Issues Analysis and Theoretical Approaches to Leading the Change Paper Example

Introduction

I am writing this to brief you on several issues about the company which requires change and to also provide a theoretical framework that would be necessary for leading the change. The major problems include Nokia's business architecture, organizational challenges, leadership, innovations, and research and development, and venturing policies. I intend to present to you the symptoms of the issues and the causes of these symptoms, followed by an analysis of the way forward based on theory.

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Background

Nokia experienced high levels of growth after launching and was the best mobile phone brand regarding sales, market share, and functionality in 1998. The company enjoyed years of dominance and success until 2007 when Apple launched the iPhone. Nokia attempted to counter this competition by starting the Windows phone but was unable to match Apple's game. In subsequent years, the company's market value declined, leading to its acquisition by Microsoft. Since then, the company has never gone back to its original market position and still struggles to catch up with Android and iPhone producers. There is a need to identify the main issues affecting the company and the process of leading change to improve the company's market standing. The main problems identified include business architecture, corporate culture, and organizational structure.

Central issues

Business architecture

In 1996, the company faced a crisis in production due to failing logistics to satisfy the increasing demand. There was a shortage in the supply of materials for use in production coupled with high levels of demand. These factors caused the company's output to stall. The company tightened the process descriptions, financial systems, logistics systems, and other factors to solve this problem. This strategy corrected the logistics of Nokia and made its products cheaper compared to those of its competitors. Resultantly, the company was able to optimize its operations, produce alternative products, and broaden the range of products. However, this move would affect the company negatively in the long run.

The strategy adopted in 1996 increased control that replaced innovativeness and creativity with time. The approach led to higher production, thus translating to higher sales, increasing the need for more employees. The increase in the number of employees demanded a change in the organizational structure and administration of control mechanisms. The emphasis on bureaucracy led to more time spent in meetings and other procedures leading to employees spending less time on their jobs. Also, the high number of employees increased production and segmentation of the market resulted in slow decision procedures, confusion regarding reporting to the many managers, multiple responsibility lines, and general management complications. These problems still exist today and are a significant reason why the company has taken a long time to catch up with android producers as well as Apple.

Another issue with the business architecture of the company is its inability to change faster compared to other players in the market. This challenge has been evident in the company being left behind as Google's carrier partners and Apple released a wide range of Android and iPhone-powered devices, thus replacing Nokia in its previous commanding power. The company was led into a shaky patch and made losses for a long time. The company reported a loss of net income from $1.29 billion to $1.02 in 2010 (Sutherland 2011). At the same time, its market share dropped from 40 percent in 2009 to 31 percent in 2010. The drop in revenue and market share came at a time when Apple reported revenue of $10.5 billion in one quarter, and a profit of $6 billion which was equivalent to a 78 percent increase. This trend proves that the company is slow in adjusting to market changes, reducing its competitiveness and adaptability. The slow pace has enabled the company's competitors to enjoy the market that was once experienced and controlled by Nokia.

Corporate culture

The corporate culture at Nokia has been detrimental to the company's growth through loss of competitive advantage to companies such as Samsung, Blackberry, and Apple. Evidence shows that the company had considered developing a touch-screen smartphone in 2005, a move that would have countered Apple in its early stages of growth. However, the prevailing culture at that time that was characterized by inertia, conservatism, and risk avoidance stopped the company from investing. This move is what knocked Nokia out of the smartphone market for a while and made other companies overtake it and enjoy limited competition. The conservative and risk-averse nature was also evident in 2011 and 2012 when the company had overestimated the value of its brand hence resolving to maintain its old system despite the technological changes that were occurring. Later, the company developed the Windows phone which was considered too difficult to use compared to other brands. The company would be among the best today if it changed its corporate culture.

The corporate culture at Nokia was previously characterized by high levels of organizational fear that gave rise to frightened middle managers and temperamental leaders. Middle managers were scared of losing their jobs while leaders had the pressure to meet their targets. The company also suffered due to lack of integrity as the leaders and managers were aware that the Symbian operating system was inferior but feared to criticize it.

Organizational structure

Nokia faces three core challenges in its organizational structure, which have a significant impact on the outcome of the company. One major organizational problem is the overload of top management which reduces the effectiveness of communication between the leaders and the subordinates. Also, too many members in senior management positions increase bureaucratic problems, thus causing subordination barriers that reduce the efficiency of completion of operational tasks and the implementation of new ideas. Attention shifts from immediate and critical issues since the processes involved are long and tiring.

Another organizational problem in the company is that only one individual in top management is responsible for technology. This practice reduces the effectiveness of product review and examination before approval. The senior manager in charge of technology controls both the functionality and durability of the systems and products. These two tasks should be delegated to two top managers to increase the attention on issues of technology, thus improving the product.

Lastly, the company has adopted a technique whereby units get separated at the top management level. The two primary divisions are smart devices and mobile phones. This separation results in the inefficient use of resources and time that could be used in the joint development of the products based on demand.

Way Forward

The culture at Nokia has created fear in the employees affecting the way they interact. The structural factors coupled with the human element led to a state of myopia that reduced the company's ability to innovate. The solution to these problems is a change in the company's culture that involves an improved connection between leaders and employees to improve their state of mind and emotions. The leaders at Nokia ought to take responsibility for all the issues of the company including loss of market share, failed innovation, bad decisions, the risk of the company losing its status, and roles (Pieterse, Caniels & Homan, 2012). The leaders should also learn from Nokia's past failures as well as failures by other companies. Middle managers and top leaders need to be courageous enough to challenge the CEO as a way of seeking more benefits for the company.

The company also needs to increase adaptability to market changes such as digital transformation. Leaders and employees should stop operating on an old mindset to enhance their ability to face new types of competition and changes in customer behavior. The company should continuously challenge the current systems and embrace any improvements that could be helpful to the company. This change should be coupled with increased innovation at all levels and departments of the company. The company should adopt a culture that seeks to utilize and improve talents and encourage listening and learning. A good step in leading a change in the corporate culture is by increasing the communication of the values and missions of the company and ensuring that leaders act according to these goals. To obtain sustainable and meaningful change, leaders must learn from past experiences (Stouten, Rousseau, & De Cremer, 2018). However, in the implementation of reform, leaders must be ready to deal with employee resistance (Zafar, & Naveed, 2014). The change process requires the employees and managers to change the underlying values that translate into their behaviors.

References

Brand Minds. (2018). Why did Nokia Fail and what can you Learn from it? Retrieved from https://medium.com/multiplier-magazine/why-did-nokia-fail-81110d981787

Pieterse, J. H., Caniels, M. C., & Homan, T. (2012). Professional discourses and resistance to change. Journal of Organizational Change Management, 25(6), 798-818.

Stouten, J., Rousseau, D. M., & De Cremer, D. (2018). Successful organizational change: Integrating management practice and scholarly literature. Academy of Management Annals, 12(2), 752-788.

Sutherland E. (2011). Nokia Facing 'Significant Challenges' from the iPhone and Android. Retrieved from https://www.cultofmac.com/79132/nokia-facing-significant-challenges-from-iphone-and-android/

Synergy Group. (n.d.). Three Problems in Nokia's Organizational Structure. Retrieved from https://www.organizationalstructures.com/three-problems-in-nokias-organizational

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), 9-51.

Zafar, F., & Naveed, K. (2014). Organizational Change and Dealing with Employees' Resistance. International Journal of Management Excellence, 2(3), 237-246.