Nokia Company Resistance to Change

Subject: Case Studies
Pages: 3
Words: 750
Reading time:
4 min
Study level: Master

Strategic management’s fundamental question is how firms achieve and maintain a competitive advantage in a rapidly changing market environment. Most organizations lack proper change management; consequently, the process of implementing new technologies or policies faces active resistance from employees. Besides, without effective leadership and managers’ guidance, resistance to change can cause a possible economic failure of the company. It is essential to analyze why employees are reluctant to change regarding an example of the Nokia company. The case of Nokia’s organizational change and mismanaged employees’ attitudes towards business transformation resulted in the company’s crisis.

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Resistance is a conscious action or inertia of a worker to delay adopting and implementing certain decisions in an organization; organizational changes drive these actions. The general reasons for resistance are a corporate, group, and individual factors (Amarantou et al., 2018). Employees are reluctant to modify norms and patterns of performance, adhering to traditional decision-making methods (Amarantou et al., 2018). Thus, such an attitude becomes an obstacle to the organization’s adaptation to the pace and directions of market changes.

The strength of resistance may differ depending on the firm size, corporate culture, and individual preferences. In the case of Nokia, the unfavorable position towards changes was strong. At the beginning of the 21st century, Nokia’s growth was robust (Hussein, 2020. Customers worldwide were satisfied with the products, while the company’s rapid growth led to the loss of its agility and new business ideas (Hussein, 2020). The organizational changes occurred between 2001 and 2005; a set of measures were taken to encourage innovation, including the redeployment of key leadership roles and the reorganization into a matrix structure in 2004 (Picciano, 2018). Hence, it resulted in the departure of keymen of the management team and problems in strategic planning.

Resistance to organizational change is the ability of personnel to oppose innovations. It is expressed in actions aimed at ensuring the preservation of the existing state within the enterprise or its units. The reasons are insufficient and subjective information about the need for changes, the workers’ benefits, and the organization’s advantages (Amjad and Rehman, 2018). Employees often consider innovations unnecessary because they believe the company is already operating effectively (Amjad and Rehman, 2018). Furthermore, their attitude arises from the lack of knowledge of how to implement the change; for instance, managers are not aware of methods that should be implemented to maintain alterations (Amjad and Rehman, 2018). According to Paul and Franckeiss (2002), effective communication and leadership are critical factors in change management. Hence, these reasons result in mistrust in the methods of implementing changes.

Concerning the Nokia company, conflicts within matrix organizations are widespread as it requires multiple teams with different priorities to work together; disagreements can accompany the units’ joint activity. In Nokia, a firm with a long tradition of decentralized initiatives, this new organizational structure has not received employee support (Sulphey, 2019). The middle managers had neither the experience nor the relevant knowledge in inter-structure negotiations, one of the most critical components of a successful matrix.

Regarding reorganization, the process determines the outcome more than the structure itself. Organizational change is considered ineffective if corporate leadership does not pay attention to resource allocation processes and support managers’ initiatives (Stouten, Rousseau, and De Cremer, 2018). In Nokia, supervisors should have met the ever-growing demands of product development programs without properly designed software and project management skills (Sulphey, 2019). For instance, referring to Lewin’s model, the new implementation should be accompanied by bolstering the forces for change; an alternative is to diminish the resistance (Pawar and Charak, 2017). However, both options were disregarded; constant conflicts retarded decision-making (Khan, Raza, and George, 2017). The situation was exacerbated by the decrease in growth and the CEO’s unpopularity; thus, many managers left the company (Khan, Raza, and George, 2017). As a result, senior management lost its technology competency, unable to resolve conflicts regarding the new organizational structure (Khan, Raza, and George, 2017). Costs saving and profit-sharing plans led to an increase in low-quality products.

To sum up, Nokia’s organizational change caused resistance to change due to a lack of enthusiasm on the part of leadership. The new organizational structure of the enterprise did not correspond to the planned changes. The culture of the company is the basis that can hardly be adjusted. The norms and values automatically become a factor of resistance when trying to change them quickly and separately. Therefore, organizational changes did not fit the corporate culture; for Nokia, the following years were a struggle and strategic stagnation period.

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Reference List

Amarantou, V. et al. (2018). ‘Resistance to change: An empirical investigation of its antecedents’, Journal of Organizational Change Management, 31(2), pp. 426-450.

Amjad, A., and Rehman, M. (2018). ‘Resistance to change in public organization: Reasons and how to overcome it’, European Journal of Business Science and Technology, 4(1), pp. 56-68.

Hussein, R. (2020). ‘How fear of change, lack of innovation led to Nokia’s failure?’, International Journal of Business Ecosystem & Strategy, 2(4), pp. 43-48.

Khan, S. T., Raza, S. S., and George, S. (2017). Resistance to Change in Organizations: A Case of General Motors and Nokia’, International Journal of Research in Management, Economics and Commerce, 7(1), pp. 16-25.

Paul, V. and Franckeiss, A. (2002) ‘The five dimensions of change: An integrated approach to strategic organizational change management’, Strategic Change, 11(1), pp. 35-42.

Pawar, A., and Charak, K. (2017). ‘Study on Adaptability of Change Management: Review of Kurt Lewins and Kotter Model of Change’, Research Revolution International Journal of Social Science and Management, 5(4), pp. 79-83.

Picciano, M. (2018) ‘The Demise of Nokia—A Cautionary Tale of Restructuring Gone Wrong’, OD Innovator Magazine, Web.

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Stouten, J., Rousseau, D. M., and De Cremer, D. (2018). ‘Successful organizational change: Integrating the management practice and scholarly literatures’, Academy of Management Annals, 12(2), pp. 752-788.

Sulphey, M. M. (2019). ‘Could the adoption of organizational ambidexterity have changed the history of Nokia?’, South Asian Journal of Business and Management Cases, 8(2), pp. 167-181.