Running head: NOKIA’S REBIRTH 1
Nokia’s Rebirth
Olakunle Adebowale
Carrie Baggarly
Kimberly Marshall
Benjamin Reeves
Thomas Scibelli
Stephen Steele
Liberty University
BMAL 504 – Leading Organizational Change
NOKIA’S REBIRTH 2
Nokia’s Rebirth
Part 1
Introduction
To get to understand the rebirth and transformation that happened with Nokia and build a
business case around it some core fundamentals about Nokia need to be understood.
Nokia was the dominant phone manufacturing company for many years. It had the brand
recognition, global presence and sales volume advantage over other companies operating within
the same space. The question now becomes how does a company that dominant fall from the top
to the point of bankruptcy within a span of four years?
In understanding the fall, it’s pertinent to understand that Nokia actually started as Pulp
Mill Company, over 150 years ago, and over the years it continued to evolve to a conglomerate
by transforming itself and focusing on communication devices like the mobile phone for which it
became a dominant force within the industry. Nokia was used to transformation and a company
that was built with evolution embedded into its core.
As the company looked down the barrel of its existence, between 2005-2010 Nokia fell
from grace from its position as being a world-dominant and innovative technology company
(Vuori & Huy, 2016). Its revenues declined by 26%, it was shrinking its human capital at the
highest rate within its existence, and it was racking up business losses in the tune of $2Billion
dollars in less than a year. They realized it needed to go through another transformation, a
transformation that will test the agility of the change management processes it had built over
time, and the paradigm of what kind of company it wanted to look like should it survive the
transformation and change.
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This was the mother of transformation for her, it was a period Nokia wasn’t sexy to the
consumers anymore, it wasn’t a darling to the investors and the new kids on the block ( Apple
and the Android new comers ) were technology advancing their products and had gained all the
market share faster than Nokia could understand what was going on or know how it was going to
respond to the market; the changing environment where companies must be agile to the constant
change so they can meet consumers’ needs and wants (Worley, Williams, & Lawler, 2016);
Nokia couldn’t do this as it had forgotten and lost its identity with the leadership and the vision it
was to embracing.
This created a Re-birth of Nokia, via the transformation that it needed to re-shape and re-
focus the company into a new dimension. A dimension that requires a bold and thought-
provoking leader that prepares it for the future and is ready to make bold changes as to its
people, goals, culture as to ensure it dominates the spaces it decides to occupy again. (Laamanen
& Vaara, 2016).
Background
In 1865, Fredrik Idestam started a paper manufacturing mill in Southern Finland and just
three years later he opened a second mill near a small town named Nokia. In 1871, the company
went through its first transformation and became a share company officially creating the Nokia
company.
Nokia continued its growth through the 19th century and in the 1960s the company
expanded into electronics. It developed many electronic devices which also included radio
telephones for the army. The 90s was the decade where Nokia really hit their stride by
expanding into the Nordic and European regions. They were developing multiple mobile devices
such as the Nokia 2100 which completely amazed the company when it sold more than 20
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million devices and the Communicator in 1997 which had features like email, calendar, fax, and
a large display. By 1998, Nokia had released five additional models of mobile technology and
the company had become a global leader in the industry. It surpassed the competitors like Apple,
Siemens, and Sony by increasing their profits from $8.9 billion to $42.8 billion.
In 2007 things began to take a downward turn when Nokia had its first quarterly loss in
over a decade. One big mistake Nokia committed was underestimating their competitors in the
mobile industry race for dominance. During that time, other companies introduced more
innovative products, such as the release of the iPhone and HTC’s mobile device running on the
new Google android operating system. One critical technological decision that severely hurt the
company’s ability to keep up with the competitors was to allow their phones to continue to
operate on the Windows platform instead of converting the technology over to an android
operating system. The continued downfall could be linked to the lack of creating a new vision
and strategy, a negative change culture, and misunderstanding of consumer needs. Information
technology or telecommunications can be considered a continuous, fast changing environment
where companies must be agile to the constant change so they can meet consumer’s needs and
wants (Worley, Williams, & Lawler, 2016).
Nokia realized that some dramatic changes needed to be made to try and save the
company, and in September 2010 Nokia made the decision to replace their CEO with Stephen
Elop, who was the former head of Microsoft’s Business Division. Elop developed a new
strategy, changed the management group, and decision making and organizational structure.
These organizational changes had huge impacts for the leadership and for the organization which
included many layoffs and employee transfers. As Kumar Basu stated, “Transformation efforts
inevitably lose steam if leaders fail to create the desired mind‐sets on the part of employees or to
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ensure that the right people are spending the right amount of time on driving necessary changes
(2015).”
Even with all the changes being put into place, in 2013 the situation was at a critical
stage. Their sales had continued to drop which then caused huge operating losses and share
prices were continuing to fall. In April 2014, over 32,000 employees and Elop were transferred
to Microsoft when the sale of Nokia was finalized. This marked the official end to the Finnish-
born company which had over 150 years of industrial development and rich history.
Reinventing Nokia
After Stephen Elop’s departure and the sale of Nokia’s devices and services to Microsoft,
Nokia consisted of Nokia Networks, HERE location services, and Nokia Technologies. Rajeev
Sure became the new President and CEO, where he still holds the positions today. After the
failure of the mobile technology, Nokia faced difficult decisions about its future. In order for
Nokia to continue success, they had to adapt and renew themselves through their remaining
business lines and regenerate the vision. Nokia would follow the multi-layer path dependence
framework, which consists of preformation, formation, and lock-in at four layers (Wang,
Hedman, & Tuunainen, 2016). The framework was accomplished through acquisitions of other
companies but also selling one of their business lines. The Nokia’s vision was to be a world-
leading network technology and serviced business, along with licensing and innovation for
Nokia Technology. One way to regenerate the vision is to describe a “burning platform”, which
that highlights the threats of not changing; Nokia just experienced “burning platform” with their
Devices and Services division (Ciampo, 2017). Between 2014-2018, Nokia focuses on
transforming the company into a more competitive overall technology company.
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Nokia’s technology focuses on developing advanced technology and licensing, where
Nokia networks focuses on broadband infrastructure, software and services. In December 2014,
Nokia network’s technology assisted Telenor Denmark providing voice phone calls over the LTE
network. By 2016, Nokia Network’s technology became the mainstream technology, and
predicted that 10% of all LTE subscriptions would use the voice over LTE. Nokia will create
partnerships or provide solutions to government agencies across the globe, large corporations, all
the while innovating new technologies. To continue to the growth and technology dominance,
Nokia acquired Alcatel-Lucent in 2015. Alcatel-Lucent is a major player in the
telecommunications industry, where they developed routers, switches, and other network
components. Nokia and Alcatel-Lucent both had complementary portfolios, and by combining
both companies would increase operating cost synergies of EURO 900 million by 2019.
Acquiring Alcatel-Lucent would assist in moving towards the new 5G network.
In September 2018, Nokia Network invested in the new 5G network, which is predicted
to be released and used by 2020. Nokia invested in 5G solutions in the technology, software and
services where they can dominate in the Western markets over the Chinese companies, such as
Huawei and ZTE. One particular business deal to mention is Nokia’s and T-Mobile’s worth $3.5
billion. Nokia will provide end-to-end 5G solutions to T-Mobile through technology, software,
and services. In the first half of 2018, Nokia’s global services accounted for 29% of Nokia’s
total network division.
Nokia would embark on the Android smartphone and tablet industry again. One of the
caveats to Microsoft’s purchase of Nokia’s Devices and Services division was that Nokia could
not release any mobile phone technology until 2016. In May 2016, Nokia and HMD Global
signed a 10-year strategic brand and intellectual property licensing agreement. This agreement,
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under Nokia Technologies, allows HMD Global to create the next generation smartphone and
tablet under Nokia’s name, which is still popular. Nokia will not actually manufacture phones,
but will gain royalties from the sales of the smartphones and tablets. In 2018, Nokia-branded
phones became the third most popular phone in the United Kingdom and globally ranked the
eleventh.
Nokia HERE provided mapping, navigation and location intelligence. Nokia HERE
technology combined high definition maps with cloud technology to provide real time location
experiences with connected devices, such as smartphones, tablets and wearable devices. Nokia
HERE was partnered with Oracle allowing shippers and logistical service providers to better
track their shipments via map display, geocoding, and routing capabilities. In August 2015,
HERE digital mapping and location services was sold to automotive companies comprising of
AUDI, BMW, and Daimler AG. Nokia’s profit from the sale of HERE digital mapping and
locations services was approximately EUR 2.55 billion. The sale of HERE digital mapping and
location services would complete Nokia’s transformation in becoming a world-leading network
technology and serviced business, along with licensing and innovation for Nokia Technology.
Part 2
Diagnosis of current situation
Failure to adapt and read the “situation” is not solely a business issue. Failing to adapt
plagues individuals and societies in general. The ones that survive are the ones that are quick to
change and adapt. Nokia has always seemed to be one step behind when it comes to what
technology to focus on and where its priorities should lie. Apple was well invested in the vision
of developing the iPhone in 2006 while Nokia was still focusing on mP3 players. By the time
Nokia realized they were behind it was too late in the game. Nokia fell out of the phone market
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because they lacked vision and innovation. Innovation can lead to a product performing better or
easier and more convenient to use, more reliable, and more durable (Pisano, 2015). The Nokia
phone does not stack up well when compared to the iPhone when judging by the criteria
mentioned above. Without innovation a company doesn’t stand out compared to its competitors.
One reason Nokia does not grab as many headlines when compared to its competitors is
because it is not an “experience”. It is “trendy” to have an iPhone. Nokia needs to take further
steps to work on encouraging innovation in its ranks and to improve its image. They will never
succeed in rejoining the smartphone market unless they take risks and deliver more than just the
status quo. Nokia will likely always have a “loyal” following that will stick with them no matter
what. You could probably say that Apple experienced this situation pre-iPod and iPhone days.
People likely bought and had MAC computers out of loyalty to Apple as opposed to them being
superior products. Nokia needs to build a larger base, so it has a little more room for error. They
can do this by being consistent and always thinking ahead. One way to keep your customer
happy is to always keep them on their toes in anticipation for your next product. Has there been
a time when people have “camped” outside to get a Nokia product? Episodes such as this show
the big difference between Nokia and Apple. “Companies must think through what
complementary assets, capabilities, products, or services could prevent customers from defecting
to rivals and keep their own position in the ecosystem strong (Pisano, 2015).”
One aspect Nokia needs to look at to avoid past mistakes and suffer a similar downfall is
communication within the company. Innovation will never be a high priority or successful if
people are not in communication with one another. Management of innovation is a big problem
throughout the business world and companies are often unprepared to deal with managing
innovation (Lendel, Hittmár, & Siantová, 2015). Nokia is much more likely to succeed in being
NOKIA’S REBIRTH 9
innovative if they embrace it and permeate a culture that is receptive to it. Communication is a
big part of innovation. It carries risk and capital must be invested to think outside the box, but
the rewards are worth it. Only so many chances are afforded before people permanently move
away from your products.
Recommendations:
Nokia has done an excellent job so far pivoting from making mainly mobile cellular
devices, which ended in them losing a lot of money, to now making profits by investing and
building mobile network infrastructure, like the new 5G network. In order for Nokia to continue
on the path of profitability, they must continue to evolve and innovate. They have already
learned the lesson, the hard way, of what happens when you become complacent and are slow to
change. They now need to leverage their expertise in the telecommunications industry to
diversify their business offerings customers in order to solidify the viability of their company.
This type of diversification and innovation will not happen by accident though, it must be
a deliberate effort and it’s why I am recommending that Nokia establish a new business
innovation division. The division’s mission would be to explore different areas where Nokia
could establish themselves. There are two main strategies that Nokia could use to expand their
offerings, first, business level product diversification. Business level product diversification is
when a company expands “into a new segment of an industry that the company is already
operating in” (What is Product Diversification, n.d., para. 1). The second strategy is corporate
level product diversification, this is when companies expand “into a new industry that is beyond
the scope of the company’s current business unit” (What is Product Diversification, n.d., para. 1).
Within the new division that Nokia creates, one department can focus on business level
product diversification, the other department can focus on corporate level product diversification.
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Under the business level product diversification department, they will have the responsibility to
explore new areas within the field they are currently making most of their profit, which is the
mobile network industry. This department might explore ideas such as alternate means of
establishing mobile networks. For example, right now cell towers dominate the landscape, but
why is satellite communication not currently as widespread? Satellite communication could
eliminate poor cell coverage because your “cell tower” would be in the sky above you and cover
a huge area. This is just one example, I know this department would be able to think of many
more.
The other department within the division would focus on corporate level product
diversification. This department would look for areas where Nokia could expand into in which is
currently outside of the industry they are profiting in. Research has shown that companies that
diversify their product line greatly increase their profitability (Srinivasan, Thenmozhi, &
Vijayaraghavan, 2016). One area the corporate level product diversification department might
want to explore, is the data management and data storage industry. With their mobile networks
already in place, this could be a natural transition into this industry.
After these ideas are thought of and explored intellectually, they would need to be
analyzed to see if they were even possible, and if they were, would it be worth the risk to the
company. After the business analysist was completed, these ventures would then be presented to
the executive board of the company to make the final decision. This is my our recommendation
for Nokia, the paragraphs below will describe how they will could be implemented.
Implementation Plan
Nokia will should consider developing strategic teams and workgroups that will make the
organization more productive. World-class organizations need to be proactive and look for ways
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to continuously improve. The organization must should set performance goals and continuously
monitor them for progress. Seeking feedback from employees and customers is an excellent way
to continuously improve. Feedback with be anonymous in nature to eliminate fear of reprisal or
retaliation. Feedback from internal and external customers will allow Nokia to exceed the
services of other organizations.
Teams will can be established to work on economic, social, and environmental impact.
Teams will need toshould consist of new employees, mangers, and experienced employees.
Teamwork is a concept that creates unity in the workplace, allows for feedback and various
perspectives, increases productivity and efficiency, offers learning opportunities, improves
morale, and engages employees. Companies that look toward the future must rely on
teambuilding within their organizations. Economic teams will should look at ways to increase
revenue, eliminate redundancy, the benefits of job creation, diversification of business practices,
business retention and expansion, and economy fortification. Social teams will should develop
methods to improve morale, improve ethical decision-making processes, and increase customer
satisfaction. Social teams will needmay want to closely monitor the impact and acceptance of
new and existing products. The social teams must work towards the well-being of internal and
external customers. Environmental teams will should look for ways to become environmentally
friendly, go green, eliminate waste, and encourage recycling practices.
As the company expands teams will need toshould continuously monitor progress and
communicate. The teams are dependent on each other and communication is imperative. Teams
must should communicate on a weekly basis, preferably through weekly staff meetings that
group leader/managers attend. Team work leads to a sense of pride within organizations, and
employees feel as if they are making a difference. Teamwork is a concept that creates unity in
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the workplace, allows for feedback and various perspectives, increases productivity and
efficiency, offers learning opportunities, improves morale, and engages employees. “In the
conditions of the fast-changing world, both leadership and teambuilding become the key factors
for competitiveness and business performance.” (Bilas & Adeeb, 2017, p. 60).”
Leadership training will need to be implemented for all levels of management and for
aspiring managers. Every manager in the organization will should receive training on building
trust and respect, communication skills, coaching, recruitment and retention, meeting
management, motivating and encouraging employees, project planning, and employee
evaluations. The Management Training Institute provides excellent training for managers. The
program contains three different training modules with a total of 48 topics (Management
Training Institute, 2015). Managers will should meet during Friday staff meetings to discuss
developments throughout the week. The information will be disseminated to employees on
Monday mornings. Information must be disseminated from the top down, on a regular basis.
Employees are the backbone of the organization. Nokia must assure that its employees
are physically and emotionally capable of completing their jobs. Implementing a morale,
welfare, and recreation (MWR) program will lead to a happier, healthier, and more devoted
workforce. Unfortunately, 65% of the world’s workforce did not receive recognition in the past
year (White, 2014). The MWR program will should include time off awards, monetary awards,
recognition ceremonies, discounts to physical fitness facilities, family gatherings, training
opportunities, career advancement programs, and employee assistance programs. To be fully
committed to the organization employees must feel valued and part of the organization.
Incentive programs promote productivity and efficiency within organizations. MWR programs
have been successful in the military and have greatly improved morale and resiliency. Nokia
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will should use the MWR program to assist employees and their families in every possible
manner.
Biblical Integration
The fact that Nokia was able to transform itself and ensure it continued existence and even get to
greater heights is a feat that is very commendable. We as Christians need to also look at our lives
and find ways to continue to transform from one level to another and not remain as babes still
requiring milk, as the bible puts it in Hebrews 5:12 (NLT), “You have been believers so long now
that you ought to be teaching others, Instead, you need someone to teach you again the basic
things about God's word. You are like babies who need milk and cannot eat solid food”
We in light of this need to feed ourselves with Gods word, growing to be teachers and
transforming our lives to the point we can be strong, strong enough to withstand the trials and
tribulations that lives brings us and be able to teach others and becoming the matured Christians
God wants us to be as we age up.
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References
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teamwork in business organizations. Economica, 2(100), 51-61. Retrieved from
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Ciampa, D. (2017). What CEOs get wrong about vision and how to get it right. MIT Sloan
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Kumar Basu, K. (2015). The leader's role in managing change: Five cases of Technology‐
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