Organizational
agility
in the
Adaptive
Cycle
case study:
Konstantins Babahodzajevs
Arvind Bihari
Mouade Boussaid
Martin Jorna
Alexandre Pinheiro
Introduction
Explaining organizational agility through the use of a case
study about NOKIA.
1. Evolution in five phases (1988 – 2012)
2. Adaptive Cycle according to the phases
3. The use of Virtual Organizations
4. The impact of the organizational structure on the agility
1
Why NOKIA?
Nokia went through significant changes in the recent
years and fits well with the different phases in the
Adaptive Cycle.
About NOKIA
• Finnish multinational communications and
information technology corporation
• 122000 employees across 120 countries
• Annual revenue of € 38 billion
2
Five Phases of NOKIA
I. Crisis era (1988-1992)
II. Entrepreneurial era (1993-1997)
III.Equilibrium era (1998-2004)
IV.Transition era (2004-2008)
V.Crisis era 2 (2009-2012)
3
Phase I (1988 - 1992)
•
•
•
Nokia underestimated how intensely
competitive the telecom business was
Nokia had ambition to internationalize and diversify
Nokia expanded by making new acquisitions, based on
their large telecom business in the USSR
4
Phase I (1988 - 1992)
Cause:
Collapse of Soviet Union
CEO committed suicide
•
•
Change:
Split-up into handset and network
businesses.
Fully digitalization of networks(Pioneer)
•
•
5
Phase II (1993 - 1997)
•
•
•
Production and Sales needed
to meet Nokia financial targets
Nokia Mobile Phones faced major difficulties in
operations,logistics and sourcing
The supply chain wasn't prepared for the demand,
propelling them into a "logistics crisis”
6
Phase II: Logistics Crisis
"The crisis increased leadership unity in NMP and within
corporate management, as it was seen as a "growing
pain" - a toxic side-effect of exploding growth - not as a
failure management."
Importance to redesign the supply system to more
disciplined and structured approach
•
•
Implementation of an integrated ERP system
Nokia realized that a more formal process of managing
growth was required
7
Phase III (1998 - 2004)
Nokia was concerned that it would
miss new growth opportunities.
So they came to two conclusions:
•
•
Intellectual Leadership was introduced in 1995 that led
to the creation of new ventures and research and
established in 1998 Nokia Venture Organization as their
home
Nokia realized they needed a third core business,
however this was considered to be too daunting of a
process. Instead they focused on strategic evolution
and renewal of the core business
8
Phase III (1998 - 2004)
Organizational Structure:
9
Phase III: 2001 Disruption
•
Market growth slowed down in 2001
•
Competition became more severe
•
Market share dropped from 35% to 30% from 2002 to 2005
This lead to a new organizational structure, segmenting into
nine value domains:
10
Phase III: 2001 Disruption
11
Phase IV: (2004 - 2008)
•
Seasoned leader executives
resigned, due to the new interdependent matrix
•
•
structure
The different domains started losing their capability to
cooperate together
In 2006 the management team was rebuilt and Nokia
announced it would merge its network division with
Siemens
12
Phase IV: The 2006 Structural Change
13
Phase V: Present
•
•
Couldn't compete with disruptive innovations by
competitors in the smartphone market
o
o
iPhone
Android
New competitors arrived in the networks market
o
ZTE and Huawei (China)
14
Phase V: Present
•
•
•
•
Nokia responded to the smartphone threat, however
they did not respond to the services delivered next to
the smartphones.
Symbian OS did not have an app market like Google
Play or the App Store.
Symbian OS was not built for touchscreen navigation,
this resulted in Nokia having to play catch-up.
In the networks market, the new competitors have
competitive pricing.
15
Phase V: Organizational Structure
16
Virtual Organization
• Nokia has a virtual organizations policy since
2008
• Close cooperation with Microsoft, where
Microsoft develops the software (Windows
Phone 8) and Nokia focuses on the devices
17
Influence of Organizational Structures
18
Nokia’s Process over time
Fully
digitalization of
the networks
1995-Realization that
the supply chain wasn't
prepared for the
demand
Intellectual Leadership
was introduced
1988- CEO
Committed
Suicide
2004-Seasoned
leader executives
resigned, due to
the new
interdependent
matrix structure
2006- Nokia
announced it was
merging its
network business
with Siemens
1998- Process and
establishment of NVO
1988
1993
1991-Collapse
of the Soviet
Union
1998
Implementation
of an integrated
ERP system
Split-up into
handset and
network
businesses
1996-Two forums were
created: The Nokia
Strategy Panel and
Business Development
Forum
2004
2001-Market
Share drop.
NMP split its core
mobile phone
business into 9
different marketsegment focused
“value domains”
2008
2009- Creation
of the “Ovi
Store”
Thank You For Your Attention!
Q&A
References
• “The Dynamics of Strategic Agility: Nokia’s
•
Rollercoaster Experience”,Y.Doz and
M.Kosonen ,California Management review
Vol 50, no. 3, 2008
John P. McCray, Juan J. Gonzalez, John R.
Darling, (2011),"Crisis management in smart
phones: the case of Nokia vs Apple",
European Business Review, Vol. 23 Iss: 3 pp.
240 - 255