Change Management Intervention in Nokia

Background

Dating back to 1865, Nokia was established as a Finnish multinational corporation dealing in sectors including cable, paper products, tires, mobile phones, televisions and tires. Due to rapid success in the telecommunication market in 1990s, Nokia became the best-selling mobile phone brand in 1998 (Nokia, 2020). Nokia has been a global leader in the mobile phone industry for over 14 years since the 1990s. It is world’s largest manufacturer of the mobile phones that deal with customers across 130 counties.

Despite of its leading position in the global telecommunication market, the rapid growth of Nokia didn’t come without a price. During 1988, as the revenues of Nokia soared, the company’s profits dropped due to the severe price competition in the electronics market (Cuthbertson, et al., 2015). Later on, grappling with the changing consumer trends, Nokia firmed its footings under new leadership before the 21st century ticked. With evolution of handsets incorporated with multimedia designs, the era of 3G ushered while giving way to disruptive new technologies like smartphones (Reference for Business, 2019). Since the advent of smartphones, Nokia is still struggling to regain its profits and revive its market leadership again.

This report will focus on the diagnosis of the problems and opportunities that Nokia had to face for triggering relevant change strategy. A change intervention model will be presented to address the identified problems and opportunities in accordance with ethical implications and overcoming barriers during implementation.

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Problems & Opportunities

It’s of no surprise that Nokia had to give up its thrown unwillingly to Samsung and Apple as the new smartphone technology entered the mainstream market in 2007 while claiming 40% of the market share. During mid-2000s, HTC, Sony and Palm triggered the manufacturing of touch-based modern smartphones along with advanced features that were well received and welcomed by the market (Vuori & Huy, 2016). This disruptive technology was taken hands on by the modern tech-savvy customers globally. No later than 2007, Apple also launched the iPhone with revolutionary and extremely intuitive user experience, cool-looking aesthetics, high graphics and new internet browser into the mobiles (Giachetti & Marchi, 2017).

The new disruptive technology set up the higher bars for Nokia and Samsung’s mobiles in the market. While responding to changing trends, Nokia launched its 5800 XpressMusic phone that came with software quality issues as random reboots and memory shortages were experienced by the customers (Chaturvedi, et al., 2017). Facing the customers’ outrage and bad reviews, Nokia jumped back at making its QWERTY phones and started selling them at lower price range. No later than 2012, Nokia had already lost more than $88bn in market value after the announcement of Apple iPhone in 2007 (Chaturvedi, et al., 2017). However, still despite of many structural changes, business model redesigning and changing leadership models, Nokia still holds 13% of smartphone market share as compared to 18.9% of Samsung, 15.8% of Apple, 19.6% of Huawei and 10.1% of Xiaomi. (see figure below) (Canalys, 2020).Global Shipments and Market Share by Vendors

Given the above identification of issues, it is evident that Nokia missed the major external trend of the smartphone revolution and didn’t use its leading market position to grab on the opportunity. Currently, the product life cycles of Nokia phones have shortened dramatically with Apple’s and Android’s continuously evolving smartphone platforms. Consumers have already transited from traditional mobile phones to smartphones while throwing Nokia off-guard. Hence, given the changing trends and advent of 3G, 4G, 5G and robotics, fostering change at Nokia is unavoidable.

The demise and failure of Nokia in the smartphone market is due to stiff competition from Samsung & Apple and its lack of focus on innovation. The company that misses the constant innovation has undoubtedly the highest probability of getting pushed out of the market. Hence, through the change management frameworks, much-needed change can be fostered. The two change management models for Nokia are outlined below.

ADKAR Model:

The ADKAR model of change outlines the five-step procedure that can be adopted for achieving the desired outcomes (Galli, 2018).

Awareness: Awareness is about seeking the participation of relevant stakeholders before the change can be propagated. For instance, the management of Nokia is required to be aware of the consequences of not meeting the changing needs of the customers in the market. For example, currently, Apple is considering launching OLED displays, wireless charging phones, 5G-supporting iPhones, Ultra-Thin Film Batteries, gelatinous material made iPhones, gesture control and AI-powered bots incorporation in iPhones for meeting the demand of changing customers’ trends (Griffin, 2016).

Desire: After leading people to see the need for change, the management must establish the desire for change amongst the team members (Galli, 2019). At this stage, the employees must be provoked to be the change agents by helping the team in excelling in a given environment by leveraging their expertise.

Knowledge: The knowledge about the application of change must be formed at this stage. The management would outline skills and behavior required during and after the change (Kazmi & Naarananoja, 2014). Knowledge of market trends, user preferences, competitor products and innovative technologies must be known by Nokia team for implementing the change process.

Ability: It is the capacity and talent required for actually implementing the change while overcoming the barriers. Offering employee’s development plan, skills training sessions and programming and application development workshops can ensure that the team members have the required expertise to meet the change (Galli, 2019).

Reinforcement: It is the process of strengthening the change management process. Once the decision for change has been taken, mechanisms are required for keeping that state (Kazmi & Naarananoja, 2014). Rewards and encouragement could be used for reinforcing the change management process by Nokia.

ADKAR Model of Change

Lewin’s 3 Stage Model of Change

According to this model, the companies have to go through three particular phases of progress as leaders plan for actualizing the changes required (Hussain, et al., 2018). The three processes are unfreeze, change and freeze.

Unfreeze: Being the first step, organizations are required to prepare for the change by recognizing the forces for change and driving group members to get ready for the changes (Hussain, et al., 2018). The main aim is to recognize the need for change, determine what needs to be changed and encourage the replacement of the old behavior.

Change: In the mid step, after recognizing the need for change, a proper plan must be made for implementing the change process. Employees must learn new concepts on the change requirement (Hussain, et al., 2018).

Refreeze: Changes are reinforced and stabilized at this last step for integrating changes into the normal way of doing business (Hussain, et al., 2018).

Lewin’s 3-Stage Model of Change

Change Intervention

Given the level of problems being faced by Nokia in this digitally competitive environment driven by technology and innovation, ADKAR model of change is chosen. The rationale behind choosing this model is that Nokia needs drastic changes for bringing itself from the state where it has remained frozen for a long time without being innovative (Longtin & Defraigne, 2016). However, Nokia had adapted to prototypes of big screen, touch screen and 3D user interface, still due to high bureaucracy, the concepts were rejected in the market (Aspara, et al., 2014). The major external force behind Nokia’s requirement to change is the change in consumer behavior. Hence, applying the ADKAR model is suitable in given case of Nokia.

AWARENESS:

At the first step, Nokia’s team needs to be made aware of the changes required. The market share of Nokia has been falling since 2010s along with a fall in its market value from 300 bn euros in 2000 to only 6 bn euros in 2017 (Lamberg, et al., 2019). In this case, the incumbent management of Nokia needs to react for bringing changes. A transformational, strategic and incremental change is required in Nokia’s case. For instance, understanding the new era of 5G, robotics and AI is mandatory for Nokia to change its mobile models while focusing on customer changing trends (Aspara, et al., 2014). The new application development techniques and advancement in software as well as hardware is much needed in Nokia’s case. Moreover, the management at Nokia needs to have long-term thinking rather than short term thinking. A data-driven decision must be taken to get the list of the expectations and then a clear vision of where to lead.

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DESIRE:

Desire must be awaken amongst the stakeholders for changing and participating in the change process. With Nokia, the leadership must be targeting the changing paradigms of technology. This can be done by partnering up with Microsoft, IBM and Google for bringing the software innovation in its handsets. With innovative software teams on board with Nokia, there is a strong change of using the expertise of their innovative teams and move forward. By tapping in the Android market through partnering up with Alphabet (parent company of Google with $16.2 R&D budget) Nokia can make use of android OS for designing tis new smartphones rather than supporting Symbian and Window’s phones (Cuthbertson, et al., 2015).

KNOWLEDGE:

The knowledge for how to bring change, how to implement change and what would the proposed solution offer is required at this stage. In case of Nokia, the change is required across various departments and the way the whole corporation currently operates. By understanding the key market trends, consumer needs and key new technologies like 5G, OLID Screens, wireless charging, AI and Robotics, Nokia can offer better products for its customers in Middle East, Asia and Africa. Moreover, the economic considerations of each region must also be taken into account while pricing the new models (Vuori & Huy, 2016). Again, partnerships with Windows, Google and IBM can break the ice of innovation for Nokia.

ABILITY:

For implementing the change, perfect blend of skills, expertise and ability to implement changes are required. Training, mentoring and coaching of the team members can enhance the possibilities of successfully stirring the change process in the organization. Here, Nokia can offer employee development plans in partnership with leading universities like MIT and Harvard. Moreover, building the team through talent-based programs can allow Nokia to leverage the expertise of fresh graduates (Galli, 2019). Again, partnering up with Google and Microsoft can allow Nokia in absorbing the benefits of expertise of the talent management and performance management plans led by these innovative firms. By having an innovative and expert talented team, the culture of old norms can be broken at Nokia.

REINFORCEMENT:

In order to keep the changes fostered in earlier steps, the higher management at Nokia needs to setup mechanisms in place. Rewarding employees on innovative breakthroughs, allowing them to voice out their views on new technologies and letting them question different ideas can allow Nokia to ensure high quality of its processes. Moreover, brainstorm sessions and regular meetings regarding requirements of market and changing trends can make Nokia to reaffirm the changes for good (Galli, 2018).

 

Barriers in Implementing Change Intervention

The change management plan at Nokia, as recommended above, shows that it could leverage the expertise of Microsoft, Google and IBM by partnering up with them in order to move away from Symbian phones to new smartphones era. The required change would likely cause resistance amongst the customers, network operators, software developers and shareholders.

  • Customers Resistance: The Symbian users of Nokia could feel shocked and angry about the partnerships and discontinuing of the Symbian phones. The sudden abandonment of cheap phones and Symbian technology for adapting the smartphones could likely to stir anger and disappointment in the market. This can be reduced by offering and aligning some of the old features of Symbian phones in the smartphones to ensure that customers get what they desire for.
  • Employee’s Resistance: Since partnership with Microsoft, IBM and Google would mean that the new culture of working would be offered at Nokia, it is likely that employees do not welcome the new ideas. In order to eliminate this resistance, Nokia must educate the employees about the change beforehand and efficiently communicate with them about bringing the change. By active participation of employees, the barrier to resistance would be reduced or removed.
  • Network Operator’s Resistance: The resistance could also be seen from network operators due to allowance of web-based calling over 3G using the internet. However, such worries of network operators’ could be minimized by making GSM as default application to make calls.
  • Shareholders’ Resistance: Shareholders’ might resist in partnering up with leading firms like Microsoft, IBM and Google for having a fear of being overshadowed by these big tech giants. As a result of this, it is likely that the share prices could drop down. In order reduce the resistance by shareholders, complete communication and need for bringing change is required by Nokia’s management. The stakeholders must be informed before bringing new changes in the models and operating systems. This way, the resistance could be minimized.
  • See stakeholder analysis in Appendix A for understanding which stakeholders have high influence and who can support the change management process at Nokia.

Ethical Issues Consideration

Leading change needs integrity and tact at part of upper management. The top leaders at Nokia would be deciding on the change management strategy like partnership and joint-venture with Microsoft, Google and IBM and then push it down to the rest of the organization. If the management needs to lead change with integrity, it needs to communicate transparently about the reason for change (Sharif & Scandura, 2014). The ethical issues like employees’ entrenchment and shift of line of authorities can cause negative stir about Nokia in the market. Hence, treating employees as an essential part of the change process must be maintained at all levels of the change management process. Situations of the organizational change come with high uncertainty due to which justice concerns can be triggered amongst employees that could become a cause of resistance to change (Jacobs & Keegan, 2018). Hence, maintaining close ties with employees, being transparent about the need to change, communicating the steps of change management and giving authority to employees for voicing out their concerns, can reduce the likelihood of ethical failures at Nokia during change management process.

References

Aspara, J., Lamberg, J.-A. & Laukia, A., 2014. Strategic management of business model transformation: Lessons from Nokia. Management Decision, 49(4), pp. 622-647.

Canalys, 2020. Global smartphone market Q2 2020. [Online] Available at: https://www.canalys.com/newsroom/canalys-global-smartphone-market-declines-q2-2020
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Chaturvedi, S., Singh, S. & Chaturvedi., S., 2017. Analysis of Decline Market: with Special Reference To Nokia Mobile Phone. International Journal of Engineering Research and Development, 13(9), pp. 22-27.

Cuthbertson, R., Furseth, P. I. & Ezell, S. J., 2015. Apple and Nokia: The Transformation from Products to Services. In: Innovating in a Service-Driven Economy. London: Palgrave Macmillan.

Galli, B. J., 2018. Change management models: A comparative analysis and concerns. IEEE Engineering Management Review , 46(3), pp. 124-132.

Galli, B. J., 2019. Comparison of Change Management Models: Similarities, Differences, and Which Is Most Effective?. R&D Management in the Knowledge Era, 1(3), pp. 605-624.

Giachetti, C. & Marchi, G., 2017. Successive changes in leadership in the worldwide mobile phone industry: The role of windows of opportunity and firms’ competitive action. Research Policy, 46(2), pp. 352-364.

Griffin, M., 2016. Apple, Emerging Technology And The Iphone That Could Be. [Online] Available at: https://www.311institute.com/future-of-the-apple-iphone/
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Hussain, S. T. et al., 2018. Kurt Lewin’s change model: A critical review of the role of leadership and employee involvement in organizational change. Journal of Innovation & Knowledge, 3(3), pp. 123-127.

Jacobs, G. & Keegan, A., 2018. Ethical Considerations and Change Recipients’ Reactions: ‘It’s Not All About Me’. Journal of Business Ethics, Volume 153, pp. 73-90.

Kazmi, S. A. Z. & Naarananoja, M., 2014. Collection of change management models–an opportunity to make the best choice from the various organizational transformational techniques. GSTF Journal on Business Review, 2(4).

Lamberg, J.-A., Lubinaitė, S., Ojala, J. & Tikkanen, H., 2019. The curse of agility: The Nokia Corporation and the loss of market dominance in mobile phones, 2003–2013. Business History, 5(2), pp. 1-47.

Longtin, F. & Defraigne, J.-C., 2016. The race to 5G in China and the European Union: an analysis of Huawei and Nokia’s innovation policie. International Journal of Industrial Organization, 7(8), pp. 2-16.

Nokia, 2020. Our history. [Online] Available at: https://www.nokia.com/about-us/our-history/
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Reference for Business, 2019. Nokia Corporation – Company Profile, Information, Business Description, History, Background Information on Nokia Corporation. [Online] Available at: https://www.referenceforbusiness.com/history2/35/Nokia-Corporation.html
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Sharif, M. M. & Scandura, T. A., 2014. Do perceptions of ethical conduct matter during organizational change? Ethical leadership and employee involvement. Journal of Business Ethics, 124(2), pp. 185-196.

Tools Hero, 2019. ADKAR model of change. [Online] Available at: https://www.toolshero.com/change-management/adkar-model/
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Tools Hero, 2019. Lewin’s Change Model. [Online] Available at: https://www.toolshero.com/change-management/lewin-change-model/
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Vuori, T. O. & Huy, Q. N., 2016. Distributed attention and shared emotions in the innovation process: How Nokia lost the smartphone battle. Administrative Science Quarterly, 61(1), pp. 9-51.

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