Take off the Blinders: Lessons to Learn From Nokia’s Woes

In 2013, during the press conference to announce NOKIA being acquired by Microsoft, the CEO of Nokia ended his speech by saying: “We didn’t do anything wrong, but somehow, we lost.”

With him and his management team distressed, he added, “we have done nothing wrong with our business, but the world has changed very quickly. We missed out on learning, we missed out the change, and so we lost a valuable opportunity that was at hand to become a giant company.” The message is that companies, however big or small need to take note of changes, and act in time or they will be disqualified from the competition. Nokia, once a lead player in the mobile telecomms space, failed to keep pace with changing customers’ needs and did not want to adapt to the market dynamics. Instead of adopting Android (like everyone else at the time), “it stubbornly stuck” with Symbian (in the pre iPhone days). Nokia also failed to update its software offerings and only focused on hardware. There was “distinct lack of vision, discord at top level on strategy and the technology was inferior to Apple’s which went on to dominate the space to this day”.

“Nokia’s ultimate fall can be put down to internal politics. In short, Nokia people weakened Nokia people and thus made the company increasingly vulnerable to competitive forces. When fear permeated all levels, the lower rungs of the organisation turned inward to protect resources, themselves and their units, giving little away, fearing harm to their personal careers. Top managers failed to motivate the middle managers with their heavy-handed approaches, and they were in the dark with what was really going on”. Tim O. Vuori, assistant professor in strategic management at Aalto University and Qui Huy, Professor of Strategy at INSEAD Singapore, 2015, Distributed Attention and Shared Emotions in the Innovation Process: How Nokia Lost the Smartphone Battle.

Some background: Since its heyday in the 1990s and early 2000’s, Nokia is no longer recognizable as the company and brand that led in mobile communications. Although the first acquisition by Microsoft failed to live up to expectations, Nokia’s network infrastructure is an attractive acquisition target to players like Microsoft. Microsoft and Nokia have history. In 2013, Microsoft paid over $7 billion for Nokia’s handset business in an ill-fated attempt to provide a third alternative to iPhone and Android handsets with Windows Phone. This strategy failed, with the purchased assets from Nokia written off in 2015, resulting in thousands of job losses. Although Nokia has since re-entered the mobile phone business, it is Nokia networking arm that would interest the potential acquirers with the US government banning telecoms providers from using equipment from Chinese suppliers such as Huawei.

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