This blog is a follow-up of my former blog about Digital Transformation approach.
Recently, I was been involved in a hiring process for the implementation of Digital Transformation Busines services for Nokia.
The people from Nokia which who I was involved for this project where in no way a participant in how a digital Transformation projects should be done or had the required knowledge for this.
People where in my opinion resisting to changes and the 2 responsible head of Transformation where not even involved in this hiring process, or aware of this initiative, which was for me very strange to encounter.
What went wrong within Nokia and this digital transformation project.
- The Strategic Decisions That Caused Nokia’s Digital Transformation Failure?
- Reorganizing for agility
- Nokia managers just did not see what has to be done to establish this Digital Transformation!
- The lack of Digital Transformation knowledge and the right people for the job.
Although Nokia’s results were strong, the share price high and customers around the world satisfied and loyal, Nokia’s CEO Jorma Ollila was increasingly concerned that rapid growth had brought about a loss of agility and entrepreneurialism. Between 2001 and 2005, a number of decisions were made to attempt to rekindle Nokia’s earlier drive and energy but, far from reinvigorating Nokia, they actually set up the beginning of the decline.
Key amongst these decisions was the reallocation of important leadership roles and the poorly implemented 2004 reorganization into a matrix structure. This led to the departure of vital members of the executive team, which led to the deterioration of strategic thinking.
Tensions within matrix organizations are common as different groups with different priorities and performance criteria are required to work collaboratively. At Nokia, which had been accustomed to decentralized initiatives, this new way of working proved an anathema. Mid-level executives had neither the experience nor training in the subtle integrative negotiations fundamental in a successful matrix.
As I explain in my former blog, process trumps structure in reorganizations. And so, reorganizations will be ineffective without paying attention to resource allocation processes, product policy and product management, sales priorities and providing the right incentives for well-prepared managers to support these processes. Unfortunately, this did not happen at Nokia.
NMP became locked into an increasingly conflicted product development matrix between product line executives with P&L responsibility and common “horizontal resource platforms” whose managers were struggling to allocate scarce resources. They had to meet the various and growing demands of increasingly numerous and disparate product development programmes without sufficient software architecture development and digital transformation project management skills. This conflictual way of working slowed decision-making and seriously dented morale, while the wear and tear of extraordinary growth combined with an abrasive CEO personality also began to take their toll. Many managers left.
Beyond 2019, top management was no longer sufficiently technologically savvy or strategically integrative to set priorities and resolve conflicts arising in the new matrix. Increased cost reduction pressures rendered Nokia’s strategy of product differentiation through market segmentation ineffective and resulted in a proliferation of poorer quality products.
Their digital transformation project was already doomed to fail on the moment this initiative was been launched, this duo the lack of the knowledge and right people for the job.
Nokia managers just did not see what has to be done to establish this task! Duo the fact that the wrong people sitting on places they should not be sitting and most of all the lack of expertise which they are trying to get onboard, I was one of them and I did in the past many digital transformations for companies like Vodafone, BMW AG, aviation and Insurance companies spread over Germany, UAE and UK.
The final decision came from a Mr. Satish.R., Head of Network Operations, Mr. Kedar.K, Managed Services ME Region, MEA MS Operations Excellence and Mr. Rajiv.R, Circle Head at Nokia Solutions & Networks, none of them had the required knowledge how to establish a roadmap or blueprint for this digital transformation. For privacy reasons I do not mention full names of these hiring managers. I noticed during these meetings, that there are still doubts, how to address this Digital Transformation.
There is a lot of resistance within Nokia from different people/groups at the moment! So, I was asking these managers a simple question “How to overcome resistance?”
One of my goals is to tackle these resistant people/groups and convince them from the “New Nokia Approach” created by people who not even aware of the real impact of a digital transformation! Nokia is becoming once again a dysfunctional organization…
The Root cause of resistance at Nokia:
- Failed attempts at change in the past
- Lack of visible support and commitment from managers
- Not involving Executive Leadership
- You cannot successfully implement change without support from all levels of business. Your employees take cues from the executive team, and if leadership doesn’t adhere to the plan for change management, it’s very likely your employees won’t either.
- Encourage company leaders to set an example, and the rest will follow
- Not involving Executive Leadership
- Lack of awareness about why changes are being made
- Fear of how change will impact job roles
- Fear of job loss
Agile Transformation Roadmap
- Establish a product-centric approach to delivery
- Initial Assessment
- Will the organization restructure?
- Setup Communication Plan (All Participants)
- Creation of Agile PMO
- Product and project plans
- Which framework is most appropriate for the organization or team?
- A reasonable date range of the roadmap items
- Retrospectives at various levels (a plan on how to respond to change)
- Retrospectives at various levels (a plan on how to respond to resistance)
- Include a “Why” and/or “Vision” Statement
- What is the Scope of the initiative? Definition
- Forming A Team to Lead the Transformation
- Organization level of team level?
- Creating the Agile Teams and Champions
- Creation of subsequent agile transformation project plans, where appropriate
- Define Metrics for Success
- On-Going Coaching (During the entire project)
- Inspection and Adaptation
- When and how to introduce agile adoption
- Reinforcement
- Training
- Purchasing and training on tools
- Training of Stakeholders and other members of the organization at all team levels
Unfortunately, none of the hiring participants could agree or explain more about their own vision for this roadmap? Effectually this had no results, and this is now the lack within Nokia.
FRAMEWORK
Framework to measure digital transformation progress
01. Measure the number of users relative to the number of licenses purchased
02. Analyze the breadth and limitations of usability
03. Count the number of processes performed on new software
04. Productivity indicators
05. Amount of new revenue attributed to digital investments
06. Focus on the right metrics and guide your initiative to success
07. Which factors impact the choice of KPIs
08. How to set the right digital transformation agenda
09. Digital maturity
10. Organizational agility
11. Customer experience improvements
12. Business continuity
13. How to choose the right measurement software
14. Measure digital transformation effectively
Some key factors for Customer Satisfaction:
Digital proficiency
– Percentage of the marketing spend that is digital
– Brand value in the market
– Reach of the organization in the market
– Digital maturity quotient of the employees including board and senior leaders
– Percentage of revenue through digital channels
– Contribution to digital initiatives from each department, finance, HR, IT, Sales & Marketing
Customer focus
– Net promoter score
– The rate of new customer acquisition
– Number of customer touch points addressed to improve customer experience positively
– Percentage increase in customer engagement in digital channels
– Reduction in time to market new products to customers
– Change in customer behavior over time across channels
Return on innovation
– Percentage of revenue from new products/services introduced
– Percentage of the profit from new ideas implemented
– Number of innovative ideas reach concept to implementation
– Number of new products or services launched in the market
– Number of new business models adopted for different classes of customers
– Rate of new apps and APIs to offer new products/services inside and outside the company
What can we learn from Nokia?
Nokia’s decline in this digital transformation cannot be explained by a single, simple answer: Management decisions, dysfunctional organizational structures, growing bureaucracy and deep internal rivalries all played a part in preventing Nokia from recognizing the shift from product-based competition to digital transformation to establish a better revenue, smoother processes and most of all customer satisfaction.
Top Takeaways
- It almost seems inevitable for large, successful companies to get tangled up in internal politics. Nokia is no exception.
- Customers expect innovation. Without it, they’re bound to switch to competitors.
- Embrace new ideas. Actively monitor consumer demands, as they will dictate your success as a company going forward. Sounds cliché, but the customer is always right.
“Stability breeds instability. The more stable things become and the longer things are stable, the more unstable they will be when the crisis hits.”
Conclusion
I am reaching out to higher management of Nokia, to ask them to make the right decision and to obtain the “right people” for the job, then I see a much better chance to succeed in this digital transformation journey. When however, they would not do this, then it is once again doomed to fail, which will only discourage customers more and more…
