Nokia - Fostering Innovation HR case Presentation Presented by: Parakhiya Vasant Guided by: Kumar Gaurav
“ Our approach is to create classic, timeless designs that combine ergonomics with aesthetics. Shapes, colors and counters that can deliver harmony, balance and beauty.” - Jorma Ollila, Chairman and CEO, Nokia Corporation
History of Nokia Tracked back to the year 1865, when, Fredrik Idestam, a mining engineer, established a forest industry enterprise on the bank of river Nokia in south western Finland to manufacture paper. The enterprise was called Nokia corporation.
In 1898, Carl Henrik Lampen, a shopkeeper and J.E. Segerberg, an engineer, set up the Finish Rubber Works Ltd. (FRW) to manufacture rubber and associated chemicals. In 1912, Konstantin Wikstorm, an engineer, set up the Finnish Cable Works (FCW) to manufacture electrical cables for lighting purpose. In the early 1900s, FRW started exploring possibilities of expansion to meet increased production. It ultimately decided to enter into a partnership with Nokia Company, which had by then diversified into power generation, to purchase energy inexpensively from the company for its own operations.
In 1904, FRW relocated to a place near the Nokia river and started working in cooperation with the Nokia company. From 1900s, the FRW grew, and in 1922, it bought a majority stack in FCW which was then in the midst of the financial crisis. These 3 companies (Nokia corp., FRW, FCW ) then started working in cooperation and managed to capture market leadership in their respective area. Talk of the integrating the 3 companies through a merger began surfing at board meetings from the early 1930s.
This however, met with stiff opposition from auditors and lawyers who rejected such a move on the grounds that it was not in accordance with corporate by laws. Consequently the board voted against the merger in 1937. The issue emerged again in 1960s, when the Nokia company began moving towards the technology sector. In 1960s, Nokia company had entered the telecommunications market with the manufacture of radio telephones and data modems.
Over the year, the FRW had been controlling the Nokia company and the FCW through majority stacks. However, the business grew and the control pattern no longer reflected the changing revenue of the company, talks of a merger started surfing. In 1967s, the original Nokia company was merged with the FRW and the FCW to form the Nokia corporation. This new company had four major businesses – Forestry, Rubber, Cable and Electronic.
In the 1980s, Nokia was the major producer of computer monitors and televisions sets. Nokia also manufactured the first car phones for NMT, the world’s first international cellular mobile telephone network. The phones were launched in Scandinavia in 1981. the company was also the original producer of the first hand portable phones in 1987, which revolutionized the portable phones market which only saw huge, bulky models till then. Nokia was also instrumental in popularizing GSM technology which was just picking up at that time in Finland.
Nokia diversified most through acquisitions. The company entered new markets and adopted new technologies by acquiring Mobira, Salora, Televa and Luxor of Sweden to strengths its position in the consumer electronics and telecommunications market. In 1987, it acquired the consumer electronics operations of the German standard Elektrik Lorenz, the French consumer electronics company, Oceanic and the Swiss cable machinery company. This was followed by an expansion of its cable industry into continental Europe with the acquisition of the Dutch cable company, NKF.
The deregulation of markets in the major parts of the world in the 1980s and 1990s bought new opportunities as well as increased competition for Nokia. The company, which was then operating in such diverse fields as rubber, electronics and communication equipment, decided to change its strategy to adapt to the changed environment. Under the leadership of Jorma Ollila, the head of Nokia Group, the corporation divested its non-core businesses and focused on telecommunications.
At the end of 2002, Nokia set sales totaled $30.8b. The company employed about 52,000 people around the world, of which about 19,000 were working in Research and Development. The corporation had production facilities for mobile phones in 9 countries and R&D centers in 14 countries across the global.
Nokia Code of Conduct The Nokia’s code of conduct was introduced in 1997 to support the development of the inclusive environment envisaged by the company. The code of conduct has been approved by Nokia’s Group Executive Board and is introduced and reinforced to Nokia Employees through induction, training and internal communications. It is reflected in Nokia Values and Nokia Way of working, and every Nokia employee is expected to conduct himself or herself , and his or her business, in line with this code Without exception.
<ul><li>Ethics and the Law </li></ul><ul><li>Human Rights </li></ul><ul><li>Conflicts of Interest, Gifts, & Bribes </li></ul><ul><li>Workplace Practices </li></ul><ul><li>Environment </li></ul><ul><li>Supplier </li></ul><ul><li>Implementation </li></ul>
<ul><li>Ethics and the Law </li></ul>Nokia is strongly committed to the highest standards of ethical conduct, and full compliance with all applicable national and international laws. This includes, for e.g., those relating to antitrust and promoting fair competition, corporate governance, preventing bribery, illicit payments and corruption, publicly traded securities, safety in the intended use of the product and services.
Nokia deliver to customers, labor laws and practices, in the environment, human rights laws and internationally recognized standards, and protecting copyright, company assets and other forms of intellectual property. Nokia’s goal is not mere minimum legal compliance, but as an industry leader to be among the world’s best in corporate responsibility, practicing good corporate citizenship wherever it does business.
<ul><li>Human Rights </li></ul>Nokia will respect and promote human rights. Nokia recognizes, with the international community, that certain human rights should be considered fundamental and universal, based on accepted international laws and practices. Among those rights that Nokia views as fundamental and universal are: freedom from any discrimination based on race, color, nationality, ethic origin, age, religion, gender, merit status, connections with a national minority, disability, freedom of opinion and expression. Nokia will not use child or forced labor. Nokia will not tolerate working conditions or treatment that are conflict with international laws and practices.
<ul><li>Conflicts of Interest, Gifts, & Bribes </li></ul>Nokia employees must avoid activity that leads to a conflict of interest. This includes, but is not limited to acceptance and giving of personal gifts or hospitality, to or from Nokia stakeholders, other than gifts of nominal value or reasonable hospitality given in the ordinary course of business. Any agreement or understanding regarding favor or benefits in exchange for the gifts must be avoided. Gifts of other than nominal value may not be accepted without full disclosure to and prior relevant clearance from the employees supervisor.
<ul><li>Workplace Practices </li></ul>Nokia employees must respect and encourage Nokia values at work , promoting teamwork, individual responsibility,. And the strength that comes from diversity. Nokia will strive to pay fair compensation, and provide a safe and healthy workplace for employee. Nokia is committed to equality of opportunity in all its employment practices, policies and procedures , job requirement fulfilled, no employee or potential employee will, therefore, receive less favorable treatment due to their race, colour, nationality, ethics, origin, age, religion, gender, connection with a national minority, membership or non-membership of a trade union. Nokia will encourage employee to lead balance personal and professional lives.
<ul><li>Environment </li></ul>Nokia’s environment activities are based on lifecycle thinking. The goal is to reduce adverse environmental effects during our product lifecycles. This is done by managing our own operations and our supplier network, incorporating Design for Environment into our product development, processes and service design and supporting sound End-of-life practices. Nokia is not use any endangered species for any business purpose which is harmful for human or animal.
<ul><li>Supplier </li></ul>Nokia will do its utmost to contract only with subcontractors or suppliers who including adhere to international human rights and environment laws and practices. Nokia commits to monitoring the ethical performance of its suppliers and to taking immediate and thorough step in cases where the ethical performance of its suppliers come into question.
<ul><li>Implementation </li></ul>The compliance commitment in this code extends to all matters, including decisions relating to trade, investment, subcontracting, supplying, business development, and in all other business and employment relationships. Nokia’s approach to implementing this code of conduct will be active, open and ethically sound. Although difficult questions of interpretation may arise in specific instances, particularly regarding the need to sensitively balance local customs and requirements with global standards and guidelines; Nokia recognized that the above commitment means that Nokia will so its utmost to identify ethical, legal, environmental, employment, and human rights issues and resolve matters consistent with this code of conduct.
Fostering Innovation The vision and mission of Nokia played very important role in fostering innovation. Nokia’s vision was to create and operate in, what the company calls, ”an inclusive environment,” An inclusive environment refers to a culture which emphasizes individual and cultural differences and seeks to benefit from these differences.
Nokia believes that diversity is one of the key determinants of success, as it increased creativity, mirrored the marketplace, and improved the attraction and retention of human resources, among other things. This inclusive was reflected every aspect of the company’s work – from management decisions, to behavior, and to the way the company related to its employees, customers and business partners.
Research & Development Nokia’s R&D operations were scattered across the world in 69 sites, and its 19,579 engineers, designers and sociologists. They were given complete freedom to operate and develop their own ideas, over and above officially designated research projects. Nokia’s research culture focused on helping employees challenge themselves, and not shy away from making mistakes. Researcher were encouraged to develop their own ideas, and all ideas were given due respect.
According to company sources, the aim of a dispersed R&D, was to ensure that the researchers did not develop a “tunnel vision.” By establishing research centers around the world, the company was able to get a wider perspective of the market as well as across to international intelligence, which was eventually reflected, in the product. All of them were encouraged to run their own projects and, as a Nokia analyst pointed out, “ that is why freaky ideas from junior engineers can end up in a product rather quickly.”
For E.g. One good instance of this creative freedom was the program developed by Loan Sorensen, who was in charge of the 3310 model, which allowed users to send text message to each other in chat room. She developed this outside the official project and added it to the phone at the last minute without consulting her boss.
“ when an artist is really excited and does a sculpture day and night, then he is energized by it, because its in his hands and he owns it. This is how you get art. Our artists aren’t just closing their eyes and watching until the innovation comes. We are innovating all the time.” - Yrjo Neuvo, Head of R&D at Nokia.
Nokia’s Production Facilities and R&D Centers Production Facilities` R&D Centers 1. Finland 1. Australia 2. China 2. Canada 3. Brazil 3. China 4. Germany 4. Denmark 5. Great Britain 5. Finland 6. Hungary 6. Germany 7. Mexico 7. Great Britain 8. South Korea 8. Hungary 9. USA 9. India 10. Japan 11. South Korea 12. Spain 13. Sweden 14. USA
The Secrets of Nokia’s Success <ul><li>Bold Strategic Intent </li></ul><ul><li>Innovation Through Value Chain </li></ul><ul><li>Flat Organization </li></ul><ul><li>Entrepreneurial spirit </li></ul><ul><li>Collective Leadership </li></ul><ul><li>Global R&D Networks </li></ul><ul><li>Competition and Cooperation </li></ul><ul><li>Customer Satisfaction </li></ul>
The Nokia Way The Nokia way is characterized by a flat organizational structure which facilitates speed and flexibility in decision making, provide equal opportunity, encourages openness towards people and new ideas, and a constant quest for innovative products. Nokia strives to provide employees with a platform for personal growth by providing a challenging environment, a clear vision, goals and shared management beliefs.
Nokia’s values are the main components of the Nokia way. These focus on; Customer satisfaction Respect for the individual Achievement Continuous learning
Questions for discussion <ul><li>Organizational culture has a profound influence of the success of the organization. What are the major component of Nokia’s culture and what are their implications for the organization? </li></ul><ul><li>Examine the R&D culture at Nokia and comment on the contribution of an open culture to innovation. </li></ul><ul><li>Discuss how Nokia’s culture support self actualization in employees and the benefits that accrue to the company because of this. </li></ul>