Preface:
In today’s business world, change is not an exception but the norm.
The rapid pace of technological advancements, global competitive landscape, shifting consumer preferences, and unforeseen disruptions like the pandemic have made change an inherent part
of organizational life.
If the recent example of the Honda-Nissan merger is anything to go by, the “business of
management is to manage change”. Such is the pace and intensity, that the once dominant
Nissan – the darling of investors, known for its reliability and innovation is staring at the brink of
bankruptcy with its shares falling a whopping 80%, prompting a bail out by Honda.
As Peter Drucker once famously said, “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.” This reality has elevated change management from a “nice to have skill” to a core competency that management across levels must embrace.
Why Change is central to Business success:
At its core, management is about steering an organization toward achieving its goals. These goals, however, exist in a constantly evolving business environment. This dynamic context demands not only adaptability but also proactive efforts to anticipate and shape change. Organizations that fail to evolve, risk stagnation and irrelevance.
The Fall of Nokia, a lesson in adaptability
The case of Nokia is now such a well-documented case study on change and adaptability. Once a dominant player in the mobile phone industry, the fall of Nokia serves as a stark reminder of the perils of failing to adapt to shifting consumer preferences.
The rise of touchscreen technology and app ecosystems, spearheaded by Apple and subsequent advancement by Android devices, marked a paradigm shift in the mobile ecosystem. While competitors embraced these advancements, Nokia clung to its legacy Symbian operating system.
By the time the company attempted to catch up, it had lost both market share and consumer trust. In 2014, Microsoft acquired Nokia mobile phone division, marking the end of its reign in the industry.
The question remains, despite all market intelligence why did the Nokia senior leadership fail to see the shift in landscape? What can leaders learn from the Nokia case example?
What explains why leadership fails to catch shifting trends
- Cognitive bias: Leaders often prefer to maintain the current state of affairs, especially if past strategies have been successful. This resistance to change can cloud their judgment.
- Short-term focus: Many leaders prioritize short-term results, such as quarterly earnings or immediate profitability, over long-term strategic shifts. This focus can lead to a reluctance to invest in disruptive innovations that may not yield immediate benefits
- Fear of Uncertainty: Change often involves stepping into the unknown, which can be daunting. They may fear the potential risks associated with transformation.
- Echo Chambers and Group think: Most management decisions are done in a hierarchical manner and often distant from the ground reality. Leaders are often surrounded by people that reinforce their viewpoints rather than challenging them.
- Emotional attachment to status quo: Leaders may have emotional or reputational stakes in existing strategies, making it harder to pivot away from them. It’s a case of investing in ‘diminishing returns’.
Leading in the Future
The businesses of tomorrow will be defined by one’s ability to navigate complexity and ambiguity.
In a world where the only constant is change, the ability to manage it effectively is no longer optional. It is the essence of good management.
Srikanth is the founder of Vruddhi India, a management consulting firm focused on Change leadership practices. We specialize in guiding companies through the complexities of change in a way that is uniquely personal and customized. You can email me at srikanth.pv@vruddhiindia.com for more information.