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November 26, 2020

Nokia restructuring plan tested by executive departures

By GlobalData Technology

New Nokia Networks CEO Pekka Lundmark, who took the helm in August, unveiled an aggressive restructuring plan designed to improve the company’s competitive profile against Huawei, Nokia, and a host of other competitors. However, a string of executive departures point to internal resistance to those plans.

In October, Lundmark announced significant changes to the company’s operating model, including the creation of four new P&L-responsible groups: Mobile Networks, IP and Fixed Networks, Cloud and Network Services, and Nokia Technologies. The move signals a shift away from Nokia’s prior focus on end-to-end solutions, the primary theme underlying company strategy for the past five years.

The changes are designed to help the company unlock additional customer value and enhance internal accountability. In addition, the new organizational structure provides each business unit with more autonomy to own and drive investments that directly impact their respective businesses.

High level departures heap pressure on Nokia restructuring plans

Since the announcement, however, several high-profile executives have signalled their intention to leave the company:

  • Barry French, Nokia CMO, announced on LinkedIn 5 November that he would leave Nokia by year’s end after 15 years with the company.
  • Marcus Weldon, CTO and President of Bell Labs, took to Twitter 23 November to confirm news of his plans to leave Nokia after Q1 2020. Weldon has been a major advocate of the end-to-end approach taken by Nokia prior to the current restructuring.
  • TelecomTV reported 24 November that Basil Alwan and Sri Reddy, joint Presidents of Nokia’s IP/optical unit, are planning to depart. Both have been with Nokia since it acquired Alcatel-Lucent in 2016. The backdrop of this announcement is that the IP/optical unit will now be folded into the IP and Fixed Networks group to be headed up by new group President Federico Guillén.

The string of departures puts even greater pressure on Lundmark as he prepares for the next milestone in his restructuring plans: an update scheduled for 16 December in which more details have been promised. Considering the continuous restructuring moves by Nokia over the past few years, new CEO Lundmark will need to convince customers – and apparently his own workforce – that the new plan is the one that will return the company to growth and profit.