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Change Management in Nokia

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Change Management in Nokia

  1. 1. 2013 MOUMITA ROY ROLL- HRM/12/16 PGDM IN HRM CHANGE MANAGEMENT IN NOKIA
  2. 2. CHANGE MANAGEMENT IN NOKIA 2 | P a g e CHANGE MANAGEMENT IN NOKIA 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
  3. 3. CHANGE MANAGEMENT IN NOKIA 3 | P a g e A C K N O ACKNOWLEDGEMENT • ABSTRUCT • INTRODUCTION • LITERATURE REVIEW • OBJECTIVE • METHODOLOGY ØANALYSIS • NOKIA • CONCLUSION • LIMITATION • REFERENCE THANK YOU
  4. 4. CHANGE MANAGEMENT IN NOKIA 4 | P a g e 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.
  5. 5. CHANGE MANAGEMENT IN NOKIA 5 | P a g e 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
  6. 6. CHANGE MANAGEMENT IN NOKIA 6 | P a g e 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
  7. 7. CHANGE MANAGEMENT IN NOKIA 7 | P a g e 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
  8. 8. CHANGE MANAGEMENT IN NOKIA 8 | P a g e • 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
  9. 9. CHANGE MANAGEMENT IN NOKIA 9 | P a g e 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
  10. 10. CHANGE MANAGEMENT IN NOKIA 10 | P a g e 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
  11. 11. CHANGE MANAGEMENT IN NOKIA 11 | P a g e 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.
  12. 12. CHANGE MANAGEMENT IN NOKIA 12 | P a g e 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
  13. 13. CHANGE MANAGEMENT IN NOKIA 13 | P a g e 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 Type Julkinen osakeyhtiö (Public) Traded as • OMX: NOK1V • NYSE: NOK Industry Telecommunications equipment Internet Computer software Founded Tampere, Grand Duchy of
  14. 14. CHANGE MANAGEMENT IN NOKIA 14 | P a g e 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)
  15. 15. CHANGE MANAGEMENT IN NOKIA 15 | P a g e 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
  16. 16. CHANGE MANAGEMENT IN NOKIA 16 | P a g e 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.
  17. 17. CHANGE MANAGEMENT IN NOKIA 17 | P a g e 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.
  18. 18. CHANGE MANAGEMENT IN NOKIA 18 | P a g e 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.
  19. 19. CHANGE MANAGEMENT IN NOKIA 19 | P a g e 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.
  20. 20. CHANGE MANAGEMENT IN NOKIA 20 | P a g e 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-
  21. 21. CHANGE MANAGEMENT IN NOKIA 21 | P a g e 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.
  22. 22. CHANGE MANAGEMENT IN NOKIA 22 | P a g e 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.
  23. 23. CHANGE MANAGEMENT IN NOKIA 23 | P a g e 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.
  24. 24. CHANGE MANAGEMENT IN NOKIA 24 | P a g e “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.
  25. 25. CHANGE MANAGEMENT IN NOKIA 25 | P a g e • 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.
  26. 26. CHANGE MANAGEMENT IN NOKIA 26 | P a g e • 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.
  27. 27. CHANGE MANAGEMENT IN NOKIA 27 | P a g e • The Nokia Siemens Networks logo since 2007 • Since 2010 CHANGE IN PHONE MODEL • REDUCTION IN SIZE OF NOKIA MOBILE PHONES
  28. 28. CHANGE MANAGEMENT IN NOKIA 28 | P a g e • 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)
  29. 29. CHANGE MANAGEMENT IN NOKIA 29 | P a g e • 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.
  30. 30. CHANGE MANAGEMENT IN NOKIA 30 | P a g e • 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.
  31. 31. CHANGE MANAGEMENT IN NOKIA 31 | P a g e 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
  32. 32. CHANGE MANAGEMENT IN NOKIA 32 | P a g e 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.
  33. 33. CHANGE MANAGEMENT IN NOKIA 33 | P a g e 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
  34. 34. CHANGE MANAGEMENT IN NOKIA 34 | P a g e 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
  35. 35. CHANGE MANAGEMENT IN NOKIA 35 | P a g e 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.
  36. 36. CHANGE MANAGEMENT IN NOKIA 36 | P a g e • 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.
  37. 37. CHANGE MANAGEMENT IN NOKIA 37 | P a g e • 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
  38. 38. CHANGE MANAGEMENT IN NOKIA 38 | P a g e • Closing • Reinforcing Changes • Managing Change-Planning • Managing Change-Execute • Preparing for Change • Closing/Monitoring Change Fig: implementation of successful factors
  39. 39. CHANGE MANAGEMENT IN NOKIA 39 | P a g e 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.
  40. 40. CHANGE MANAGEMENT IN NOKIA 40 | P a g e 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].
  41. 41. CHANGE MANAGEMENT IN NOKIA 41 | P a g e v Nokia and Strategic Change - the Essential A2 Business Case [14 Jun 2012].
  42. 42. CHANGE MANAGEMENT IN NOKIA 42 | P a g e

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