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Unit 12: Organisational Change

Notes
with working on specific markets independently, especially Russia, China and India.
Nokia had finally learnt from its folly of neglecting these growth markets.
September 2003 saw Nokia marching ahead with its structural changes by dividing the
company into four divisions: mobile phones, multimedia phones, enterprise solutions
and networks. These divisions along with the cross-divisional market operations and
technology platforms gave it a matrix structure attuned to the existing environment that
needed flexibility (refer Exhibit 1: Nokia's Organisation Structure, 2003-2008). The divisions
were small in size and enabled faster response in targeting markets that were vastly
different with respect to feature demand and usage.

Exhibit 1

This structure was significantly responsible for the growth that Nokia saw in this period,
especially in the emerging markets. Nokia managed to overcome its mistake of allowing
competitors like Motorola to run away with product innovations like flip phones. But
Nokia's change-if-unfit methodology of dealing with its organisation structure ensured
that the second wave of restructuring was not too far away.

The First Wave Loses Steam
The second wave of restructuring was necessitated by the changes in the rapidly growing
marketplace. The existing structure was strained by this growth which magnified its
deficiencies. Trouble started creeping in as technologies began to converge and the phones
started becoming similar. Every phone in the market seemed to be offering similar features
that drove the demand for a common platform. The structure was incapable of meeting
such needs. The major issues faced by this structure were:

1. Repetition of work across divisions and non-standardisation of product
2. Poor coordination among divisional groups working on the same technology
3. Inability to develop any major expertise
4. This led to cost ineffectiveness and called for a major revamp and re-structuring in
Nokia.
The Second Wave
Nokia restructured itself into three main functional groups: Markets, Devices, and Software
& Services (refer Exhibit 2: Global Architecture (New Structure), 2008).
Markets: This division handles customer, front-end sales and the go-to-market strategy of
Nokia sales worldwide.

Contd...

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