Managing Organizational Change

Managing Organizational Change

CHAPTER 1- Case
– no introduction
– total should be 2500 words
– for each question 200-250 words
– for each case, only answer 4 questions not 5 ((Preferably the easiest 4 questions)) but of course the answer should be clear and in good explanation.
– for each case, any 4 questions – three references
– ORGANIZATIONAL CHANGE AT NOKIA
As 2010 drew to a close, Finland‐based Nokia, the world’s leading producer of cell phones, announced the elimination of 1,800 jobs.1 Surprisingly, the 3 percent reduction—which came a little more than one year after a previous 3 percent workforce reduction—accompanied an announcement of a strong third‐quarter result. As the impact of the recent global recession slowly receded, Nokia produced strong sales and profit numbers. So, why the cutbacks?
Nokia’s rise from a 19th‐century paper mill headquartered in Espoo, Finland to the world’s largest cell phone maker and leading employer in its native country is the stuff of business legend. In particular, its ability to overtake the previous market leader Motorola was based in large part on its early awareness of a global market for cell phones. With core competencies in production, distribution, and research and development, Nokia produced mobile phones that dominated not just Europe but also the emerging world markets. As late as 2002, Nokia led the market in the United States as well. However, by 2009 its U.S. market share had slipped to 7 percent (from a high of 35 percent). It had been surpassed not only by its old rival Motorola but also by LG and Samsung, both based in Korea, and Research in Motion, the Canadian‐based producer of the Blackberry. And then, of course, there was the hottest—or perhaps more accurately the coolest—smartphone of all, the iPhone.
In some ways, it might be said that Nokia’s weakness in the U.S. market was the result of conscious strategic decisions made by the company. Nokia built its phones on the European standard GSM format rather than the U.S. standard CDMA format. This decision allowed Nokia phones ease of access to world markets.2 By mass production of phones for a global market, Nokia lowered production costs. However, the decision limited its access to the U.S. market, where over half the phones operated with CDMA. Then too, Nokia failed to forge close ties with wireless providers, instead offering open phones that would then need to be adapted to a particular provider. Nokia’s approach worked well globally. In the United States, however, wireless providers—Verizon, Sprint Nextel, AT&T, which together controlled 96 percent of the U.S. market—wanted to offer phones themselves that could be cobranded and bundled with longterm service contracts.
Perhaps most damaging, however, was Nokia’s lack of responsiveness to the shifting tastes and expectations of the U.S. customers. Mark Louison, head of the North American unit, conceded, “In the past, we had a one‐size‐fits‐all mentality that worked well on a global basis but did not help us in this market.” Recognizing its growing weakness in the United States, Nokia placed an American on its management board in 2007, hired another American to be its chief development officer and moved its chief financial officer (CFO) to an office in the States.
Smartphones—phones with both Internet and e‐mail functionality—represented the fastest growing and most profitable segment of the cell phone industry. As the Blackberry became a standard business tool, and the iPhone’s popularity exploded in both the United States and globally, Nokia’s share of the smartphone market fell dramatically. And its stock price tumbled, even after stock markets began to recover from the recession.
Many observers, both inside the company and outside, said that Nokia had become a victim of its own success, complacent and reluctant to rock the boat. In 2010, the Nokia board recruited Stephen Elop from Microsoft to transform the global giant. Elop publicly admitted that Nokia had grown complacent and removed from customers. “It was management by committee,” said one executive describing the company’s approach to innovation. “Ideas fell victim to fighting among managers with competing agendas, or were rejected as too costly, risky, or insignificant for a global market leader.” Elop vowed to focus on the internal barriers that existed to new product development. “Nokia has been characterized as an organization where it’s too hard to get things done,” he admitted. “But the board has vested in me the mandate to lead Nokia through this change.” In particular, Elop said his first priority was to stem the loss of U.S. market share.
Not all news was bad. Nokia still remained the global leader in the basic phone market. In one of his first moves as new CEO, Elop announced job cuts. “The cuts were intended,” he said to streamline software development for Nokia’s smartphones by improving “agility and responsiveness” in the software development and Web services units.

Answer the following questions:
1. What was the primary cause of Nokia’s drop of market share in the United States?
2. What technological decision did Nokia make which led to their difficulties in the United States?
3. What market decision did Nokia make which impacted their effectiveness in the United States?
4. In 2010, the Nokia board recruited Stephen Elop from Microsoft to transform the global giant. What internal operational barriers did he discover?
5. What was one of the first moves that Elop made to stem the loss of US market share? Why did he make this move?

CHAPTER 2- Case

TURNAROUND AND TRANSFORMATION AT DUKE UNIVERSITY CHILDREN’S HOSPITAL
In 1996, the 135‐bed Duke University Children’s Hospital faced a deep financial crisis.1 Key administrators at the hospital provided the following dire assessment:
A decrease in Medicaid allowances and an increase in patients with capitated reimbursement * were driving revenues down. Expenses were down as cost per case for children’s services ballooned from $10,500 in fiscal year (FY) 93 to $14,889 in FY96. This caused a dramatic reduction in the net margin—from (−)$2 million in FY93 to (−)$11 million in FY96. Programs were slated to be eliminated and services were targeted for reduction. Sales productivity had fallen from the 80th to the 70th percentile range. In addition, patient and staff satisfaction was at an all time low.
Jon Meliones, the hospital’s chief medical director, realized that he and fellow hospital executives faced a particular challenge. “No matter how effective the chief executive officer (CEO) and chief operating officer (COO) are,” he observed, “they can control only a portion of the components that drive the organization’s financial performance.” Physicians determined length of stay, drug prescriptions, and tests, while accepting referrals that helped determine revenues. Nurses drove quality. Any effective change would require a united effort among administrators and clinicians.
Meliones led his staff through a diagnosis of the root causes of the hospital’s financial crisis. They found a particularly troubling pattern of behavior. “The problem was that our hospital was a collection of fiefdoms,” said Meliones. “Each group, from accountants to administrators to clinicians, was focusing on its own individual goal rather than on the organization as a whole.” Creating a shared sense of responsibility for the hospital’s performance and realigning patterns of behavior would be required.
A team consisting of Meliones, the chief nurse executive, and nurse managers agreed upon an approach that emphasized the interdependence between financial performance and excellence of health care. “We want patients to be happy … and for them to have the best care,” the team concluded. They also adopted a motto for their planned strategic renewal: “No margin, no mission.”
Excellent patient care and excellent financial performance would be the twin hallmarks of the hospital’s strategic renewal. Implementation next moved to a single unit: pediatric intensive care. Meliones and his team worked to operationalize new behaviors through a redesign of roles, responsibilities, and relationships. With the participation of doctors, nurses, the medical staff, and even accountants, the team redesigned how all members of the unit would undertake their responsibilities. The unit called on a popular measurement tool, the balanced scorecard that looks not just at financial outcomes but also customer perceptions, internal business processes, and the ability of an organization to learn and grow, to help reinforce desired new behaviors. Meliones and his leadership team returned the hospital to profitability in three years.

Answer the following questions:

1. What is leading the Children’s Hospital to alter their strategy?

2. What steps has Meliones taken?

3. What behaviors will need to be changed?

4. How did he drive change within the pilot unit?

5. How effective was the effort?

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