Nokia: Reinvention of the Company

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Nokia is a multinational Finnish corporation founded back in 1865 where its core activities are in telecommunications, information technology, and customer electronics sectors. It was considered the market leader for mobile phones for more than a decade, from early 1990’s till late of 2006 when apple and Samsung disrupted the market with their innovations and new technologies and ever since Nokia struggle trying to make profit and reclaim the market leadership “throne”. However, By 2014 Nokia decided to exit smartphone industry and changed its vision regarding to that. 

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In January 2007, the bar for the mobile industry became very high as Apple introduced the iPhone to the market, a ground-breaking and breath-taking smartphone that disrupted the whole industry. With a naive reaction to this, Nokia launched the so called 5800 XpressMusic smartphone which it was negatively criticized by the customers as its user interface was nowhere near the iPhone.

In late 2008, the situation became even harder for Nokia in terms of market share as Google stepped into the game and announced the launch of Android platform allowing Google to gain huge market share at a rapid rate as Nokia’s rivals, such as HTC and Sony, started manufacturing smartphone supported by Android platform. As a result, Nokia’s market share has eroded rapidly as many of its customers, even the loyal ones, switched from its outdated Symbian platform to either iPhone or Android platforms instead.

In 2011, Nokia had a strategic partnership with Microsoft in aim to reclaim the market leadership in smartphone industry. However, this partnership went very bad and resulted in damages within the company as employees protested, disagreed with Nokia’s CEO Stephen Elop, there was a wave in resignations, and not to forget the culture difference between Stephen Elop and Nokia’s employees (culture clash between North America and Scandinavian cultures). As a result, Nokia had to reinvent itself and face the fact it is no longer a major player in the smartphone industry.

If someone had one of Nokia’s phones, he/she can still remember the welcome screen which had Nokia’s old vision on it which was “Connecting People”. In other words, Nokia promised to connect people to what is important to them and inspire them to communicate with each other through providing innovative mobile technology in order to create a world where everybody is connected.

As of 2014, Nokia changed its vision to reflect its decision to exit the smartphone market and focus on the digital technology. The vision became “We create the technology to connect the world”; emphasizing a new clear direction of the company’s change into different market, motivating people and coordinating between them in creation of technologies that will make the world always connected. Also, as it’s obvious that the term “connect” is still in Nokia’s core aspect of vision as it works as the Pole star, guiding the transformation of the company in the new market by focusing on: respect, achievement, renewal, and challenge as core values that provide a basis for behavior guidance for decision making.

By April 2014, Nokia disengaged itself from past strategy and finalized the sale of all of its Devices & Services business to Microsoft and announced the new strategy that is based on three business units: Nokia Networks, HERE and Nokia Technologies in aim of becoming a technology leader and building a long-term shareholder value.

As for the reporting lines, the two business units HERE and Nokia Technologies each will have a leader who is reporting directly to Nokia’s CEO, who has full accountability for the performance of the company. Additionally, Nokia Networks will be under direct control of the CEO and the main Networks leaders will report to him. With regard to financial reporting, there are four operating and reportable segments: Mobile Broadband and Global Services within Nokia Networks, HERE and Nokia Technologies. A separated operating and reportable segment was formed for the sold business units Devices & Services, which is presented as discontinued operations until April 25, 2014 when its sale was completed. With regard to the decision making process, the company assigned a board named Nokia Group Leadership Team and will be responsible for all the operational management of the company, which includes the company strategy and overall business portfolio.

When Nokia changed its vision once it realized it can’t compete any longer in smartphone market, employees had been forced out of their comfort zone, asked to learn new skills and behaviors and face the possibility of losing their jobs. All of this had made Nokia to think of new ways to communicate its new vision with their employees and their stakeholders in general to overcome the change resistance and inspire people to be engaged with the change and give them a tempting cause to fight for. Nokia faced a huge challenge in order to change the authoritarian culture of fear that was caused by the emotional attachment to the outdated Symbian platform and previous CEO Stephan Elop respectively, which infiltrated in multiple levels of management. 

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