Nokia Fosters 'Instability'

http://online.wsj.com/article/SB121356401839675677.html

Experts Have a Message for Managers: Shake It Up
By PHRED DVORAK
Wall Street Journal

In January, cellphone giant Nokia Corp. threw itself off balance.
The Finnish company had previously divided its cellphone business into three groups based on market segments: consumer phones, feature-heavy smart phones and business phones. Instead, Nokia executives carved the cellphone unit into two functional groups: those developing the phones themselves and those creating its growing software-and-services offerings.
The reorganization allowed Nokia to focus more attention on software and services, an increasingly important part of its business. It also created an organization that is "unstable by design," because the two units are encouraged to challenge each other, says Mikko Kosonen, a former Nokia strategy chief who advised the executive team on the new corporate structure.
One potential friction point: whether Nokia's software should be reserved for the company's cellphones or marketed to other hardware makers, a question with the potential to affect the profits each unit can make. But units no longer set their own financial targets, one of many tactics that force executives to resolve their differences rather than fight.
That mix of tension and collaboration is designed to "keep the organization awake," says Mr. Kosonen, who recently authored a book on strategic agility with Yves Doz, a professor at the Insead business school in Fontainebleau, France. "The very things that make you great will kill you -- unless you take medicine to stay agile," says Mr. Kosonen.
Nokia's reorganization highlights a growing challenge for companies: how to continually prepare for change -- even when things seem to be working well.