The Chief Executive of Samsung Electronics recently told its employees that, “We must begin anew. Most of Samsung’s flagship businesses and products will become obsolete within ten years. ” This corporate strategy of reinvention would inevitably involve significant change for employees. Do you think that resistance from employees is likely to be the biggest problem for a business that wants to reinvent itself? Justify your answer with reference to Samsung Electronics and or/other organisations that you know.
A corporate strategy is a plan based on the corporate aims and objectives which defines the overall scope and direction of the business by identifying its choice of business, markets and activities. For an organisation facing such problems where reinvention may have to occur, deep consideration would have to be taken into account factoring in all the issues that cause resistance to change; the causes of change; the effect change will have on employees and ways to manage change.
The Finnish company Nokia is a prime example of company having to take on a new corporate strategy in order to compete with competitors that have over taken them in the market. Nokia had to replace its chief executive Olli-Pekka Kallasvuo, who had spent over half his life at the mobile phone maker. The reason for this change is because Nokia where struggling to compete with the smartphone market and were very slow to innovate. Nokia’s share price was falling, whilst Apple, a competitor with a smart phone on the market, saw a rise in their net profit by 78%.
There are various reasons why external causes of change have taken place, including technological advances and competitors actions that have left Nokia behind. When making corporate changes on a company, issues such as resistance from employees is likely to be a problem. This is because of factors such a fear of the unknown, fear of failure, lack of trust and losing something of value. For Nokia, a new chief executive, Stephen Elop, was appointed and in order to get his staff on board in sent round an email warning staff that it is “standing on a burning platform”.
This was an analogy stating that they would have to make great changes in order to save the company. This gave the staff a sense of reality showing that they would all have to make adaptions to the way Nokia should be working in order for it achieve market growth and compete with its competitors. This email meant that he could prevent resistance from employees because it made it clear that they did not have another option. Therefore creating a sense of trust in him, and he diluted the fear of the unknown as this gave the staff guidance and a purpose to aim towards.
This also in a way acted as an ultimatum and therefore didn’t give them an option, so losing something of value was not an issue as the company as a whole was becoming more devalued over time, the more they left it. Nokia will have to manage this change closely in order to make sure that they are working as efficiently as possible. For this, they would need to communicate well, as this will run through all the stages on the workforce. Elop achieved this primarily with the burning platform, but would need to pursue this through the reinvention.
Training is very important when dealing with emerging products because they need to be of a high enough standard in order to gain a market share. Therefore, the workforce have to be well trained so that they understand the tasks that they are given. Nokia must also check on how individuals are coping with the change to prevent resistance from employees. Supports needs to be given to employees to prevent a ‘sink or swim’ philosophy as that will damage the business if it leads to low quality output or poor customer service because staff were poorly supported during the change period.
However, the causes of change could have a larger effect on the business that resistance from employees. Globalisation and technological advances could have set Nokia back further than they can recover. Competitors such as Apple invest so much into research and development, and with Nokia’s lack of innovation, this could make to too hard to them to recover fully and emerge with a strong market share into the smart phone market.
They could still increase their market share in the mobile phone market, but it may be too late to compete with the likes of Apple and Samsung in the smart phone market. Resistance from employees could become minimised by using Kotter’s model for change management. Nokia have promoted change by establishing a sense of urgency, which they achieved with the email sent round to all staff. They have created an effective project team to lead the change, this started by changing the chief executive.
They have also communicated the changed vision to all the staff with the analogy of the burning platform. To conclude, I think that resistance from employees is not likely to be the biggest problem for Nokia as although I think it could create problems, if managed in the right way, which they have already demonstrated, it could be minimised hugely. Overall, I think that the main problem for Nokia is going to be increasing R&D and innovation and breaking into the smart phone market, which its competitors are already strongly establish in.