et's face it - a lot of us owned a Nokia at the beginning of the 2000s. In fact, they were at their peak, being the tech industry leader in mobile phones.
Where did they go? And why? To make it clear, Nokia is still active in the phone market and tech industry, with smartphones targeting the low and middle-budget markets. It’s just that Microsoft owns the old giant’s operations now.
The story of Nokia’s downfall has been discussed everywhere – even in universities to be taught in business management classes as a case study not to repeat the same mistakes. We do not expect this to change anytime soon - as the story is one hell of a bad example of business and people management.
When Steve Jobs introduced the first iPhone to the market, the mobile phone industry was dominated by Nokia, which at the time was selling over half of the total number of phones demanded worldwide. But for once, we see that even a giant such as Nokia can fall in just a matter of years if they fail to envision the future of new technology and manage in-house problems. But you might wonder - how can you go from the go-to mobile phone to being pretty much irrelevant in such a short period of time? Well, it’s not that hard - if one bad decision is followed by another one and so on, and it all started from…
Company culture. “Company culture gone wrong” can be the tagline associated with Nokia.
But let’s start by creating some context. Nokia was always a company that could reinvent itself. With a history that began in 1865, we can expect the company to have a long list of endeavors over the years. They were even in the rubber galoshes business in the 20th century.
But when the tech company tasted its success in the mobile phone industry, it moved its focus fully on developing its products. And believe it or not, their Nokia 1100 and 1110 are the most sold mobile phones ever.
However, the high-level management felt their brand was simply too big for failure, and they got cocky. And it makes sense! After all, the company had a strong hardware infrastructure and a lot going for it. This confidence, unfortunately, caused them to become complacent and ignore the digital age, and as a result, their mobile market share plummeted. It’s funny to think about it - as Nokia actually considered touchscreen phones back in the 1990s - but they never fully built on that idea.
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And they couldn’t see the importance of software, new technology, and user experience. Their whole company was focused on hardware engineering teams that did not work closely with the software teams. For instance, the CEO of Nokia at the time, Jorma Ollila, had a strong focus on hardware engineering and was not interested in the idea of software, even after Apple released the first iPhone. And that’s not all! It was becoming such a corporate nightmare that Nokia's culture began to diverge from its core values.
Nokia did not pay attention to the switch in the consumer’s preferences when the iPhone appeared and Google’s Android quickly followed. With the year 2007 coming to an end, iOS and Android were ready to take over the phone market.
It was time for Nokia’s management to worry, put things on the table, and acknowledge the threat. If only…
The development of its own operating system was a very slow and unproductive process for Nokia. To make matters worse, the fear of failure caused the middle-management teams to become paralyzed and the progress ground to a halt. Higher management, on the other hand, reported feeling fearful because they didn’t know how to acknowledge the elephant in the room since they did not want the company’s shares to drop, their bonuses to fall, and their status to diminish.
If Nokia had been able to take the leap of faith and move forward with the development of its operating system and new technology, it could have seen success in the market and potentially become a major player in the industry. This would have allowed the company to increase its market share, increase its profits, and make the company a more attractive investment.
But what do they find as a solution? Lying.
Middle management started lying about the deadlines and the progress they were making. Higher management started lying to shareholders. Not a great look! After all, higher management was not capable of checking the progress since they weren’t engineers at their core and had no new technology. Tell the management what they want to hear was the new mindset adopted at Nokia.
So, switching to Android in time might have been a lifeboat worth taking for Nokia, who should have stayed competitive in the phone market and tech industry.
Who knows where Nokia would be today if they had better management and a feelings-sharing system that didn’t make you feel fear? Or perhaps a better vision and grasp of reality. The history can’t be rewritten, though, and the actions that Nokia took after 2007 secured its fall.
Without focusing all their effort on innovating their operating system and taking note of what Apple and Google were doing well, Nokia thought they knew the consumers better. They had success before, and they could do it again. How? By serving more hardware. They started developing more phone models that were in demand everywhere but couldn’t see the bigger picture. By the time they decided to enter the smartphone market with their “iPhone killer”, it was not only too late, but their product was full of issues.
By 2011 Nokia started to work with Microsoft to try and save each other’s mobile phone operations. Nokia adopted the Windows operating system, and customers were once again unsatisfied with the result. Two years later, Nokia was acquired by Microsoft, and we are left with a great story worth learning from.
However, the company didn’t disappear.
They continued manufacturing phones but competed in the low and mid-range budgets and did a great job. Nokia also focused on other aspects of technology and telecommunications as was expected from a company that used to bring innovation to the market every time.
We are optimistic about Nokia’s future and the impact it will have in the transition to a more digitalized and integrated society. As of February 2023, the company announced its first rebranding in more than 60 years, presenting a new modern logo that completes a fresh rebranding. For the first time in the last few years, Nokia is trying hard to get over the preconception that they are only a mobile phone company. The rebranding comes with the message that the company is a B2B-oriented company, focused on digital and technological innovations, promoting collaboration and communication in a world that is facing a new disruptive Industrial Revolution.
By
Daria Dondea
•
September 3, 2024 9:00 PM
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