Nokia CEO Pekka Lundmark shared more details about Nokia’s transformation strategy. He said that this action will continue until the end of 2023. Nokia’s executive team will be reduced from 17 to 11. Moreover, at least 14,000 employees will be transferred from corporate functions to Nokia’s four new business groups. They have already appointed the leaders of these four business groups.
In addition, the more important decision that may result in part of Nokia’s business divestiture or transition to other frameworks has been temporarily postponed. The company will officially announce its new corporate structure with four main business units on January 1, 2021.
Nokia did not provide financial guidance information for 2021 or the next few years. But the company expects to share more details with investors in a few months.
Tommi Uitto will serve as the president of the Mobile Networks business group. This is Nokia’s largest business. But it is also one of Nokia’s biggest challenges because the company will continue to implement a multi-year plan to switch from high-cost SoCs to FPGAs. The Mobile Networks business unit includes Nokia’s RAN, microwave wireless link products, and network planning, deployment, and support services. They do not expect the business unit to return to profitability in 2021. But Pekka Lundmark said that he believes the unit will eventually be able to improve its financial performance.
Primary goal of the company
He said that the company’s primary goal is to “replicate the success of 4G in the 5G field“. “We expect that profit margins (in 2021) will be roughly zero. But there will be significant improvements in the long term. Next year will be a challenging year, and profit margins and pricing pressures in North America will be particularly strong.”
Up to now, Nokia has reached 133 5G commercial agreement cooperation. Pekka Lundmark said that the company is going to improve its market position in Open RAN and virtualized RAN. And they also plan to expand their market share in private enterprise private networks.
Also read: Nokia Plans To Build the First 4G Network On The Moon
Federico Guillén will lead the Network Infrastructure business unit (including Nokia’s IP, optical network, fixed network, and submarine network). Raghav Sahgal will lead the Cloud and Network Services business unit (including communications software, mobile core network, enterprise business, cognitive, and managed services). And Jenni Lukander will lead the Nokia Technologies business unit (including Nokia’s patents, technology, and brand licensing)
The company’s organizational structure will be very simple
Pekka Lundmark also said that they established these four business units based on typical purchases of Nokia’s customers to reduce complexity and decentralize decision-making power. He said that the president of each business group will be responsible for the performance of their respective departments.
Pekka Lundmark said: “The current organizational structure is still valid until the end of this year. This organizational structure is actually quite complex in many aspects, and the management team is huge. Under the current model, even for a fairly simple mobile access network transaction, there are five management team members who are responsible for the transaction to some extent. And it requires a lot of coordination and work.”
In addition, he said that starting from January next year, the company’s organizational structure will be very simple. They will focus on one business group. It is part of the entire network, and other parts of the network will follow the same logic.