ioopl: Strategic Change Management in Organisation (Nokia)

In the name of Allah, the most gracious, the most merciful

Unit 3 - Assignment

Introduction

About Nokia:

Nokia is a Finland-based company, established in 1865. 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 2012. Nokia was the world's largest vendor of mobile phones from 1998 to 2012. Nokia is a public limited-liability company listed on the Helsinki Stock Exchange and New York Stock Exchange. (Nokia, 2012)

It is the world's 143rd-largest company measured by 2011 revenues according to the Fortune Global 500. (CNN, 2012)

It has an employee base of around 97,798. It has 14 manufacturing facilities located in China, UK, Finland, Hungary, Germany, Mexico, Brazil, and the Republic of Korea. Its Research & Development centres are located in Finland, Japan and China. (Nokia, 2012)

On 1 April 2007, Nokia's Networks business group was combined with Siemens's carrier-related operations for fixed and mobile networks to form Nokia Siemens Networks, jointly owned by Nokia (50.1%) and Siemens (49.9%) and consolidated by Nokia. Nokia Siemens Networks is a data networking and telecommunications equipment company. It is the world's fourth-largest telecoms equipment manufacturer measured by 2011 revenues (after Ericsson, Huawei and Alcatel-Lucent) (Nokia Siemens Network, 2013)

Among Nokia’s major strategic acquisitions is of Navteq. In October 2007, Nokia bought Navteq, a U.S.-based supplier of digital mapping data, for a price of $8.1 billion. This formed the basis for Nokia Maps which is a direct competitor to Google Maps. (Infoworld, 2013)

The Scenario:

Nokia is a well renowned mobile manufacturing company. In the past Nokia was holding a prestigious position in the mobile market which has been affected due to a change in technology in the mobile communication industry. My task in this assignment as a Strategic HR Manager/ Change and Innovation Consultant is to help Nokia pull out from its current position and regain it position as a market leader. It would be my responsibility to make strategic decisions, bring changes in business, technology, HR and any other areas that are affected in the organisation. I would be advising the Nokia’s higher officials on policies and issues related to technology and the impact which they had on the company.

a) Identify and discuss appropriate models of strategic change (3.1.1)

Change management is a strategic process to achieve goals and make changes (Adelaide, 2013). Paton and McCalman (2000) suggest that there are two states when dealing with any change, Proactive and Reactive. Proactive state is when one is ready for any new situation. Being proactive is about creating or controlling a situation by causing something to happen rather than responding to it after. Being proactive is acting in advance to deal with an expected situation. Reactive is the state in which certain situation or change happens and then there is a reaction to it. It is defined as acting in response to a situation rather than creating or controlling it.

There are various models of change which facilitate the change management process. Below is a summary of few.

ADKAR Model

The ADKAR model of change states that in order to successfully deploy a change we have five step processes that should be adopted in order to successfully achieve the objective. These five are: Awareness, Desire, Knowledge, Ability and Reinforcement. (Change-Management, 2013)

Awareness: Strategic change management is most effective when an organisation actively seeks the participation of all the relevant stakeholders. Stakeholders have interest in the organisation and they can be affected by the organization's actions, objectives and policies. The awareness part states that there should be some awareness among stakeholders before any new change is propagated. It’s all about letting stakeholders know that why a change is needed now and what will be the advantages associate to it.

Desire: By making aware to stakeholders about the change there will be a desire among them to support the change. It could also provoke a desire among them for the change when they have an awareness of why the change is necessary.

Knowledge: The knowledge is defined in this context as the knowledge about understanding and analysing how to apply the change. It’s also the knowledge, skills and behaviour required during and after the change.

Ability: The ability is defined as the talent or capacity required in implementing the change. It could also be the ability to overcome the barrier that may restrict the implementation of the change.

Reinforcement: Is defined as the process of strengthening. Once the decision has been taken, a change has been made then there are mechanisms required to keep that state. It could be achieved by rewards and encouragement.

KURT LEWIN MODEL

The Kurt Lewin model of change states that there are three stages which are needed to make any change successful. These states are Unfreeze, Change, and Freeze.

Unfreeze: The Unfreezing part is the most important part which helps stakeholders to accept that a change is needed because the current situation is not suitable. Its about creating an awareness among the incumbent that compel them to unfreeze from their current state.

Change: After the unfreeze stage, the next state is of the state of the change itself. This is the phase in which change is happening. It’s a process and that process is considered as a transition. During this transition period, lot of efforts may be required. Support is also important here and can be in the form of training, coaching, and expecting mistakes as part of the process.

Freeze: In the final stage – once the changes that have taken place, they needs to be firmly preserved. In this stage a trust need to be affirmed and asserted among the stakeholders to convince them in order to pursue with the new.

(3.1.2) Evaluate the relevance of the selected models of strategic change to Nokia in the current economy.

In the light of current economy especially with the likes of Android and iPhone, dominating the mobile phone market, we would evaluate ADKAR strategic model and argue whether this change model is relevant to the Nokia in the current circumstances.

The ADKAR Model

As we know from the market analysis that Nokia once had a prestigious position in mobile telecommunications and related services. But for last 5 years the company has not been performing according to high standards it once sets for itself. There are many factors which have lead to the current situation of the company from change in user preferences to advancements in technology, innovation, fierce marketing and product competition from rivals as well as factors effecting within the company.

According to a report published in January 2012, Nokia has around 105,000 employees across 120 countries, sales in more than 150 countries and annual revenues of around £30 billion.

The market share of Nokia has decreased rapidly with the likes of iPhone, Samsung and other android enabled devices coming into the market. In order to make a dent in the smartphone market currently dominated by Google’s Android operating system and Apple’s (AAPL) iOS platform, Nokia would now require a change in the platform strategy.

At the moment picking up market share is a big part of Nokia’s fight.

The ADKAR Model states that in order for any company or an organisation to bring a change, it must first of all needs to create an awareness among the stakeholders as to why the change is eminent and if they don’t react now then this could lead to much deeper problems.

From this we conclude that a strategic and transformational change is required at Nokia.

The KURT LEWIN MODEL

Considering the scenario of Nokia we find that KURT LEWIN’s Model of change is also applicable under the current circumstances. The situation at Nokia is that they need drastic changes to bring them from a state where they have been frozen for a long period of time and get align with the right.

According to Kurt Lewin Model the first step towards any change is to convince people that a change is compulsory and articulate the need for a change.

Nokia stocks fell 39.6 cents to 1.83 euros at the close of trading in Helsinki, bringing the stock’s decline in the past 12 months to 58 percent. The company has a market value of 6.8 billion euros ($8.6 billion), down from a peak of more than 300 billion euros in 2000. (Bloomberg, 2013)

Nokia has lost more than 70 billion euros in market value since Apple introduced the iPhone in 2007, taking the lead in smartphone innovation. (Bloomberg, 2013)

Clearly this indicates that changing its currents way of operating is inevitable. After that appropriate measures and procedures are conducted to bring in the change. This stage also involves restructuring and reorganizing of current work flows and taking appropriate measures to meet new business needs.

Finally it’s about persisting with the change and refreezing in the new state. Although in technology the norm is the change. Everything changes in businesses especially in telecommunications industry the change cycles are much more frequent because of the advancements in technology. Hence an iteration of Kurt Lewin Model is required.

b) Select an appropriate model for change that could be used at Nokia (3.4.1)

Since Nokia is struggling to cope with the existing companies who are dominating the mobile market, a change is required at the strategic level in order to bring Nokia to a position that it once holds.

The model I believe is applicable to Nokia in the light of current situation is ADKAR Model which describes how a strategic change can be implemented from its concept to implementation. The ADKAR Model simplifies this by defining each step in a specific holistic way.

3.4.2) Set a plan to implement that model for change Awareness

From ADKAR change model’s initial block we recognise that awareness should be created among the stakeholders of Nokia so that they are aware of why the change is required and what would be involved. This would give them knowledge of what is the risk of not changing.

Recently Nokia announced to cut 10,000 jobs globally by the end of 2013 and shut production and research sites in Finland, Germany and Canada in-line with continues loss and the stock fell to the lowest since 1996. (Bloomberg, 2013)

Nokia fell 39.6 cents to 1.83 euros at the close of trading in Helsinki, bringing the stock’s decline in the past 12 months to 58 percent. The company has a market value of 6.8 billion euros ($8.6 billion), down from a peak of more than 300 billion euros in 2000. (Bloomberg, 2013)

Nokia Siemens, which also is struggling to return to profit, is cutting 17,000 jobs worldwide to save 1 billion euros in annual operating expenses and production costs by 2013. (Bloomberg, 2013)

In this case, the incumbent management of Nokia would need to be aware of what the consequences are if they don’t react now to change and move the company forward. An incremental, strategic and transformational change is inevitable. What they want to do is focus on long term thinking rather than short term thinking, and constantly re-invent themselves.

Data Driven Decision making is required by focusing on customer trends, app developers demands, advancements in software and hardware one can get the gist of expectations and a clear vision of where to lead.

Desire

Change is the most important factor in any business today. The ADKAR model states that there should be a desire among the stakeholders to change and participate in the process to support it. This would only be possible if they are already aware of why the change is needed.

It’s all about inspiring people, and what you inspire them to do, how you make them feel and how you articulate this vision of where they should go.

If there is a goal, and that goal is overarching and if that matters people and get people excited about it then they naturally want to pursue it.

With Nokia, the change is inevitable now specifically in leadership, strategy and technology.

The deal with Microsoft has been a positive change and this has shifted technology paradigms for Nokia. Considering the fact that Microsoft's annual innovation budget is around $10 Billion. Software innovation is at the heart of Microsoft’s business (Microsoft, 2013). With Microsoft on board with Nokia, Nokia has a very good chance to use the expertise of Microsoft innovation and move forward.

First and foremost, Nokia is adopting Windows Phone as its primary smartphone platform now. They believe that working with Microsoft, have help them to drive and define the future of the platform by leveraging their expertise in hardware optimisation, software customisation, and language support. (Nokia, 2013)

If people are threaten with prospect of extinction, they will tend to compete ferociously

We suggest that Nokia may eventually have to choose an alternative platform to target emerging markets rather than continuing to support Symbian and an outdated version of Windows Phone 7.5 for its basic phones while Windows Phone 8 for its latest smart phone. It really needs to tap in the Android market and make use of the android OS for it new smart phones.

On Dec. 6 2012, Nokia (NOK) unveiled plans to cooperate with China’s dominant cellular operator, China Mobile (CHL), to offer the Lumia 920T, Nokia’s new Windows-based smart phone, to the more than 700 million Chinese who are China Mobile subscribers. The Lumia tie-up with China Mobile offers Nokia “a chance to re-establish its brand in China,” writes John Butler, Bloomberg Industries analyst (BusinessWeek, 2013).

For Nokia to be dominant in market they would need to build an eco system, a platform.

We suggest that for Nokia to excel in this space, they have to incorporate Android operating system into their hardware. This would create a new eco system of apps to be developed for Nokia.

Knowledge

The term knowledge in the context of ADKAR Model is defined as knowledge that is required on how to change, how to implement the change and how to accomplish the tasks involved. In order to change anything you have to understand it. It requires a deeper understanding of the whole system, its policies, processes and procedures. The knowledge of what the proposed solution would offer is required and its future consequences.

In the case of NOKIA a change is eminent across various departments and the way cooperation currently operates.

Understanding of the markets trends, shift in users preferences, offering new affordable mobile devices to new customers especially in the regions of developing countries of Middle East, Asia and Africa. The economical conditions of the world also need to be taken in consideration. This knowledge is critical in making decisions before a new product is to be launched. And this process is ongoing.

Use expertise of Microsoft and their partners

Nokia would also need to lift their platform, specifically the partnership with Microsoft is a strategic partnership that would use their complementary strengths and expertise to create a new global mobile ecosystem.

Under the partnership Nokia have adopted Windows Phone as its principal smartphone strategy. Microsoft adCenter would provide search advertising services on Nokia’s line of devices and services. (Microsoft, 2013)

New platforms

Nokia would also need to explore further new platforms in case the Microsoft partnership does not prove fruitful results so they would require some openness towards other platforms like Android.

Ability

The fourth postulate of the ADKAR Model suggests that in order to implement a change, the ability to implement that change is required. The ability to utilise skills, execute strategy, and overcome the barriers and to implement the change is required. This ability can be enhanced by various initiatives such as training, mentoring and coaching.

Offering employee development plan such as skills training and supervisory skills can increase the ability of workers.

If Nokia can state its goal, and they state it right, then it’s very likely they would be able to attract the really best talent as a result.

With Microsoft as their strategic partner in technology, Nokia can leverage the expertise of Microsoft in talent management and employee performance management. For instance the symbiosis between Microsoft and Nokia can have a profound effect on the way Nokia works.

Nokia and Microsoft are also combining services assets to drive innovation. Nokia Maps, for example, will soon be at the heart of key Microsoft assets such as Bing and AdCenter, and Nokia’s application and content store will be integrated into Microsoft Marketplace. Similarly, Microsoft will provide developer tools, making it easier for application developers to leverage Nokia’s global scale. (Nokia, 2013)

Reinforcement

It’s the empowerment of the people. After the change has been implemented, members of team need to be reaffirmed that change is for good and here to stay.

During the reinforcement process its best to constantly monitor progress, encourage and direct. Schedule regular meetings to discuss how things are going. Review any quantity and quality measures that are relevant. (Monster, 2013)

The higher management needs to setup mechanisms to keep the change in place.

It’s a well known fact that Incentives derives behaviours. Setting up mechanisms to reward employees otherwise there is a potential risk that employees may be drifted to old ways.

It’s an “adopt or die” situation for Nokia and the stakeholders would need to realize that change is for their own benefit.

For Nokia this would mean that they would need to create an environment of innovation like their rivals Apple and Google so that the employees feel motivated that they are making a positive change.

3.4.4) and develop appropriate measures to monitor the change progress

Monitoring the change

Monitoring the change as its happening is an important task and it value cannot be underestimated. It provides an ongoing analytics to the change process and gives an early indication to events which helps to carry out the process in a seamless way. There are many ways by which the change can be monitored. It could be monitored by focus groups and workshops, management open-door policies, team briefings, Q&A sessions, external consultants/ auditors, staff feedback, staff suggestion, anonymous hotlines or confidential contacting mechanisms, attitude surveys and questionnaires. All of these are ways by which an organisation can effectively keep a measure of the change process. (OCFS, 2013)

The most appropriate measure in case of Nokia would be to have Focus groups and workshops and management open-door policies.

The focus groups encourage employees across all the departments to discuss the matters that concern them most. Its enables the employees to have their say in the matter and it encourages idea generation. Because whenever there is change there will be conflict and if the companies don’t seek out conflict they won’t excel, because at least in conflict there are ideas and with the conflict the management don’t hear the best ideas. So a healthy debate with the employees is an important analytic tool that could be deployed to measure the change. (OCFS, 2013)

The second important method to monitor the change is by implementing a culture of management open-door policies. This encourages employees to discuss the matter with the person in question and it eliminates the strict “Boss culture” from the organisation. Employees feel they have a power to speak to the appropriate person and can share their view.

c) Assess and comment on using strategic intervention techniques (most suitable) in Nokia (3.1.3)

The term intervention refers to all the planned programmatic activities aimed at bringing changes in an organization. These changes are intended to ensure improvement in the functioning of the organization - in its efficiencies and effectiveness. The changes are brought through the employees in the organization while consultants facilitate the change process. (management4all, 2013)

Strategic Interventions are broadly defined as set of planned activities that are intended to improve an organisations performance and effectiveness.

The targets of interventions could be Strategic, Techno-Structural, Human Resource Management and Human Process Interventions. (OCL, 2013)

In case of Nokia, we will discuss Strategic Interventions techniques and how they can be applied to Nokia in order to change the current state of Nokia.

Mergers and Acquisitions

Nokia Siemens Networks was created as the result of a joint venture between Siemens Communications division (minus its Enterprise business unit) and Nokia's Network Business Group. (Guardian, 2013)

Among Nokia’s major strategic acquisitions is of Navteq. In October 2007, Nokia bought Navteq, a U.S.-based supplier of digital mapping data, for a price of $8.1 billion. This formed the basis for Nokia Maps which is a direct competitor to Google Maps. (Nokia, 2013)

For Nokia to survive in this mobile industry, which is mainly driven by the growth of the internet as more and more users are now beginning to use internet and their first point of contact with the internet is via a mobile phone.

Nokia would need to plan some strategic mergers and acquisitions with companies that have a strong hold in the web and the internet market and companies which are coming up with new innovative ideas and solutions for the mobile devices.

As Nokia merged with Siemens to form Nokia Siemens Networks which is now the fourth-largest telecoms equipment manufacturer measured by 2011 revenues (after Ericsson, Huawei and Alcatel-Lucent) (Reuters, 2013) and the company is creating a huge profit for Nokia.(Fiercewireless, 2013)

The Navteq acquisition was also a very successful acquisition and this formed the basis for Nokia Maps which is a direct competitor to Google Maps. (Nokia, 2013)

Similarly, Nokia could also do some strategic mergers with companies like HTC, LG, Huawei and Sony who are also bringing new innovations in the mobile hardware industry.

Another tactics that could be adopted by Nokia would be to acquire innovative companies which specialise in the area of local, social and mobile and this would give them an edge over other mobile companies as the next generation of apps would be built around local, social and mobile; as quoted by Eric Schemidt(CEO of Google) at the LeWeb conference 2011. (Youtube, 2013)

Nokia can use the merger option with strong companies in the mobile hardware section as when the companies are in crises they can choose to merge with another company to become successful as bigger is better in corporate world (Rasmussen, 2013)

Nokia Microsoft Partnership (Plan A)

Since February 2011, Nokia has had a strategic partnership with Microsoft, as part of which all Nokia smartphones will incorporate Microsoft's Windows Phone operating system (replacing Symbian). (BBC, 2013)

Nokia has joined forces with Microsoft in an attempt to regain ground lost to the iPhone and Android-based devices. The deal will see Nokia use the Windows phone operating system for its smartphones. (BBC, 2013)

The joint product roadmap will give consumers a near-exhaustive portfolio of established products and services, including things like location services, search, entertainment, social, advertising, eCommerce, and a variety of others. (winsupersite, 2013). This would also be an advantage to users who use Microsoft Office. According to the statistics Microsoft Office is installed on one billion machines around the world. (Thenextweb, 2013) So the same UI of Microsoft Office on phone and the PC would mean that most people would be comfortable with the ease of use of Microsoft Office.

Incorporating Android OS (Plan B)

Keeping in mind that the almost 5 years ago people were mostly using Nokia phones but now they are using Android based devices as with the introduction of Android apps and a plethora of free apps that Android market offers are available in the market place. This has given users a plenty of choice to perform their daily tasks on these smart phones. Most users have started using phones of Samsung, HTC etc which incorporated Android OS while others are opting for iPhones which offers them apps on the Apple platform.

The key point here is that users would switch to phones which offer them fast, reliable, secure and innovative opportunities to get their jobs done in a fun and friendly way. On top of that rich user friendly interface also plays a huge role in winning the users trust and confidence.

Samsung coupled with Android, while iPhone coupled with iOS have offered users exactly these innovations and that has been a hallmark for their success.

If Nokia is to revive itself they would have to follow the similar capabilities that Android and iOS phones are offering.

One strategy for Nokia is to consider partnership with Google and incorporate Android as its smart phone operating system. This would give users with plenty of choice who are already familiar with the Android OS and would enable them for an easy transition to switch back to Nokia phones.

The Android smartphone operating system was found on three out of every four smartphones shipped during the third quarter of 2012, accounting for 75.0% of the 181.1 million smartphones shipped in 3Q12. (Businesswire, 2013)

Conclusion: Nokia stands a chance that if partnership with Microsoft does not go well then at least they have a fall back plan of Android as their OS. So this needs to be understood by CEO, and other higher management of Nokia to have both strategies implemented before its too late.

Smart Tablets

Another area where Nokia should keep a focus is the tablets market which is quickly replacing desktop PC’s and laptops. As more and more users every day are switching to tablets.

Tablet as a category has witnessed a huge jump in the last year. As per IDC report, a total of 52.5 million tablets were shipped in the last quarter of 2012, which is a 74.3 percent increase from the third quarter and up 75.3 percent from 2011's fourth quarter. (NDTV, 2013)

Culture Change

For Nokia to succeed in the technology market which is stimulated with innovation, they should adopt the Google 80% rule. According to Eric Schmidt the CEO of Google while speaking at the Princeton University he quoted: “We encourage all of our employees to spend 20% of their time to do what they are interested in and what they love to do, not what their boss wants them to do; and out of that most of our great new products have come from” and this is how they have incorporated the innovation culture inside their organisation. (Youtube, 2013)

Implementing such 80-20 rule in Nokia would also encourage their employees to innovative and come up with ideas that would be beneficial to the company and would also facilitate the users. So it’s a WIN-WIN model.

Secondly, it is axiomatic that Nokia now need to break from existing closed model of apps development which has worked for them for a decade. This could be achieved by empowering apps developers to make apps for the phones without limitations of the underlying hardware and software.

Monetising the app market would also encourage developers to make apps for Nokia for which they get rewarded for their efforts. Apple has been successful by monetising the app developers through AppStore which other platforms have been incapable of monetizing.

By joining forces with Microsoft, Nokia is already going along the line of incorporating Window mobile operating system as its core mobile operating system which gives them an opportunity to tap in the market

Just as iTunes gave Apple a significant advantage in having a comfortable app purchasing mechanism that customers already accepted and used. Until that is matched by Nokia for its marketplace, it will still remain fragmented.

Another lesson that Nokia should need to learn from Google is that the high tech and telecoms industry changes quite frequently so they need to constantly re-invent themselves with new ideas, new innovation and new platforms etc and understand the norm is change.

Creativity and Innovation

Stephen Elop, the CEO of Nokia said: "While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time."

"The first iPhone shipped in 2007, and we still don't have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable." (BBC, 2013)

Since the 2007 introduction of the iPhone, Nokia has lost 90% of its market share. The company announced it would adopt Microsoft’s smartphone operating system in 2011, giving up the home grown Symbian in an attempt to regain its role in the mobile market. (mashable, 2013)

Nokia plans to continue ordering the production of Windows Phones powered by Microsoft’s (MSFT) previous-generation Windows Phone 7.5 platform through much of 2013. By continuing to sell Windows Phone 7.5 devices, Nokia can better target emerging markets with low- and mid-range smartphones that are far less expensive than Windows Phone 8 handsets, which require more modern components. (Yahoo, 2013)

To keep up with pace of new innovations, Nokia is also releasing design files that will let owners use 3D printers to make their own cases for its Lumia phones. (BBC, 2013)

Presentation of New Product Features to Customers

While Nokia has packed its new Lumia with some unique hardware features, such as wireless charging capability and a camera with optical image stabilization, the chief executive Stephen Elop said that the company faces a challenge in being able to show off these features to consumers. "Our innovation doesn't matter at all, if these features aren't presented well in the retail environment," Mr. Elop said. "When you walk into a store, we will need a trained sales person to say 'Hand me your iPhone or your Galaxy SIII and let's take some pictures side by side.' If that process happens, we will do very well." (Wall Street Journal, 2012)

d) Examine the need for strategic change in Nokia (3.2.1) and assess the factors that are driving the need for Strategic Change in Nokia (3.2.2)

The need for Strategic Change is induced by various compelling forces affecting the businesses to change. Some of these forces are customers, competitors, technology, regulations, distribution channels and suppliers.

Needs for change due to Internal Factors

Profitability

Profit is the revitalization for any business; it participates in expanding the business in the form of retained earnings. Profits also increase the market value of company’s stock, which is beneficial for the investors looking for capital appreciation. (TheGeminiGeek).

In current economic times when the US and Europe is stuck twice by financial recession (Guardian, 2013), normal consumers are demanding more value for their money. So producing cheap phones

Nokia Stock Exchange: Nokia stock rates have fallen dramatically in last 5 years. But having said that the way company is moving forward, the technologies, symbiosis, the partnerships and strategic plans suggest that it could be back to its previous status.

Other Important Factors: Chinese good quality mobiles like Q-Mobile etc. offering much better performance at half the cost of Nokia phones. (TribunePK, 2013)

Profitability also plays an important role in the functionality of an organization. Without the profits no business can stay operational for long. In telecoms industry the role of profitability is even more critical as these telecom companies have to constantly invest in the research and development and they need to set a high budget for their R&D.

Nokia has seen a substantial drop in their profits in last 10 years. The company has a market value of 6.8 billion Euros ($8.6 billion), down from a peak of more than 300 billion Euros in 2000. (Bloomberg, 2013)

Nokia has lost more than 70 billion Euros in market value since Apple introduced the iPhone in 2007, taking the lead in smart phone innovation. (Bloomberg, 2013)

New Product and Service design

As customers are now become more demanding than ever in terms of look and feel and the functionality of products.

Apple set the trend with sleek iPhones and everyone started to love the shiny new look and feel of the iPhones. Customer like products which are eloquent and they love to show others.

Game developers also love the iPhone mechanism of monetization and more and more developers are developing apps for the apple devices. Developer revenues from Apple's app store in September 2012 passed $6.5 billion, with more than 35 billion downloads of 700,000 available apps in the AppStore. (IGN, 2013)

Similarly Samsung Galaxy S3 has been a huge success too. Neil Shah, senior analyst at Strategy Analytics, attributes part of Samsung's success to the larger form factor of the Android handset. "A large touchscreen design, extensive distributions across dozens of countries, and generous operator subsidies have been among the main causes of the Galaxy S3’s success," (Pocket-Lint, 2013)

Nokia would need to look at these market trends and organize itself to match these market trends.

Need for change due to external factors

Developments in technology

The advancements in technology have a profound effect especially in IT and telecommunication sector where the competitions is high from countries like China, Japan and Korea. Due to this continuous shift in technology – companies continuously face challenges. Many companies are spending a large amount of capital in research and development.

Rate of underlying technology innovation is not slowing down in next decade, a technology base case would offer that Moore’s Law which is the rule that semiconductors double in capacity or computing capability (speed) doubles every 18 months is going to continue for at least next 10 years. So CPU rates will increase by a factor of 100 in next ten years. (Intel, 2013)

Doubling every 18 months is roughly a factor of 10 in five years. In 10 years that’s a factor of 100. In 25 years it’s roughly a factor of 100,000.

Another law, Kryder's law says that memory (digital storage space) doubles every 12 months (ScientificAmerican, 2013). The tech companies are fully aware of these statistics and cannot afford to lose their grip on keeping up with the rate of technological innovation.

According to Eric Schmidt, CEO of Google, “We only need to look at the internet adoption rate which gives us a clue into mobile adoption rate as “most people now and in future will have their first internet experience on a mobile phone not on the pc”. We have only got about one billion plus users using the smart phones in the world. 3 billion in total uses mobile phones of any type so that’s 2 billion without smart phones. While the world’s population is around 6.5 billion plus. According to the statistics, another billion users will be using the smart phones by next year ~ 2015. So what we are seeing now is just a small piece of a very large pie. Every big company wants to get its share and that’s why we see the race among the players to accommodate these next billion plus users” (Telegraph, 2012).

Nokia would need to realize that the importance of technology change is critical in telecoms industry, as it drives the uses behavior.

Change in Customers requirements

Customers play a significant role in driving the change. In case of Nokia the change is driven by the user behaviours which demand elegant phones with high quality apps running on them. This standard has been set by competitors like iPhone and Samsung. The user expectations have risen higher due to these new phones with powerful software running on equally powerful hardware.

Activities and Innovations of competitors

Competition is another major factor which drives change in an organisation. Nokia faces competition from Samsung which announced it last 5 quarters consecutive record sales. Samsung Electronics has said it expects to make a record profit for the quarter to the end of December, powered by growing sales of its smart phones. It has estimated an operating profit of 8.8 trillion Korean won ($8.3bn; £5.1bn) for the quarter, a 90% jump from the same period a year earlier. (BBC, 2013)

HTC has also challenged the Nokia Lumia 920's claim to be the flagship Windows Phone 8 handset by offering new Windows smartphones with its HTC 8X windows phone range. (BBC, 2013). Samsung has also launched its Samsung Ativ S which is a Windows 8 Phone.

Nokia would need a powerful marketing strategy like Apple and Samsung where they have got brute force tactics, carpet bombing the airwaves with TV commercials. Advertising in magazines and other TV shows about latest features and what makes them stand out from the crowd. A research suggests that about 70% of consumers walk into the store already knowing what they want to buy so it’s absolutely essential that brand awareness and product benefits are presented to the customers. (BBC, 2012)

e) Assess the resource implication of Nokia not responding to such Strategic change (3.2.3)

The resource implications of not responding to strategic change can come in the shape of loss of revenue, loss of jobs, loss of market share, company reputation, damage to brand name, media criticism and loss of confidence among the stakeholders.

In case of Nokia some implications have already began for example, Job cuts, as Nokia reduced its earnings forecast for the second time in 2012 and said it will cut as many as 10,000 more jobs and shut production and research sites in Finland, Germany and Canada. The job cuts are aimed at accelerating Nokia’s cost- reduction efforts. The company now targets additional savings of about 1.6 billion Euros, aiming to bring annual expenses at its devices business to about 3 billion Euros by the end of 2013. That’s down from 5.35 billion Euros in 2010 (Bloomberg, 2013).

f. Develop systems to involve stakeholders in the planning of change (3.3.1) and develop a change management strategy with stakeholders (3.3.2) (6.3.2)

Stakeholders are defined as those individual, group or bodies that have an interest in an organisation. Stakeholders can affect or be affected by the organization's actions, objectives and policies. An example of key stakeholders are creditors, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions and the community from which the business draws its resources. To involve stakeholder in the innovative change management the most important task is to identify and prioritise the key stake holders. This is achieved by using the stakeholder analysis tool which gives indication about the key people who play an important role in the company.

As it could seen from the table below that the high power stakeholders are the key executive management and the customers of Nokia.

Nokia Stakeholder Analysis Tool	Low Stake	High Stake
Low Power	MONITOR/MINIMAL EFFORT Suppliers etc	KEEP INFORMED Government, Legislative bodies etc
High Power	KEEP SATISFIED External directors etc	MANAGE CLOSELY Venture Capitalists, Customers, Higher Management Staff, CEO etc

Once the stakeholders have been identified and then importance prioritised, then the next step for managers is to identify any conflicting expectations of stakeholder groups and need to construct strategies to suite their business goals and objectives.

For Nokia to have a culture like that of the Google, it needs to make sure that they have venture capitalists who understand strategic investment, portfolio investment.

Stakeholder engagement strategy

A stakeholder engagement strategy should establish the objectives of stakeholder engagement through the plan preparation process and indicate how the involvement of stakeholders is achieved at each stage of the plan preparation/dissemination process. It should indicate how the process of policy making will be undertaken and transparency delivered. As part of delivering transparency, the strategy should be made publicly available. The strategy should include

1) The vision for stakeholder engagement and

2) The details of purpose, players, methods and responsibility. Guiding principles include inclusivity, transparency, appropriateness, clarity and comprehensiveness.

The stakeholder engagement strategy builds up trust and understanding between key stakeholders. Stakeholders are offered an opportunity to participate in decision-making process. It also helps in identifying points of dispute at an early stage. Stakeholders achieve a real sense of the problems to be overcome during the change process.

Change Management Strategy with Stakeholders

The ADKAR model states that there should be a desire among the stakeholders to change and participate in the process to support it. This would only be possible if they are already aware of why the change is needed.

Offering employee development plan such as skills training and supervisory skills can increase the ability of workers.

After the change has been implemented, members of team need to be reaffirmed that change is for good and it’s here to stay.

The higher management needs to setup mechanisms to keep the change in place. It’s a well known fact that Incentives derives behaviours. Setting up mechanisms to reward employees otherwise there is a potential risk that employees may be drifted to old ways.

It’s an “adopt or die” situation for Nokia and the stakeholders would need to realize that change is for their own benefit.

For Nokia this would mean that they would need to create an environment of innovation like their rivals Apple and Google so that the employees feel motivated that they are making a positive change.

g. Evaluate and comment on the systems used to involve stakeholders in the planning of change (3.3.3) incorporating a strategy for managing resistance to change (3.3.4)

The systems by which Nokia’s stakeholders could be positively engaged in a change management strategy is discussed previously. Once the key stakeholders have been recognised, then they are prioritised, their interests and objectives are taken into consideration and a strategy is planned to articulate change strategy to them. The way this could be achieved is:

· The designed systems are considered to address the issues within the stakeholders.

· The systems suggest issues and their priorities to be considered within the stakeholders.

· The systems are designed to receive reports and proposals from the stakeholders.

· Meeting held periodically throughout the change process.

· Provides comment on proposals being made by the stakeholders.

Managing resistance to change

As Nokia now needs to invest in the cutting edge technology that is disruptive, it requires new platforms, more innovation. The innovation is needed in its development tools and to provide developers with incentives. Nokia needs to copy good practices from the industry and from competitors. The organisation needs to be more open, flexible and transparent and this is a huge change.

Whenever there is a change there is likely to be some resistance. This resistance come in many different ways and could be resolved in various different ways as well. The major sources of organisational change are structural inertia or inactivity, limited focus to change, group inertia, threat to expertise, threat to established power relationships, and threat to established resource allocations.

In case of Nokia, the way to handle these threats and resistance to change is by adopting various strategies. Some of the strategies to overcome are:

Education and Communication: If Nokia employees are educated about the change beforehand, then this will allow them an opportunity to understand as to why the change is required and hence by educating and efficiently communicating there will be less resistance. If we involve employees in the change effort then are more likely to understand the change then to resist it. By active participation and implementing change plan the barrier to resistance could be removed.

Another way by which the change resistance could be minimised is by support from managers towards their staff. By mentoring and supporting during the change process, managers could help employees deal with fear and anxiety during a transition period.

Nokia managers could reduce resistance by offering incentives to employees and the future benefits that the effective change would bring.

Another method of combating resistance is by coercion or compelling by force of authority. Nokia managers could effectively force employees into change by making clear that resisting change could lead to losing jobs and that could be one of the last resort to strategically manage the change resistance.

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Wednesday, 9 October 2013

Strategic Change Management in Organisation (Nokia)

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