Why Did Nokia Fail? - The Reason Explained

Описание: Why did Nokia fail?
This article presents one of Nokia's reasons for failure and what you can learn to improve your leadership.
A concise timeline of Nokia's important moments:
In October 1998, Nokia became the best-selling mobile phone brand in the world;
Nokia's operating profit went from $1 billion in 1995 to almost $4 billion by 1999;
The best-selling mobile phone of all time, the Nokia 1100, was created in 2003;
In 2007, Apple introduced the iPhone;
By the end of 2007, half of all smartphones sold in the world were Nokias, while Apple's iPhone had a mere 5 per cent share of the global market;
In 2010 Nokia launched the "iPhone killer" but failed to match the competition;
The quality of Nokia's high-end phones continues to decline;
In just six years, the market value of Nokia declined by about 90%;
Nokia's decline accelerates by 2011 and is acquired by Microsoft in 2013.
Nokia's demise from being the world's best mobile phone company to losing it all by 2013 has become a case study discussed by teachers and students in business management classes.
When explaining Nokia's fall many observers found three reasons:
Nokia's technology was inferior to Apple's;
The arrogance among top-level managers;
Lack of vision.
In order to understand its rapid downfall from its position as a world-dominant and innovative technology organisation, Tim O. Vuori, assistant professor in strategic management at Aalto University and Qui Huy, Professor of Strategy at INSEAD Singapore conducted a qualitative study. The results were published in the 2015 paper Distributed Attention and Shared Emotions in the Innovation Process: How Nokia Lost the Smartphone Battle.
The study consisted of interviewing 76 Nokia top and middle managers, engineers and external experts and conducting in-depth investigations.
Here is what Mr Huy and Mr Vuori found:
At that time Nokia suffered from organisational fear;
The organisational fear was grounded in a culture of temperamental leaders and frightened middle managers;
The middle management was scared of telling the truth because they feared being fired;
Top managers were afraid of the external environment and not meeting their quarterly targets;
Executives were afraid to publicly acknowledge the inferiority of Symbian, Nokia's operating system;
They knew it would take several years to develop a better operating system that could compete with Apple's iOS;
Top executives were afraid of losing investors, suppliers and customers if they acknowledged their technological inferiority to Apple;
Top managers intimidated middle managers by accusing them of not being ambitious enough to meet their goals;
Top management was lied to by middle management who felt telling the truth was useless;
Top managers lacked technical competence which influenced how they could assess technological limitations during goal setting; by comparison, the top engineers at Apple were all engineers;
Instead of allocating resources to the achievement of long-term goals such as developing a new operating system, Nokia management decided to develop new phone devices for short-term market demands.
The experts' conclusion regarding why Nokia failed to adapt and compete is this:
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.
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