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 - February 2011 - Elop issued the famous “burning platform” memo bluntly explaining the serious strategic challenges facing Nokia - 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 smartphones 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 organisational structure - a significant process of delayering - 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-centralised 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 anonunced it was laying off 4000 employees to move manufacturing from Europe and Mexico to Asia March 2012, Nokia anonunced it was laying off 1000 employess 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 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 an associated “ecosystem” of apps. The consumer transition from traditional mobile phones to smartphones 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 organisational structrure 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 Stephen Elop’s response as the New CEO
On his first day at Nokia: Elop sent an email to all employees asking three questions: - What do you think I need to change?
- What do you think I need not or should not change?
- What are you afraid I’m going to miss?
The email generated thousands of replies and the responsese suggested that Nokia’s corporate communication had failed; many complaints of management indecision and staff frustration. The...
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