The case study company that I have chosen for this essay is Nokia. Nokia is a; Finnish multinational communications, information technology and consumer electronics company. Nokia was founded in1865 by Fredrick Idestam, Leo Mechelin and Eduard Polón in which the current CEO is Rajeev Suri. The reason I have decided to choose this case study is that Nokia has not only been around for 152 years but has continually reinvented itself. This shows that Nokia has stayed with the times and have responded well to change, showing innovation and great leadership.
Nokia has a very interesting history which has shaped the present day company. Originally Nokia was ground wood pulp mill based in South Western Finland. It then transformed into an electricity business towards the end of the 19th century. In 1902 Nokia added electricity generation to its business activities. It also moved into rubber products and manufactured galoshes. After the first world war the company almost went bankrupt however they have been able to transform themselves into many businesses. In 1987 Nokia released their first mobile phone called ‘The Mobira Cityman 900’. It was very popular and dominated the market but after years of increased competition and market domination from the likes of Apple, Nokia made a huge decision in 2014 to exit the market as it was no longer profitable. This was an extensive change for the business although this was not the first time they had reinvented the company. They had decided to sell the device business to Microsoft and their current foundation of the business is networking equipment. The decision to sell their device business took hard consideration and for the executives to come together to use their leadership skills and decide the best future for the company. The executives had decided to survive they needed to change the products and their strategy. They were in a previous partnership with Siemens which they decided to buy out and carry it on as their own. Once they had control of the company they started on a major change strategy. This consisted them of; creating a new portfolio , corporate and capital design, business arrangement, and a new management team into place. This was a huge change for Nokia and ever since then they have been doing very well. On Nokia’s website it states ‘Nokia announces change in its organisation and Group Leadership Team to accelerate the execution of the company strategy’. (Nokia,2017)
Since the changeover for Nokia from producer of mobile phones to networking material and appliances they have become profitable. They have a stable growing share price, repaid billions of dollars in cash to their shareholders, and very importantly become the most valuable company in Finland once more. By the leaders taking charge they were able to make a decision that would benefit the company in many ways. This is showing that the leaders in Nokia have been living up to the standards of what a leader should be. The skills they showed included; competence, a vision and the ability to communicate that vision effectively and professionally and also they had the capability to build strong teams around them. This shows the customers and outsiders that there is faith in the company. By the company taking a chance and adjusting they showed that taking the risk is worth it if you have the right minds and vision. As stated above in the article ‘The caring leader’ it states that leaders should be ‘prepared to stand up for what they believe, against opposition and ridicule.’ (Gabriel, 2014). Nokia have proved that this quote is appropriate, if you don’t stand up from what you believe in then your company will likely become non-profitable and have to exit then market for good.
The reason for Nokia leaving the market was due to the CEO at the time Stephen Elop. Stephen Elop was the CEO of Nokia from 2010 till 2014 and he was involved in many controversies including the ‘burning platform’ and the partnership with Microsoft. He was blamed and criticised for a variety of his decisions, which concluded in the company making huge losses not only financially but in the market share. During his time at Nokia the stock prices dropped a massive 62%. This is not what you want from a CEO and a leader, from this their market share halved, their smartphone market share dropped from 33% to a small 3% and the business suffered a €4.9 billion loss. He is most known from Nokia but has also worked previsouly for other companies such as Telstra which is an Australian Telecom Company. He has also worked for Adobe Systems, Macromedia and Boston Chicken. It is stated that Elop was the ‘wrong man to lead Nokia’ (Arthur, 2017). It was said he was ‘one of the world’s worst’ chief executives, according to a new book published in Finland’. (Arthur, 2017). This shows that Elop was not the right leader for the job. Leaders are expected to improve, help and better the business but Elop did the opposite. Some leaders have big egos and put themselves first rather than their companies. He may well have also been a “toxic leader” as described by above rather than a “caring leader”.
There are many reasons for organisational change. Some include; the company performance, new technology being released and high turnover.
Many companies like Nokia have benefitted from organisational change but there are many that do not and this is often down to leadership. Examples of companies that demonstrated organisational change but were defeated were both Walmart and J.C.Penny. Both of these companies are American and were unsuccessful with their change for many reasons. Starting with Walmart, Walmart sold everyday low prices, from food to electronics, clothing, and so much more. They were a very popular store with many customers until they decided to change their market. They decided to to expand into a different market by brining in increased priced goods which was mainly fashion items. High-end customers were not impressed and low-end customers began to look elsewhere for deals. Walmart had to stop the increased priced goods and hire a new advertising agency to assist in getting back customers and brand loyalty. The reason for this was that they lost sight of their original customer base and began to go after different customers who had not yet bought into the brand. For J.C.Penny they also forgot the needs of their core customers. They decided to change the ‘rewards’ for the customers. In 2012 they decided to remove the sales and coupons and replace them with ‘month long values’. By doing this J.C.Penny thought this would remove the drama and build-up and consumers could be guaranteed the best prices all year round. Nonetheless, customers did not adapt to their idea as they felt like they weren’t getting a good deal. Shortly after this happened the president at the time Michael Francis stepped down. This shows that J.C.Penny like Walmart’s forgot the most important stakeholders in the business the customer perhaps in a rush to make more profit rather than focusing on what the paying customers would want. Both of these companies should have taken more time and consideration and thought about both the needs of the customers. These are two examples of companies that lost there way for a bit but were able to acknowledge their mistakes and continue to build their companies future. Nokia is very different as the choices the leadership had to make was major change or face bankruptcy that is when real leadership is put to the test.
To conclude Nokia has been able to pull off reinventing themselves multiple times. They have done well considering loosing billions and having to exit the market. It shows the impact of leadership on the business both good and bad. Nokia being around for 152 years shows that they can tackle any problems thrown at them including them exiting the market. The have done this conti
nually reinventing itself. This shows that Nokia has stayed with the times and have responded well to change. By Nokia taking the right steps and exiting the market they have been able to keep the brands name popular. They have taken organisational change and executed it very well. As explained earlier there are other companies which haven’t executed change well. If they had not changed strategy they could have resulted in major failure. As stated in the literature review change cannot happen without leadership.