“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