As if the hypercompetitive, constantly evolving communications, media and technology business weren’t already challenging enough, Nokia Siemens Networks has been operating over the past four years with the added burden of merging two industry heavyweights into an even stronger one.
Formed in 2007 as the result of a joint venture between Siemens’ COM division and Nokia’s Network Business Group, Nokia Siemens Networks is now one of the largest telecommunications hardware, software and services companies in the world, with more than 70,000 people in 150 countries. The company’s successful work following the merger to drive consolidation and integration of two very different, complex organizations provides important insights about how to develop an agile change capability to underpin and support new business strategies.
As Nokia Siemens Networks discovered, creating a new business strategy is only a first step. The more challenging part of the journey is about putting in place the organizational structures, systems, processes, leadership capabilities and learning opportunities that enable the company to execute that strategy.
Nokia Siemens Networks executives recognized that an immediate priority following the merger was the implementation of a common IT platform and one mode of operations, consolidating the company’s processes and systems end-to-end—from “quote to cash.” Non-standard procedures were interfering with normal business operations. Simply processing an order was a major undertaking, because a customer team would have to check which parts of the order were from the former Nokia portfolio and which were from the former Siemens portfolio, and then enter different parts of the order into different systems.
To address these challenges, the company launched a Process & IT Consolidation program to standardize numerous business processes and consolidate legacy ERP systems onto one platform. More than 1,000 people were assigned full-time to the program, working in five areas: offering and configuration, sales order management, supply end, demand supply planning and master data. The consolidation program was planned in phases, with rollouts scheduled by geographic region.
Signs of resistance
The complexity and risks of the consolidation program became clear in its initial months. For example, working and conducting business in a merged organization meant dramatic changes for sales and customer teams—changes in processes, technology, product portfolios, and roles and responsibilities.
The companies also had very different operating models. Siemens’ COM division was primarily decentralized, while Nokia’s Network Business Group operated on a more centralized basis, with standardized processes and systems companywide. Cultural challenges existed as well: the two partners had incompatible backgrounds regarding customer service and different attitudes toward formality and reporting hierarchies.
About a year into the consolidation initiative, the global recession hit, making the situation even more stressful. Grander goals of supporting organizational change began to take a back seat to simply hitting quotas and meeting performance goals. Voices of resistance began to be heard across different regions, and it soon became clear that the program was in trouble. One business owner remarked that, “The people from Nokia and people from Siemens started holding on to their old ways of working in almost a religious way. This paralyzed us.” A pilot deployment in Spain in mid-2007 encountered numerous challenges and, by the end of the year, the program team had to delay the first of the country rollouts.
A new direction
To get the change program back on track, executives looked to more closely involve leadership from across the entire organization. What was needed was a comprehensive change program that was not only IT driven, but also business driven. Jyrki Runola, an executive with a broad business background in sales and customer service, was appointed the new program lead.
Runola, who is currently executive director of Nokia Siemens Networks and a member of the operations leadership team, also worked with Accenture, a long-term partner with Siemens and Nokia across multiple areas. As Runola recalls, this outside perspective was essential: “We needed to get everyone to speak the same language, breathe the change together and act as change leaders.”
A rebranded change initiative, the Quote-to-Cash Business Change Program, was launched in spring 2008. One of Runola’s goals for this new phase of work was to make the management of change everyone’s business, not just the work of a separate team. Päivi Koskimaa of Accenture, who led the strategic communications and change engagement at Nokia Siemens Networks, emphasizes that the ultimate goal is to become a “change-capable” organization. “What’s needed with broad transformational challenges like the ones Nokia Siemens Networks faced,” says Koskimaa, “is to see an organizational change program as something that is not separate from everyday business responsibilities and the way people work, but part of it. Changes have to be embedded in how people perform, how they learn and how they are rewarded.”
Building a change network
Nokia Siemens Networks launched a series of initiatives designed to drive the vision for the change across the company, creating a change network of expertise to encourage understanding and support new kinds of behaviors. Several structural moves helped. For example, program governance was redesigned to ensure representation across business functions.
Another priority was executing a stronger internal communications strategy—articulating the program’s goals to the organization but also listening more effectively to people. Social networking applications and interactive virtual sessions brought hundreds of participants together to share lessons about how to make different groups, and the whole company, more successful. Best practices and success stories from different regions were collected to showcase improvements in different areas of the business as a result of the change program.
According to Runola, “We completely changed our way of communicating. Instead of using an overly technical vocabulary, we began using simpler, clearer, business-oriented language. We started to communicate the benefits of the change in a way that could be understood not only at the top management level but also at the grassroots level of the organization.”
Effective change leaders
Nokia Siemens Networks also developed and launched a new leadership training and coaching initiative, creating a network of influential leaders to engage the business and drive broad enthusiasm and support for the change. Runola, along with the Accenture team, understood that to create effective and influential leaders, the responsibilities of change managers had to be mapped against the talent pools from which these managers were chosen. This leadership network began to make a real difference in engaging and inspiring the organization to embrace new ways of working.
Another important strategy for the change program was to use the business case as a way to understand the potential benefits of the change, and to see the impact to the organization articulated in quantifiable terms. Program leadership defined a series of key performance indicators to track improvements in overall business performance and tied incentives to those metrics. This approach helped the company assess progress not simply in terms of hitting program milestones, but on results delivered.
According to Konrad Schuette, the Quote-to-Cash core leadership team member, “Too often, business cases are used to get an approval from management to start an initiative, and then they are forgotten. We have actively used the business case as a tool to track our progress in a realistic and transparent way. It’s important for the change program to work with the entire organization to make the business case come to life.”
Moving forward: A change-capable organization
Overcoming its initial setbacks, the Quote-to-Cash Business Change Program is now seen as a major success for Nokia Siemens Networks. The company has thrived without suffering from the significant performance degradations typically experienced by organizations going through post-merger integration.
Several measurable benefits have been realized as a consequence of the program. For example, analysis of a recent three-month period showed that average on-time delivery performance has been higher for the countries where the program has been deployed compared with other regions. Demand-planning accuracy has increased significantly and the company has also achieved reductions in inventory value and sales backlog.
Consolidation is proceeding rapidly. Today, the business change program is playing a major role in driving the company’s strategic goals of growth, improved customer focus and global consistency. Notes Runola, “Because of this experience, we are now much closer to being a change-capable organization.”
About the author
Craig Mindrum is a strategy and communications consultant and the managing editor of Outlook Online.
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