“We didn’t do anything wrong, but somehow we lost.” – Stephen Elop, CEO of Nokia, during his last speech before being acquired by Microsoft.
In order to really understand how badly Nokia has fallen, here are some important facts to know:
- In October 1998, Nokia became the mobile phone brand with the most sales in the world.
- Nokia’s operating profit increased 4x from 1 BILLION DOLLAR in 1995 to almost 4 BILLION DOLLAR in 1999.
- The Nokia 1100, the highest-selling mobile phone of all time, was created in 2003.
- In 2007, Apple launched the iPhone.
- At the end of 2007, more than 50% of the world’s HP sales were Nokia brands. At that time the iPhone only had 5% of global sales.
- In 2013, Nokia was bought by Microsoft.
What happened in the 6 years between the launch of the iPhone and Microsoft’s acquisition of Nokia that was so devastating that it caused Nokia’s demise?
Nokia’s demise sparked much debate, investigation and was used as a case study on how to properly run the company. After much investigation, the experts found that the biggest factor was NOT the iPhone, innovation, vision, or anything like that.
The biggest factor in Nokia’s demise was its bad corporate culture, which led to internal politics.
At that time, Nokia, which incidentally is the market leader in the HP world, became arrogant, and caused the following culture to emerge:
- At that time Nokia there was an atmosphere of fear throughout the organization.
- The atmosphere is formed because of the culture of temperamental leaders and fearful middle-level managers.
- Mid-level managers are afraid to speak up because they are afraid of being fired.
- Top-level managers are afraid of external factors and do not achieve targets.
- Executives are afraid to publicly admit that Nokia’s Symbian Operating System is worse than the competition.
- They know that it will take several years to create an operating system that can compete with Apple’s iOS.
- Executives fear losing investors, suppliers, and customers if they admit that their OS is not as good as Apple’s.
- Upper-level managers intimidate middle-level managers by saying that they are not ambitious enough to achieve their targets.
- The top-level managers were lied to by the middle-level managers because they thought that telling Nokia’s top brass was the truth in the marketplace.
- Top-level managers do not have sufficient competence to assess and influence their technology limitations, and this is evident in the preparation of their work plans. In comparison, the top-level managers at Apple are all technically savvy Engineers.
- Therefore, instead of allocating resources to achieve long-term goals such as RnD in the new OS, Nokia has instead chosen to allocate resources to RnD for new HP Hardware for short-term goals.
Bittueditx