Nokia and the Disruptive Smartphone Technology

Nokia and the Disruptive Smartphone Technology

In today’s tech-savvy, fast-paced, and globalized world, a majority of companies are struggling with the changing markets, technologies, new legislative or judicial rulings, environmental constraints, industry regulations, and policies both locally and internationally (Kopetzky et al., 2013). For example, disruptive innovation or technology is primarily responsible for creating new value networks and markets that are subsequently disrupting existing value networks and markets, displacing existing alliances, products, services, and leading players. On the other hand, legislative rulings, industry regulations, as well as environmental constraints tend to impact the operability of companies by setting new compliance rules. Failure to abide by these rules, such as greenhouse gas emission limits, often leads to fines or revocation of operating licenses. In recent years, a few companies have faced judicial rulings, industrial constraints, or disruptive technology, with some recovering strongly and others falling to oblivion. This paper primarily seeks to explore how Nokia Corporation battled the issue of disruptive technology and how it responded.

Describe the organization and the change to which it is responding.

Nokia Corporation, commonly shortened as Nokia is a multinational Finnish-based conglomerate that deals with information technology, telecommunications, as well as consumer electronics. Headquartered in Espoo, Helsinki, Nokia was mainly founded in 1865 as a pulp mill. In 2018, it employed approximately 103,000 employees across 100 countries and recorded revenues of about €23 billion through its affiliates spread across 130 countries. Since its inception, Nokia has operated in more than 150 industries in the last 150 years. However, as of 1990, the firm has primarily focused on massive technology development, production, and supply of telecommunications infrastructure and licensing. Between the years 2000 and 2009, Nokia was ranked as one of the largest mobile producers and technology companies, controlling an impressive 40 percent market share in 2007. The company has been fundamental in designing 3G, GSM, and LTE standards (Schofield, 2007).

Despite being a dominant player and pioneer of most mobile technologies, including gaming, mobile cameras, LTE, and many others, Nokia faced stiff competition from uprising companies that produced new, high-tech smartphones powered by easy-to-use Android and iOS operating systems. Between 2010 and 2014, the organization faced its worst nightmare, with its market share and sales dropping to near zero, forcing the company to restructure its business model. These disruptive operating systems designed by Google and Apple changed the market, displacing Nokia’s Symbian OS. By 2010, only Nokia and NTT DoCoMo were still using the old-fashioned Symbian OS, with the likes of Sony Ericsson and Samsung shifting to Android. Nokia’s smartphone sales and market share dropped significantly in 2011.

Discuss the degree to which the change has been disruptive and how the organization has responded to the dynamics created by this change.

Disruptive technology can be very detrimental if the affected organization fails to lay smart and sufficient strategies to counter the influence of these new disruptive innovations. Nokia is an excellent example of companies that tested the market power and might of Google’s Android and Apple’s iPhones. The decision to stick to the old Symbian OS proved too costly to the company, which recorded operating losses amounting to €487 million in 2011, the highest it had recorded in roughly 19 years (Orlowski, 2011). Nokia blamed these losses, and later, share prices that fell to $2 to ambiguity. According to Orlowski (2011), the firm’s smartphone unit sales and non-smartphone unit shipments dropped by 34 percent and 12 percent, respectively, year-on-year. By 2011, Nokia had lost its lead to Samsung and Apple. Nokia announced a strategic partnership with Microsoft in 2011, allowing the company to use Windows Phone 7 as its lead and flagship OS.

Evaluate the strategies the organization used in its change plan and determine the level of success the organization experienced with the strategies.

Acknowledging that Android-powered phones and iPhones were gobbling up its market share, Nokia devised new tactics to counter these new market forces. Firstly, the firm signed a partnership deal with Microsoft in February 2011, which allowed it to use the Windows Phone 7 OS on its phones. The deal also permitted Nokia to integrate Microsoft’s other platforms and services, such as Bing. Cord (2016), in his 2014 book The Decline and Fall of Nokia, notes that the firm still posted huge losses even after the merger. Even Window’s first smartphone series, the Lumia 800, introduced to the market in 2011, could not stop the dropping sales, with the stock prices falling to $2 in 2012.

In June 2012, Nokia, through its then Chief Executive Stephen Elop, announced a move to release approximately 10,000 workers in a cost-cutting strategic plan as well as the closure of the Salo production plant. With all these plans failing to revive the firm’s fortunes, Nokia launched the project ‘Meltemi’ to lower its manufacturing costs by focusing o cheap, low-end smartphones. Nokia also shifted its focus to the high-performing North American market rather than concentrating on the whole world by partnering with AT&T to produce and distribute Nokia Lumia 900. With the company failing to revive its smartphone division, Nokia decided to completely sell it to Microsoft in 2013 to cut any further losses. However, since 2014, the company has expanded its portfolio through innovations and acquisitions, eventually improving its profitability (Cord, 2016). The Nokia Networks division today provides communications, network infrastructure, and network services. Other divisions include Nokia Technologies, Nokia Bell Labs, Nuage Networks, NGP Capital, HMD Global, Alcatel Mobile, and Alcatel Submarine Networks.

Determine the effect the change had on stakeholders, and to what degree stakeholders have resisted. Assess how well stakeholder resistance was addressed.

The rise of the transformative and disruptive Android and iOS technologies in the early 2010s negatively impacted Nokia’s stakeholders’ profitability and fortunes. According to the Macrotrends (2020) report, these disruptive technologies had by 2012 damaged Nokia’s performance that its stock prices fell to about $2 from about $7 in 2010, representing a nearly 53.29 percent slump. Even after witnessing how Android was disrupting their profits, market share, and operations, Nokia’s stakeholders still opted to embrace and partner with Microsoft’s Windows OS rather than Google (which owns Android), which proved fatal. According to Ando (2013) of Reuters, Nokia’s stakeholders were growing impatient with CEO Elop’s inability to match the profits recorded by Samsung, iPhone, and other Android-powered smartphones. This actually prompted the sale of Nokia’s phone division in 2013, which controversially led to the resignation of CEO Elop, who allegedly received a payout of €18.8 million.

Evaluate the overall implications the change had on interdepartmental collaboration.

In general, disruptive technology profoundly impacted Nokia’s interdepartmental collaboration. The change was both positive and negative. Negatively, following the laying off approximately 11,000 employees, the remaining workers suffered emotional distress and fear due to a lack of job guarantee. There were miscommunications and a lack of collaboration, with each department trying to avoid facing the blame. Positively, the rise of Android and other new smartphone technologies pushed departments to forge new ways of surviving through collaboration. In particular, after the sale of Nokia’s phone division, the company created a new teamwork platform called ‘Cognitive Collaboration Hubs’ aimed at bringing departments, individuals, processes, and technologies together for problem-solving and innovation (Nokia, n.d.). These platforms are aimed at keeping the company at the forefront of innovation by being able to discover current market trends and implement those technologies. Today, Nokia has returned to profitability and has more than seven cutting-edge business divisions, including Nokia Technologies, Nokia Bell Labs, Nuage Networks, NGP Capital, HMD Global, Alcatel Mobile, and Alcatel Submarine Networks.

In your opinion, how well did the leaders of the organization respond and prepare for the change? What worked and what did not work with the strategies they implemented?

In my opinion, it is unquestionable that Nokia’s leadership did not effectively prepare and respond to the imminent disruption posed by iPhone and Android-powered smartphones. It was unwise for them to stick with their old-fashioned Symbian OS in 2010, even after early signs pointed to changing customer preferences and market trends. Nothing seemed to work for them, including releasing the Nokia Lumia 800 series as well as partnering with Microsoft in 2011. This failure forced them to sell their mobile division to Microsoft in 2013.

What modifications would you suggest the leaders of the organization make in order to better address the change dynamics? What additional strategies would you recommend to assist the organization through this change?

I would advise leaders of Nokia, and other managers steering bigger companies, to implement the following few things to better counter or address the changes posed by disruptive technologies. Firstly, I would recommend that they track technology and market potential endlessly. In today’s dynamic and tech-powered business landscape, the margin of error is very minimal compared to the 90s or 2000s. Managers can enjoy a first-mover advantage by ensuring they constantly research and track new technologies. They must also be able to understand the potential of their market. In addition, they must be willing and prepared for the imminent and unseen tomorrow. They must be able to predict the future and design innovative ways of engaging with this new landscape when that time comes. All these strategies will help Nokia, and other companies, avoid the Android-like surprises that can be fatal.

References

Ando, R. (7 May 2013). Nokia Investors Tell CEO Their Patience Running Thin. Reuters, https://www.reuters.com/article/us-nokia-agm/nokia-investors-tell-ceo-their-patience-running-thin-idUSBRE9460LV20130507

Cord, D. J. (2016). The Decline And Fall Of Nokia. Stairway Press.

Kopetzky, R., et al. (2013). Strategic Management Of Disruptive Technologies: A Practical Framework In The Context Of Voice Services And Of Computing Towards The Cloud. International Journal of Grid and Utility Computing, 4(1), 47-59.

Macrotrends. (2020). Nokia: 26-Year Stock Price History/Nok. https://www.macrotrends.net/stocks/charts/NOK/nokia/stock-price-history

Nokia. (n.d.). Cognitive Collaboration Hubs. https://www.nokia.com/networks/services/cognitive-collaboration-hubs/

Schofield, J, (27 Nov. 2007). Nokia Increases Its Market Share In The Mobile Phone Business. The Guardian, https://www.theguardian.com/technology/blog/2007/nov/27/nokiaincreasesmarketsharei

Orlowski, A. (21 July 2011). Nokia Posts A Massive, Loss Blames ‘Ambiguity.’ The Register, https://www.theregister.co.uk/2011/07/21/nokia_q2_2011_massive_loss/

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Contemporary Organization Evaluation

In today’s fast-paced and global community, most organizations are faced with constant change. Research contemporary organizations that are currently responding to a significant change within the industry, such as disruptive technology; state, government, or industry regulations; environmental constraints; judicial or legislative rulings; etc.

Choose one organization from your research that has recently responded to major change, or is currently responding to change. Write a paper (1,250-1,500 words) discussing how well the organization is responding to the change dynamics. Include the following:

1. Describe the organization and the change to which it is responding.
2. Discuss the degree to which the change has been disruptive and how the organization has responded to the dynamics created by this change.
3. Evaluate the strategies the organization used in its change plan and determine the level of success the organization experienced with the strategies.
4. Determine the effect the change had on stakeholders, and to what degree stakeholders have resisted. Assess how well stakeholder resistance was addressed.
5. Evaluate the overall implications the change had on interdepartmental collaboration.
6. In your opinion, how well did the leaders of the organization respond and prepare for the change? What worked and what did not work with the strategies they implemented?
7. What modifications would you suggest the leaders of the organization make in order to better address the change dynamics? What additional strategies would you recommend to assist the organization through this change?

Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

You are required to submit this assignment to LopesWrite. Please refer to the directions in the Student Success Center