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Organizational agility in the Adaptive Cycle case study:

Organizational agility in the Adaptive Cycle case study:. Konstantins Babahodzajevs Arvind Bihari Mouade Boussaid Martin Jorna Alexandre Pinheiro. Introduction. Explaining organizational agility through the use of a case study about N OKIA .

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Organizational agility in the Adaptive Cycle case study:

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  1. Organizational agility in theAdaptive Cycle case study: KonstantinsBabahodzajevs ArvindBihari MouadeBoussaid MartinJorna Alexandre Pinheiro

  2. Introduction Explaining organizational agility through the use of a case study about NOKIA. • Evolution in five phases (1988– 2012) • Adaptive Cycle according to the phases • The use of Virtual Organizations • The impact of the organizational structure on the agility 1

  3. Why NOKIA? Nokia went through significant changes in the recent years and fits well with the different phases in the Adaptive Cycle. About NOKIA • Finnish multinational communications and • information technology corporation • 122000 employees across 120 countries • Annual revenue of € 38 billion 2

  4. Five Phases of NOKIA • Crisis era(1988-1992) • Entrepreneurial era(1993-1997) • Equilibrium era(1998-2004) • Transition era(2004-2008) • Crisis era 2 (2009-2012) 3

  5. Phase I (1988 - 1992) • Nokia underestimated how intensely competitive the telecom business was • Nokia had ambition to internationalize and diversify • Nokia expanded by making new acquisitions, based on their large telecom business in the USSR 4

  6. Phase I (1988 - 1992) Cause: • Collapse of Soviet Union • CEO committed suicide Change: • Split-up into handset and network businesses. • Fully digitalization of networks(Pioneer) 5

  7. Phase II (1993 - 1997) • Production and Sales needed to meet Nokia financial targets • Nokia Mobile Phones faced major difficulties in operations,logistics and sourcing • The supply chain wasn't prepared for the demand, propelling them into a "logistics crisis” 6

  8. Phase II: Logistics Crisis "The crisis increased leadership unity in NMP and within corporate management, as it was seen as a "growing pain" - a toxic side-effect of exploding growth - not as a failure management." Importance to redesign the supply system to more disciplined and structured approach • Implementation of an integrated ERP system • Nokia realized that a more formal process of managing growth was required 7

  9. Phase III (1998 - 2004) Nokia was concerned that it would miss new growth opportunities. So they came to two conclusions: • Intellectual Leadership was introduced in 1995 that led to the creation of new ventures and research and established in 1998 Nokia Venture Organization as their home • Nokia realized they needed a third core business, however this was considered to be too daunting of a process. Instead they focused on strategic evolution and renewal of the core business 8

  10. Phase III (1998 - 2004) Organizational Structure: 9

  11. Phase III: 2001 Disruption • Market growth slowed down in 2001 • Competition became more severe • Market share dropped from 35% to 30% from 2002 to 2005 This lead to a new organizational structure, segmenting intonine value domains: 10

  12. Phase III: 2001 Disruption 11

  13. Phase IV: (2004 - 2008) • Seasoned leader executives resigned, due to the new interdependent matrix structure • The different domains started losing their capability to cooperate together • In 2006 the management team was rebuilt and Nokia announced it would merge its network division with Siemens 12

  14. Phase IV: The 2006 Structural Change 13

  15. Phase V: Present • Couldn't compete with disruptive innovations by competitors in the smartphone market • iPhone • Android • New competitors arrived in the networks market • ZTEand Huawei (China) 14

  16. Phase V: Present • Nokia responded to the smartphone threat, however they did not respond to the services delivered next to the smartphones. • Symbian OS did not have an app market like Google Play or the App Store. • Symbian OS was not built for touchscreen navigation, this resulted in Nokia having to play catch-up. • In the networks market, the new competitors have competitive pricing. 15

  17. Phase V: Organizational Structure 16

  18. Virtual Organization • Nokia has a virtual organizations policy since 2008 • Close cooperation with Microsoft, where Microsoft develops the software (Windows Phone 8) and Nokia focuses on the devices 17

  19. Influence of Organizational Structures 18

  20. Nokia’s Process over time • 1995-Realization that the supply chain wasn't prepared for the demand • Intellectual Leadership was introduced Fully digitalization of the networks • 2004-Seasoned leader executives resigned, due to the new interdependent matrixstructure • 2006- Nokia announced it was merging its network business with Siemens 1988- CEO Committed Suicide • 1998- Process and establishment of NVO 1988 2004 1993 1998 2008 • Implementation of an integrated ERP system • 2009- Creation of the “Ovi Store” • 2001-Market Share drop. • NMP split its core mobile phone business into 9 different market-segment focused “value domains” 1991-Collapse of the Soviet Union • 1996-Two forums were created: The Nokia Strategy Panel and Business Development Forum Split-up into handset and network businesses

  21. Thank You For Your Attention!

  22. Q & A

  23. References “The Dynamics of Strategic Agility: Nokia’s Rollercoaster Experience”,Y.Dozand M.Kosonen ,California Management review Vol 50, no. 3, 2008 John P. McCray, Juan J. Gonzalez, John R. Darling, (2011),"Crisis management in smart phones: the case of Nokia vs Apple", European Business Review, Vol. 23 Iss: 3 pp. 240 - 255

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