The paper "Problems Associated with Innovation and Change: Case Study of Nokia" is a perfect example of a case study on management. In the contemporary global business environment, every organization has to change and innovate to survive (Brahmankar, 2012). Even large organizations which have established and cemented market leadership positions are no exception. In the mobile phone industry, Finnish mobile phone manufacturer Nokia had occupied the position of the world’ s largest vendor of mobile phones from 1998 to 2012. However, faced by stiff competition from rivals Samsung and Apple, Nokia ended its fourteen-year run as the world’ s largest mobile phone manufacturer as sales dropped from 27 percent in the first quarter of 2011 to 21 percent a year later (Troianovski & Grundberg 2012). The decline of Nokia and loss of market leadership by what was once the world’ s largest and most recognized mobile phone brand has been attributed to several strategic decisions taken by senior Nokia management regarding funding for research and development and which product lines to prioritize in an effort to consolidate market share.
Specifically, several analysts have pointed at the decision by senior Nokia management to diversify from the successful Symbian-operated smartphone and the dismissal by Nokia engineers and executives of touch screen technology and the as the strategic blunder which allowed competitors such as Apple, Research in Motion and Samsung Electronics to eat into Nokia’ s market share and dislodge it as the most valuable mobile phone brand (Smith 2009, O’ Brien 2009, Hill 2013). This case study will analyze some of the challenges associated with innovation and change by focusing on some of the reasons why Nokia lost its leadership position in the mobile phone industry.
The case study will analyze these challenges by focusing on three areas: funding and prioritization, implementation, and change management. Underfunding and prioritization, the case study will argue that Nokia’ s executives made several strategic blunders by not dedicating the organization’ s existing capacity to the development of smartphones and as a result, we're left lagging behind rivals Apple despite having had the capacity to introduce devices with features similar to Apple’ s iPhone. Under implementation, it will be demonstrated how most of the ideas, prototypes, and concepts generated by Nokia simply never made it to the end consumer as they were not turned into products (devices) which would have helped maintain the company’ s competitive edge.
Finally, under change management, it will be shown how Nokia’ s complex bureaucratic corporate culture has been a barrier to the change management process and resulted in Nokia losing market share to its more entrepreneurial and pro-active rivals Apple. Funding and Prioritization Analysts have often referred to Nokia CEO Stephen Elop’ s 2010 “ Burning Platform” memo as one of the most destructive management decisions which saw Nokia lose its dominant lead in the smartphone market to Apple and Samsung.
In the “ Burning Platform” memo, Elop suggested that Nokia’ s market leadership in the smartphone market based on its line of Symbian operating system phones was vulnerable and that competitors such as Apple (which had released the iPhone in 2007) were gaining ground on Nokia (Elop 2011, Lomas 2012). Subsequently, Nokia would undertake a series of strategic changes that involved a strategic partnership with Windows to develop a third mobile operating system to challenge Apple and Android. At the time, Nokia was spending more than € 5 billion a year on research and development, approximately a third of the industry total and cumulatively more than four times what competitors such as Apple spent (Troianovski & Grundberg 2012).
However, despite occupying the leadership position in the smartphone market, Nokia’ s funding for research and development, over $38.6 billion over a decade, was not productive as it did not result in any new devices which significantly challenged Apple’ s iPhone. This has been attributed to internal rivalries and competition in senior management who were divided over the strategic decision the company should take and resulted in Nokia lagging behind as its competitors rolled out new devices such as the iPhone that eventually supplanted Nokia at the helm (Troianovski & Grundberg 2012, Smith 2009).
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