Nokia Corporation’s Development and Change

Background of the Organization

A brief history of the company

Nokia Corporation is one of the most prosperous electronic firms in the world. This firm was started in 1865 by two Finnish scientists, Fredrik Idestam, and Leo Mechelin. These two individuals were business enthusiasts. They were interested in turning their skills in engineering into a large business unit. Fredrik Idestam was an astute engineer with a keen interest in a ground pulp mill. This was the first line of business that this firm engaged in. Fredrik Idestam was a smart engineer who managed to develop systems that could make the company run with a lot of ease. On the other hand, Leo Mechelin was a statesman who was able to finance the company and bring onboard individuals with the capacity of transforming the firm.

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Change within this organization was witnessed in those early years of its development. As the company developed, Idestam became the chairman of this company. Based on his experience and the connections he had both with the government and other non-governmental institutions, Mechelin was convinced that the firm would make more profits if it ventured into the electricity industry. However, this move was strongly opposed by Idestam who was the chairman then. He did not understand the need to change the product line of the firm or diversify, while the current product was considerably profitable. Upon his retirement in 1896, Mechelin became the chairman of the firm. He was able to convince other members to consider diversification of the products by entering into the electricity industry. That was the first attempt that this firm made towards change.

The move was successful, and the firm was able to expand rapidly. The expansion of this firm in those early years was basically due to conglomeration. In 1967, Nokia Corporation had expanded and could sell its products outside the home country of Finland. The firm entered the electronic industry in the mid-1960s as a division of the electric department. This division expanded very first, and would later become the main department of this firm in the world market. Nokia developed its first cellular phone in 1981, which gained a lot of popularity in the 1980s. This developed this industry, and currently, it is considered one of the leading electronic firms in the global market.

The organizational context for change

The world is changing, and with it comes some changes in the organizational setting. According to Adams (75), change is one of the factors that cannot be avoided within the organization. It defines an organization and society at large. As Anderson (73) puts it, change is the most constant factor in human life and any organization. As controversial as this statement is, the change would always come with many controversies. Every member of an organization will always appreciate the fact that change is the main driver of an organization. The mission statement of an organization and the vision would always state what the firm plans to achieve, and where the firm sees itself in a few years. This is a clear indication that the entire firm, from the top management to the junior-most employees appreciates the need for change within an organization. It is, therefore, intriguing that most stakeholders would try to oppose change.

People would feel uncomfortable changing the set structures. A manager who is used to a certain way of doing things will feel challenged when forced to use a different strategy due to the pressures of change. Technology itself is a change, and many firms have failed due to their inability to adapt to the changes brought about by technology. Kodak was displaced by Fuji Film as the market leader due to its inability to implement changes that were brought forth by technology. It is, therefore, an obvious fact that change cannot be ignored. It should be embraced to gain a competitive advantage in the firm.

The driving forces of change and type of strategic renewal

Change is driven by several factors, and as Adams (94) notes, the drivers of change can broadly be categorized as external or internal factors. A transformation can be driven by the macro or micro factors within an environment. To have a clear understanding of the external drivers of change, a PESTEL analysis would be appropriate.

The political environment is an external driver of change. A change in the political structure will have a direct effect on an organization. As Bradford (98) observes, if there is a radical change in the political structure of a country, the effect will be felt within the organization. Economical status of the external environment will also act as an agent of change. For instance, the economic recession of 2008/2009 was a serious change driver. Because of the recession, firms were forced to come up with a changed management structure to suit the prevailing market conditions within the environment. The social structure of society will always act as an agent of change. The societal changes can be caused by the changing trends in society. This will act as a driver of change within the society for it will be forced to adjust to being in line with the prevailing societal conditions. Technology is probably the biggest driver of change. The world is changing due to the changes brought about by technology. Scientists are under constant pressure to make life easier and more entertaining, and as Anderson (88) notes, they have not been disappointed.

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The internal drivers of change within an organization are the stakeholders whose actions will have a direct impact on the organization. The internal drivers of change may also be considered as the agents of change. The agents of change are the forces that would carry out the change. The recent changes that have taken place within Nokia Corporation clear demonstrate what internal forces can do to bring change within an organization. Risto Siilasmaa has been both an agent for negative and positive change within this firm. When appointed as the chairman of this organization, there was an unprecedented fall in profitability because he failed to offer an approach of leadership that was expected by various stakeholders. This was until he came to understand this industry and the firm in particular. Risto Siilasmaa became an agent of positive change within this firm. He came up and challenged all the existing structures within the organizations, and fostered new approaches regardless of the opposition that was given by various stakeholders within the firm. This resulted in an upward trend in the profitability of the organization. The agents of change will include the top management of an organization, as was in the case of Nokia Corporation, the middle level or junior employees, or the shareholders of the firm. These agents will work as a unit to ensure that they achieve the ultimate goals of the organization despite the changing environmental factors.

The stakeholders involved and implications of change for them

As mentioned above, some stakeholders are always involved in change within the organization. These stakeholders can be categorized as internal stakeholders and external stakeholders. Internal stakeholders include all the employees, the management, and the shareholders. Employees are the wheels upon which change can be implemented within the firm. The implication of change on them is that they will be forced to adapt to the new strategies brought about by the change. The management is the engine through which change can be realized within an organization. It is through them that new strategies that can bring about change are developed. The shareholders offer the necessary finance that will fuel the firm to manage changes that take place in the market.

Culture of the Organization

The original culture

Culture is very important within an organization. According to Cummings (117), organizational culture helps defines the approach through which an organization will always approach several issues in the market. Nokia has had a culture that has defined the approach of managing various issues in the market. The original organizational culture of Nokia was a little rigid towards change. This culture defined the relationship between management and the employees. There was a strict hierarchical flow among the employees. An employee of a lower rank couldn’t bypass the immediate boss to a more senior officer. That was regarded as insubordination and an employee could be punished for that.

Cultural changes over the years

This rigid management structure has changed over the years. The management of Nokia has become very flexible and sensitive to changes taking place in the environment. The firm has changed its organizational culture to reflect on the current dynamic world. It has dropped the bureaucratic leadership style that was commonly used before. Employees can express their thoughts to senior management without fear of punishment. The culture has also embraced dynamism brought about by the emerging technology. The firm is very keen on adapting to the new technological changes in the market.

How the culture helped or hindered the change effort

As was witnessed, rigid organizational culture hurts to change. It inhibits the possible changes that may help the firm in the market. This was a hindrance to Nokia. However, when Nokia changed this culture to a more flexible one, it became easier to manage change with minimal effort. As Bradford (114) notes, the ability of a firm to manage change directly depends on the organizational culture it embraces.

The adaptive nature of the change

Firms should find a way of adapting to change. Nokia was able to adapt to the emerging market trends when it changed its organizational culture, a move that saw it become one of the largest electronic firms in the world. The external market forces are never static, and for a firm to be successful, it must develop strategies that are sensitive to change to help it manage market forces.

The Change Effort Itself

Evaluating the change effort using a model

Lewin’s three-staged change management model is one of the simplest and most common change models that are in use in the current business environment. The model is also popularly known as the unfreezing, change, and freeze model. This strategy proposes a scenario where if a firm plans for a change, it should accept that change is necessary. It should drop some of the long term strategies that may hinder change. The firm should then introduce change within the system. After this, it should make all the relevant stakeholders understand this change in a process called freezing. It is through this that the desired results can be attained.

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This process has both positive and negative impacts. Change brings positive impacts to a firm because it allows it to create an environment where it can easily adapt to emerging technologies. However, it may be an expensive venture, especially if it massively affects the firm. It will force the management to overhaul part of it and even subject their employees to intensive training.

In assessing the effectiveness of change, it is always necessary to look at the way employees have altered their output over a certain period. Embracing change involves incurring some costs. These costs must translate into profitability for the firm. For this reason, the effectiveness of change can directly be determined by looking at the productivity and profitability of the firm before and after initiating change.

The leadership of the Change Effort

Change can only be realized if there is a proper leadership structure within the firm. A change effort would always demand proper management for there to be a clear direction towards successful change management. According to Cummings (90), the change will always start from the management. This fact was confirmed when the first chairman of Nokia, Fredrik Idestam, resisted change. It is only upon his retirement that Nokia was able to bring several changes in management structure, and product offerings. As such, the leadership should always be looked at as the engine that drives change within a firm.

It is, therefore, important for leaders to display the core characteristics of leadership change when managing the employees. The extent to which this should be done will always depend on the nature of change that is needed. In case change needed have a serious impact on the firm, the management must get deeply involved in the change, from the top management to junior management. However, some changes are considered minor, and therefore, should be left in the hands of junior managers of the firm.


It is clear from the above discussion that change is very important for firms in the current business environment. The business environment has become so competitive that only those firms that are dynamic can survive. Nokia has realized the importance of dynamism, and its leadership has been keen to embrace it. This firm has developed an organizational culture and leadership structure that allow employees to exploit their potential and express their innovativeness within the firm. It is this flexibility and sensitivity towards change that scholars have recommended for firms that wish to remain competitive in the market.

Works Cited

Adams, John. Organization Development and Change. Washington: National Training and Development Service, 1974. Print.

Anderson, Donald. Cases and Exercises in Organization Development & Change. Los Angeles: Sage, 2012. Print.

Bradford, David. Reinventing Organization Development: New Approaches to Change in Organizations. Hoboken: John Wiley & Sons, 2005. Print.

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Cummings, Thomas. Organization Development & Change. Australia: Cengage Learning, 2009. Print.

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