Report on Strategy Implementation at Nokia

1. Introduction & Purpose of Report

Nokia has long been known as the leader of the telecommunications industry boasting an impressive history of adapting to market shifts. More than seven years prior to the release of Apple’s now infamous iPhone and iPad, Nokia had developed products of alarming similarity (Troianovski & Grundberg, 2012). However, in a move that sparked the demise of their market dominance, they released their product far before the market was ready (Troianovski & Grundberg, 2012). The tumultuous decade that followed was rife with ‘strategic blunders’, allowed by an ineffective corporate culture and structure (Troianovski & Grundberg, 2012, p.2). Thus, Nokia are now playing catch up in a market they had long anticipated (Troianovski & Grundberg, 2012). This report will investigate the separate roles of corporate culture and structure on the implementation of strategy within an organization. Furthermore, it will analyze relevant theories and functions of management, and recommend an appropriate course of action for Nokia to improve its strategy implementation.

2. Problem Identification

Nokia’s major issue is a lack of strategy implementation, evident in their inability to successfully bring products to the market. While the lack of strategy implementation is the symptomatic problem, it is not however the cause. The underlying issues affecting strategy implementation are a complacent culture that is fraught with internal rivalries and an organizational structure that allows for such complacency in its slow decision-making and wasted research efforts. These underlying issues have resulted from the evident neglect of the four functions of management, particularly planning.

2.1 Lack of Strategy Implementation

Development and formulation of strategy is not where most businesses fall short, it is the failure to implement strategy that leads to an organization’s demise (Ahmadi, Salamzadeh, Daraei & Akbari, 2012). Schermerhorn, Davidson, Poole, Simon, Woods, and Chau (2011, p.217) define strategy implementation as ‘the process of allocating resources and putting strategies into action’, and emphasize its fundamental role in the success of an organization. Implementing strategy allows an organization to achieve its objectives (Schermerhorn et al. 2011; Waweru, 2011). Thus, without strategy implementation, Nokia cannot hope to compete in the volatile telecommunications industry and will only continue in its downward spiral.

3. Organisational Culture

Organizational culture, though difficult to define, is essentially referred to as the history, or shared set of values that guides the behavior of employees in an organization (Lumby, 2012; Schein, 1990; Schermerhorn et al. 2011). The culture of an organization involves the people, the way they interact, their motivation and accomplishments (Iqbal & Sharma, 2012; Schermerhorn et al. 2011). Therefore, human resources need to be managed effectively to establish an organizational culture that is able to implement strategy (Kim & Sung-Choon, 2013; Schermerhorn et al. 2011). A dysfunctional organization fails to recognize its culture as a significant factor in effectively implementing strategy (Kim & Sung-Choon, 2013; Shaw & Ronald, 2012). In contrast, a successful organization fosters an organizational culture that is able to effectively implement strategy (Ahmadi et al. 2012; Heeroma, Melissen & Stierand, 2012; Iqbal & Sharma, 2012; Klein, 2011; Schermerhorn et al. 2011).

3.1 Analysis

The positive correlation between culture and strategy has provoked wide research and suggests that an alignment between the two is imperative to organizational success (Ahmadi et al. 2012; Heeroma et al. 2012; Iqbal & Sharma, 2012; Klein, 2011; Schermerhorn et al. 2011). An alignment between organizational culture and strategy should be based upon configuration theory (Heeroma et al. 2012; Slater, Olson & Finnegan, 2010). Configuration theory suggests that there is no one universal culture that is appropriate to all situations and demands (Schermerhorn et al. 2011; Slater et al. 2010). Thus, the culture must be tailored to the organization, factoring its en`vironment, strategy and structure (Heeroma et al. 2012; Klein, 2011; Schermerhorn et al. 2011; Slater et al. 2010). This theoretical approach lends itself to an adaptive and flexible organization (Schermerhorn et al. 2011). In order to develop such an organization Klein (2011) suggests a basic methodology for aligning culture and strategy. This includes diagnosing the current culture, comparing the behavioral norms and expectations required to implement strategy, and developing approaches to respond to issues (Klein, 2011).

3.2 Nokia’s Complacent Culture

The complacent organizational culture rife with internal conflict at Nokia has had a detrimental effect on the implementation of strategy. Organizational culture must be supported and implemented through strategic leadership practices as evident at Nokia’s number one competitor, Apple, who thrive through effective management of their culture (Schermerhorn et al. 2011). In an industry where differentiation, innovation and product development are vital to an organization’s success, it is imperative that Nokia develops a cohesive, flexible and adaptive culture that rewards risk taking and creativity (Ahmadi et al. 2012; Klein, 2011; Schermerhorn et al. 2011). ‘Adaptive organizations operate with a minimum of bureaucratic features and encourage worker empowerment and teamwork’ (Schermerhorn et al, 2011, p.255). These organizations are better able to implement strategy, as they are contingent in approach, and thus better positioned to deal with uncertain environments (Ahmadi et al. 2012; Schermerhorn et al. 2011).

Forging an adaptive organization in order to align culture and strategy requires effective planning, organizing, leading and controlling by top management (Pryor & Taneja, 2010; Schermerhorn et al. 2011). Nokia’s top management need to set objectives, the processes to achieving these and control methods to measure if they are on track to achieving the objectives (Schermerhorn et al. 2011). In doing so, Nokia should follow Klein’s (2011) methodology for aligning culture and strategy. Maintaining open communication and involving employees in this process is recommended in order to gain their support and their perspective on day-to-day business activities (Schermerhorn et al. 2011). Nokia must establish a clear direction and forge an adaptive culture with open communication and employee involvement, otherwise known as visionary leadership (Schermerhorn et al. 2011). This style of leadership encourages staff to rally behind top management and share in the passion of an organization (Kim & Sung-Choon, 2013; Klein, 2011; Schermerhorn et al. 2011).

4. Organisational Structure

On the other hand, it is argued that organizational structure has a major influence on strategy implementation (Iqbal & Sharma 2012; Pertusa-Ortega, Molina-Azorin & Claver-Cortés, 2010; Schermerhorn et al. 2011). Organizational structure is the design of an organization, the arrangement of tasks, objectives and decision-making processes (Pertusa-Ortega et al. 2010; Schermerhorn et al. 2011). Strategy is a plan and guided course of action involving organizational objectives (Mintzberg, 1994 as cited in Abu Bakar, Tufail, Yusof & Virgiyanti, 2011). The structure of an organization and the type of strategy it employs are major factors in influencing competitive advantage and organizational performance (Pertusa-Ortega et al. 2010; Schermerhorn et al. 2011). Thus, an imperative component to an organization’s success is that its structure supports its strategy (Iqbal & Sharma 2012; Pertusa-Ortega et al. 2010; Schermerhorn et al. 2011).

4.1 Analysis

Drawing on the experience and confidence of the executives and top management to guide the organization by means of developing short and long term plans, including contingency plans, that are linked to organizational goals, is an effective approach to developing a structure through which strategy implementation is possible (Eisenhardt, 1989; Schermerhorn et al. 2011). Henry Mintzberg suggests a contingency approach to organizational structure (Heriot, Loughman & Thomas, 2009; Pertusa-Ortega et al. 2010; Schermerhorn et al. 2011; Slater et al. 2010). This approach identifies factors such as strategy, organizational goals and environmental uncertainty, and their particular influences on the type of structure appropriate (Heriot et al. 2009; Pertusa-Ortega et al. 2010; Schermerhorn et al. 2011; Slater et al. 2010). Thus, top management must understand the role of strategy, setting objectives, planning and decision making, and the external environment in effective strategy implementation (Pertusa-Ortega et al. 2010).

4.2 Nokia’s Convoluted Structure

In the past decade Nokia spent more than four times the amount that their main competitor Apple has, on research and development and have little to show for it (Troianovski & Grundberg, 2012). Qualcomm, who collaborate with Nokia on projects, note that the amount of time spent simply strategizing is extensive (Troianovski & Grundberg, 2012). In this case it can be argued that having the courage to make the decision has just as much of an effect as the quality of the decision itself (McKenzie, van Winkelen & Grewal, 2011). Thus, Nokia’s top management must overhaul the convoluted structure of the organization and develop processes to speed their flawed decision-making in order to improve strategy implementation (Eisenhardt, 1989; McKenzie et al. 2011; Schermerhorn et al. 2011).

In order to improve their decision-making processes, Nokia must utilize the functions of management. It is vital that Nokia’s top management practice effective planning by setting clear goals, objectives and strategies, and putting control measures in place to evaluate the success of the strategy being implemented (Schermerhorn et al. 2011). This proactive approach to management is known as visionary leadership, whereby a clear direction is established and implemented (Schermerhorn et al. 2011). Once a clear direction is established, Nokia’s management must then focus on organizing by allocating resources and appointing tasks in order to implement strategy (Schermerhorn et al. 2011). Thus, through the functions of planning, organizing, leading and controlling, Nokia’s dysfunctional decision making practices can be effectively eliminated and strategy can be implemented (Eisenhardt, 1989; Schermerhorn et al. 2011).

5. Recommendations

Nokia needs to address the strategy implementation of their organization immediately. It is evident that both the current corporate culture and the structure at Nokia are ineffective. Thus, a restructure of the organization is needed in order to foster a culture that effectively implements strategy. A vital component of this restructure would involve a new approach to the functions of management. First, it is imperative that Nokia’s top management attends training to gain the skills necessary to practice visionary leadership because establishing and implementing a clear direction for the organization is vital to its success (Schermerhorn et al. 2011). Nokia’s future must involve an overhaul of its culture and it is suggested that top management follow Klein’s (2011) methodology for aligning culture and strategy. Furthermore, executives and top management must meet on a fortnightly or monthly basis to establish and assess short and long term organizational goals. They must also establish procedures to put objectives into action, pressure points that identify when something is going wrong and periodically assess whether they are on track and adjusting their approach accordingly (Schermerhorn et al. 2011). This periodical assessment will ensure a structure that is contingent in design and thus able to adjust according to its strategy, goals and environment. However, the process of implementing plans and strategies requires the co-operation of all employees, not just top management, in order to foster a cohesive and adaptable culture. Thus, open communication of the executive meetings is advised. This should occur through several modes of communication, for example staff meetings, emails and newsletters. Through maintaining open communication and involving staff in decision making Nokia can establish a culture that encourages staff to rally behind top management and share in the passion of the organisation.

6. Conclusion

It is evident that strategic implementation is Nokia’s symptomatic management problem caused by the underlying issues related to organizational culture and structure. Culture and structure are interrelated assets in an organization equally affected by the functions of management. Thus, Nokia’s problem is not only its complacent and conflicting culture, but also the fact that its structure has allowed for this through ineffective planning, organizing, leading, controlling and decision-making. A structure that is contingent in design whilst consistently fostering a culture of innovation and strategy implementation is where the future should lie for Nokia. Through the alignment of structure and culture with strategy, Nokia will be in a position to capitalize on opportunities and implement strategy effectively.

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