Final Technology and Innovation: A case study of Nokia

Technology and Innovation: A case study of Nokia
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Abstract
Nokia mobile was one of the leading companies in mobile tech. Nokia witnessed a period where there was an upsurge in its business operations all over the world. However, from the year 2007, sales from Nokia began declining due to iPhone entering the market with new technology. iPhone was focusing on manufacturing smartphones with the IOS platform, which were much appealing to the users. Nokia faced a real threat as it was stuck in the past with old technology, the Symbian operating system. Consumers were complaining about the Symbian because it was complicated to use and, in some instances, even shut down. During the same period, the company faced challenges with its leadership. The delay in management decisions to adopt new technology and failure to innovate new software caused a shift in the market, as people started to resort to Android and IOS. Nokia's market share dropped, and it started to sack employees. The paper discusses the instances where the management of Nokia failed through various steps of leadership. It further explains how the company could have made it right and remained a global leader in phone technology.
Introduction
By default, globalization affects many businesses in different ways, especially on the need for companies to adopt new technologies and innovate new products to match consumer preferences that keep changing daily. This can be achieved effectively when companies conduct market research and get informed on emerging trends and varying consumer needs based on geographical orientations. Continuous innovation is critical for the growth of any economy. Technology firms' capability to redesign production methods and reconfigure organization structure is crucial as it offers a competitive advantage for the growth of companies, industries, and countries (Feldman, 2004). In 2019, Forbes reported news on firms that failed to innovate and crumbled down. The firms include; Blockbuster and Toys R Us, which lack of innovation mainly, caused their failure. Another classic example of a company that failed to adopt technological innovation was Nokia, which came crumbling from being a top mobile brand to a shell quickly. This research seeks to analyze the rise and fall of Nokia while highlighting critical ethical, systematic, and leadership failures that brought the once giant Finish Company to its knees.
Description of the problem
Nokia Corporation is multinational communications, consumer electronics, and information technology company with headquarters in Espoo, Helsinki Metropolitan, Finland. Founded in 1865, the corporation has various companies, but of concern in this research is the Nokia mobile/phone business. It started as a pulp mill in southwest Finland by mining engineer Fredrik. In 1967, the Nokia pulp industry merged with Finish cable works and Finnish rubber to form a corporation. In 1981, the corporation launched Nordic Mobile Telephone Service, the world's first international cellular network, and in 1982, they introduced the Mobira senator, the first car phone. In the same year, Nokia DX200 was the company's first digital telephone. In 1987, the firm introduced the first handheld mobile phone, "the Mobira city man," and in 1991, Harri Holkeri, the then Finnish prime minister, made the world's first call using Nokia equipment (Monaghan, 2017).
 In 1992, the then chief executive officer (CEO), Jorma Ollila, saved the company from the brink of bankruptcy by focusing only on mobile phones and telecommunications and selling its rubber, cable, and consumer electronics divisions. The same year Nokia launched its first digital handheld GSM phone, the Nokia 1011, to start mass production; that marked the beginning of its mobile phone business' successful growth. The company sold 20 million phones, which were way above its target. The company achieved tremendous growth, and in 1998 it became the world leader in the mobile phone market (Monaghan, 2017). Between 1996 and 2007, Nokia phone sales increased by 200 percent while revenue turnover increased almost tenfold from $ 7.75 bn to $61.54bn as per exchange rates of 2020 (Statista, 2018). Nokia's early success was primarily due to its young, united, and energetic leadership team at the top that was visionary and made courageous management choices that leveraged the company's innovative technologies and met the market demands. The huge returns started putting the company under short-term performance pressure while neglecting long-term innovations.
Trouble for the company started in 2005 when CEO Jorma Ollila stepped down in the process of a poorly implemented reorganization strategy that was meant to rekindle the company and decentralize its initiatives. The restructuring process brought various changes, and many experienced managers left due to the top management's unethical issues. The replication effect was that its top management was no longer sufficiently technologically experienced and strategically integrative to set priorities. This led to a prolonged decision-making process within the management. As a market leader for over a decade, Nokia did not plan its future, as it seemed satisfied with its products. Therefore, due to a lack of innovation, the company took too long to respond effectively to changing market trends and continued to use its Symbian OS. The OS lacked a user interface and could not compete with more appealing iPhone and Android that had superior platform-based having high demand in the market. The company started to experience a decline in revenue in 2008, a 30 percent fall in third-quarter profits (Milmo, 2008).
Meanwhile, its phone sales dropped by 3.1percent, while sales of Apple iPhones grow by 327.5percent (Schofield, 2008). In 2009, Nokia laid off 1700 employees due to the global economic recession that hit mobile phone sales and admitted its slow response to the rise of the iPhone and Android (Ramnarayan, 2009). On realizing they were losing more customers, the company made the biggest mistake by entering a wrong deal with Windows 2011. The first windows phones were still new in the market and lacked a customer base. Second, Nokia's Lumia series launched with Windows OS had some operational problems and could not compete with Android and iPhone. This led to the ultimate collapse of the company. 
Nokia took too long to enter the smartphone market. Stiff competition from Samsung and Apple and its lack of focus on innovation-led to its collapse. Nokia spent much time focused on short-term strategies and development of device durable hardware functionalities, while its competitors focused on innovation as their core competencies to gain market share.
Lack of collaboration and partnership also affected the company; Nokia had a large market share initially and enjoyed a monopoly of profits. This made it ignore the power of its competitors and refuse to enter into collaboration with them. They realized later that its competitors had developed a very superior operating system with much more capabilities than its Symbian OS and were in line with the changing market trends. In 2012, the company cut 4000 jobs and moved smartphone manufacturing to Asia and in 2013; Microsoft bought Nokia's mobile business for $7.5 bn (Ovide, 2013; Garside, 2012).
Ethics
Ethical management is significant for the growth and development of an organization. From the year 2007, Nokia was involved in a series of unethical issues attributed to stiff competition from iPhone and Android OS mobiles. Due to the lack of new technology adoption in 2008, Nokia and Siemens resorted to entering a joint venture to form the Nokia Siemens Network (NSN). The Iran telecom company contracted the NSN to intercept Internet communications of Iranian citizens. The tech allowed the government to monitor SMSs, instant messages, web traffic, and voice calls. The move triggered demonstrations in 2009 by pro-democracy movements, as Nokia angered them. They then boycotted Nokia products including, the messaging services. Finally, Nokia issued a public apology to the Iranians in 2010, though it was late, as the damage had already been done. In 2011, the NSN decided to reduce Iran's operations and not conduct new businesses (Lester & Dalat-Ward, 2019, p.16).
Due to pressure arising from the market for new technology, Nokia finally decided to form a strategic partnership with Microsoft to create a new global mobile ecosystem. The partnership aimed at producing windows phones to counter the iOS and Android phones ("Nokia and Microsoft Announced Plans for a Broad Strategic Partnership to Build a New Global Mobile Ecosystem, 2011"). The move led to the production of the first phone, Lumia 920 that mainly focused on the Windows operating system and a good camera. Nokia then released a video to indicate how powerful the camera of the Lumia 920 was. An online tech magazine, The Verge, discovered that the video had a reflection on it.
Further, investigations revealed the video was taken by Steadicam held by a cameraman in a van, thus putting into compromise the advertisement team (Lester & Dalat-Ward, 2019, p.16). The company decided to conduct investigations but never released any findings to the public. Even though Nokia owed the public an apology for the breach of ethics, the firm never apologized.
The bold move in Iran led to the arrest of several civilians in the country, who were then tortured by the government. The activists filed a lawsuit against Nokia in the US Federal Court regarding the company's action of illegally tapping their phones. The rage among the Iranian citizens led to the drastic decline of Nokia's business operations. Nokia Siemens finally decided to ramp down its operations in Iran in 2011 gradually. The camera of the Lumia 920 was brilliant, but the severe breach of ethics was uncalled for. Nokia just apologized for the confusion in releasing the video but never apologized for the unethical behaviors. Though the impacts of unethical issues were minimal, the series of events gradually led to Nokia's fall. In the period between 2009 and 2012, Nokia lost a third of its total revenue, which led to the downsizing of the company to 25 percent. The company's market share shrank to less than 5 percent and almost faced bankruptcy (Krigsman, 2018).
The theory of utilitarianism advocates for doing good to the greatest number of people Johnson (2019, pp. 25-26). The theory has it that an individual's actions should collectively focus on improving the welfare of an organization (Baujard, 2013). Nokia should have dedicated itself to serve the interest of a common man rather than a government or an institution. The framework of common good relates directly with the practice of ethics in an organization (Bonde & Firenze, 2013, para. 7). The company had the moral obligation to put the customers' interest first and ought to have been honest with them. The common good is significant in that the interests of the customers come first. To instill a successful code of ethics in the company, I could have assembled all directors and the top managers to develop strategies for eradicating unethical behaviors. Such initiatives involve the punishment of individuals involved by either termination of contracts or demotions. Severe cases would have resulted in punishment by law. The involved fellows would have been investigated independently with private investigators and charged in a court of law. Apart from punishments, there would have been regular training conducted annually to remind the staff importance of ethics. Thus, human resource managers would put measures in place not to employ individuals with a history of misconduct. Upon recruitment, the individuals would be required to sign a mandatory code of ethics form.
Systems Thinking
There is an upsurge of complex systems all over the world. The upsurge has been caused by continuous globalization as nations become more and more interconnected to each other. Significant technological advancements have also been witnessed in the 21st century that has been integrated with different systems. International trade ties are also becoming more rampant due to companies' urge to invest overseas to increase their revenues. Nations are coming up with policies that are causing adverse effects in others. This has caused systems to move towards interconnectedness as never witnessed before. With system thinking, it is easier to understand the complexity in behaviors, allowing for their prediction of outcomes. The number of system thinkers is rapidly growing to solve this problem. The system thinkers have to expand their knowledge to counter the increasingly complex globalized systems that will come up in the future.
Barry Richmond (1994), the founder of system thinking, defines system thinking as an art and science of deriving inferences on behaviors by developing deep understandings of underlying structures. He argues that people take different positions when viewing the same thing—for instance, seeing both forest and trees (one eye on each). However, Barry fails to explain the relationship between the elements of system thinking adequately. It is Peter Senge (1990) who clearly defines system thinking as a discipline of seeing wholes. He narrates that system thinking involves interrelations and not things for seeing a change in patterns. The definition evokes a deeper understanding of system thinking, hinting at it as a natural way of thinking. Bui and Baruch (2010) analyze the five disciplines of Senge in a multi-level approach, from the individual level (personal mastery) to the collective level (team learning, mental model) and finally to the organizational level (shared vision, systems thinking).
Personal Mastery
Personal mastery refers to the commitment of an individual in an organization by continuous clarification of personal visions, focused energies, and patience to see real scenarios. "It goes beyond competence and skills, though it is grounded in competence and skills. It goes beyond spiritual unfolding or opening, although it requires spiritual growth. It means approaching one's life as a creative work, living a life from a creative as opposed to the reactive viewpoint" (Senge, 1990, p. 141). Personal values are key, as they influence the natural behaviors of an individual. Employees always bring their values to the place of work.
The period between 2010 and 2012 witnessed a mass exodus in Nokia due to the loss of jobs. This led to low promotion rates in the company. The situation led to Nokia's downfall as the remaining staff lacked motivation and the urge to continue working. Leaders are mandated with the task of lifting the morale of employees. The company should have initiated strategies for creating new position names to act as a way of promoting employees. Bonuses and other incentives should also have been provided to promote the culture of hard work.
Mental Models
Mental models are the external systems specifying cause and effects on the relationship with the management system. The mental models influence human mindsets and behaviors, hence significant to learning (Bui & Baruch, 2010). The leadership, culture, and commitments of the organization influence them.
Nokia had tremendous growth, which led to a lack of attention to its values and cultures. With the company's cultural values declining, engineers lacked motivation, hence the inability to focus on the development of new technologies that led to the downfall of the company. Nokia needed a leader to enhance transformation among the employees. The leader needed to go back to the basics and inform employees on the significance of upholding the company's cultures and values instead of focusing on short-term productivity. Cultivating the innovation culture against the focus on productivity could have gone a long way to help the company foresee the future and prepare itself well.
Team learning
Team learning is "the process of aligning and developing a team's capacity to create the results its members truly desire" (Senge, 1990, p.236). It is fundamental for an organization to have talented employees that collaborate with others by sharing knowledge and skills. Members have to be committed to effective team learning. It needs a combined effort from team members to participate in innovations and product developments (Bui & Baruch, 2010).
Nokia had facilities in place for effective team learning. The company built significant training centers in 11 countries spread across the globe. However, the centers failed to fulfill their obligations fully. They over depended on the Symbian platform from the year 1997 to late 2000. The platform also had some flaws that the company never strived to improve on. For instance, the operating system had poor Internet performance and unsatisfactory app availability. Consumers began to embrace other operating systems, but the company never bothered to develop a more effective operating system to supplement. To solve this problem, Nokia should have employed highly qualified technicians to initiate effective team learning. The technicians also needed support from leaders who can coordinate quality team learning.
Shared Vision
A shared vision is a common objective that all members of the organization have to believe in. An organization must operate under a vision they have built together to create a commitment of a shared future (Bui & Baruch, 2010). The first step of building a vision for an organization is assessing each of the individual's visions. The visions are rooted in person either by images or pictures. Individuals can also have visions through beliefs, values, and aspirations. The combined visions are then shared to achieve the overall company goal.
Nokia's technological development stretched to numerous directions and lacked an excellent strategic vision (Lamberg et al., 2019). Most of the company's visions were short-term in nature. The company tried to accomplish much in a short period, which led to two issues; they lagged in the operating systems battle and engaged in many partnerships rather than developing focused actions. The company was in dire need of a visionary leader to steer it forward. The company should have adopted techniques of taking into account its employees' visions and aspirations, such as advancement in education, which could have opened new horizons, which could have possibly helped the company foresee the future.
System Thinking
System thinking is the ability to examine a problem while it is blown at interconnecting elements. Senge (1990) articulates that system thinking helps in foreseeing deep-lying patterns beneath details and events. It enables a good understanding of the system's behavior and how it reacts to parts of problems. Senge (1990) further argues that; team learning, shared vision, mental models, and personal mastery form the basis of system thinking. Individual competencies that include interpersonal skills, particular thinking skills, and emotional intelligence are significant to system thinking. System thinking has two laws; today's problems arise from yesterday's solutions, and cause and effect are not closely related in space and time. The failure of the system thinking of Nokia was caused by leaders' arrogance to listen to advice from different people. Eventually, they reached an ultimatum where decisions were being made in a rush, thus leading to the company's fall. The company needed an ideal framework where all four systematic leadership disciplines are integrated into forming an effective system of thinking.
Organizational Dynamics
Organization dynamics is compared to an organization's lifespan (Stamper & Liu, 1994, p.645). An organization's survival and health depend on its ability to keep and attract a new set of employees. This is based on the understanding that the existing members will quit either due to retirement reasons or for pursuing greener pastures. A company's agility in the market also depends on its ability to change its products according to market trends and customer demands. Nokia struggled with the transition after CEO Ollila stepped down in the year 2005. The company failed to cope up with emerging market trends and stuck with the Symbian OS due to a lack of innovation. The company delayed adopting new technology from device-based to platform-based software. Samsung and iPhone were producing smartphones, but Nokia took too long to produce smartphones. After failing to embrace new technologies in the market, the company took time to cooperate with other companies to produce smartphones. The four frames; structural, human resource, political, and symbolic frames, could have solved the above issues as developed by Bolman & Deal (1991, p.511). The frames are adopted in leadership for sound management of a company or an organization.
Structural frame
Bolman & Deal (1991, p.511) emphasizes an organization's clear objective goals by assigning various people specific roles and coordinating diverse activities through rules, policies, and by a chain of command. The organizational structure at Nokia was horizontal, thus allowing for flexibility and fast communication between various departments. The horizontal structure is divided into two groups: technology platforms and customer and market operations. The two groups worked closely with the solutions unit to provide solutions to various challenges. The solutions department also ensured that the development and management of new mobile devices met customers' expectations.
However, the horizontal structure has some shortcomings in an organization. In Nokia, the management lost control of the employees because managers' ratio to employees was out of proportion. The structure made fewer employees get promoted, contributing to low morale due to less or no motivation. Nokia had four departments: multimedia, mobile phones, networks, and enterprise solutions. For good coordination between the four departments, they needed to have been independent. However, that is hard to achieve, considering how the departments were interdependent. The organization's primary challenge was the lack of a clear division of power, and some of the individuals were not sure of their roles, which led to a crisis in power management. Some departments seemed to have been duplicated. For instance, the marketing department had marketing research in its framework, while the company also had a marketing research department. The scenario called for urgent restructuring. The company should have adopted a hierarchical structure where the CEO is at the top and managers, who manage other teams. The structure opens room for promotions, guarantees employees to specialize in their fields, and reduces managers' ratio to employees.
Human Resource
Nokia had strategies in place that took care of the needs of employees. The adopted strategies already met Bolman and Deal (p.511) expectations that required organizations to meet basic human needs. The two authors advocate for empowerment by distributed leadership mechanisms, support, staff development, and responsiveness to employees' needs. Focus on boosting employee's morale is key to the well being and success of an organization.
The human resource department failed to instill discipline in the company and thus led to many ethical issues. The department ought to have taken the necessary disciplinary actions against the individuals involved. The department should also have streamlined the company's operations by boosting employees' working spirits.
Political frame
The political frame places an organization where it can network, create coalitions, and build a very strong powerbase. Leaders who use this approach should focus on the realities that exist within and outside their organizations. The political frame is highly applicable where an organization's resources are diminishing (Bolman & Deal, 1991, p.512).
The personnel at Nokia tasked with undertaking political relations failed. They took a long to enter a deal with other firms in the market when sales were declining. From the year 2007, Nokia partnered with Microsoft in 2012, which was very late. Though the deal was good, iPhone and Samsung had already established themselves in the market, and overtaking them was not going to be an easy task. The leaders could have brokered a deal earlier just when the sales started declining. Being a leading tech firm in mobile phones, Nokia could have considered entering a strategic partnership with small firms like Google, developing the android operating system.
Symbolic frame
The symbolic frame is centered on the cultural beliefs of an organization. It revolves around the core foundations of a company. Organizations develop cultural symbols to develop a sense of mission and identity (Bolman & Deal, 1991, p.512). The Finnish view Nokia as their cultural pride. During its peak period, the company accounted for 4 percent of the country's total GDP. The company operates on a simple and straightforward mission statement, "Connecting People." Their vision statement read, "Our strategic intent is to build great mobile products" (Nokia Official website, 2011). Their sole mandate was based on building, maintaining, and enforcing positive culture with its business.
The company failed to uphold what is on their mission statement. Yes, Nokia was building great mobile products, but they were completely stuck in the past. They soon became visionless and started making erratic decisions to turn things around quickly. That was not going to happen; instead, it lost track. The leaders and employees of the company ought to have reminded themselves of the vision and mission statements. Once an organization forgets about its mission and vision, it is doomed to fail. The vision and mission statements form the company's basis, and individuals should always strive to accomplish the ideas. Nokia needed leaders who had an idea of what the company needs to accomplish at their fingertips.
Teams and collaborations
Teamwork in leadership is necessary for the success of any organization. According to Chong (2017), a high-performing team category is capable of achieving set goals while performing their roles to the expected standards and with the interest of other team members at heart. The teamwork at Nokia led to both the success and failure of the company. The teamwork displayed under the management of CEO Jorma Ollila at the beginning, from 1992, was bound together with a common...