Nokia announces high-level strategic principles and a new operating model that will be effective on January 1, 2021.
“Our industry is undergoing profound changes. Industrial automation and digitalization are increasing customer demand for high-performance networks, with a trend towards open interfaces, virtualization, and cloud native software. This will revolutionize how we design, deploy, manage and sell our products and solutions,” said Pekka Lundmark, President and CEO.
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“As we work to renew our strategy, we will ensure we are well positioned to leverage these trends, improve our performance and position the company for long-term value creation.”
At this point, Nokia’s strategy review has reached four conclusions. First, that technology leadership will be the top priority; second, that the company’s current customer base, consisting of telco operators and enterprises (including webscale companies), provides a solid platform for value creation; third, that there is a longer-term opportunity to move into higher-value “network-as-a-service” business models; and fourth, that end-to-end as a core strategic idea will be replaced with a more focused approach, with each of the company’s new business groups having a distinct role in the overall strategy.
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Nokia will have four P&L-responsible business groups structured around unique customer offerings, with ownership for becoming one of the market leaders in their respective sector. They will also need to demonstrate a clear route for delivering shareholder value with return on capital employed as a key metric.
“Our goal is to better align with the needs of our customers, and through that increase accountability, reduce complexity and improve cost-efficiency. Going forward, we will have a more rigorous approach to capital allocation and will invest to win in those segments where we choose to compete,” said Pekka Lundmark.