Change management, leadership and motivation of Nokia - Assignment Example

A critical discussion of the change management, leadership and motivation of Nokia Executive Summary Nokia is remembered as the most electrifying technology company in the world. Nokia’s market share was 48.7% in the third quarter of 2007 which slipped to 3.5% in the third quarter of 2012. This assignment aims to study the journey of Nokia and the different leadership styles adopted by the eminent personalities who had been entrusted with the responsibility of carrying the glory of Nokia over the years. The leadership styles of Nokia’s former chairman and CEO of Jorma Olilla are discussed which led Nokia to its glorious history. Leadership styles and change management strategies of Stephen Elop are discussed to analyze Nokia’s merge into Microsoft. The different motivational strategies of Nokia are analyzed in this assignment in order to evaluate the performance of the company over the years. Table of Contents Table of Contents 3 Research Methodology 5 Concept of Leadership 5 Analysis of the Leadership Strategies of Nokia 6 Nokia under the Leadership of Jorma Ollia 6 Nokia under the Leadership of Kallasvuo 7 Nokia under the Leadership of Stephen Elop 8 Analysis of the motivation strategies of Nokia 8 Incentive Program 8 Empowering Employees 8 Human resource development program 9 Change management strategies adopted by Nokia 10 Conclusion 10 Reference list 12 Introduction Nokia has an extended history of flourishing change and innovation which helped the company to adapt the shifts in markets and technologies. From its modest beginning with one paper mill, the company has taken part in many sectors over time; paper products, tires, plastics, rubber boots, consumer and industrial electronics, chemicals, cables, telecommunications infrastructure and more. (Nokia, 2015a). The journey of Nokia began in 1865 when Fredrik Idestam started a paper mill in Southwestern Finland which was followed by another mill on the banks of river Nokianvirta which inspired him to name his company ‘Nokia AB’. Nokia’s first step into telecom industry took place in the year 1967 when it was merged with a Finnish telecom company named Finnish Cable Works Ltd. The first telecom joint venture of Nokia with Finnish TV maker Salora was the establishment of Mobira Oy, a radio telecom firm (Nokia, 2015a). Nokia created a revolution in the telecom industry with several achievements such as, evolution of the first cellular telecom network named Nordic mobile telephone service; introduction of Mobira Cityman and Mobira Senator; development of the Global System for Mobile (GSM) which is used in maximum number of commercial forms of communication. After tasting success in the telecom industry, Nokia solely concentrated on manufacturing superior phones. The entire nation was thankful to Nokia and the value of the company increased 500% with a global turnover from $8.9 billion to $42.8 billion (Nokia, 2015a). With the entry of Google and Apple Inc, Nokia found it difficult to tackle the problem caused by Android and Apple smartphones. Nokia resorted to some hasty decisions instead of having faith and perseverance. The underlying principle for selecting this organization is, the company portrays an advancement of different types of leadership styles and evidently highlights how the success of Nokia has been affected by each style. As Nokia’s journey in the telecom industry has been a remarkable one, the company has been highly successful in motivating its employees. The decline or the collapse of Nokia is attributed to the upheaval caused by Apple, Google and other low cost competitors in the mobile device industry and Nokia’s failure to act accordingly. The company also failed to incorporate innovation in its product category. This assignment focuses on the leadership and motivational strategies of Nokia and attempts to analyze how the company performed under various leaders from time to time. Finally, the problems that led to acquisition of Nokia by Microsoft are analyzed and the assignment is concluded with suitable recommendations on the leadership and motivational strategies of the company. Research Methodology The research work of this assignment was based on secondary data and information. In order to define, explain and understand theories regarding leadership and motivation information from internet, blogs, case studies, course books, newspapers and journals were used. Statistical data were extracted from the secondary information as required, to connect the theories with Nokia’s practical scenario. Concept of Leadership Leadership is the process by which one individual consistently exerts more impact than others on the nature and direction of group activity. According to Rost (1993), a person who makes things happen that would not happen otherwise is known as a ‘leader’. Leadership plays an integral role in any organization as it involves providing appropriate direction to the employees, communicating with the employees, inspiring, empowering and motivating them to contribute successfully in achieving the organizational success (Koontz, 2009). Analysis of the Leadership Strategies of Nokia According to the Articles of Association of Nokia, it is stipulated that the company needs to have a team named Nokia Group Leadership Team which is solely responsible for supervising and managing the operational activities of Nokia (Nokia, 2015c). Over the years, Nokia was led by many different leaders and eminent personalities who carried the glory and fame of the company with equal vigor and dynamism. In the year 1988, Nokia faced a setback when chairman Kairamo committed suicide as the company was facing severe competition in the consumer electronics market (Marquardt, 2000). Kairamo was succeeded by Simo S. Vuorileto who focused on the high tech divisions of the group separating Nokias flooring, paper, rubber and ventilation systems businesses and entering into joint venture with companies such as Tandy Corporation and Matra of France to produce mobile phones for the US and French markets (Marquardt, 2000). Nokia under the Leadership of Jorma Ollia Vuorileto was succeeded by Jorma Ollila. Ollila brought about major changes in the structure of the Nokia group. He depicted different types of leadership styles. Initially, during the period 1988 to 1993 when Nokia’s consumer electronics business posted heavy losses, Ollila demonstrated autocratic leadership and he reduced the workforce of that segment by 45%, centralized all operations and closed down many plants (Advameg, Inc., 2015). Soon the company started to gain momentum as Nokia led by Ollila completely focussed on its core competencies which were telecommunications. At this stage, Ollila adopted participative and transformational leadership styles which helped the company to achieve global recognition as the employees were highly motivated to perform and the company repeatedly came out with high-margin products superior to those of its competitors and in tune with market demands. Under the leadership of Ollila, the company produced excellent products as he pumped up the research and development departments with the funds and powers to create innovative products. The leadership style of Ollila was democratic and very liberal which contributed to the success of Nokia. He encouraged innovation and wanted his employees to be very open-minded (Advameg, Inc., 2015). He allowed his employees to commit mistakes as he firmly believed that people learn from mistakes along with trial and error. (Marquardt, 2000). He let the employees speak their minds and contribute to the company. Olilla hosted many annual meetings known as the ‘Nokia Way’ to give employees the opportunity to determine the company’s priorities (Thomas, Miles and Fisk, 2006). Based on these annual meetings, he would have management translate these priorities into strategic plans. CEO Ollila retired from his position in the year June 2006 who was succeeded by Olli-Pekka Kallasvuo, a lawyer by profession. Nokia under the Leadership of Kallasvuo Kallasvuo failed to retain the dominating position of Nokia in the smart phone era as the company failed to innovate and transform from its present scenario and Nokia lost the ground to Apple Inc. At this juncture, some traits of Laissez-Faire leadership style crept in the company (Aluya, 2009). As the company grew larger and richer, each department became its own kingdom and each executive assumed the role of an emperor and people were more concerned about their own status and internal promotion than cooperating actively with other departments to produce innovative products at a faster rate. Kallasvuo stepped down and he was replaced by Stephen Elop. Nokia under the Leadership of Stephen Elop Stephen Elop who stepped in as Nokia’s new CEO in September 2010 displayed high level of collaborative leadership style along with transformational leadership qualities. Through collaborative leadership, Elop created new strategy and vision for Nokia; he communicated his actions and provided new direction to the company. By entering into a partnership with Microsoft, Elop took bold leadership steps to respond to the new threats in the growing smartphone market (Archer and Cameron, 2013). Analysis of the motivation strategies of Nokia Incentive Program Nokia incorporates Vroom’s Expectation theory of motivation while providing incentives to the employees through its incentive program. The theory emphasizes the need for organizations to relate rewards directly to performance of the employees and ensure that the rewards provided are those rewards deserved and wanted by the recipients (Koontz, 2009). Nokia provides monetary incentives comprising production and researchers’ incentives, global bonus plan and work performance work structure. The company also provides non-monetary incentives which are included in non-monetary performance bonus system comprising promotions and opportunities of self-development (Nokia People and Planet Report 2012). Empowering Employees Empowering employees is a psychological theory which is represented through four aspects; impact of an individual’s role in the organization, self-determination, competence and meaningful work. In organizations where resources and information are easily accessible, reasonable mistakes of employees are taken as a part of the learning process and more value is given on employee learning which makes employees feel more empowered (Hill, 2008). Nokia adopted the empowerment strategy where the company allowed employees and managers to take considerable amount of self-directed and autonomous decisions. This provided a sense of belongingness among employees towards the company and they also feel that they are able to participate in the company’s profit (Nokia People and Planet Report 2012). By adopting this strategy, Nokia aligned its motivation strategies with Maslow’s hierarchy of needs theory which successfully employed motivation among employees with a sense of belongingness to the company. Nokia implemented the project manager system under which specific teams were formed for different units such as marketing, technology and production under the guidance of specific project managers. The groups decided their budgets and were given power to swiftly react to the changes in the market (Nokia People and Planet Report 2012). Human resource development program Modern employees believe that a company is not only a place for earning money but also a place for self-actualization. In a company like Nokia, possessing advance technology and high knowledge base, human resource is a competitive power. Nokia employed several techniques to motivate and value its employees through 180 inspection lists which helped the employees to assess their decision making and adaptation skills (Nokia Corporation, 2014). By adopting these motivation strategies, Nokia incorporated the job attractiveness feature of Vroom’s expectation theory. In the year 2015, Nokia rolled out the ‘Nokia Equity Program 2015’ comprising ‘Employee Share Purchase Plan’ and ‘Performance Share Plan’ with the aim of motivating its employees and enhancing the performance level (Nokia, 2015b). Change management strategies adopted by Nokia Nokia experienced a drastic change adopted by Stephen Elop, the new CEO at Nokia. He translated the need for change into a desire for change on the part of all those who can affect the success of the change through his ‘burning platform’ message (Locker and Kienzler, 2013). He wanted the employees to understand that Nokia was no longer a secure and prosperous company as Google and Apple Inc. had inflicted serious damage on Nokia’s revenue and market share. The ‘burning platform strategy’ of change management adopted by Elop created adequate concern among the employees to motivate them to accept that only way forward was to embrace a drastic and far-reaching change (Hayes, 2010). Nokia implemented the change strategy by involving Microsoft to create a new and fresh mobile ecosystem. Conclusion On September 3, 2013 it was announced that the hardware division of Nokia would be acquired by Microsoft and the deal was completed 8 months later on 25 April 2014. The glorious journey of Nokia’s smartphone business came to an end. In 1998, Nokia had firmly established itself as the global leader under the leadership of Jorma Ollila. After the glorious journey in 90s, the company started to go downhill rapidly in 2007 as the leadership strategies adopted by the leaders of the company did not succeed. Nokia’s new CEO Stephen Elop tried reviving the glory of Nokia by joining hands with Microsoft and developing the Lumia series of smart phones. Evaluation and Recommendations The glory of Nokia was crushed by Apple Inc. and Samsung. The company solely concentrated on its hardware related activities and neglected the software division comprising the apps that run on smartphones and this deteriorated the experience of using a Nokia smartphone. The development process in Nokia was dominated by hardware experts marginalizing the software departments. At this juncture, the leadership strategies of Nokia failed. Nokia should have incorporated transformational style of leadership. The company believed that the company would be able to catch up quickly even though it was late to the smartphone game as Nokia overestimated the strength of its brand. Nokia should have stuck to its own operating systems instead of embracing Windows phone in 2011. The motivational practices should have been reviewed, as employees in Nokia were more concerned about internal promotions and their personal status. Implementing change in leadership and motivation is a difficult task as it involves restructuring the entire structure of the organization. At the same time, it firmly holds the trust of the stakeholders, but it definitely provides long-term benefit to the company. Reference list Advameg, Inc., 2015. Crises of Leadership, Profitability in the Late 1980s and Early 1990s. [online] Available at: [Accessed 2 July 2015] Aluya, J., 2009. Complexity of leadership, organizations and the real estate industry: disrupting existing systems. Bloomington: AuthorHouse Archer, D and Cameron, A., 2013. Collaborative leadership: building relationships, handling conflict and sharing control. New York: Routledge Hayes, J.,2010. The theory and practice of change management. New York: Palgrave Macmillan Hill, 2008. Principles of management 1e(sie).New Delhi: Tata McGraw-Hill Koontz, H., 2009. Essentials of management. New Delhi: TataMcgraw Hill. Locker, K and Kienzler, D., 2013. Business and administrative communication. New York: McGraw-Hill/Irwin Marquardt, M., 2000. Global leaders for the twenty-first century. Albany: State University of New York Press. Nokia Corporation, 2014. Offering A Good Place To Work For All Our Employees. [online] Available at: [Accessed 2 July 2015] Nokia People and Planet Report, 2012. Employees. [online] Available at: [Accessed 2 July 2015] Nokia, 2015a. Our story. [online] Available at: [Accessed 2 July 2015] Nokia, 2015b. Nokia Equity Program 2015. [online] Available at: [Accessed 2 July 2015] Nokia, 2015c. Nokia Group Leadership Team. [online] Available at: [Accessed 2 July 2015] Rost, J., 1993. Leadership for the twenty-first century. Westport: Greenwood Publishing Group, Inc. Thomas, M., Miles, G and Fisk, P., 2006. The complete ceo: the executives guide to consistent peak performance. New Jersey: John Wiley and Sons. Read More