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Business transformation is not just important, it is vital for any organization to succeed in todays extremely competitive environment. Disruptions in technology, market needs and wants, the product cost/service delivery model, and world economic trends force businesses to either reinvent themselves to succeed or die away. Many businesses have successfully implemented Business Transformation and reinvented themselves, thus satisfying their clients and increasing value for their shareholders by staying ahead of the competition. A growing faith in dismantling, destabilizing, deconstructing and reconstructing organizational structures and institutional processes is likewise echoed throughout corporate life, and perhaps nowhere more so than in the rise of short-term contracts, fast-paced networking and multiple working identities. The performance of endless corporate reinvention and personal makeover strenuously advocated by the global electronic economy touches on the related issue of social acceleration from the speeding up of production and technological innovation to industry adjustments to constant fluctuations in consumer demands.
Cultural stress on self-reinvention is becoming increasingly evident at the organizational or institutional level. Ceaseless corporate reinvention, organizational downsizings and institutional remodelling have become central to the operations of the global economy.
The Finnish communications multinational Nokia, for example, is a single instance of such organizational re-fashioning and reinvention. Engaged in the manufacturing of mobile devices for the convergent communications and Internet industries, Nokia employs staff in 120 countries and has achieved global annual revenues of over fifty billion Euros with sales in more than 150 countries. Yet this telecommunications giant actually began life as a paper manufacturer, and subsequently expanded into rubber works and the manufacture of galoshes; it was not until the 1960s that the company moved into electronics and then subsequently in the 1970s into telecommunications. Today, in the early years of the twenty-first century, the grip of an imagination for reinvention continues as Nokia refashions itself away from mobile phones and towards mobile devices.
Definition
Transformation (n) A marked change, as in appearance or character, usually for the better. The process or result of changing from one appearance, state, or phase to another. Reinvention is the only formula that enables a business to achieve success and improve Key Performance Indicators, as demanded by the changing market. Suitably keeping and perfecting this formula over time allows a business to not only foresee coming challenges, but to face them. Consequently, the businesss market always remains positive, allowing the business to generate and retain a competitive edge over its competitors. The major considerations that revolve around any reinvention process are: 1. Staying in business 2. remaining profitable
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2. Increased Revenues
Businesses can harness collaboration and self organization to spur innovation, enhance growth, and drive dramatic improvements in productivity that increase revenues, reduce time to market, improve marketing ROI, and lead to better and faster development of products and services.
3. Reduced Costs
Improved processes, faster adaptability, and greater flexibility result in readiness for coming challenges both foreseen and unexpected. This readiness eliminates the potential costs (often major) of sudden change or breakdown.
For timely Business Transformation, the following holistic and pragmatic approach is suggested:
So, a Transformational initiative can only succeed after a careful Market and Competitive Analysis. The Business Transformation model must be defined based on facts specific to the organization and its unique
be the engine of success in designing new products and services, measuring performance, improving efficiency and customer satisfaction, or even operating the business with its new business model. Set the process right and the system will work correctly. Processes must change when the customer needs change. Business Transformation can radically improve organizational processes to an optimum level and provide flexibility for future endorsements.
Open standards will foster interoperability, allowing disparate devices, applications, and networks to communicate. This interoperability is extremely vital for the development of network effects and the operation of Metcalfes Law, which demonstrates that the value of a network increases as users are added to it. Interoperability, in turn, allows the full benefits of each addition to be realized. So, with the changes that are inevitable over time, organizations need to adapt to new market realities. They must learn how to benefit from open standards and leverage the opportunities that result. Your competitors will leverage open standards. If you dont, youre giving them a competitive advantage.
How apt that Nokia begins by making paper one of the most influential communications technologies in history.
Electronics go boom
In 1912, Arvid Wickstrm sets up Finnish Cable Works, the foundation of Nokias cable and electronics business. By the 1960s, Finnish Cable Works already working closely with Nokia Ab and Finnish Rubber Works starts branching out into electronics. In 1962, it makes its first electronic device in-house: a pulse analyser for use in nuclear power plants. In 1963, it starts developing radio telephones for the army and emergency services Nokias first foray into telecommunications. In time, the companys Mikro Mikko becomes the best known computer brand in Finland. And by 1987, Nokia is the third largest TV manufacturer in Europe.
Having been jointly owned since 1922, Nokia Ab, Finnish Cable Works and Finnish Rubber Works officially merge in 1967. The new Nokia Corporation has five businesses: rubber, cable, forestry, electronics and power generation. But as the 1980s come into view, its an entirely new industry that makes Nokia a household name around the world.
BIG PHONES
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the late 1970s and early 1980s it seems everything from Tom Sellecks moustache to JR Ewings list of enemies is seriously big. And as the mobile communications revolution starts to gather momentum, the early handsets continue the trend. The new Nokia Corporation is ideally placed to take a pioneering role in this new industry, leading the way with some iconic and by todays standards, very large products.
Nokia sets the ball rolling in 1979, creating radio telephone company Mobira Oy as a joint venture with leading Finnish TV maker Salora. 1981 then sees the launch of the Nordic Mobile Telephone (NMT) service, the worlds first international cellular network and the first to allow international roaming. The NMT standard catches on fast and the mobile phone industry begins to expand rapidly. In 1982, Nokia introduces the first car phone the Mobira Senator to the network. That same year, the Nokia DX200, the companys first digital telephone switch, goes into operation.
MOBILE REVOLUTION
In 1987, GSM (Global System for Mobile communications) is adopted as the European standard for digital mobile technology. With its high-quality voice calls, international roaming and support for text messages, GSM ignites a global mobile revolution.
As a key player in developing this new technology, Nokia is able to take full advantage.
A new direction
On July 1, 1991, Finnish Prime Minister Harri Holkeri makes the worlds first GSM call, using Nokia equipment. And in 1992, Nokia launches its first digital handheld GSM phone, the Nokia 1011. That same year, new Nokia President and CEO Jorma Ollila makes a crucial strategic decision: to focus exclusively on manufacturing mobile phones and telecommunications systems. Nokias rubber, cable and consumer electronics divisions are gradually sold off.
B.1
PROBLEM
The phenomenal growth of the cellular phones market continued through the first half of the 1990s. In Western Europe, the number of subscribers grew from 5 million in 1991 to 23 million in 1995. The three globally leading mobile phones manufacturers, Motorola of the US, Nokia Mobile Phones of Finland and Ericsson of Sweden had strengthened their positions. Up to the end of 1995, the industry had been in an allocation state: all the phones that manufacturers could produce were sold. Until 1995, global demand had exceeded all expectations. At the end of 1995, however, sales growth slowed down, coinciding with a
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global lack of semiconductors. Surfing on a tsunami of a growing market suddenly did not seem so lucrative anymore.
B.2
Of the leading companies in the industry, Nokia Mobile Phones was the least vertically integrated. They were facing, an opportunity of gaining market share or getting seriously wounded in the competition. The questions Nokia faced were: (a) What is the importance of supply chain partnerships for Nokia Mobile Phones? With their growth rates, they have to be sure that their suppliers are able to provide them good quality components, just-in-time, with minimum total cost of ownership. (b) However, they cannot tie up capital or management resources in running their suppliers' businesses. Furthermore, they cannot afford to tie themselves to a technology partner whose technology might become obsolete for the future generations of mobile phones. (c) With whom, why and on what does Nokia collaborate on product development to stay on top? How does Nokia use networks to explore new or exploit existing capabilities for the transformation of its business?
B.2.1 Logistics
Nokia's stumble at the end of 1995 was caused not so much by external conditions as by shortcomings in the critical discipline of logistics--feeding all the right items to factories, warehouses and distributors in hundreds of locations around the globe. Until 1995, logistics for Nokia Mobile Phones had been straightforward: With unit sales surging to 100% a year, managers focused solely on buying enough parts to feed five plants in Europe, Asia, and the US. The chip debacle in 1995, however, signalled new problems. Without the necessary chips, phone production backed up, causing inventory build-up in other components. Parts prices were eroding by 20 to 25% a year, but NUT couldn't take advantage of this trend. So it got saddled with high costs. Supply Line Following the share price collapse in the end of 1995, Nokia Mobile Phones took quick action to change course. The response was a corporate-wide initiative called. Supply Line Management (SLM). The focus was shifted onto finding potential improvements in the supply lines, the communications and logistics lines between Nokia and their immediate suppliers or customers. Old strategies and structures simply did not match with the new challenges, so NMP started to search actively for a new sourcing strategy. Sourcing was divided in global versus regional responsibilities. Furthermore, NMP categorized their suppliers as global, regional (same continent) or local (same country, city, site and/or same cultural and language background). There could be multiple, single or sole source suppliers for a certain type of component. Single source supplier meant that NMP purchased everything from one
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supplier, but there was another supplier available if needed. Sole source supplier meant that there was only one supplier available. Inside Nokia, there seemed to be contradictions, "Chinese truths," in what people believed to be the best alternative in a particular sourcing situation. However, there was a natural tendency to move towards single sources when volumes were growing.
SLM Teams Nokia Mobile Phones formed teams to slash inventories and speed up turnover of raw materials and finished goods. They were set up to figure out the best possible sourcing strategies for component groups to support both global and regional sourcing, purchasing, incoming logistics, material quality and product development activities. Five SLM teams started working to provide NMP with quality components, just-in-time with minimum total cost of ownership. Each team was responsible for one of the following component groups: Electronics components. Electromechanical components. Mechanical components. Accessories and batteries. Investments (machinery and equipment for factories and R&D). Globally, team members came from sourcing, R&D, factories and distribution centers, production engineering centres, finance, and legal affairs. SLM Steering Group set the targets.
B.2.2
International innovation networks of Nokia, succeeded in making it a world leader in the development and manufacturer of mobile telecommunications.
1. Strategic change is often considered as a necessity for companies to survive
in a turbulent environment. Intense international competition and rapid technological change are often mentioned as primary motives for companies to adapt their corporate strategy
2. One way of facilitating strategic change is to engage in alliances for the exploration
of new capabilities and the exploitation of the existing knowledge base of the corporation .Alliances are a means of learning from alliance partners. The process of learning boils down to the exchange of technological knowledge or capabilities. Technological capabilities are the accumulated technical skills and know-how in an organization 3. Business firms seem to have constructed a network of firms around them with which they develop a wide variety of new products over longer periods of time. Innovation networks are particularly important in industries where technology changes rapidly and product life cycles are short. Essential for the innovation process is sharing ideas, among often rivalry business firms, on the development of new products.
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4. Alliance networks The period 1997-2002 marks the beginning of the third generation of mobile telecommunications, the development of UMTS technologies. In this period, Nokia had 48 strategic alliance agreements, of which 25 were joint development agreements, 16 co-production contracts, six joint ventures and one standardization consortium. Nokia has many joint R&D agreements on relatively new technological capabilities with weak ties i.e. with partners it did not collaborate before.
When comparing 1997-1998 with the period 2001-2002, it is evident that both the number and character of the alliance networks has changed dramatically .In 2001-2002, Nokia engaged in almost twice as many alliances, namely 32 versus 60 alliance agreements. The partners and types of products developed in these alliances also changed in this relatively short time span.
With the rise of a new technology in the third trajectory, joint development of commonly accepted (open) standards is needed. For that reason the partnerships with competitors is essential. An example of a joint development agreement that involves standard setting is a strategic alliance with the Japanese NTT DoCoMo in 2001. Nokia and NTT DoCoMo will cooperate specifically in promoting open mobile architecture for WCDMA-based third-generation mobile communication services in areas such as browsing, messaging and application execution.
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C.
CONCLUSION
1. A look at Nokia's recent history reveals that supporting and nurturing innovation in design and business have helped Nokia enjoy being the undisputed global market leaders in mobile handsets for almost twenty years. 2. The most interesting result of this case study is that Nokia has been collaborating much more through joint R&D, outsourcing and standardization consortia, but has
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at the same time managed to develop and maintain a strong brand name and corporate identity. Nokia effectively uses an open innovation strategy in the development of new products and services and in setting technology standards for current and future use of mobile communication applications. 3. Nokia has reinvented its business model time and again to maintain its leadership status in the industry. To achieve growth and success, Nokia had to go through a number of corporate restructurings to revive the organisation and adapt to its dynamically changing goals and visions. Restructuring allowed Nokia to come to terms with the increasing competition in the industry, creating an organisational culture that promotes innovation and results in low attrition rates compared to the industry. 4. Nokia, over the years, has evolved both organically and inorganically. It has always kept an eye on the future and worked towards achieving of its future goals. To support this corporate strategy, it has reinvented itself a number of times in the past in order to adapt. This has helped Nokia to be a step ahead of its competitors
D.
THE PRESENT
1. During success time for several years Nokia lost touch with market trends, for example mobile internet and touch screen were ignored, application shop was too late, and operating system was not changed or modified on time. As a result net sales of Nokia fell 29 per cent in the first quarter of 2012 and it made a pre-tax loss of 1.5bn, from a profit last year of 403m, with the gross profit margin on smartphones dropping to 15.6 per cent compared with a 28.9 per cent margin in the first quarter of 2011. 2. In premium segment Nokia is behind Samsung and Apple. Windows-based Lumia which was expected to regain Nokia positions, failed to meet those expectations with sales of just 2 million units, while Apple sold 37 millions of iPhones. 3. Nokia suddenly finds itself squeezed out of its own game although it started from a vantage point among the mobile platforms.
E.
VIEWS
In todays competition within the mobile phone industry the key issue is to have a platform for developers and to add new applications. This is so because the mobile phone has apart from communication also become a device for banking, gaming, education, music and the list goes on. Apple and Googles mobile platforms attract today developers from all over the world and these developers constitute a global eco-system of entrepreneurs and for innovation of new applications. Nokias management apparently failed for too long to understand these game-changes going on within the mobile industry and failed to install a sense of urgency for change throughout the organisation. The management stuck for too long within its comfort zone of design and superior mobile cameras. And it seems that Nokia forfeited a connection with mobile software developers and thereby missed out on the opportunities of getting new applications from global co-creation among entrepreneurs and innovation eco-systems. Incidentally, the most successful app for i-Phone is the game Angry Birds developed by a Finnish company.
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BIBLIOGRAPHY
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INDEX
TOPIC Introduction Business Transformation What Is Business Reinvention Why Is Reinvention Important? Holistic Approach to Achieving Business Reinvention. Case Study Nokia (Organisational Re-Invention) The Company (Story So Far) Nokia The Mobile Company(Problem) Nokias Response Conclusion The Present My Views
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