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Nokia, a mobile phone once at the palm of everybody’s hands and now, a forgotten brand overshadowed by tech giants such as Apple and Samsung. The fall of Nokia was relatively unforeseen because it had the largest market share of 40% in 2009 (The Summary). In the period between the 1990s to the late 2000s, Nokia reached its peak operational level in mobile phone networks and handsets. However, due to several factors such as an incompetent management team and the threat of new entrants, Nokia’s dominance in the mobile phone industry quickly eroded. Nokia is a prime example of how a successful corporation can become obsolete when unable to adapt to current market needs.
Introduction Nokia, a mobile phone once at the palm of everybody’s hands and now, a forgotten brand overshadowed by tech giants such as Apple and Samsung The fall of Nokia was relatively unforeseen because it had the largest market share of 40% in 2009 (The Summary) In the period between the 1990s to the late 2000s, Nokia reached its peak operational level in mobile phone networks and handsets However, due to several factors such as an incompetent management team and the threat of new entrants, Nokia’s dominance in the mobile phone industry quickly eroded Nokia is a prime example of how a successful corporation can become obsolete when unable to adapt to current market needs Key problems Nokia experienced The Threat of New Entrants At their prime, Nokia had amassed a huge customer base with a majority of first-generation mobile phone users having owned a Nokia phone at one point in time (The Summary) This, however, was very short-lived New companies were entering the mobile phone market with their ideas of how a mobile phone should be The first came in the form of a Blackberry, whose mobile phones had great functionality geared towards business usage and was primarily used to conduct business (The Summary) Simultaneously, Apple had introduced the iPhone which was the reinvention of a mobile phone into a smartphone, with a differentiating smartphone interface, iTunes and the AppStore (The Summary) Google had a slightly different approach to the market, instead opting to sign other manufacturers up to use their Android operating system which was connected to a variety of digital content as well as its marketplace (The Summary) Google’s strategy gave rise to the Korean giant, Samsung, which turned out to be a formidable competitor in the mobile phone industry for both Nokia and Apple All these other companies had taken up a majority of Nokia’s market share, which dropped from 40% in 2009 to 24% in 2011, and are all competing based on product differentiation and price (Giachetti & Marchi, 2010) Although Nokia may have been the pioneers of the mobile phone, any late entries to the mobile phone industry would not necessarily mean they are at a disadvantage when it comes to market share (Willkie et al., 2014) Being an incumbent firm at the time, Nokia would have been facing situations that threaten their relative advantage due to the pressures from the mobile phone market dynamics (Aspara et al., 2011) Unfortunately, they failed to sustain the pressures from other mobile phone manufacturing firms lOMoARcPSD|10803158 Inability to adapt to market needs The release of Research in Motion’s Blackberry, Apple’s iPhone and Google’s Android operating system redefined customer preferences According to Video 2, Nokia responded to the release of Apple’s iPhone by releasing an all touch screen Nokia 5100 Music Phone but was viewed negatively by critics due to its poor software implementation which resulted in a lacklustre user interface (The Summary) Nokia’s operating system, dubbed Symbian, was poorly built, overly complex, outdated and simply problematic concerning its maintenance and operation (The Summary) To keep up with the ever-changing customer preferences, Nokia needed to innovate at a higher rate They were once the leading firm when it comes to innovation in the mobile phone industry but firms such as Apple had taken over Nokia’s pre-eminence status (The Summary) On top of that, Nokia had a large product range for different customer segmentation (Video 4) The issue here is that Nokia was trying to adapt to the needs of the market separately by innovating on many different devices, instead of adapting to customer needs altogether within one physical device Having a large variety of product offerings may lead to customers being confused as to which products are better than the others (Lowe et al., 2020), this will be further explained in the recommendations section A company as large as Nokia has to proactively adapt to its current landscape to better respond to the needs of consumers as well as capture more of the market (Lowe et al., 2020) Lack of Innovative Leadership When it came to innovation and product development, Nokia was a company that was viewed by others as a slow-moving organisation When Olli-Pekka Kallasvuo took over, he merged the smartphone and basic phone operations but instead of innovating more on their smartphones, they went backwards and focused more on the traditional phone (Video 2) Stephen Elop replaced former CEO of Nokia, Olli-Pekka Kallasvuo, in September of 2010 and he had a good grasp of the fundamental issues Nokia were facing at the time but lacked understanding in how to address these issues Nokia needed to innovate at a higher rate compared to Apple and Google, to stay ahead of its competitors Unfortunately, Nokia was just a huge company that learned to maintain its global position instead of innovating for new opportunities, according to Frank Nuovo, former VP and Chief Design Officer of Nokia (Video 3) For example, Nokia had come up with an 8-inch tablet way lOMoARcPSD|10803158 before the release of Apple’s iPad but did not have any sense of urgency when it came to grabbing new opportunities (Video 3) Most organisations need to put their focus on innovation and creativity, to stay competitive and gain sustainability, especially in the mobile phone industry (Khalili, 2017) Stephen Elop had the right idea but the wrong execution concerning focusing on innovation and creativity According to Video 3, Elop had called 100 engineers and product managers from different offices as far as Massachusetts to China, to attend a meeting to come up with a more competitive phone However, some groups were struggling to make themselves heard while others were only focusing on keeping their jobs The outcome of this meeting ended up in vain, as the software they reached a consensus on was discontinued after a short period In this case, leadership behaviour can be critical as it helps to create a risk-tolerant atmosphere in which employees are confident to think beyond the box and contribute to the generation of new and useful ideas (Khalili, 2017) Internal conflict regarding the operating system Symbian was Nokia’s primary operating system since the 1990s and was proven to be very popular throughout the years However, after Olli-Pekka Kallasvuo was appointed and decided to restructure its operations, the company started going backwards and was heavily afflicted with internal conflict (Video 2) By 2008, Nokia’s executives decided to shift their top priority towards creating an operating system that can compete against Apple’s slick operating system (Video 3) The internal conflict within Nokia began when two teams were created to solve their operating system issue, one to revamp their Symbian operating system and the other to create an entirely new operating system, named Meego (Video 3) This resulted in the two teams competing against each other for support of the upper management which hindered their R&D progression as they were spending more time arguing internally rather than creating new designs (Video 3) What change strategies would have been the most appropriate to apply and why? Nokia can adopt a layered change management strategy by introducing multiple methods that can operate together or separately, due to the company's dysfunction in terms of management structure and workforce relations lOMoARcPSD|10803158 Action Research Model The action research model is commonly used as a way of planning and implementing change within an organisation Planned change can be attained using this change model by first conducting initial research on the developmental needs of the organisation which will then provide information that can be used for any measures taken towards change This leads to a cycle of repetitive processes of research and information gathering that will be proactively utilised in making changes within the organisation This cycle will have to involve a substantial amount of collaboration between the organisational development (OD) practitioner and members of the organisation The measures taken will be carefully evaluated based on the results, therefore before action planning and any implementation, this model strongly emphasises data gathering as well as diagnosis The goal of this change model is to help specific organisations develop a piece of more general knowledge and understanding that can be applied within other scenarios as well as implement the planned change According to Yves Doz in Video 4, Nokia was a company that had an understanding of what the future of the industry entailed but failed to act upon the early analysis they carried out regarding the future of the industry Furthermore, Nokia we’re spending their R&D budget on building a wider range of products to cater to different customer segments and preferences, instead of focusing their R&D resources on a focused product range (Video 4) By utilising this change strategy, Nokia can create an internal culture of collaboration as this change model encourages and heavily emphasises the collaboration aspect between the OD practitioner and members of the organisation, to successfully effect change within the organisation On top of that, this change strategy can ensure that there is no information gap between the upper management and operations team of Nokia, which in turn may lead to lower levels of internal conflict (Waddell et al., 2019) External Change Agents Alagoz et al define external change agents as a consultant associated with a body separate from the organisation that officially control or promote intervention decisions in the desired direction These external change agents usually have a specialist background in a scientific area relating to organisational development science or the technologies being implemented This position involves external researchers who can carry out a multisite intervention analysis lOMoARcPSD|10803158 and other officially identified persons from an external agency When compared to internal OD practitioners, external OD practitioners tend to be more mature, have more management experience and spend most of their time within the OD space (Waddell et al., 2019) There are several advantages of contracting an external OD practitioner that will be discussed Firstly, an organisation that lacks particular expertise can simply hire an external OD practitioner that specialises in said expertise that is unavailable internally (Waddell et al., 2019) Adding on to that, even if the organisation has that particular expertise but would like a more objective point of view into the organisation’s development process, an external OD practitioner may be able to assist in that (Waddell et al., 2019) Furthermore, external agents can challenge the status quo and can delve into difficult issues, since they are allowed to so where an internal OD practitioner might not be able to so Lastly, external OD practitioners who are reputable in what they specialise in will often be provided with some deference and power within the organisation (Waddell et al., 2019) It would have been highly beneficial for Nokia to hire an external OD practitioner during the period when Nokia was experiencing intense internal politics and conflict, to have an unbiased mediator who can provide a more objective solution for both parties in conflict (Waddell et al., 2019) Along with its advantages, there are also several disadvantages when hiring an external OD practitioner Firstly, external OD practitioners will need more time to familiarise themselves with the organisation and rely on the parties involved to provide as much information as they can to make informed decisions (Waddell et al., 2019) Secondly, organisations may be wary of outsiders as they would have doubts as to whether an external OD practitioner may be able to solve their internal issues (Waddell et al., 2019) Lastly, members of the organisation may believe that an external OD practitioner may not have the organisations best interest in mind Promote a culture of adaptability According to Video 3, the culture within Nokia was very toxic with their employees deeply involved with internal politics This is mainly due to the fact that the management team decided to divide the software team into two, thinking it would be more efficient to come up with the best software for Nokia but as it turned out, this made the two teams compete against each lOMoARcPSD|10803158 other instead of collaborating and created a toxic work environment It is evident that the culture within Nokia did not promote innovation nor creativity Nokia’s mistake, however, was that it should have promoted a culture of adaptability within its working environment The culture of adaptability values innovation as well as creativity and emphasizes flexibility and the importance of meeting the customer’s needs (Do et al., 2016) Nokia would have benefitted from having a culture of adaptability by meeting customers needs at every turn as the mobile phone industry was highly volatile and rapidly changing What specific recommendations would you have made if you were part of the senior management team at Nokia and why? Simplify their product offerings A major factor in Nokia’s downfall was the over-diversification of their products, Nokia was too focused on creating a product for every single customer segments instead of focusing on a smaller range of products that would satisfy every customer’s needs As a result, resources were being spent inefficiently for products that had a shorter life cycle due to the rapid advancement of the mobile phone industry, which also meant that they were too short term oriented The senior management team could simply decide to reduce the size of their product offering by focusing their R&D and resources on current products and features that most meet the customer needs as opposed to spending their R&D and resources on a variety of products that fulfil different needs for different customer segments With this recommendation, Nokia may see their products stay relevant longer in the ever-changing landscape of the mobile phone industry To compare, we shall take a look at Nokia’s fiercest competitor, Apple Apple when compared to Nokia, has a smaller core product offering which consists of their smartphone, tablet and laptop Apple’s core product offering is small, user friendly and uncomplicated (Khan et al., 2015) whereas, Nokia prioritised short-term product innovation instead of focusing on their products long-term innovation development resulting in a large product offering that can confuse customers (Vuori & Huy, 2016) With Apple’s consumer products such as the Apple iPhone, they keep the line-up simple with a few variations of the product differing simply based lOMoARcPSD|10803158 on specifications A positive point about Apple’s strategy is that they’ve redefined the needs of the customers within the mobile phone industry and are in the best position to give their customers exactly what they need The success of Apple can be attributed to the fact that their products have a certain exclusivity to them, for example, certain Apple products stop being produced by Apple themselves when newly updated products are released which is due to happen every year so that they can put more focus on their new products instead This is a good strategy as it keeps demand high to allow for consistent sales and allows for a better allocation of resources towards making their current product better instead of creating an entirely new product Nokia would have been able to maintain its competitive position within the mobile phone industry if it had continued innovating on its core products Switching from a Matrix Structure to a Product-Based Divisional Structure As mentioned previously, Nokia struggled with the dynamics of its matrix organisational structure This struggle caused an internal divide between Nokia’s upper management and their operations team which played a vital role in the demise of the organisation At that point, Nokia should go back to the basics and restructure its entire organisation One way they could this is by restructuring their organisation to a product-based divisional structure A product-based divisional structure consists of various smaller functional divisions (Devaney, 2021) This type of structure focuses on a particular product line for each division within the organisation (Devaney, 2021), for example, one division within Nokia could be focused on their mobile phone offering while another division could be focused on their service offerings On top of that, each division can have its own sales and marketing team, as a result, communication within each department would be more transparent The productbased divisional structure would be ideal for Nokia as it eliminates the aspect of division by having the mobile phone team working together within a single department and can make resource allocation more efficient, which can promote collaboration within a department Compared with Nokia’s competitors, Apple has a hierarchical organisational structure which is similar to a product-based divisional structure Apple has divided their departments based on different product groups, namely iOS and macOS (Meyer, 2019) What differentiates Apple's organisational structure from a product-based divisional structure is that Apple's lOMoARcPSD|10803158 structure also includes a weak functional matrix which is beneficial for inter-divisional collaboration This has worked well for Apple as this structure has been implemented ever since its early days (Meyer, 2019) but as the years passed, it has gone through some incremental changes within its structure but still maintained the overall hierarchical organisational structure In Nokia’s case, they would need a complete restructuring as their previous organisational structure was dysfunctional Nokia would still need time to adjust to a new organisational structure before they can implement other changes to improve and make operations more efficient Conclusion Nokia, back in its prime was a force to be reckoned with, a company with all the resources and capabilities to become one of the greatest mobile phone manufacturing companies in the world However, a series of bad decisions and complacency, unfortunately, led the respectable company to its downfall Nokia lacked proper leadership and was plagued with internal conflict, both of which played an important role in their demise as they were unable to adapt to the current needs of the market and were too slow to so when they attempted to If Nokia were to implement some of these recommendation and strategies mentioned above at the time, they may have very well been still leading the mobile phone industry into the future lOMoARcPSD|10803158 References Aspara, J., Lamberg, J., Laukia, A., & Tikkanen, H (2011) Strategic management of business model transformation: lessons from Nokia Management Decision, 49(4), 622-647 https://doi.org/10.1108/00251741111126521 ColdFusion (2015, January 12) Nokia | The Rise And Fall [Part 2] [Video] YouTube https://www.youtube.com/watch?v=RQEn19symz0 ColdFusion (2015, January 16) HOW Did Nokia Fall? [Finalé] [Video] YouTube https://www.youtube.com/watch?v=NJS1C-j7TX4 ColdFusion (2015, January 6) Nokia | The Rise And Fall [Part 1] [Video] YouTube https:// www.youtube.com/watch?v=yyRb_4-cquc Devaney, E (2021) Types of Organizational Structure Every Company Should Consider Blog.hubspot.com Retrieved April 2021, from https://blog.hubspot.com/marketing/teamstructure-diagrams Do, B., Yeh, P., & Madsen, J (2016) Exploring the relationship among human resource flexibility, organizational innovation and adaptability culture Chinese Management Studies, 10(4), 657-674 https://doi.org/10.1108/cms-01-2016-0022 Giachetti, C., & Marchi, G (2010) Evolution of firms' product strategy over the life cycle of technology-based industries: A case study of the global mobile phone industry, 1980– 2009 Business History, 52(7), 1123-1150 https://doi.org/10.1080/00076791.2010.523464 INSEAD (2018, February 18) INSEAD’s Yves Doz discusses Nokia’s failure in the mobile phone industry [Video] YouTube https://www.youtube.com/watch?v=XNhhQLcaH0I Khalili, A (2017) Creative and innovative leadership: measurement development and validation Management Research Review, 40(10), 1117-1138 https://doi.org/10.1108/mrr09-2016-0213 Khan, U., Alam, M., & Alam, S (2015) A critical analysis of internal and external environment of Apple inc International Journal Of Economics, Commerce And Management, 3(6) lOMoARcPSD|10803158 Lowe, C., Stanley, J., & Stanley, J (2020) Australian case study Research In Transport industry adapting to change: An Transportation Economics, 83, 100940 https://doi.org/10.1016/j.retrec.2020.100940 Meyer, P (2019) Apple Inc.’s Organizational Structure & Its Characteristics (An Analysis) Panmore Institute Panmore Institute Retrieved April 2021, from http://panmore.com/apple-inc-organizational-structure-features-pros-cons Vuori, T., & Huy, Q (2015) Distributed Attention and Shared Emotions in the Innovation Process Administrative Science https://doi.org/10.1177/0001839215606951 Quarterly, 61(1), 9-51 Waddell, D., Creed, A., Cummings, T., & Worley, C (2019) Organisational Change (7th ed.) 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