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. 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 pro- duced 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 aware- ness 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 per- haps 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. stan- dard CDMA format. This decision allowed Nokia phones ease of access to world markets." 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 long- term 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 men- tality 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 Many observers, both inside the company and outside, said that Nokia had 2010. the Nokia board recruited Steph ci Stephen Elop from Microsoft to transform the global giant. Flop publicly admitted that Nokia had grown complacent and r from customers. "It was management by committee." s ing the company's approach to innov . "Ideas fell victim to fighting among nificant for a global market leader." to focus on the internal barrier a has been characterized as ar organization where it's too hard to get things done," Asia we fret priority was to bedyoga through this change." In particular, global leader in the basic phone market. In one of his first moves are development for kia's smartphones by improvise " in the software development and Web services units