Wikström (2004) presents another example of a company, Tieto-X. It is the leadingcontract work solutions company in Finland, specialises in the Information Technology field.
After several acquisitions between 2000 to 2002, Tieto-X had experienced an exponentialgrowth. Tieo-X did not have applications flexible enough to meet the growing need for futuredevelopment and growth. Hence, Tieto-X started a total systems renewal process for bothfinancial and operational system in 2002 (Wikström 2004).Environmentally, Tieto-X encountered emergent changes which included the ‘Year 2000’phenomenon and the fact that Finland joined the Economic and Monetary Union. Both led to anincrease in business opportunities due to the higher demands for Tieto-X’s services. At the sametime, both emergent changes intensified competition as it increased entry of foreign firms intothe Finish market (Wikström 2004).Organisationally, several planned change events applied after the emergent changeshappened.
Tieto-X had a fundamental change on its business strategy. It changed from a productorientedto a customer-oriented one. Each salesperson received dedicated customer relationshipsto manage and dedicated braches of industry to serve. It also implemented the CRM system”which identifies, develops, integrated and focuses the various competencies of the firm to the’voice’ of the customers in order deliver long-term superior customer value, at a profit, to well identified existing and potential customer segments.” (Starkey, Woodcock 2002; 267) With theseplanned change events, it strengthens the customer relationships with the company. Also, theCRM system improves customer loyalty and also corporate profitability.
At the same time, therewas also emergent change. Tieto-X had to cope with the turnover of top management as allmembers of the company’s top management have left the company within 2 years. Theirpositions have been replaced with new people. Surprisingly, this turnover has actually speededup the transformation process.Individually, there are planned changes on salesperson’s job descriptions. Salespersonwere required to contact new and old customers more actively instead of managing therecruitment of new experts.
They can hence, generate new contracts with both new and oldcustomers instead of the old customer base and long-lasting contracts.Tieto-X managed to deal with both planned and emergent changes together onenvironmental, organizational and individual level. After changing, it has successfullytransformed into a customer-oriented company which is a competitive advantage. Again, TietoX’ssuccess illustrates that the ability to change is the crucial element in company’s corecompetences. It passed the 3 core competencies tests. First, the emergent changes increased thedemand for its products, and hence, a larger market in the industry.
Second, a successful CRMsystem has implemented which now become the only data store where all transactions aboutcustomer relationships are stored. It benefited the customers as they can feel a personalconnection to the company brand. Lastly, the strong bonding between customer and the companyis something that is difficult for other competitors to procure.
Therefore, with the ability ofchange, Tieto-X has established competitive advantages. It shows that change is an importantelement for a company’s core competences.On the other hand, ability to change may not be a crucial element of the company’s corecompetences in some situations.
When a company has lack of competence or commitment inrecruiting or managing the change process, it is hard for the company to succeed. Also,company’s planning or execution of the change process will also determine the success of thechange. Orlikowski (1995) mentioned that “Changes in the environment put pressure onmanagement to improve the customer service, but it was also management’s receptivity to, andappreciation of, those changes that ultimately determined the precise organizational response”.Hence, it depends on how the companies manage changes in order to establish core competence.
An example is given by Nokia, which was a mobile market leader for several years. In the recentdecade, Nokia has been losing its place at the top of the smartphone market. In 2011, Nokiaannounced to be fully devoted to the Microsoft Windows Phone ecosystem at the high-endmarket, and ditched the original Symbian system. Stephen Elop, the CEO of Nokia believed thatthe Windows Phone Platforms provides unique competitive advantage by having fluid userexperience, a maturing ecosystem and strong business capabilities.
(Amanda, 2013) However,the switch to the Windows Phone platform was so sudden, nearly all stakeholders were shockedwhen the change was announced. Members in the company resist change as they are afraid ofuncertainties and confused about the situations, and worried about losing jobs. Around athousand Nokia employees participated in a protect after the announcement (Helsingin Sanomat2011). Even Bill Gates, Microsoft’s chairman and co-founder, admitted that the Windows Phonestrategy was a mistake (Charles 2013). Nokia should have planned such major change carefully earlier (Amanda, 2013). They should have conducted research of possible solutions to emergentchanges; adapted a well-established planned change management; analysed differentstakeholders, prepared for risk management and prioritisation (Cameron, Green 2012); anddeveloped a better communication channels inside the company.
In contrast, Nike and Tieto-X both accept failure, take responsibility and also reactpositively to emergent changes. They also have well-planned changes which are very innovative.Therefore, companies can establish competitive advantage not because of sheer luck, but becauseof the organized management and innovative strategies taken (Valllabhi 2009) to deal withchange. Ability to change is a crucial aspect of a company’s core competence. But the ability tomanage change is equally important in order to success.