The case of Nokia and what companies can learn from it

Nokia has done it: The Finnish company, which was market leader for mobile phones from 1998 to 2011, has overslept the signs of the times. The company’s management focused almost exclusively on improving mobile phone production processes and forgot to drive the development of new digital products.

Smartphones with touchscreen were initially not an issue for Nokia. It was a market leader and could afford to smile at the smaller competitors who offered this feature. The end of the song: In 2014, Nokia sold the mobile business to Microsoft, because they only losses incurred.

Digitization and the consequences

Something similar can happen to any company that does not respond quickly enough to change. Change means today, above all, digital transformation.

Everywhere – in the production processes, in the services as well as in the products – digital technologies are introduced. Even the textile industry develops fabrics that can change their color, for example in response to external influences. Every company has to adapt to these changes if it does not want to break the path of the Finnish mobile phone manufacturer at some point.

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These changes also necessitate changes in the corporate structure. Long-term planning cycles are out, as well as the step-by-step execution of tasks that have been set months in advance. Instead, companies must react quickly and flexibly, adapting to the changing world of the industry, and staying one step ahead of their thinking.

Although companies in Germany see the same thing (for 72 percent of medium-sized companies, digital transformation was one of the key challenges in 2016, according to Bitkom’s Practical Guide to Digitization), the structures in many companies remain the same. A large part of the companies are still run hierarchically from top to bottom. But this is not how digital transformation can succeed.

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Agility is not an empty phrase

Instead, companies need to be agile. Agility, which unfortunately many corporate leaders still think, is again such a slogan without content. But that’s not true. Agile work in the company means, among other things, that hierarchies are eliminated or greatly reduced. Employees should independently develop creative solutions, produce ideas alone or in a team, without fear of being seen as a cross driver or daydreamer. There are executives, but it is not their job to control the employees. Instead, team leaders should empower employees to achieve the best possible work outcome.

The work in agile companies is also much more geared to the wishes and needs of customers. If the customers are only partially satisfied, this requires a quick counter-tax. Decisions are made in agile companies even if they are not sure if they will succeed. Errors are accepted, but thanks to the agility of the company, they can quickly be revised.

Incorporate workers more strongly in operational processes

Agile work also means that not only the employees receive feedback from their supervisors, but also the executives from their employees. Employees in an agile company are constantly sharing what is going well or not well, making suggestions that also affect levels of hierarchy and decision-making, and most importantly, they can challenge decisions without fear of reprisals.

Such feedback benefits both management and employees. The former learn very quickly when something in the company does not run smoothly, the latter feel more involved in the company processes, which increases the motivation to work. After all, employees (not only) in agile companies are a significant factor in business success. Keeping professionals and gaining new ones – also through word of mouth of those already employed in the company – is essential in times of skilled labor shortage. Especially when it comes to digital transformation.

And then the circle closes. Companies that are rethinking and changing their structures have a good chance of profitably advancing the digital transformation, of adapting services and products, and / or developing new ones to keep up with the times. Because taking the path from Nokia is not an option, is it?

Nora Heer is the founder and CEO of Loopline Systems, a spin-off of the Human Resources division of Project A Ventures. She is a certified media economist and trained in systemic coaching, leadership development and human resources management. In the podcast at LEAD she talks about how she works for fairness, empowerment and lifelong learning.

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