Nokia

Name / ID # : Tugce Guner / 630052291

Azar Hasanov / 620036032

Alibay Alibayli / 590066639

Ayush Agrawal / 630058475

Module Name : BEMM162 – The Creative Organisation

Assignment # : Assignment 3

Topic : Nokia Company Organizational Creativity Report

Module Convenor : Dr. Varuni Wimalasiri

Number of Pages (including this one): 18

Table of Contents

Executive Summary ............................................................................................................................ 2

Introduction ............................................................................................................................................ 3

Aim ............................................................................................................................................................. 4

Investigation Methods........................................................................................................................ 4

Literature Review ................................................................................................................................. 4

Findings ................................................................................................................................................... 6

External Factors ............................................................................................................................................... 6 Recruitment and diversity ............................................................................................................................ 6 Organizational environment ........................................................................................................................ 8 Crowdsourcing .................................................................................................................................................. 9

Conclusion ............................................................................................................................................ 10

Recommendations............................................................................................................................. 11

Methods of evaluating creativity ............................................................................................................ 11 Different disciplines drawn to generate solutions ......................................................................... 12 Diverse Recruitment .................................................................................................................................... 12 Structure ........................................................................................................................................................... 13 Cultural Adjustments .................................................................................................................................. 13

References ............................................................................................................................................ 14

BEMM162 THE CREATIVE ORGANISATION Nokia Company Organizational Creativity Report

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Executive Summary

Nokia is a Finnish company operating in the fields of network infrastructure, location-

based technologies and advanced technologies and is headquartered in Espoo, Finland

(NOKIA, 2014a).

Nokia was the dominant player in the mobile telecommunications sector for more than a

decade (Lee, 2013). It was not the first company releasing a mobile phone, but the thing

making Nokia get to top was to do this well by reaching the true mass appeal (Lee,

2013). Ben Wood, who is an analyst at CCS Insight, indicated that people would not talk

about the brand names while they were talking about the phone they have, they would

only say the numbers like 3310 or whatever they had; because there were no mobile

phone brands as big as Nokia (Lee, 2013).

This is a fact that Nokia first fell behind Apple by the year 2007, when the so-called

revolutionary mobile phone, iPhone was introduced by Steve Jobs. Then Samsung

started rising in the mobile communications sector. While these two mobile giants were

leading the sector, Nokia fell behind step by step.

Blaming only one reason would be unfair for the sudden fall of Nokia; however, the first

reason behind this fall was the operating system that Nokia was using on their mobile

phones. Nokia was still making great phones, but the time that iPhone was introduced

they were using Symbian systems for their phones and Symbian have quickly been out-

dated; as Ben Wood indicated that “Nokia missed the importance of software” (Lee,

2013). In addition to this, the timing of changing to the Microsoft operating systems can

be considered as late; since Apple and Samsung have already taken over the

dominance in the market and left Nokia behind. There is one more fact that should not

be missed out, which is that, Microsoft’s Windows Phone system was the only choice

left for Nokia to survive and differentiate.

Another reason was that Nokia could not respond to the trends in mobile market quickly.

They waited a year after iPhone to unveil their fist touchscreen phone which was less


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than a smartphone but more a handset optimized to play music (Cheng, 2014). In the

late 2012, a research conducted by Roger Cheng, who had the chance to talk to former

and current employees of Nokia that time, resulted that “to many of the employees of

Nokia, it wasn't just arrogance that kept them rooted in Symbian, but the inability to take

risks” (Cheng, 2014). By the end of 2013, Nokia's market share was still 15 percent,

which was basically a result of their cheaper basic phones, according to data compiled

by Strategy Analytics; however, smartphone market share of Nokia was in the low

single-digits (Cheng, 2014).

Microsoft bought Nokia’s handsets production on April 25th; therefore, the question for

Nokia is now “whether or not the Nokia and Lumia branding will dissolve” (Struble,

2014). Stephen Elop, who is the former CEO of Nokia and now heading the Microsoft’s

devices division, hinted that the Nokia brand may disappear in the future along with the

Lumia range. He spoke to TechRadar and said: “What we have to decide is what the

brand will be. Because we have not decided what brand will be dominant for

smartphones, that’s work that’s still ahead. And of course the way we’ll go through that

process is to assess with consumers what they respond most positively to, what

conveys the best message and the best hopes of success.” (Smith, 2014).

Introduction

Before taking further steps, it is useful to understand what creativity is. Creativity is

defined as “the use of imagination or original ideas to create something; inventiveness”

(Oxford Dictionaries). It is a concept that is very useful for the companies to differentiate

themselves from their competitors, therefore there’s a need to apply it in the

organizational framework successfully. Shalley and Gilson define organizational

creativity as “the development of ideas about practices, procedures, products or

services that are potentially useful to an organization” (Shalley & Gilson, 2004).

In the case of Nokia, the level of creativity also needs to be considered on the cultural

level. Nokia’s code of conduct is “striving for the highest degree of ethical conduct in


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every action they take” as indicated in their corporate website (NOKIA, 2014b).This is

based on the Finnish culture of the company. Focusing on ethics and risk management,

Nokia missed out the importance of organizational creativity in their corporate

governance structure. The cohesive Finnish culture affected Nokia’s decision of not

embracing creative ideas, consequently not taking risks (Beckett, 2011).

Aim

The aim of this report is to evaluate the level and processes of creativity at Nokia by

analyzing the factors by looking at the historical facts that left the company behind its

competitors. By the time the writers of this report decided to make their research about

Nokia, the basic aim was to make assumptions for the future of the company.

Meanwhile, it was announced that Nokia would be acquisited by Microsoft Company

who was in partnership with Nokia on producing Windows operated Lumia

smartphones. The acquisition of Nokia by Microsoft is now confirmed and the deal,

announced last fall, is worth more than $7 billion (Molina, 2014). Therefore, this report

focuses on the reasons of the fall of the company by pointing out the lack of creativity

processes in their organizational structure.

We hope to identify the core differences in the company structure with main competitors

like Apple and Samsung to find an answer to this particular question: “Why Nokia

stayed behind in the race of innovation on mobile phone and tablet PC industry?”

Investigation Methods

The information to be used in this research project is going to be provided by mainly

looking at the company reports and press releases.

Literature Review

Progressively, creativity has become appreciated and esteemed across a multiplicity of

responsibilities, professions, and businesses (Nonaka, 1994). In the present day’s fast-


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paced vibrant work setting, supervisors and administrators go on to apprehend that to

keep on being competitive they require their workforces to be enthusiastically involved

in their work and putting an effort to produce original and fitting merchandises,

practices, and methods. Granting the level of creativity needed and the significance of

creativity can vary contingent on the jobs or profession in hand, a great deal of

supervisors would approve that there is a possibility, in virtually every job, for personnel

to be extra creative (Amabile, 1997). Additionally, since individual creativity offers the

basis for organizational creativity and innovation, and these have been associated to

company performance and existence, it is imperative, if not grave that personnel are

creative in their work (Shalley and Gilson, 2004).

Creativity as a whole in an organization comes down to individual level creativity.

According to Bharadwaj and Menon, individual level creativity can be considered using

individual creativity mechanisms. These mechanisms talk about actions undertaken by

individual workers within an organization to improve and augment their proficiency and

competence for creating something, which is significant and innovative within their work

setting (Bharadwaj and Menon, 2000). Research done has revealed findings that

companies that offer knowledge creating environments end up being more successful

than other companies. Organizational creativity mechanisms talk about the degree to

which the organization has introduced proper methods and implements, and delivered

resources to embolden evocatively innovative performances within the organization

(Ford and Giola, 1995).

Employing data collected from 634 organizations, the results of the research revealed

that the existence of both individual and organizational creativity mechanisms brought

about the maximum level of innovation performance. Institution of a creative

environment within an organization, even with low levels of individual creativity has

proved to create more innovation within that particular organization (Nonaka, 1991).

Employing creative individuals does not simply increase creativity within an

organization. Instead, it is important to institute a creative environment for such

employees to work in. The consideration of what and how creativity impacts innovation


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performance can be critically improved by added study that assimilates the inherent and

extrinsic drivers of creativity (Bharadwaj and Menon, 2000).

Findings

External Factors

Some of the external factors that might influence the creative environment in Nokia

include competition and diversity. With increased competition from other organizations

such as Apple, Samsung and others, Nokia might be forced to become more creative in

the creation of its products as well as the processes and procedures being used.

Similarly, the creation of diverse products could motivate employees to think out of the

box and become more creative in the merchandises being produced in the coming. With

the incessant change in technology in the present day world, individual as well as

organizational creativity becomes imperative, and the companies are forced to generate

a more creative environment for their employees.

Another external factor that might be deemed to alter the creative environment of Nokia

is the preferences of the customers. There are constant changes in the environment

with individuals preferring products that fully suit their needs and beyond. This affects

the creative environment of the company as it is forced to create better and more

innovative products that suit these needs of the customers (Inkpen, 1996). In addition,

with the diversity in the products created by other companies, employees in Nokia and

the organization as a whole was forced to be more creative in coming up with novel and

original products which are different from the rest. This factor boosts creativity within the

organizational environment.

Recruitment and diversity

According to Mullins (2006), the company pays special attention to the recruitment

process in order to pick up the experienced workers to support the individual level

creativity. Dijk and Ende (2002) state that the recruitment of experienced employees


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plays a key role in organizational creativity. More than that, another analysis is carried

out in order to check the cultural compatibilities of the new employees (Steinbock,

2001).

Recruitment process of Nokia also includes the behavioural interview section that aims

for checking an individual's creativity level (Bardia, 2005). During that interview, several

questions are being asked about the previous initiatives that an employee took during

the creativity process. Despite the fact that Nokia's HR department have got some

frameworks and tools in selecting the applicants, in order to increase the diversity they

sometimes allow some flexibility in order to employ the people from diverse background.

The reason is that the company believes that creativity is driven by the diversity (ibid,

2005).

Cultural differences are another factor to consider that could affect the creative

environment of an organization. Nokia is a global corporation, which encompasses

employees from different cultural backgrounds. However, in order to gain mutual

creativity within the organization, these employees have to work together. Being from

different cultural backgrounds with different points of views and ways of life, this can

affect the creative environment of the organization (Niu and Sternberg, 2001). For

example, the Chinese employees would differ in their own perspectives with employees

from the Western world due to different points of views (Nisbett and Masuda, 2003).

However, Gilson (2001) argues that diversity and dissimilarity can increase creativity.

This is because it enhances composition of different capabilities and understanding

within a creative setting or an organization.

The event of “World Cafe Methodology” was applied to create an environment in which

Nokia employees from diverse backgrounds could discuss the issues. While the

discussions carried on, facilitators could take the ideas those agreed. However, the

concept is not used now, as it has been valued as impractical (Willigan, 2009).


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Organizational environment

Institution of a creative environment within an organization, even with low levels of

individual creativity has proved to create more innovation within that particular

organization (Nonaka, 1991). Therefore, employing creative individuals alone might not

increase creativity within an organization. It is also important to institute a creative

environment for such employees to work in. The consideration of what and how

creativity impacts innovation performance could be critically improved by added study

that assimilates the inherent and extrinsic drivers of creativity (Bharadwaj and Menon,

2000).

Nokia could take note of creative structures set in place by Google Inc. The employees

who are deemed to be the creative centre of the organization are not given any chain of

command. There is an open door system, which encourages employees to be more

creative and openly discuss any issues concerning the products, processes and

practices of the organization (Scott, 2008). The organization has also gone ahead to

employ organizational creativity. The workforces are encouraged to work in groups so

as to come up with more creative ideas and products. This ensures that the creative

strengths of each and every employee are utilized and harnessed. The company has

also created a creative environment whereby the creative employees are encouraged to

work when it suits them best and are not given a restricted work time line as all the

other companies. This has greatly increased the level of creativity within Google (Scott,

2008). Nokia might also use this proven technique to foster the creativity within the

organization.

One of the problems in Nokia as an organization is the dawdling decision making which

slows down and terminates the possibility of creativity and innovative activities. Some of

the problems experienced by the company are deemed to be due to poor decision-

making and internal rivalries. Creativity is hampered if the organization does not

encourage or foster its continuity. In particular, individual creativity becomes diminished.

Employees, who are responsible for the creative and innovative activities, stop being

effective once the organization lacks recognizing or considering their work. Nokia could


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employ some of the institutional creativity structures set in place by Apple Inc. Apple

has been one of the outstanding companies that fully encourage and inspire their

employees to incessantly come up with innovative products. The level of creativity

within the organization is fostered, and the creative ideas brought forth by employees

fully considered (Zylla-Woellner, 2010).

It has to be noted that the organisational culture of Nokia, which is the cohesive Finnish

culture, prevented Nokia managers to take risks and not support creative ideas, thus

underestimated the changes in the market (Beckett C., 2011). According to Denning,

workers in Nokia had been creative enough to come up with a prototype and model of a

smartphone several years before their inception into the market. However, the company

failed to consider these creative ideas from its employees and discarded them. Several

years later, Apple introduced the iPhone into the market which propelled into success

and in turn caused the downfall of Nokia (Denning, 2011).

With these in mind, it is imperative for Nokia as an organization to take risks. It is

through such risks that creativity produced by employees can be turned into innovation

and success. The company also has to define its corporate culture to suit the levels of

creativity of both the individual creative thinkers but as well as the organization as a

whole. This could be achieved through implementing as well as recognizing the creative

ideas brought forth by the employees.

Crowdsourcing

Nokia weighs in on its external environment as a basis of creativity, and in turn employs

its customers as a foundation of motivation and incentive. For example, the company

uses online forums and discussions to permit the public to recommend and propose

new concepts and enhancements as well as offer more insight regarding the existing

products and systems set in place. Being in partnership and association with the public

and the consumers, Nokia is able to make the most of the level of creativity provided by

the external sources. This in turn expands and broadens the knowledge levels of the


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institution. In addition, as much as these ideas and recommendations might not be

groundbreaking, Nokia uses them to develop and integrate the needs of the customers.

This as a result, fosters creativity of the companies by the creation of standards that are

recommended.

Another source of creativity that Nokia uses for its benefit is the creative environment

outside of the organization (Vanhemert, 2010). Nokia created a web-based environment

called "Ideasproject" where anyone could participate, share thoughts, and create mobile

apps (Ideasproject, 2014). Nokia's online forums also serve for this purpose. This kind

of projects helps Nokia to benefit from the creativity of its customers, to get a customer

feedback on the products and form a basis for the future developments. Additionally,

this is also a way of diversification where the company is not only depended on the

internal environment but uses the external environment which provides an opportunity

and reduces the risk of lacking the improvement techniques.

Conclusion

It is bewildering to comprehend how Nokia has been a dwindling player in the mobile

phone market considering it was the main player by far a few decades ago. Institutions

such as Samsung and Apple have grown and come up with ground breaking and

innovative ideas that have seen them stake a place as the main players in the industry.

Therefore, for a company that highly relies on creativity has got to come up with creative

and innovative concepts and in the end implement such ideas.

Regardless of employing and recruiting the most creative individuals in the environment

or employ the recommendations and ideas from its consumers, Nokia’s vertical

corporate structure inhibits success of such aspects. The company is too risk averse

and the managers of the companies are afraid to implement and finance ideas that are

pitched through by their creative thinkers. The company goes wrong because it places a

lot of emphasis on the resources used and barely focuses on the processes or the

results that follow through. For Nokia to improve its position in the market it was


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necessary to take risks and also change the structure of the company. The creative

employees, even those on the lowest levels should have been given the chance to bring

out their thoughts and ideas, not only on novel matters but also on the existent nature

and structure of the company.

Recommendations

In as much as Nokia has full knowledge of the importance and need to improve on

creativity levels, at least as a part of Microsoft today, it is imperative for the organization

to place emphasis on employing and encouraging changes in the following aspects:

Methods of evaluating creativity

Some of the methods that managers can use to evaluate the creativity levels in an

organization include brainstorming. It is usually used by managers in order to gain

knowledge quickly on any upcoming or recent developments or technologies (Bouchard,

1971). According to Bouchard, another method employed was called the Morphological

box but was not frequently used as much as brainstorming. Another method that can be

employed is the use of teams. The managers can place the creative thinkers in teams

and initiate programs or projects to evaluate and ascertain the level of creativity. This

method can also be used to evaluate the level of individual creativity in relation to

organizational creativity (Crawford, 1966).

Environmental and psychological evaluations can also be another method used by

managers. These methods encompass the usage of sound, pigment, sensory incentive

or deficiency, scent, and the likes, to change the brain's regular environment to support

creativity (Crawford, 1966). In order to understand creativity in this kind of environment

it is important for managers to create a good relationship with the creative thinkers.

Having an atmosphere where such creative thinkers are given the platform to bring out

their creative ideas and trust the organization, it becomes easier to understand creativity

(Gee and Tyler, 1976).


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Different disciplines drawn to generate solutions

The company can also draw solutions from other disciplines such as psychology.

Studies in psychology have revealed that individuals tend to be more aggressive and

determined once their work is recognized. Therefore, it is imperative for Nokia as an

organization to recognize and ascertain the level of creativity produced by its

employees. According to research done by Dehnavieh et al, the factors that influence

creativity and innovation within employees such as managers are mostly individual

factors such as lack of appreciation and motivation (Dehnavieh et al, 2010). These can

help Nokia as an institution to better institute a creative environment which would in turn

increase the level of creativity in the forthcoming (Anderson and King, 1993).

Other solutions can also be drawn from other disciplines such as social learning theory

and cognitive theory. These theories imply that a certain set of behaviours if not all can

be learnt through observation and therefore passed on. This usually can help in

leadership and passing on new behaviours or certain skill sets that can easily be learnt.

This notion can be highly beneficial to Nokia as it can increase its levels of creativity

through social learning theory. This could be implemented and employed in

organizational creativity through individual creativity. Creativity in a team can be

established through the observation of creativity levels of an individual.

Diverse Recruitment

It is necessary for Nokia to cease being stingy and restrictive while seeking and

recruiting their employees. More so, Nokia being an organization that is heavily

dependent on creativity to have a competitive advantage over its rivals in the phone

market and industry, it is important for them to permit a wider range of employees

during recruitment. This will aid the company in being able to react properly to changes

in its environment. Therefore, the company should not always focus on the level of

experience of employees while hiring them.


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Structure

The main structure that was prevailing in the company is a vertical and ordered one. It is

recommended that the company should institute and follow a more decentralized and

horizontal structure. It is necessary for the company to institute a friendlier and

somewhat lenient corporate culture (Nonaka and Toyama, 2003). A more permitting

and open-minded structure will foster communication of creative and notions as well

increase levels of creative thinking amongst the employees. With this in place, creativity

will emerge from all areas of the organization (Swailes, 2000).

Cultural Adjustments

Due to the cohesive Finnish culture, the company is overall risk averse. It has

previously and frequently observed that Nokia instigates numerous ideas and notions

but fails to make them come to life due to not taking risks. It is imperative for the

company to realize that only when these ideas are implemented can they be turned into

valued resources in the end. Being set in an industry that is based on technology and

values inventiveness and groundbreaking concepts. As a part of the Microsoft now,

Nokia has to start taking risks and be more willing to take up such ideas and make the

most of the creativity presented (Shalley and Gilson, 2004).


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