Wikström (2004) presents another example of a company, Tieto-X. It is the leading
contract work solutions company in Finland, specialises in the Information Technology field.
After several acquisitions between 2000 to 2002, Tieto-X had experienced an exponential
growth. Tieo-X did not have applications flexible enough to meet the growing need for future
development and growth. Hence, Tieto-X started a total systems renewal process for both
financial 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 an
increase in business opportunities due to the higher demands for Tieto-X’s services. At the same
time, both emergent changes intensified competition as it increased entry of foreign firms into
the Finish market (Wikström 2004).
Organisationally, several planned change events applied after the emergent changes
happened. Tieto-X had a fundamental change on its business strategy. It changed from a productoriented
to a customer-oriented one. Each salesperson received dedicated customer relationships
to 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 these
planned change events, it strengthens the customer relationships with the company. Also, the
CRM system improves customer loyalty and also corporate profitability. At the same time, there
was also emergent change. Tieto-X had to cope with the turnover of top management as all
members of the company’s top management have left the company within 2 years. Their
positions have been replaced with new people. Surprisingly, this turnover has actually speeded
up the transformation process.
Individually, there are planned changes on salesperson’s job descriptions. Salesperson
were required to contact new and old customers more actively instead of managing the
recruitment of new experts. They can hence, generate new contracts with both new and old
customers instead of the old customer base and long-lasting contracts.
Tieto-X managed to deal with both planned and emergent changes together on
environmental, organizational and individual level. After changing, it has successfully
transformed into a customer-oriented company which is a competitive advantage. Again, TietoX’s
success illustrates that the ability to change is the crucial element in company’s core
competences. It passed the 3 core competencies tests. First, the emergent changes increased the
demand for its products, and hence, a larger market in the industry. Second, a successful CRM
system has implemented which now become the only data store where all transactions about
customer relationships are stored. It benefited the customers as they can feel a personal
connection to the company brand. Lastly, the strong bonding between customer and the company
is something that is difficult for other competitors to procure. Therefore, with the ability of
change, Tieto-X has established competitive advantages. It shows that change is an important
element for a company’s core competences.
On the other hand, ability to change may not be a crucial element of the company’s core
competences in some situations. When a company has lack of competence or commitment in
recruiting 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 the
change. Orlikowski (1995) mentioned that “Changes in the environment put pressure on
management to improve the customer service, but it was also management’s receptivity to, and
appreciation 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 recent
decade, Nokia has been losing its place at the top of the smartphone market. In 2011, Nokia
announced to be fully devoted to the Microsoft Windows Phone ecosystem at the high-end
market, and ditched the original Symbian system. Stephen Elop, the CEO of Nokia believed that
the Windows Phone Platforms provides unique competitive advantage by having fluid user
experience, a maturing ecosystem and strong business capabilities. (Amanda, 2013) However,
the switch to the Windows Phone platform was so sudden, nearly all stakeholders were shocked
when the change was announced. Members in the company resist change as they are afraid of
uncertainties and confused about the situations, and worried about losing jobs. Around a
thousand Nokia employees participated in a protect after the announcement (Helsingin Sanomat
2011). Even Bill Gates, Microsoft’s chairman and co-founder, admitted that the Windows Phone
strategy 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 emergent
changes; adapted a well-established planned change management; analysed different
stakeholders, prepared for risk management and prioritisation (Cameron, Green 2012); and
developed a better communication channels inside the company.
In contrast, Nike and Tieto-X both accept failure, take responsibility and also react
positively 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 because
of the organized management and innovative strategies taken (Valllabhi 2009) to deal with
change. Ability to change is a crucial aspect of a company’s core competence. But the ability to
manage change is equally important in order to success.