Scope of Presentation: - Understanding Strategic Agility - Strategic Agility Framework - Key capabilities enabling Strategic Agility - The Curse
of Success - Dynamics of regaining Strategic Agility - Regaining Strategic Agility – Core Drivers - Nokia: The Case facts
Understanding Strategic Agility “Strategic Agility is an on-going capability for real time strategic sensitivity, quick collective commitments, and fast and strong resource deployment. It is an antidote to the pain of repeated sequence of success, slowdown and rigidity, crises and renewal.”
Strategic Agility – Key Dimensions
Key Capabilities for Strategic Agility
The Curse of Success
Regaining Strategic Agility-”The Core Framework”
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Planting and nurturing seeds of change via ventures and experiments Encouraging new ideas Reframing new opportunities Learning from innovative experiences with new products and businesses
Dividing business into smaller market facing units Building common core business process/activity system architecture Putting the organization “offbalance” by making it multidimensional Fostering leadership development and people mobility
Using a multidimension organization to put a member of the top team under pressure Reintroducing interdependencies in roles and responsilibilites Creating time for dialogue Changing norms of interactions –informal exchanges
Source of energy and apathy Pride of building a good brand and becoming a leader Articulation of values, visibly enhances leadership unity and new organization Leading by example Affiliation and belonging
The Dynamics of Strategic Agility
Nokia’s Rollercoaster Experience
Nokia: Strategic Agility at work
• • • Transition from century old base in forest products and rubber to a telecom company In 1980 NOKIA was in deep trouble because of costly acquisition in consumer electronics and Computers. The fall of soviet Bloc reduced telecom demand. Nokia’s top management was in disarray.
NOKIA venture into Digital mobile communications- Convergence of personal insights and two major discontinuities. Discontinuities
• Governments were likely to invite more players- Monopoly won’t exist • Nokia had earlier experience of providing cost effective end to end solutions to small operators • Digitization of resources was likely and Nokia prior experience with Intel made them confident that they possess skills to develop digital switches and adapt to modular architecture and standardized interfaces.
• User friendly interface and good design could make mobile phones mass consumer products • Nokia need not deploy full fledged subsidiaries across the countries to internationalize in emerging markets.
Nokia regrouped base stations and switches into new cellular network division to make more fluid resource allocation. Nokia vision 2000 to move from a conglomerate to mobile telephony demonstrated resource fluidity at corporate level. Personal insights led to an innovative framing of the market and he possibility of a agile global organization. Awareness of trends, Competency development and resource fluidity came together in a small strategic window at the start of the GSM telephony to end Nokia’s period of instability and chaos at the top management level.
Nokia: Systematic Planning
• • Nokia was chasing rapid market growth but Nokia Mobile Phones faced a crisis in terms of operational excellence The resource fluidity provided agility but the crisis led to more formal procedures leading to rigidity
The company was growing without integrated supply chain which resulted in more inventories and less customer satisfaction. Growing complexity in product architecture and variety couldn’t be handled in traditional ways.
The “growing pain” increased leadership unity in the business group. Nokia was shifting to more formal process for managing growth which led to the risk of strategic rigidity. The reliance on a few major customers and growing sense that 3G was the answer of the emergence of internet reduced its strategic sensitivity. The logistics crisis provided for resource fluidity for mass products but the care associated with it led to more rigidity in planning. On one hand Nokia required fast innovations in New product development whereas on the other hand is also had to put high emphasis on disciplined execution led to a constant tussle between rigidity and resource fluidity.
Nokia: Strategic Sensitivity
• • • With Strategic rigidness on its core business, Nokia would miss new growth opportunities With the logistics crisis, it was evident that the reliance on two legs can get Nokia in trouble Nokia Conglomerate logic remained however the two legs were different in every aspect
It began with “an Intellectual Leadership”- to plant seeds of cognitive change in Nokia The new third venture should be in line with the strategic value chain of the conglomerate Nokia formed Nokia Venture organization• Continuous and simultaneous strategic development • Break the hostage of rigid planning and accept emerging insights • Form new forums of dialogue through the Nokia Strategy Panel and Business development forum to improve Nokia wide strategic dialogue • The NVO helped in maintaining a level of strategic sensitivity at every management ranks CONS of the NOKIA venture Organization • The renewal efforts/integration between NVO and core business was done by top management which couldn’t nurture the needs of individuals at minute details. Technologies like WLAN got unnoticed. • In this fast changing environment of “winner takes it all” there was no room for any delay and error
So though the NVO fostered leadership unity still the strategic sensitivity of the organization was to be taken to next levels to have inbuilt strategic sensitivity
Nokia: Strategic Sensitivity
• NVO Fostered Leadership Unity but what was way behind in strategic sensitivity
Commoditization of mobile phones • Strategic confidence led to discounted risk • Growth stall forced change in cost structure • Commoditization forced the company to look at innovative products to counter competitors prop. Platforms NMP split its core business into 9 parts to exploit economies of scale and expertise from NMP common regional sales and marketing capabilities. Half of them dedicated to new business opportunities in NMP and NVO to exploit digital convergence opportunity in mobile entertainment, imaging and enterprise sectors.
Further these were clustered into 3 business groups which were supported/challenged by horizontal groups of sales/marketing/ operations. • The resultant was a complex matrix structure which resulted in high amount of resource fluidity but it took some time for employees to adapt to he new structure and culture • At individual level roles were primarily defined as “vertical” or ‘horizontal” with a few exceptions Because of the logistics crisis, Nokia had already honed its business practices and hence these changes of reorganizing could be done quickly and effectively.
Nokia: Building leadership Unity
• With the new matrix structure, NOKIA struggled to attain Leadership Unity between Business groups
The prime reason was difference in size of NMP and Nokia Networks which resulted in constant tussle for allocation of resources. • NMP supplied phones according to multiple standards whereas networks focused on GSM and 3G. • Conglomerate mindset at top made the groups more independent
In 2005, Nokia appointed new CEO Oili-Pekka Kallasvuo • Not much difference in the business model of Phones, Multimedia devices and enterprise solutions • All the three groups interdependency on service and applications
The business groups were merged and this integrated system had Leadership unity. Key Concerns of the integration • • There was conflict of interest between groups as the goals of each had negative impacts on the goals of others. This was resolved by sharing each others goals and expectations to enhance collaboration among teams.
Nokia: Roller coaster ride
• We observed Nokia ride from strategic sensitivity to resource fluidity and then to Leadership unity in a period of 3 years.