High-Stake Writing Assignment
REVISED PART II
Mr. Val Gilter
August 7, 2005
Nokia is known today as one of the leaders of the telecommunications industry around the world. Nokia was not always involved in cell phones; in the past, the company sold everything from tires to rubber boots however a change in the business world forced Nokia to take a new direction. The CEO of Nokia Jorma Ollila, is responsible for this company’s new direction and Nokia is doing excellent business around the world
In the late 1990s, a global recession occurred and “ threw the company into a tailspin.” The dissolving of the USSR (which dissolved because of political turmoil) really hurt Nokia. After over a century of profitable business the company hit a brick wall and was losing $80 million a year. Faced with this problem, Ollila came up with a bold plan to save Nokia. He decided to convert this multi-product company and give it a new single focus: wireless telecommunications. His reason for following this route was because he felt cell phones would move from business markets to consumer markets.
" He believed that people have a tendency to get complacent and that takes a push to tap into their strongest instincts-those that guide success.” If that means carrying a cell phone to be contacted anywhere and look/feel important so be it. His decision was a gamble; he didn’t have market research and studies to back his plan but apparently his gamble paid off.
Nokia had a competitive edge in the way the company was re-structured to take advantage of the market and exceed projected sales. He removed things in the company that prevented Nokia from receiving customer input and comments. In business if the company is not in touch with the consumers their the business is sure to fail. After all, you make profits off your consumers. Nokia released many phones with different styles to appeal to various kinds of people in a segment market. Nokia also encouraged consumers to upgrade their existing phones to take advantage of new technology, styles and designs. The competitive edge that Nokia had was a complete solution to their problems at the time. “Management in 1993 hoped to sell 400,000 phones, instead the company sold 20 million.”
Nokia is a very innovative company. Ollila’s leadership allowed the company to excel in its production of excellent products. He pumped up the Research and Development departments with the funds and powers to create innovative products. Nokia was the first company to do the following:
Created the first digital phone for global system mobile networking
Created cell phones with the text message function
Created the first phone for Asian customers (with large full graphics display and Asian language interfaces)
Created the first phones with changeable covers/ring tones
Later on, the company was releasing a new model every month or so. Business is about adapting to changes, so even though the company had a grip on the industry, it still must work to keep ahead of other hungry competitors like Motorola and Samsung.
Ollila’s leadership style, which in my opinion contributed to the success of Nokia, was democratic and very liberal. He encouraged innovation and for his employees to be very open-minded. “Above all Employees should not be afraid to make mistakes.” People can learn from mistakes along with trial and error. You sometimes have to get things wrong before you can get them right. He gave the employees more power with a hands-off leadership style allowing them to do more instead of always listening to the boss. He let the employees speak their minds and contribute to the company. He reorganized the company into decision making teams so no one person holds all the weight for decisions and groups of people can often make better decision through discussion and looking at multiple view points. He hosted many annual meetings known as the Nokia Way to give employees the opportunity to determine the company’s priorities. Based on these annual meetings, he would have management translate these priorities into strategic plans.
Ollila performed many functions as the CEO by being a good manager. In my opinion the CEO is the super manager. Management is basically the process of coordination people and other resources to achieve the goals of the organization. He helped plan with his company by establishing goals and determining how to accomplish them. The Nokia Way shows how he is trying to take initiative and prepare his company. He is putting all the human resources together for a purpose of basically trying to manage all the other resources to produce plans, execute them and in the end make profits. He leads his army into war and motivates them by giving them margin of error. The employees help make the goals so naturally they will work towards them and don’t need to be motivated as much.
I do not think there is any one secret to Ollila’s success but just persistent planning around the market and consumers. They way he re-structured the company to be more efficient in the creation of products is also note-worthy. He did multiple things to bring Nokia to speed and almost literally rebuilt the company from the bottom up. This was not an overnight success story. Ollila was voted CEO of 2000.With all the hard work he put up he deserves it.
One word that I think can be used to describe Nokia, as a whole is Innovation. The whole company is structured in a manner to only breed more innovation then previously expected. Nokia constantly monitors its goals as time goes along and then reacts to them. The company also emphasizes a straightforward method of handling obstacles, not analyzing them to death. They find the problem and do something about it.
I feel this essay gives wonderful advice on how to conduct business and shows an example on how a company on the edge can be turned around with strong leadership. Olalla’s methods are somewhat unorthodox and are not practiced widely, but his apparent success will have others following his blueprint to success in a different industry.
From the reviewed material I can come up with a mission statement for Nokia:
Nokia exists to connect people with innovative, quality, up to date products that are easy to use. It is strange how my mission statement is similar to the actual statement
from the impressive website (nokia.com):
Nokia is a world leader in mobile communications, driving the growth and sustainability of the broader mobility industry. Nokia connects people to each other and the information that matters to them with easy-to-use and innovative products like mobile phones, devices and solutions for imaging, games, media and businesses. Nokia provides equipment, solutions and services for network operators and corporations.
Even though Nokia has enjoyed a lot of success in the past, it must work to stay on top. The company performs its own SWOT (not SWAT ) analysis in some sort of form to analyze where it will go next. The strengths of Nokia is its grip on the world of telecommunications. The company continues to be innovative and still releases phones at a fast rate. The new Nokia phone 8800 model looks to be very promising and its presentation is remarkable. One of the weaknesses is that mobile phone market is saturated and almost everyone who wants a cell phone has one. Now Nokia has to find another way to seize consumer dollars.
In high tech industries the company doing the best is still not safe as in a short period of time other companies can literally take their spot. For example Microsoft or Coca Cola are in industries in which they cannot be removed from their dominating position. Technology is a fast-paced industry where anything can happen. Opportunies for this company are to move into new service areas and help connect networks of companies. People are constantly moving in the direction of more technology and overall integration. So as long as Nokia keeps up and pumps out innovative products as it have in, the past the company can continue to prosper.
A threat for Nokia is a market trend which dictates that flip phones are superior to the regular phones. To my knowledge, Nokia does not have flip phones on the market and they should consider putting a model or two that can satisfy all the consumer’s needs. I do not see any particular group endorsing Nokia strongly (Nextel is backed by the hip hop industry) and Nokia’s market strategy could suffer from not having a typical representative in pop culture to influence the youth to pick up the products. A lot of the consumer patterns we pick up in our youth stay with us for the rest of our lives. The same way cigarette companies advertise to children, so should Nokia; only cell phones are not as harmful… yet.
Nokia is a company that will continue to grow in the 21st century. Innovation is the key to staying on top of the technology industry right now and the whole company is geared towards that. The structure of the company allows for almost flawless production of the next big thing. After learning a little about Nokia, I myself might look into trading in my phone for a Nokia brand.
Bovee, CourtlandL., John V. Thill, Barbara E. Schatzman Nokia a Finnish Tale. Business in Action. 2nd ed. Upper Saddle River: Prentice Hall, 2004.