadership were not able to abandon the outmoded habits and structures, as these had become integrated with the very identity of the company.

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Peltonen, T. (2019). Case Study 4: The Collapse of Nokia’s Mobile Phone Business. In: Towards Wise Management. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-91719-1_6

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The rise and fall of nokia change management analysis & solution, hbr change management solutions, strategy & execution case study | juan alcacer, tarun khanna, christine snively, case study description.

In 2013, Nokia sold its Device and Services business to Microsoft for a??5.4 billion. For decades Nokia had led the telecommunications (telecom) industry in handsets and networking. By the late 2000s, however, Nokia's position as market leader in mobile devices was threatened by competition from new lower-cost Asian manufacturers. Apple's 2007 release of its iPhone established an entire new category-the smartphone-immediately popular with users. What were Nokia's missteps over the years? What should Nokia have done differently?

Change Management, Mobile, Strategy , 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 The Rise and Fall of Nokia 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 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 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 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.
• 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.

The Rise and Fall of Nokia SWOT Analysis, SWOT Matrix, Weighted SWOT Case Study Solution & Analysis

How you can apply Change Management Principles to The Rise and Fall of Nokia 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 “ The Rise and Fall of Nokia “ 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.

The Rise and Fall of Nokia 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 Nokia Nokia's 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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The Real Cause of Nokia’s Crisis

• Michael Schrage

Nokia’s technology isn’t a root cause of its current crisis. Don’t blame its engineers and designers either. The company still knows how to innovate. There’s a simpler and more strategic explanation for why this once-perennial market leader became second-rate. Nokia ignored America. The company simply refused to compete energetically, ingeniously and respectfully in the U.S. […]

Nokia’s technology isn’t a root cause of its current crisis. Don’t blame its engineers and designers either. The company still knows how to innovate . There’s a simpler and more strategic explanation for why this once-perennial market leader became second-rate.

• MS Michael Schrage , a research fellow at MIT Sloan School’s Center for Digital Business, is the author of the books Serious Play (HBR Press), Who Do You Want Your Customers to Become? (HBR Press) and The Innovator’s Hypothesis (MIT Press).

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Nokia: The Inside Story of the Rise and Fall of a Technology Giant

By: Quy Huy, Timo O. Vuori, Lisa Duke

The case examines the downward spiral of Nokia, the mobile technology giant that once conquered the world, seen from the perspective of 'insiders' - based on interviews with Nokia executives at top…

• Length: 15 page(s)
• Publication Date: Sep 26, 2016
• Discipline: General Management
• Product #: IN1289-PDF-ENG

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The case examines the downward spiral of Nokia, the mobile technology giant that once conquered the world, seen from the perspective of 'insiders' - based on interviews with Nokia executives at top and middle management level. They describe the emotional undercurrents of the innovation process that caused temporal myopia - an excessive focus on short-term innovation at the expense of longer-term more beneficial activities. Nokia's once-stellar performance was undermined by misaligned collective fear: top managers were afraid of competition from rival products, while middle managers were afraid of their bosses and even their peers. It was their reluctance to share negative information with top managers - who thus remained overly optimistic about the organisation's capabilities - that generated inaccurate feedback and poorly adapted organizational responses that led to the company's downfall. The case covers the period from the early 2000s to 2010, with a focus on 2007 (the introduction of the iPhone) to 2010, when the CEO left.

Learning Objectives

After reading and analysing the case, students will understand (i) how emotional dynamics influence hard technological and strategic decisions in organizations as they translate into challenges for innovation, (ii) how emotional dynamics can undermine innovation and performance.

Sep 26, 2016 (Revised: Dec 12, 2022)

Discipline:

General Management

IN1289-PDF-ENG

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8 change management questions every IT leader must answer

Designed to speed adoption and achieve business outcomes, change management hasn’t historically been a strength of it orgs. it’s time to flip that script by asking hard questions to hone change strategies..

Early in the pandemic CIO Ken Grady pinpointed a key challenge that has vexed IT organizations for the better part of a decade.

“We saw a tremendous acceleration and adoption in the use of new platforms to stay connected and keep our organizations moving forward,” Grady recalls of those early days navigating lockdowns. “A few weeks in, my CHRO said to me, ‘Wouldn’t it be great if it didn’t take a global pandemic to accelerate adoption of tools like this?’”

Grady’s leadership team at healthcare diagnostics and software maker IDEXX had already been talking about introducing a more robust change management discipline within the enterprise IT function, and seeing what was possible when everyone was on board with transformational change kicked those efforts into higher gear.

In the digital transformation era, IT success is no longer defined by meeting a go-live date or keeping within a budget. It is determined by the creation of shared vision and goals; achievement of leadership engagement and alignment; broad buy-in and adoption of new systems, platforms, and processes; and realization of business outcomes.

At the heart of all that is continuous, effective change management designed to speed adoption in service of business goals, something that hasn’t historically been a strength of IT organizations.

“Change management is not something that can be haphazardly addressed toward the end of a transformation-type initiative,” says Matt Mead, CTO at technology modernization firm SPR.

Nor can it be accomplished by narrowly defining change management as user communications and training in the lead-up to a rollout, adds Eric Freshour, managing director in the people and productivity practice at consultancy West Monroe.

Instead, CIOs must view change management as a kind of GPS for transformation initiatives, designed to keep them on track from the get-go.

“If the change rationale isn’t clearly established and communicated at the start, the whole initiative will be an uphill battle,” says Jeanine L. Charlton, senior vice president and chief technology and digital officer at Merchant’s Fleet, where she has been leading the charge to rethink the way the 60-year-old fleet management firm operates.

As IT leaders ask their organizations to think differently about the way they do things and adopt radically different alternatives, they must also rethink their own approach to ushering in these changes. Here are the key questions they must ask about their change management strategies to set themselves and their organizations up for success.

Does IT truly have credibility with the business?

If the IT organization hasn’t built trust with the business, in large part through a track record of delivering on its promises, no change management strategy will be effective, says Swamy Kocherlakota, executive vice president and CIO at S&P Global. Transformation and turnaround efforts can’t coexist. IT leaders in organizations in which the technology function has a history of underdelivering must first right the ship before launching into digital change efforts.

Change management is also doomed to fail when there is a disconnect between business and IT strategy. IT must work to become one with the business.

“Capital ‘C’ change requires complete buy-in on the part of business partners and functions. Business peers must trust that you’re driving toward business outcomes rather than simply implementing technical solutions,” says Eduard de Vries, CIO at Axia Women’s Health. “You can only have this credibility if your team understands the business processes and how they enable enterprise value creation.”

Is there full leadership alignment on goals and outcomes?

Answering this question must start before any project enters the pipeline. “It is critical to think through change management at the outset of IT and digital initiatives. One way to do so is to co-develop a vision with leaders from both end-user populations and the IT organization,” says Freshour, who calls this a “vision and values” exercise. “This ensures a shared definition of success and alignment on desired outcomes.”

Frequent and transparent cross-functional communication among leaders is key. “Without this alignment, various managers might pursue their own digital transformation ideas independently, leading to scattered initiatives lacking focus and follow-through,” Charlton of Merchant’s Fleet says.

How will we measure readiness, adoption, and business outcomes for this initiative?

Only once key stakeholders are on the same page can IT leaders confidently establish the KPIs of change management success, which should include not only adoption rates, but also measures of change readiness and what specific outcomes will constitute a win. Establishing and tracking these metrics will enable IT to govern the change initiative most effectively through successive phases and pivot as necessary, says S&P Global’s Kocherlakota.

Kunal Purohit, chief digital services officer at Tech Mahindra, sees effective change management as a means for minimizing disruption, satisfying users and customers, and empowering data-driven decisions. But central to all that is a continual emphasis on fostering adoption.

“Above all, there should be a mechanism for continuous feedback and adjustment during the change process,” he says.

Is the planned change even viable?

All sorts of digital initiatives make perfect sense on paper, but too many end up being ill-suited to the organization undertaking them. That’s because many IT organizations skip a key step.

“Before you look for your change agents, you need your viability agents,” says De Vries, noting that he spends a lot of time at Axia Women’s Health building a network of front-line employees who can validate potential change initiatives.

“You have to have relationships with salespeople, for example, who can tell you whether they can sell your change to their customers, and front-line staff who can tell you whether a process can be executed efficiently,” De Vries says. “After you implement the change, they will become your promotors.”

De Vries sometimes even recruits these viability and change agents into IT, where they can bring their business process and customer knowledge to bear in the digital and technology organization.

Have we future-proofed our change plan?

Any digital initiative should consider the emerging technologies that may need to find their way into the program over time, say West Monroe’s Freshour and other IT leaders and advisors.

“It is important to design IT and digital solutions with an eye toward the future,” Freshour says. “While you might not deliver the most mature functionality or solutions in phase one of an initiative, it is important to consider how a digital product, platform, and system will evolve over time, in terms of both IT and business requirements.”

Tech Mahindra’s Purohit agrees, underscoring the importance of understanding and articulating how the change may evolve with future technological advancement even at the early stages of a change initiative.

Do we have the necessary change management resources to succeed?

As a general rule of thumb, IT leaders should be investing at least 10% to 20% of their project budget on change management. “You can’t cut corners when allocating the proper resources to carry out change management in relation to digital efforts,” says Freshour. IT leaders should run the numbers to ensure they’re focusing the necessary time, money, and resources to change management and adoption.

It’s important not only to have the right budgeting in place, but also the right change management expertise. “CIOs should inspect whether the organization is prepared to adapt to unforeseen changes during the transformation and whether they have the necessary resources, both financial and human , to support the change,” Purohit says.

For IDEXX’s Grady that has meant staffing IT’s new change management function with nontechnology professionals.

“To build this capability, we didn’t try and fit IT folks into the leadership of change management,” Grady says. “That’s not to say there aren’t people that grew up in IT that have natural skills in this space. But rather, we thought differently about the skills required.”

That meant recruiting folks with marketing experience who could think about change in terms of personas; segment user needs and impacts; plan messaging channels, frequency, and methods; and determine the right change metrics.

“We needed to think as much like marketers as we do technologists, and staffed the function accordingly,” Grady says. “This function has been absolutely invaluable in running large enterprise programs and the success of behavior change to unlock the digital transformation of a number of key processes.”

Do users have direct line of sight to the change?

Effective communication is critical to change readiness and adoption. “It trumps all,” says SPR’s Mead, “especially when dealing with a remote-first workforce.”

But how IT leaders communicate the details of changes is as important as what is said. In fact, it’s much better if the message doesn’t come from IT at all.

“Change communication should be designed to provide employees with a direct line of sight to the change,” Mead says. “Studies show, and our experience at SPR backs this research, that employees prefer to get information about how a change will affect them from their immediate manager. So, make sure you arm managers with timely information and try to implement follow-up meetings where necessary.”

Everyone who will be impacted by the change should have a clear understanding of the personal benefits of the change to them — what’s in it for them in this new normal.

“You need change agents at every level,” says de Vries. “Your divisional CFOs can agree with a change, but if your FPA [financial planning and analysis] teams don’t accept the new revenue recognition solution, they will create workarounds.”

The time de Vries spends with various business functions at Axia Women’s Health helps him understand the different value levers available as well as how performance is measured and incentivized in each part of the organization. “This allows me to align incentives for the change, increasing the chance of success,” De Vries says.

Are we investing enough in continuous training and development?

Training is a key aspect of any new IT initiative. But in organizations where digital initiatives are coming at the organization concurrently and successively, a more comprehensive approach to training is warranted.

At S&P Global, in addition to specific training surrounding new initiatives, the company has an EssentialTech Foundations program to help employees build foundational technical knowledge in six core focus areas: agile mindset, cloud essentials, developing an innovative mindset, automation/machine learning/AI, data science, and DevOps.

“We put our people first and invest in upskilling our workforce to thrive in this new digital paradigm,” says Kocherlakota. “Team members across all of S&P Global have access to trainings, webinars, and a plethora of resources to learn new skills.”

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Stephanie Overby is a regular contributor to CIO.com.

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