ORGANISATIONAL CHANGE IN NOKIA

Managing People Assignment

Programme: international Management

Course Title: Managing People

Word count: 2861

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 Table of Content

Title page 1

Executive summary 2

Introduction 2

The Scope of Changes Experienced by Nokia as a Company 3

Forces of Organisational Change in Nokia 5

Steps Taken to Implement Organisational Change in Nokia 7

Application of Kurt Lewin’s three-stage model 9

Application of John Kotter’s eight-stage model to Nokia 10

Chaos and complexity theory’s Application to Nokia 12

Conclusion 12

References 13

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Executive summary

During the years, Nokia faced substantial organisational changes. Re-creation, reorientation,

adaptation, and fine-tuning changes were among the many that the company went through.

Internal and external influences, such as competition and technology improvements, drove

the changes. Nokia had difficulties implementing change, including employee opposition,

which forced the company to terminate and lose workers. A notable change that had a

substantial effect on Nokia was the company's merger with Microsoft. Kurt Lewin's three-

stage model and John Kotter's eight-stage model were both used to aid the company

transition. Insight into the change process was also presented by the chaos and complexity

theories.

Introduction

Nokia is a global telecommunication, and consumer electronics company that was founded in

Finland on May 12, 1865. It is a public limited company that does business worldwide

(Sulphey, 2019). Its headquarters are in Espoo, Finland, and operates internationally in more

than 130 countries. It employs roughly 102,761 people in more than 100 countries (Salman &

Hussein, 2020). Due to a variety of circumstances, including changing market patterns,

technical improvements, managerial change, and mergers and acquisitions, the company has

gone through both planned and unforeseen organisational change (Bhalodiya & Sagotia,

2018).

Nokia's transformation from a maker of mobile phones to a supplier of network infrastructure

and technology was one of the most important organisational changes in the company's

history. The advent of new rivals and increasing customer preferences in the mobile phone

industry, which resulted in decreased sales, served as the catalyst for this change (Sulphey,

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2019). In order to meet this challenge, Nokia sold up its mobile phone division and centred its

attention on expanding its network setup and technological skills.

Reshuffling Nokia's business groups to better fit with its strategic goals was another big

organisational change. The company restructured its business segments into Mobile

Networks, Fixed Networks, Apps and Analytics, and Nokia Technologies (Peltonen, 2019).

The objectives of this restructure were to increase operational efficiency, increase customer

attention, and stimulate innovation.

The Scope of Changes Experienced by Nokia as a Company

Re-creation and Reorientation change

Nokia company undergo a re-creation and reorientation when it changes focus from its core

business of mobile phones to telecoms infrastructure. Former CEO, Stephen Elop, of the

company started this change in 2011. Nokia needed to evolve with the evolving market and

contend with rivals in the telecoms business, according to Elop (Kaur, et al., 2022).

The selling of Nokia's mobile phone division to Microsoft and the firing of thousands of

workers were two major components of this change (Salman & Hussein, 2020). In 2016, the

company also bought Alcatel-Lucent, a French manufacturer of telecommunications

equipment, further strengthening its position in the market for telecommunications

infrastructure (Salman & Hussein, 2020).

Nokia was affected in a number of ways by the change in creation and focus. The company

was able to concentrate on its core competencies in telecom infrastructure and establish itself

as a dominant force in this industry (Salman & Hussein, 2020). According to Kaur, et al.

(2022), this change in emphasis let Nokia to diversify its income sources and lessen its

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dependence on the fiercely competitive mobile phone industry. Also, it has led to certain

unfavourable effects including significant job losses and a deterioration in Nokia's image

resulted from the layoffs and sale of the mobile phone industry. The change in emphasis also

meant that Nokia was no longer a significant participant in the mobile phone industry, which

was formerly its primary business. As a result, Nokia's re-creation and reorientation change

was a crucial strategic decision that enabled the company to adjust to a changing market and

position itself for long-term success in the telecoms infrastructure sector. But there were

some short-term unfavourable effects as well, notably in terms of reputation and job losses.

Adaptation change

The adaption change in Nokia, according to Kanikani (2022), refers to the company's

attempts to adapt to changes in the telecommunications business and maintain its

competitiveness. The decision to change was motivated by the realisation that the advent of

new rivals and shifting customer tastes were posing an increasing threat to Nokia's existing

business of manufacturing mobile phones.

The adaption change has numerous consequences for Nokia as a company, it let the company

maintain its position as a leader in the telecommunications sector and capitalise on its

infrastructure technological know-how. Nokia was able to expand its income sources and

position itself as a more all-encompassing supplier of telecoms solutions because to its

emphasis on software and services. The adaptive change also had some unfavourable effects.

The purchase of Alcatel-Lucent required a substantial financial commitment and merging the

two businesses proved difficult (Salman & Hussein, 2020). The concentration on software

and services also required substantial expenditure and resources, which had an immediate

effect on Nokia's profitability.

The fine-tuning change.

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The fine-tuning change in Nokia refers to the company's attempts to hone and enhance its

current products, procedures, and services in order to better fulfil the demands of its clients

and maintain its competitiveness in the market (Salman & Hussein, 2020). This change was

brought about by the realisation that Nokia needed to constantly enhance and adapt its

product offerings in order to remain competitive and satisfy evolving consumer expectations.

Many tactical actions were taken to fine-tune the change, including expenditures in R&D, the

launch of new goods and services, and the improvement of already-available goods and

services (Doz, 2017). Through these changes, Nokia hoped to increase the value,

effectiveness, and quality of its products while also boosting the entire user experience.

Forces of Organisational Change in Nokia

Internal Forces

Internal forces of organisational change are those that develop inside an organisation and

contribute to the demand for change (Alkaya & Hepaktan, 2003). The internal dynamics of

organisational change at Nokia were crucial in the company's strategy reorientation and

adaption to stay competitive in the telecommunications sector. They comprise:

1. Leadership: Organizational change may be required due to changes in leadership and

management styles (Odor, 2018). The hiring of Stephen Elop as Nokia's new CEO in

2010 resulted in substantial changes to the company's strategic direction.

2. Employees turnover: nokia work culture was toxic to employees, employees were

under a lot of stress of losing their jobs

3. Organizational culture: Organizational change may be significantly influenced by

the organisational culture (Doz, 2017). In Nokia's example, the company's

conventional engineering culture led to a focus on hardware goods rather than

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 software and services. Nokia has to change its culture to accept new business models

in order to stay competitive.

4. Performance gaps: The desire for change might be triggered when an organisation

does not achieve its performance goals (Odor, 2018). In the case of Nokia, a huge

performance difference caused by dwindling sales and market share in the mobile

phone industry necessitated change.

External Forces

External forces of organisational change are the elements that come from the external

environment and have an influence on the organisation, necessitating change (Alkaya &

Hepaktan, 2003). Nokia was able to change its company and stay a prominent player in the

sector by recognising and adapting to these external factors. They comprise:

1. Technological advancements: A important external cause of change for Nokia was

the industry's fast technological change, notably the introduction of smartphones

(Kanikani, 2021). The company had to modify its product lineup and adopt new

technologies in order to stay competitive.

2. Globalization: Another important external source of change was the growing

globalisation of markets and competition from rising economies like China and India

(Kanikani, 2021). Nokia had to reorganise its business and increase its worldwide

footprint in order to stay competitive.

3. Regulatory environment: The operations of multinational corporations like Nokia

may be impacted by changes in rules and government policies, especially in

developing areas (Khan, 2017). Organizational change may be required in response

to, for instance, changes in local content standards or limitations on foreign

investment.

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 4. Economic environment: The demand for Nokia's goods and services may be

impacted by changes in the global economic climate, such as recessions (Kanikani,

2021). Nokia's sales and profitability were significantly impacted by the financial

crisis of 2008 and the accompanying economic slump.

5. Customer preferences: The demand for organisational change may also be fueled by

changes in the tastes and behaviours of customers (Odor, 2018). In the case of Nokia,

the transition towards touchscreens and smartphones in the mobile phone industry

represented a substantial change in consumer preferences that prompted the company

to alter its product offerings.

Steps Taken to Implement Organisational Change in Nokia

1. Hiring a new CEO

In 2010, while the company was experiencing rising competition in the smartphone industry

and its market share was dropping, Nokia appointed a new Chief Executive Officer by the

name of Stephen Elop. Elop was hired to oversee Nokia's transformation initiatives, which

included a move away from the company's conventional strategy that was centred on

hardware and towards a strategy that was more heavily dependent on software (Doz, 2017).

At this time period, Nokia was having difficulty competing with competitors like Apple and

Samsung, who had amassed a substantial portion of the market share in the smartphone

industry. Elop was entrusted with rejuvenating Nokia's product range and restructuring the

company to better compete in the shifting technological environment (Peltonen, 2019).

The hiring of Elop was a component of Nokia's wider organisational change initiatives,

which also included the execution of a new strategy, the establishment of new alliances, and

the development of new products and services. Nokia was finally able to adapt to the shifting

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market circumstances and continue to be a prominent participant in the technology sector,

despite the fact that the change was not without its difficulties.

2. Laying off and resignation of employees

As part of its attempts to consolidate its business operations and save expenses, Nokia has

experienced many rounds of staff reductions and organisational reorganisation. A

considerable number of workers have either been fired or have chosen to quit as a

consequence of this (Doz, 2017).

A number of reasons, including a decline in revenue and the need to reduce expenses in

response to an increase in competition in the mobile phone industry, have combined to drive

the decision to lay off employees. In addition, Nokia has undergone major reorganisation,

which has included the selling of its mobile phone business to Microsoft as well as the

outsourcing of some activities to third-party service providers.

The terminations of employment and resignations of employees who were affected have been

difficult for those employees, but they have enabled Nokia to concentrate on its core

business, which is the development of innovative network equipment and software solutions,

while also reducing costs and improving efficiency.

3. Merging with Microsoft

Nokia paid Microsoft $7.2 billion in 2013 to acquire its mobile phone and device division.

The transaction enabled Nokia to transfer its attention to its core business of producing

network equipment and services, while simultaneously giving Microsoft with the technology

and knowledge required to build its mobile phone company. Nokia also consented to licence

its patents to Microsoft as part of the agreement, giving the latter access to important

intellectual property in the mobile phone industry. Despite the fact that the merger caused a

considerable number of layoffs and reorganisation, the end consequence was that it enabled

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Nokia to emerge as a more streamlined and focused company that has a strong position in

both the network equipment and software industries.

4. Outsourcing Symbian to Accenture as a cost saving strategy.

In 2011, Nokia made the announcement that it will be outsourcing the development of its

Symbian software to Accenture as a method of lowering its operating expenses. The choice

was made as a part of Nokia's larger transformation initiatives, which were aimed at

streamlining the company's processes and reducing expenses. By contracting out the

development of Symbian, Nokia was able to minimise the number of employees it employed

as well as the expenses involved with software development. Yet, the company was able to

keep complete control over the platform's overall direction. Accenture, for its part, was able

to contribute to Nokia's efforts to enhance the quality and dependability of the Symbian

platform by using the experience it had in the field of software development.

Application of Kurt Lewin’s three-stage model

The Force Field Analysis is a model that was presented by Kurt Lewin. It gives an overview

of the many variables and challenges that are responsible for bringing about change in an

organisation (Alkaya & Hepaktan, 2003). When the factors that are affecting and restricting

the organisation are balanced with both internal and external factors, we say that the

organisation is in equilibrium (Odor, 2018). It is necessary to upset the existing state of

balance in order to bring about the change. 

The three-stage model of change developed by Kurt Lewin is applicable to the organisational

transformation initiatives being undertaken by Nokia. The following are the three stages:

1. Unfreezing,

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 2. Changing, and

3. Refreezing.

Nokia started preparing its staff and stakeholders for the impending changes during the

unfreezing period after seeing the need for change (Kanikani, 2021). This required explaining

the rationale for the modification as well as the objectives Nokia wanted to accomplish via it

to its stakeholders.

Throughout the phase of transition, Nokia made a number of organisational changes, such as

outsourcing and reorganization, as well as selling its mobile phone division to Microsoft

(Kanikani, 2021). Nokia wanted to concentrate on its core business of creating network

equipment and software solutions, therefore these modifications were made to increase

productivity and profitability.

Nokia tried to consolidate the improvements and incorporate them into its organisational

culture throughout the refreezing stage (Kanikani, 2021). This required creating new

guidelines and practises, retraining staff members, and tracking the success of the

modifications over time.

Application of John Kotter’s eight-stage model to Nokia

The first step, generating a sense of urgency, entailed Nokia acknowledging the need for

change owing to rising rivalry and a diminishing market share (Doz, 2017).  The company

did a research and analysis to identify weaknesses in particular areas and the need for a fresh

strategic approach (Doz, 2017).

In the second stage, Nokia established a powerful coalition of officials to push the change

process forward (Peltonen, 2019). This alliance comprised of senior executives, managers,

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and workers from diverse departments and levels of the business who were dedicated to

promoting change (Peltonen, 2019).

The third step required creating a vision for change that included concentrating on its core

business and divesting non-essential businesses (Peltonen, 2019). Nokia's strategy includes

being a major supplier of network infrastructure and services and utilising its technical skills

to build innovative solutions for its clients.

During the fourth stage, Nokia communicated the vision of change to its staff members,

customer base, and other interested parties. This entailed straightforward and uniform

communications regarding the company's fresh strategy, as well as outlining the reason for

the adjustments (Onditi, 2017).

The fifth step required empowering others to execute on the strategy, which included

reorganization, outsourcing, and divesting non-core assets. Nokia restructured its business

segments, outsourcing non-core services, and sold its cell phone business to Microsoft

(Onditi, 2017). The firm has invested in research and development to produce innovative

solutions for its clients.

Creating short term wins, including increased efficiency and better financial results, was the

focus of the sixth stage. Nokia's financial performance has significantly improved as a

consequence of the company's efforts to reduce expenses and boost operational performance.

Nokia consolidated its gains and brought about additional change during the seventh stage,

such as when it purchased Alcatel-Lucent to enlarge its network infrastructure business

(Salman & Hussein, 2020).

Nokia anchored new approaches in its organisational cultures throughout the eighth stage,

such as concentrating on its core business and developing creative solutions for its

subscribers (Salman & Hussein, 2020). In order for the improvements to be long-lasting, this

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entailed integrating new approaches to thinking and operating into the corporate culture of

the company.

Chaos and complexity theory’s Application to Nokia

The organisational structural change may also benefit from using chaos and complexity

theory (Kumarasinghe et al, 2021). According to these theories, organisations are extremely

complex, and changes in one area of the system might have an impact on other areas of the

organisation (Alkaya & Hepaktan, 2003).

The various internal and external forces of change that Nokia faced led to the development of

a complicated and chaotic environment (Sulphey, 2019). Its complexity was exacerbated by

the appearance of new rivals, the collapse of its primary industry, and the quickening pace of

technological development. Nokia has to adopt a more adaptable and agile change

management strategy in order to negotiate this complexity. This required switching from

inflexible hierarchies and command-and-control systems to a more flexible, decentralised

organisational structure (Doz, 2017).

Nokia was able to create an environment of creativity and experimentation where staff

members were encouraged to take chances and try new things by embracing chaos and

complexity theory (Onditi, 2017). This aided the business in staying innovative and

competitive in a continually changing market environment.

Conclusion

In conclusion, Nokia's experience with organisational change emphasises the crucial role that

adaptation and innovation play in the face of a quickly evolving marketplace. During the

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course of its existence, the company's success and expansion have been directly correlated to

its capacity to adapt to new circumstances and welcome change. Yet, Nokia also had

substantial difficulties and failures, such as opposition to change, ineffective initiatives, and

layoffs.  An important lesson was that a thorough strategy that takes into account the effects

on all stakeholders, and skilfully handles opposition to change is necessary for the successful

advancement of change. The process of organisational transformation that Nokia went

through is instructive for organisations in any sector because it highlights the need of being

pre-emptive, resilient, and strategic in the face of change.

References

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(1), 31 – 58.

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caused-nokias-failure-7766 [Accessed 02 April 2023].

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Isolde Kanikani. 2021, Organisational behaviour, change management and motivation seen

in the case study of Nokia mergers and acquisitions. MBA Project submitted to Chichester

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