ORGANIZATIONAL CHANGE: AN EMPIRICAL STUDY ON NOKIA
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Transcript of ORGANIZATIONAL CHANGE: AN EMPIRICAL STUDY ON NOKIA
“To improve is to change; to be perfect is to change often.”
Winston Churchill (1874-1965) British Politician
WHY NOKIA’S ORGANIZATIONAL CHANGES IS NECESSARY ?
Source: Gartner (2014)
23.918.7
3.2
2219.1
8.3
24.6
13.9
7.5
SAMSUNG NOKIA APPLE
Q3 2011 Market Share 2012 Market Share 2013 Market Share
Mapping Capabilities
2006
Joined Microsoft
2011
MAJOR ORGANIZATIONAL CHANGES IN NOKIA
Moved to Microsoft
2013
Joint Venture
2007
Core Strategy
1990
And Identifying the change triggers
ANALYSIS OF THE PRESENT CRISIS
Our investigation shows that Nokia is facing someserious difficulties and Nokia must go through somemassive organizational changes to respond to theperils.
Nokia once was a tech giant , but now? That story is only a history.
We asked some cellphone users a few key questions and Nokia’s miseries got revealed
How were the responses?
In the third quarter of 2007, Nokia's market share was 48.7 percent. By the third quarter of 2013 the company's market share had slipped to just 3.5 percent - Statista, The Statistics Portal.
Currently Using First Phone
29% 71% 70%
Nokia
Symphony 32% Samsung 13%
Sony 10%
iPhone and others 16%
OthersBrands
Nokia has lost a huge portion of its loyal
users
Nokia
Operating Platform PreferencePeople like user friendly , bug free, touch based operating systems
79.3 %7% 13%
iOS is popular for its great touch sensitive interface
and smoothness of application running
iOS
Android is regarded as most user friendly,
universal and easy to use with nice use of colored
themes
Android
Windows mobile OS is not much appreciated by users
and they use it just because they come with
Nokia
Windows
Mobile OS
Microsoft’s Acquisition of Nokia
And the reactions…
The majority believes that tagging with Microsoft is a wrong decision
55%
4%
41% It will be a success
It will be a failure
Uncertain
Key change triggersA glimpse of the factors that are indicators for bringing change
The Finnish phone maker launched phones with innovative features and different form factors to quickly respond to the market’s needs, which led it to become the largest handset manufacturer in the world
Monopoly
Nokia failed to respond to growing touch based
smartphones while HTC, iPhone took the full advantage
Rise of touch-based
modern smartphones
In January 2007, Apple launched the iPhone, a revolutionary smartphone that packs with a large capacitive touch screen that supports multi-touch gestures.
Market disruption
brought by the Apple
iPhone
An ex-manager in Nokia estimated that Nokia used to have over 300
Vice Presidents and Senior Vice Presidents around the globe
Bureaucracy
Sources of Resistance to Change
Resistance to
Change
Inside the
organization:
Employees’ resistance
Outside the
organization :
Markets’ resistance
Employee’s Resistance
• Losing job
• Changes in job roleFear of employee
• Holding their excellence as the cause of failure
• Getting into the partnership with Microsoft
Disagreement with management
• Key personnel
• Skilled employees
• Lay-off by Microsoft
Wave of resignation
• Uncertainty avoidance
• Masculine vs. FeminineCultural difference
Market’s Resistance
• Alliance of Nokia and Microsoft
• Embracing Windows as operating platform
Customer’s resistance
• Fear of losing business of international calling
• Choosing MS as strategic partner
Network operator and Intel’s resistance
• Principles of open source vs. proprietary platform
• Decrease in the value of market share
Software developer’s and shareholder’s
resistance
Kubler-Ross Five Stage Model
Kubler-Ross described five stages of grief in her 1969
book "On Death And Dying” that are just as relevant to
the normal range of feelings people have when they
are dealing with change on an individual level or in the
workplace.
Stage Interpretation
Denial
Denial is a defensive response. It is the conscious or unconscious
refusal to accept facts, information or reality relating to the
situation.
AngerWhen people deal with emotional upset they can get angry with
themselves or with other people.
Bargaining People facing change often seek to negotiate a compromise.
DepressionDuring periods of change people may feel there is little purpose in
their work.
AcceptanceEventually people pass through the period of depression and begin
to accept the their loss or change in circumstance.
The Grief Cycle — 5 Stages of Grief
The stakeholders’ reactions on Nokia’s strategy change can be reflected on the Kübler-Ross grief model:
Em
otio
na
l R
esp
on
se
Time
Shock
Denial
Anger
Bargaining
Depressio
n
Test
Acceptanc
e
February 11 ,2011
announcement
• Switch to
windows phone
• Abandon
Symbian
Initially, some consumes
and even some employees
did not believe the change
was true
February-March 2011
• Thousand of
employees walked out
of office
• Protest from consumer
• Bad comments on
Nokia Facebook page
• Users: “ Can I reuse the apps I
purchase in my Symbian phone on
my windows phone”
Nokia : “no”
• Developer: “can I use QT to write
windows phone apps”
Nokia: “No”
• Nokia share price dropped
significantly
• Many long time Nokia users and
developers are disappointed and
switched to android
Lumia phones lunched
in Q4 2011:
• Users: “So now
these Lumia
devices are out.
Let me try them
out and see how
I feel…”
• Users : “I like the
fluidity and the great
camera on the Lumia
phone! I will buy
one….”
• Profitable Q4 2012
EVALUATING NOKIA’S STRATEGY CHANGE
KOLB AND FROHMAN’S CHANGE MODEL
Scouting Entry Diagnosis
Planning Action Evaluation
Termination
Conclusions and Recommendations
¤ Quality offline maps
¤ Camera innovations
¤ Superior hardware design
¤ Intuitive user interface decision
¤ Solid manufacturing capabilities
¤ Dominance of feature phone markets
¤ Great patent portfolios
THANK YOU ALL