Extensive Case-Study on the Business Model of Nokia | IIDE
By Aditya Shastri
According to the stats Nokia the multinational company itself was the best cell phone developer and seller in the market in the early 21st century and was recognized worldwide. Even after they fail in the smartphone era, Nokia keeps prevailing with new technologies in the market. They proved that they won’t give up and will get their name back in the technology world with other new technologies.
This blog highlights the business model of Nokia, Segments of the business, e-business strategy, target market, and other features. See also our other blog that describes Nokia’s, Marketing Mix .
Let’s start with additional corporate knowledge.
Founded in 1865, Nokia Corporation is a Finnish multinational firm providing telecoms, IT, and consumer electronics. The headquarters of Nokia are in the Espoo, Finland, metropolitan Helsinki region, although the original origins of the corporation are in the Pirkanmaa region near Tampere. In 2020 Nokia employed roughly 92,000 employees in more than 100 countries, operating in more than 130 countries, and generated a yearly income of approximately €23 billion. Nokia is a Helsinki Stock Exchange and New York Stock Exchange public limited business. The Fortune Global 500 is the world’s 415th largest corporation measured its sales by 2016 and its peak in 2009 was 85th. Over the last 150 years, the corporation has been active in several industries. It has been created and linked with rubber and cables for a considerable period, although since the 1990s it has been focusing on large-scale telecommunication infrastructure, development of technologies, and licensing. In the mobile telephony business, Nokia made substantial contributions, helping to design the GSM, 3G, and LTE standards. Nokia was the world’s largest mobile and smartphone provider for a decade starting in 1998.
Business Model of Nokia
A business model is a plan that identifies income streams, customer base and finance items, and specifics for the successful operation of a business. In essence, there are nine components for any business model, two of which are customers and value proposals. The segments of customers focus on which market part a business chooses to cater to, whereas value proposals are described as solutions for customer issues and the customer wants, providing value.
Let’s dive deeper into Nokia’s infra and core…
1. Business Segments
- Nokia Networks : This generates revenues from its portfolio of goods and services which include the infrastructure of access to mobile and fixed networks, IP and optical routing, mobile and convergent core networks, as well as platforms and applications.
- Nokia Licensing: This sector focuses on Nokia Intellectual Property Licensing, including Nokia Brand patents, technology.
2. Value Chain
It is crucial to consider the value chain of the industry to better comprehend Nokia’s position in the mobile phone market. Total phone users do not buy from Nokia directly – instead, they regularly enrol with the service providers’ cellular call plans. After constructing each handset with several components supplied by other suppliers, Nokia sells its handset to the mobile service provider and/or distributor.
3. Operations and Resources
Managers in NokiaMobile87 were faced with challenges of component defects, product shortcomings, inefficient production, and the ensuing complaints from intelligent consumers and cost overflow in the proceedings to guarantee product quality and supply chain efficacy. These procedures have been developed and improved via investments. Furthermore, in particular, following the dispute with Motorola on the subject of patent matters in the U.S. at the end of the 1980s, processes in the management of intellectual property rights were underway. For NokiaCorp87’s leaders, these procedures – for any company unit – had not yet been of major concern; nevertheless, NokiaCorp95 was important to product design and quality and the effectiveness of the supply chain. NokiaCorp95 also inherited and further enhanced the importance placed on these processes from NokiaMobile87. The development of products and operations, much as it was in NokiaMobile87, became a fundamental part of the entire company. This was reflected in reducing product development lead times and increasing corporate R&D spending and university collaboration both in Finland and abroad, together with enhancing product quality and operational performance.
4. Connecting People
Nokia seeks to connect more people online by creating convincing, cheap, and localized mobile experiences. By developing assets like platforms, software, and applications Nokia will realize future investments, bringing their consumers a more advanced, more modern mobile experience and offer developers revenue opportunities. As well as looking for new ideas, Nokia wants to keep the company, customers, developers, and consumers in line with its traditional, respected, and beloved services such as touch screen, type, dual sim maps, maps, and browsers. Market research has shown that 200 million people are using Symbian worldwide and Nokia is modernizing the platform, including investments with new features and hardware advancements such as GHz+ processing capabilities.
5. The Partnership
They are planning to combine strength with Microsoft to recover supremacy in the smartphone market to achieve our objectives. The company aims to build a global ecosystem like no other by uniting forces. This ecosystem provides a unique and creative product portfolio with exceptional assets from both organizations. Nokia will assist drive and define the platform’s future with expertise in hardware optimization, software adaptation, and language support through Windows’s use as its principal platform. They combine service assets to facilitate applications for developers to impact Nokia’s worldwide scale; Nokia Maps will be integrated into Microsoft Marketplace as the core of important Microsoft assets, such as AdCenter, Bing, and the Nokia Application and content store. The advantage of Nokia’s partnering with Microsoft is that Nokia will have first access and an exclusive deal with Microsoft, allowing them to bring the new operating system to their competitors in Microsoft Windows.
- Online Market
- Social Network
- Different web pages
- Links from partners
7. Target Market of Nokia
The target segment for Nokia comprises a specific consumer group, which concentrates its marketing efforts like several ages of individuals. Two key factors may be the Nokia objective: firstly, profits, and secondly, consumers who need communication. Nokia aims at consumers. It is mostly targeted at consumers aged 19-39 looking for fun, for example. It is intended to attract them and promote themselves in the market by using this particular logo.
8. eBusiness Strategy of Nokia
For Nokia’s e-business, the presence of web users is not merely for quick sales. Nokia uses the Internet and IT’s collective power to vitally transform its strategic business and procedures. Nokia is one of the world’s most successful initiatives to develop a successful relationship with the target market through its e-commerce and e-business solutions. Nokia e-business was established in 2001 under the name Nokia Payment Solution (Nokia, 2010). The Nokia Payment solution is a unique program that allows payment services providers, including financial institutions, distributors, and consumers, to mediate the payments of three parts. This platform allows Nokia through a wide range of payment mechanisms including debit cards, credit cards, operators’ prepaid and post-payment systems to collect, manage and clear payments initiated through mobiles and other Web-enabled terminals. Nokia provides the Nokia Signet Server, which uses digital signatures to authenticate and pay non-repudiation transactions. Client and server connection verification and digital signature are complied with utilizing public key (PKI) wireless technology.
9. Organizational Structure at Nokia
The organizational structure of Nokia is horizontal and offers increased flexibility and rapid lines of communication across departments. The device unit monitors the development and management of the range of mobile devices for all main customer sectors. The solutions department continuously develops solutions ensuring that the integrated content and personalized services of a particular mobile device and the output of these three components contribute to a leading mobile phone for the end-user. The unit of solutions works closely with other departments to offer these solutions.
Overall, Nokia won the majority of the world with its tremendous technological expertise and return to society. It truly sets a precedent for paving this world’s new technology period, as well as for the future. It certainly revolutionized the organisational structure of Nokia, and split the organization into 4 business units, thanks to its fantastic business model and its great digital marketing strategy. The mobile telephone market has undergone great changes over the last two decades, with unforgettable products and quick market expansion. The market growth remains ongoing. Nokia employs creative marketing approaches to battle competition and maintains its market share through strong positioning and competitive strategies. In recent years, the company’s sales performance has risen considerably, however, they have lost some of their market share to new competitors. The company will further boost the possibilities of success in the market if the company continues to adjust its marketing policies according to the market’s needs and wishes.
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The Rise and Fall of Nokia
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The Real Cause of Nokia’s Crisis
- Michael Schrage
Nokia’s technology isn’t a root cause of its current crisis. Don’t blame its engineers and designers either. The company still knows how to innovate. There’s a simpler and more strategic explanation for why this once-perennial market leader became second-rate. Nokia ignored America. The company simply refused to compete energetically, ingeniously and respectfully in the U.S. […]
Nokia’s technology isn’t a root cause of its current crisis. Don’t blame its engineers and designers either. The company still knows how to innovate . There’s a simpler and more strategic explanation for why this once-perennial market leader became second-rate.
Nokia ignored America. The company simply refused to compete energetically, ingeniously and respectfully in the U.S. America was treated as an innovation afterthought. Nokia tried to get away with preserving its market dominance in Europe and growing its leadership in Asia. The richest country in the world was, literally and figuratively, a third-class priority for the Finnish giant.
In scarcely five years, the disruptive emergence of Apple’s iPhone and Google’s Android revealed the magnitude of this strategic blunder. You can’t be a genuine global innovator if you’re a loser in America. Look at the numbers: From 2009 to 2010, Nokia’s global share of the smartphone market dropped from almost 47% to roughly 38%. Nokia’s North America numbers are even more eye-opening: Those numbers dropped from not quite 3.5% to under 3%. Nokia is barely a marginal smartphone player in America, where it accounts for barely 7% of Nokia’s smartphone business. That’s made the U.S. a poor platform for innovation.
The iPhone’s global share now approaches 16%. Android’s global smartphone share has shot from 4% in 2009 to almost 23% in 2010. In the U.S., their shares are 24% and 39% respectively. Each of Nokia’s most ruthless rivals has roughly 10 times more share of America’s market than it does.
Although China, India, and Latin America are undeniably huge potential markets, companies ignore the world’s richest country, its consumers, and its innovators at their peril. Nokia’s unwillingness or inability to bring its best game to America has undermined its brand as both a technical and market leader. Marginalizing America allowed two of Nokia’s most dangerous competitors to swiftly, safely, and smartly out-innovate it.
If an American global market leader treated India, China, or Brazil so dismissively, its top management would (rightly) be excoriated as insular and arrogant. But Nokia’s strategic choices have left it with a comparable outcome: an inability to learn, grow or profit in a market demonstrably hungry for mobile innovation. Behaving as if America doesn’t matter takes a peculiar ignorance or arrogance. It’s not an accident that Nokia’s (relatively) new CEO is a North American .
While celebrating ‘ reverse innovation ‘ as a way to import novelty into posi-industrial markets may be popular and politically correct, America’s entrepreneurs and consumers surely deserve at least as much attention as their Asian and European counterparts. America’s wealth of ideas remains greater than the wealth of its households. Only a foolish firm thinks otherwise.
Nokia’s new deal with Microsoft may or may not be the beginning of an essential turnaround. But the larger lesson here goes well beyond mobile technology and underserved geography. Real leaders do well wherever there’s real competition. They don’t de facto abandon the world’s wealthiest markets because they think they can do better elsewhere. Most important, they respect the inarguable reality that, while global innovators can emerge from anywhere, they are still most likely to emerge from the place where Google, Apple, and Facebook began. Techno-entrepreneurs who want to win in the world still need to win in America.
- MS Michael Schrage , a research fellow at MIT Sloan School’s Center for Digital Business, is the author of the books Serious Play (HBR Press), Who Do You Want Your Customers to Become? (HBR Press) and The Innovator’s Hypothesis (MIT Press).
Nokia Change Management Case Study
Nokia is a company that has undergone significant change over the years, transforming itself from a mobile phone manufacturer to a leading player in the telecommunications infrastructure market.
This transformation was driven by a range of factors, including changes in market conditions, advancements in technology, and shifting customer needs and preferences.
However, perhaps the most important factor in Nokia’s successful transformation was its approach to change management.
In this blog post of Nokia’s change management case study, we’ll examine key strategies and tactics that the company employed to drive its successful transformation.
By examining the lessons learned from Nokia’s experience, we can gain valuable insights into effective change management and the critical factors that are required for a successful organizational transformation.
Let’s start reading.
Brief History of Nokia Journey of Change
Nokia was a Finnish company that produced a wide range of products, including paper, rubber, and cables. It was not until the 1980s that Nokia started focusing on telecommunications equipment, but even then, it was still a relatively small player in the industry.
In the late 1990s, Nokia made a strategic decision to focus solely on mobile phones, which at the time were rapidly growing in popularity. Nokia recognized the potential of the mobile phone market early on and invested heavily in research and development to create innovative and user-friendly devices.
Nokia’s decision to focus on mobile phones paid off, and by the early 2000s, the company had become the world’s largest mobile phone manufacturer, with a dominant market share. Nokia’s success was due to its ability to offer a wide range of phones at different price points and to develop cutting-edge technology such as the first mobile phones with built-in cameras and internet connectivity.
However, Nokia’s dominance in the mobile phone market was short-lived. The company struggled to keep up with the rapid pace of technological innovation and the rise of new competitors, such as Apple and Samsung. As a result, Nokia’s market share declined sharply in the late 2000s and early 2010s, and the company eventually sold its mobile phone business to Microsoft in 2014.
Nokia refocused on telecommunications infrastructure and services. It was a again a success story. In 2015 Nokia acquires French telecommunications equipment company Alcatel-Lucent.
What are those external and internal factors that caused change?
There were several external and internal factors that led to Nokia’s change management and transformation from a mobile phone producer to a telecommunication infrastructure service provider. Here are some of the key factors:
- Increased competition: The rise of new competitors such as Apple and Samsung in the mobile phone market put pressure on Nokia’s mobile phone business, leading to declining market share and profits.
- Rapid technological change: The rapid pace of technological innovation in the mobile phone industry made it difficult for Nokia to keep up and remain competitive.
- Shift towards smartphones: The shift towards smartphones and the decline of feature phones also contributed to Nokia’s decline in the mobile phone market.
- Opportunities in telecommunication infrastructure: The growing demand for 5G networks and other telecommunications infrastructure services presented an opportunity for Nokia to diversify and expand its business.
- Strategic decision-making : Nokia’s leadership recognized the need to adapt to changing market conditions and made the strategic decision to shift its focus towards telecommunications infrastructure services.
- Strengths in telecommunications: Nokia had a strong history and expertise in the telecommunications industry, which gave it a foundation to build on in expanding its business.
- Investment in research and development: Nokia continued to invest in research and development, allowing it to develop new products and services in the telecommunications infrastructure market.
- Acquisitions and partnerships: Nokia made strategic acquisitions and partnerships to expand its capabilities in telecommunications infrastructure services, such as the acquisition of Alcatel-Lucent and the partnership with Xiaomi.
07 Key Drivers of successful change management of Nokia
The successful change management of Nokia from a mobile phone manufacturer to a telecommunications infrastructure provider was driven by several key factors. Here are some of the most important drivers:
1. Clear Strategic Direction
Nokia’s clear strategic direction helped guide decision-making at all levels of the organization, ensuring that all stakeholders were aligned towards common goals and objectives. This helped Nokia to allocate resources more effectively, ensuring that investments were directed towards initiatives that supported the company’s long-term goals.
The leadership and employees focused its efforts on key priorities, such as developing new products and services in the telecommunications infrastructure market, and helped to minimize distractions from other activities that were not aligned with the company’s strategic objectives.
2. Agility and Adaptability
Agility and adaptability are important characteristics for organizations looking to succeed in a rapidly changing market environment. Nokia’s ability to demonstrate both agility and adaptability was key to its successful transformation from a mobile phone manufacturer to a telecommunications infrastructure provider. Nokia was able to quickly recognize and respond to changing market conditions and pivot its business towards new opportunities, such as the growing demand for telecommunications infrastructure services.
3. Research and Development
Nokia’s continued investment in R&D played a critical role in its successful transformation from a mobile phone manufacturer to a telecommunications infrastructure provider. By investing in R&D, Nokia was able to develop new products and services in the telecommunications infrastructure market and stay ahead of its competitors. This allowed the company to offer innovative and cutting-edge solutions that met the evolving needs of its customers. Additionally, Nokia’s investment in R&D helped the company to build a strong intellectual property portfolio, which further strengthened its competitive advantage in the market.
4. Operational Excellence
Nokia’s focus on operational efficiency and continuous improvement was a critical factor in its successful transformation from a mobile phone manufacturer to a telecommunications infrastructure provider. By streamlining its operations and reducing costs, Nokia was able to improve its competitiveness and profitability in the highly competitive telecommunications infrastructure market. This focus on operational excellence helped the company to optimize its production processes, reduce waste, and improve product quality, which in turn helped it to deliver products and services to its customers more efficiently and at a lower cost.
5. Strong Leadership
Nokia’s success in transforming itself from a mobile phone manufacturer to a telecommunications infrastructure provider was due in part to the strong and experienced leadership of CEO Rajeev Suri, who played a key role in leading the company through the transformation process. Suri’s leadership was critical in rallying employees around the new strategic direction and ensuring that all stakeholders were aligned towards common goals and objectives. Suri also provided clear direction and guidance to the organization, helping to steer the company through the challenges and uncertainties of the transformation process.
6. Cultural Change
Nokia’s success in transformation is also due to cultural change. Nokia encouraged employees to be more innovative and agile in their work, fostering a culture of experimentation and continuous improvement. The company also emphasized the importance of collaboration and teamwork, encouraging employees to work together to solve complex problems and achieve common goals. Nokia invested in employee development and training, helping to foster a culture of continuous learning and development. This cultural shift helped to create a more flexible, innovative, and agile organization that was better able to adapt to changing market conditions and drive the company’s successful transformation.
7. Acquisition and Partnerships
Acquisitions and partnerships are critical tools that Nokia used to expand its capabilities and build a competitive advantage. By acquiring companies with complementary products and services, Nokia was able to expand its capabilities in telecommunications infrastructure services, giving the company a competitive advantage and helping it to build a comprehensive portfolio of products and services. Additionally, by partnering with other companies in the industry, Nokia was able to leverage the strengths of its partners to deliver innovative solutions that met the evolving needs of its customers.
Nokia’s successful transformation from a mobile phone manufacturer to a leading player in the telecommunications infrastructure market is a powerful case study in effective change management. By adopting a clear strategic direction, investing in research and development, focusing on operational excellence, fostering a culture of innovation and collaboration, and pursuing strategic acquisitions and partnerships, Nokia was able to adapt to changing market conditions and pivot its business towards new opportunities. Ultimately, Nokia’s transformation serves as a powerful example of how organizations can successfully adapt and evolve in response to changing market conditions, leveraging their strengths and capabilities to drive growth and success in new markets and industries.
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Nie wieder prokastinieren mit unseren Lernerinnerungen.
We didn't do anything wrong, but somehow, we lost."
- Stephan Elop, ex-CEO of Nokia
Once a booming company, Nokia is considered as an example of ' change management failure'. So, why did Nokia fail to implement and manage change? What caused Nokia to fall behind its competitors? Let's take a look.
Introduction to Nokia
Change is not a new thing for Finnish telecommunication giant Nokia. The company was founded in 1865 on the banks of the River Nokia, as a single paper mill operation and moved in different industrial sectors like rubber boots, cable, paper products, tires, televisions, and finally mobile phones. The company we see today that is focused on telecommunications began its journey in 1990.
The first GSM call was made in 1991 using Nokia equipment. By 1998, Nokia was the best-selling mobile phone brand in the world. In 2001, Nokia launched its first phone with a built-in camera, and by 2004, Nokia 3G phones could capture video, browse the web, download music, watch TV on the move, and more. In 2004 the Nokia corporation reduced the number of its business units to four. The change was made in a week. This was aimed at helping Nokia meet consumer needs.
The year 2007 can be termed as 'turning point' for Nokia. It is where its downfall began. No, it is not because Apple launched the iPhone, it is because the company recalled 46 million phones due to potentially faulty batteries. Nokia partnered with Microsoft in 2010 to compete with the iPhone but it did not claim Nokia its throne back. Finally, Microsoft bought Nokia's mobile manufacturing unit for £4.6 bn in 2013 just to sell it in 2016 to HMD and Foxconn.
With all these ups and downs, Nokia is far from a dead company. Nokia's phones returned to the market in 2016. Nokia is mainly concentrating its attention on telecommunication 5G equipment. In 2021, Nokia is hoping to expand its 5G network solutions in Europe and Western countries.
What is change management?
Strategic change is a change in a company's scope, resource planning, competitive advantages, and synergy. Changes can be incremental (gradual changes) or disruptive (sudden changes).
Change management is the process of managing responses to changes in the internal and external environment of a business.
It is the leadership 's responsibility to lead the company into a changing phase. The organisational culture plays a crucial role in implementing change. It is imperative to say that it is not the organisation that changes but each employee in the organisation does. The vision and ability of leadership to make fast decisions help smoothen the transition.
The Nokia change management failure is a great example of what can happen if leadership resists change.
Analysis of key drivers of change for Nokia
In the case of Nokia, external influences forced the company to change. The telecommunication market was developing fast and Nokia failed to keep up with it.
The external influences of the industry included:
The competitive environment
Nokia ignored the threat posed by Apple when it launched the iPhone in 2007. The iPhone did not use a QWERTY keypad but the touchscreen. The iPhone had better software compared to Nokia.
Google introduced Android in 2008. Other major players like Samsung, Huawei, and Motorola jumped on it but Nokia ignored it. Nokia did not accept android but rather started developing the Symbian operating system.
First-mover advantage refers to the benefits enjoyed by the firm as a consequence of its early entry into a new market.
Nokia missed an opportunity to launch android phones and touch screen phones as well. This opportunity was captured by Apple when it launched a full touch screen iPhone.
Nokia change management failure
In the year 1998, Nokia was the largest cell phone maker and overtook Motorola. This move shocked many business gurus back then. So what happened if Nokia was the market leader? Nokia failed because it resisted the change. Nokia clung to its fundamental ways and did not change with market developments. The reasons for Nokia's change management failure are as follows (see Figure 1 below).
Not accepting Android: Nokia leadership did not see the android operating system as an advancement. They believed that customers prefer QWERTY keypad phones over touch screen phones. At the same time, companies like Samsung and Motorola launched Android-based, cheap, and user-friendly phones. With the launch of Android and iPhones, the demand for touch screen smartphones increased exponentially. Nokia realized their mistake and they introduced the Symbian operating system. Symbian was inferior when launched compared to Android. By then, Samsung and Apple had made a strong impact on the smartphone market.
Shaking hands with Microsoft: Microsoft partnered with Nokia to launch Windows phones when Microsoft itself was making losses. In this case, two negatives did not make a positive. Windows phones were not successful because there was nothing new for customers to switch from their old phones. The lack of innovative features made the windows phone a failure. Nokia was on brink of bankruptcy due to huge losses. On the other hand, Apple and Samsung were innovating, launching new product lines, and taking over different markets.
Failed umbrella marketing strategy: Another factor that contributed to the downfall was the wrong marketing strategy.
Umbrella branding can be defined as when a company sells different products under the same brand name.
Samsung 'Galaxy' series is one such example of Umbrella branding. Nokia tried to do the same under the 'Lumia' series of phones but as there was no uniqueness as compared to its competitors, the Lumia series could not fetch any success for Nokia. Nokia faced problems with branding and distribution that led to practically no sales for Nokia mobile phones.
Not working enough on software: Anyone who has used Nokia phones will surely vouch for the sturdy hardware of the Nokia phone. But when it comes to software, Nokia has taken a back seat. Nokia did not try to change software innovatively and quickly enough, giving other major players an upper hand in business. Android had already gone through some iterations when the first version of Symbian was launched. Employees knew Symbian would take years to catch up with Android. Employees did not convey actual problems to management because they thought their efforts would go in vain and rigid management would not heed to it.
Nokia thought they were too big to fail: Nokia enjoyed customer loyalty when it was at its peak of success and believed it would still be the favorite option of mobile phone buyers. This did not happen (even when Nokia finally accepted Android). Nokia is still struggling to improve the software at its core.
Not innovating enough: Apple and Samsung launch at least one flagship phone every year with some innovative advancements. Nokia is far too behind to catch up.
Dysfunctional organisation: Nokia opted to be a matrix structured organization in 2004. It caused many conflicts as many managers had equal power. It led to the power struggle in some departments and complete dysfunction in others. Some executives left Nokia and many workers lost trust in management . Employees became insecure regarding their jobs and started to hide facts. Many employees knew Symbian was way behind the Android but engineers did not tell the truth to the higher management believing that it is of no use. The tagline of Nokia is 'Connecting people' but during those days it seems like employees failed to connect with each other.
Studying Nokia change management failures has helped many companies to avoid pitfalls. We can apply change management models and processes to understand what Nokia did wrong when external factors forced Nokia to change.
Change management Nokia example: Lewin's force field analysis
Kurt Lewin proposed a model, the Force Field Analysis , which provides an overview of the different factors and issues that influence change within an organization. If influencing and restraining forces are equal, then the organization is said to be in equilibrium. The state of equilibrium should be disturbed in order to bring out the change. If the analysis indicates that forces are unbalanced, then the organization should change itself.
Lewin's force field analysis is done to check whether Nokia should or should not have changed their business practices immediately in 2008 when Android was launched.
For scoring, we are using a Likert scale (1 = Weak, 5 = Strong). The forces are rated according to their influence on the company:
Table 1 - Lewin's Force Field Analysis Example for Nokia
The analysis shows that Nokia should have changed its strategy in 2008. The Nokia change failure cost Nokia its mobile phone business. The organizational culture was also toxic at that time. Leadership did not provide a way to pass information and communicate effectively among the organisation.
As change often comes with an attitude of resistance, Nokia faced resistance at every level of management .
Fear of the unknown: The leadership was not transparent about the vision or goals they wanted to achieve. This instilled the fear of the unknown in their employees.
Misunderstanding: No proper communication channels caused inter-departmental misunderstandings.
Organisational politics and self-interest: There was always a struggle for power in the organisation. Many either resisted the change to prove the decision 'wrong' or to hold their power longer.
Nokia change management plan
In order to change quickly according to internal or external influences, organizations have to be flexible. Nokia should have embraced the characteristics of a flexible organization and made a change management plan considering the characteristics of a flexible organization.
Figure 2 shows the characteristics of a flexible organisation.
A flexible workforce: this makes it easy to increase or decrease the workforce efficiently and quickly.
Information management : information management systems help share knowledge quickly at scale within the organization.
Research market trends: analyzing and predicting the market would have helped Nokia make the right decisions on time
Internal analysis: Nokia should have conducted a deep SWOT analysis. This would have made them aware of potential pitfalls.
Once Nokia becomes a flexible organization, it can overcome resistance by using a strategy based on Kotter and Schlesinger's Overcoming Resistance to Change Model. The model includes six ways for managing resistance:
Education: Nokia informs employees about changing processes by communicating effectively.
Participation: Nokia gives resisting employees a chance to speak their minds, get their inputs to develop new processes.
Facilitation: Nokia supports employees during the time of change.
Negotiation: Nokia compromises to make some changes rather than not addressing it with their employees.
Manipulation: In manipulation, employees are offered rewards to change. Nokia could have done that to make changes quicker.
Coercion: When other methods are not viable, Nokia has no choice but to transfer, terminate, or promote employees.
With all the above considerations, Nokia's change management plan might have worked better.
We have discussed what happened with Nokia in the past. But what is Nokia doing after the takeover by HMD and Foxconn? Will Nokia's change management plan be successful under the new leadership of CEO Pekka Lundmark? As per the report released by Nokia in March 2021, Nokia has announced plans to reduce costs and invest them back into R&D. The future areas of focus will be 5G, cloud, and digital infrastructure.
The mobile network business group aims to top in wireless mobile networks and associated services. Nokia owns many patents related to 5G standards. In October 2020, Nokia's research arm, Bell Labs, recorded a $14 million contract from NASA to install the first 4G network on the moon. The opportunities look promising for Nokia. However, Nokia will only be able to conquer this quest if it implements a change management plan successfully.
Nokia Change Management - Key takeaways
- Nokia ignored Apple as a potential competitor in the mobile market.
- Nokia took a steady approach towards innovation while other competitors were fierce in bringing out new technologies.
- Nokia did not accept Android.
- Nokia invested a lot of resources in developing the Symbian operating system, which was lacking when compared to Android and iOS (Apple).
- Nokia's work culture was toxic. Employees were always under the fear of losing their jobs.
- The untimely partnership with Microsoft did not work for any side.
- The higher management of Nokia thought Nokia was too big to fail.
- Nokia overestimated brand value and customer loyalty.
- Nokia had good hardware but the lack of efficient software cost Nokia its market position.
- Nokia resisted change due to rigid organizational structure, internal politics, and the power struggle between managers .
1. Lieberman, Marvin (2016). First mover advantage. 10.1057/978-1-349-94848-2_602-1.
2. Hofer, GW & Schendel, DE Strategy Formulation: Analytical Concepts, St. Paul, MN: West Pub. Inc., 1978.
3. Kotter, JP, & Schlesinger, LA (1979). Choosing strategies for change.
4. eWeek, https://www.eweek.com/mobile/10-reasons-microsoft-s-mobile-business-has-failed-to-take-off/
5. Satellite Today, https://www.satellitetoday.com/telecom/2021/01/04/bringing-lte-to-the-moon-nokia-exec-talks-nasa-tipping-point-contract/
Frequently Asked Questions about Nokia Change Management
--> why did nokia fail in its change management program.
Nokia failed in its change management program due to many reasons such as:
- Not accepting Android
- Partnering with Microsoft to launch Windows when Microsoft itself was making losses.
- Failed application of umbrella branding
- Not working enough on software
- Think they are too big to fail
- Not innovative enough
- Dysfunctional organisation
--> Why did Nokia fail - case study?
Nokia made many mistakes with its change management approach at times when competition in the mobile industry was most fierce. The company ignored Apple completely and overestimated its brand value and customer loyalty, which cost it a profitable business segment. Rigid organisational structure and wrong partnership also contributed to Nokia's failure.
--> What adjustments does Nokia's management need to make to its products?
Nokia should have adopted a flexible organisation system for its change management plan. A flexible organisation is made up of a flexible workforce, information management and accurate predictions of market trends for better decision-making.
--> How will Nokia's values help execute the change in business strategy?
Nowadays, Nokia is opting for values as the primary factor in driving business change. These values which include 'passion for innovation' and 'being human in daily practices ' bring employees together to deliver the best products to the customers.
--> What should Nokia have done differently?
The company should have been more responsive to change, not underestimated its competition, and developed technology that the public needed rather than what it thought was best.
Final Nokia Change Management Quiz
Which country did Nokia originate from?
Nokia originated from Finland .
Which operating system did Nokia develop?
Nokia developed the Symbian operating system.
Name the operating system developed by Google that Nokia did not consider for its Phones.
Nokia ignored the Android operating system that was developed by Google.
With which company, Nokia’s partnership did not succeed?
Nokia - Microsoft partnership did not succeed.
In1865, Nokia started as
Which of the following industry sectors Nokia was not active ever?
Why the matrix organization structure did not work for Nokia?
Matrix organization structure arose many conflicts as many managers had equal power. It led to the power struggle in some departments and complete dysfunction in others. Some executives left Nokia and many workers lost trust in management. Employees became insecure regarding their jobs and started to hide facts.
How was Nokia's work culture back then which led to intercompany conflicts?
Nokia’s work culture was especially based on fear. There was little or no communication between employees and management. The company did not have a clear vision and change management plan in place.
To which company Microsoft sold Nokia’s mobile manufacturing unit in 2016?
Microsoft sold Nokia branded phone business to HMD global in 2016.
In Which sector Nokia is currently active along with mobile manufacturing?
Nokia is active in 5G network equipment manufacturing and installation.
Even though Nokia had good hardware for mobile phones, where did Nokia phones lack?
Nokia phones lacked user-centric software.
How did customers respond to relaunched Nokia phones in partnership with Microsoft?
Customers rejected the phones as Windows phones did not offer any innovative features as compared to their competitors.
Which of the following is NOT the reason for Nokia's fall?
NASA has granted Nokia to install the first-ever 4G network on the _____.
What is the name of Nokia’s research arm?
When was Nokia founded?
___ change is a change in a company's scope, resource planning, competitive advantages, and synergy.
Incremental changes are also called...
Disruptive changes are also called...
___ is the process of managing responses to changes in the internal and external environment of a business.
___ refers to the benefits enjoyed by the firm as a consequence of its early entry into a new market.
___ can be defined as when a company sells different products under the same brand name.
___ provides an overview of the different factors and issues that influence change within an organization.
Force Field Analysis
Nokia accepted Android.
Nokia is considered as an example of 'change management failure'.
Nokia used to be the largest cell phone maker.
___ force field analysis is done to check whether Nokia should or should not have changed their business practices immediately in 2008 when Android was launched.
In Lewin's force field analysis, there were more forces for Nokia to change than against change.
Nokia should have embraced the characteristics of a ___ organization.
Nokia does not exist anymore.
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6 Reasons Why Nokia failed After Enjoying Unrivaled Dominance
This post focuses on the reasons why Nokia failed after enjoying unrivalled dominance in the mobile segment for several years. The ferocious and mighty telecom giant Nokia was well known for its products' hardware and battery life.
For years, it was the talk of the town. User satisfaction with Nokia’s mobiles was globally recognized. The company launched the first internet-enabled phone in 1996 and by the start of the millennium, Nokia also released a touch-screen mobile prototype.
This was the start of a revolution in the mobile phone industry. The Finnish giant was the largest cell phone maker in 1998. Nokia overtook Motorola, a move that was hard to predict. So what led to the downfall of Nokia? It wasn’t a single factor but a myriad of reasons, most of which resulted from Nokia's resistance to change. We present to you the 6 main reasons behind Nokia's failure.
Reasons for Nokia Failure
The resistance to smartphone evolution, the deal with microsoft, nokia's failed marketing strategies, moving too slow with the industry, overestimation of strength, lack of innovation in products.
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Nokia failed to take advantage of the Android bandwagon. When mobile phone manufacturers were busy improving and working on their smartphones, Nokia remained stubborn. Samsung soon launched its Android-based range of phones that were cost-effective and user-friendly.
Nokia's management was under the impression that people wouldn’t accept touch screen phones and would continue with the QWERTY keypad layout. This misapprehension was the start of its downfall. Nokia never considered Android as an advancement and neither wanted to adopt the Android operating system.
After realizing the market trends, Nokia introduced its Symbian operating system. However, it was too late by then with Apple and Samsung having cemented their positions. It was difficult for the Symbian operating system to make any inroads. This is the biggest reason behind Nokia's downfall.
Another reason for Nokia's failure was the ill-timed deal with the tech giant, Microsoft . The company sold itself to Microsoft at a time when the software behemoth was fraught with losses.
Nokia's sales screamed the mobile phone maker's inability to survive on its own. At the same time, Apple and Samsung were making significant strides in innovation and technological developments.
It was too late for Nokia to adapt to the dynamic and rigorous changes in the market. Microsoft’s acquisition of Nokia is considered to be one of the biggest blunders and wasn't fruitful for either side.
Generally, a startup fails because of a bad marketing strategy , and the same happened with Nokia. The company followed an unsuccessful strategy of umbrella branding. Apple was the first company to apply the umbrella branding model with the iPhone at the top. It kept adding new models to this umbrella year after year. Samsung followed the same route by launching the Samsung Galaxy series but Nokia failed to take cues.
The user trust Nokia built over the years was gradually waning. The company was inefficient in its selling and distribution methods. Seeing the mess, Nokia decided to come up with some fascinating hardware and software innovations. However, these were already released by Nokia's rivals and lacked uniqueness. Failure in Nokia’s marketing and distribution strategies played a significant role in its elimination from the mobile industry market.
Nokia never kept pace with changing technology and trends. Nokia was always famous for its hardware and didn’t pay much attention to its software line-up. Initially, the company overlooked technical advancements to avoid the risks associated with bringing innovation to phones.
The business needed diversion but it was too late by the time Nokia realized this. Instead of being amongst the early initiators, Nokia transitioned when almost every major brand had already started producing awesome phones.
Nokia overestimated its brand value. The company believed that even after the late launch of its smartphones, people would still flock to stores and purchase Nokia-manufactured phones. A misconception! People still make predictions of Nokia retaining the market leadership if it uses better software at its core. However, this is far from the truth as seen today.
The company got stuck with its software system which is known to have several bugs and clunks. Nokia felt its previous glory would help alleviate any sort of trouble. Unfortunately, things didn’t play out that way.
The lack of innovation in its products only added to Nokia's woes. While brands like Samsung and Apple came up with advanced phones every year, Nokia simply launched the Windows phone with basic features.
The Nokia Lumia series was a jump-start measure, but even that collapsed due to a lack of innovation. The unattractive and dull features didn’t help. In the era of 4G, Nokia didn’t even have 3G-enabled phones. Nokia also came up with the Asha series but it was game over by then.
Wrong decisions and risk aversion brought the decline of the mobile giant. Nokia refrained from adopting the latest tech. Nokia's failure became a case study that made organizations realize the importance of continuous evolution and enhancements. The journey of what was once the world’s best mobile phone company to losing it all by 2013 is quite tragic. Nokia also strongly lacked leadership and guidance.
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Why did Nokia fail?
Not switching to android, lack of innovation, Not upgrading the software and overestimating the brand value were some of the reasons that led to the failure of Nokia.
What is Nokia?
Nokia is a consumer electronics company popular for its mobile phones. It is one of the largest mobile phone manufacturers in the world.
Is the Nokia company closed?
No, the company is still running but it has shut down some of its plants.
Why did Nokia reject android?
Nokia never considered android as an advancement and on purpose denied adopting Android in 2011.
Why did Nokia fail to compete with Samsung and Apple?
Nokia didn't adopt Android and focused on its hardware more than its software, which is why it failed to compete against Samsung and Apple.
Are there any new Nokia smart phones coming in near future?
Though Nokia might seem dominant on the phone front, the company occasionally comes up with some new phones/smartphone devices. Here are some of the Nokia smartphones that are likely to be launched in 2022:
- Nokia 2760 Flip 4G
- Nokia C21 Plus
- Nokia Suzume
- Nokia C2 2nd Edition
- Nokia C21
Who took over Nokia?
Nokia phones were robust and dependable companions of the pre-smartphone era. However, Nokia's Java and Windows phones failed to stand out in the market dominated by the Apple and Android phones. The Android phone manufacturing companies like Samsung, LG, HTC, Sony, Motorola, and other Chinese smartphone developers like MI, Realme, Oppo, Vivo, and the Apple IOS devices took over Nokia in the mobile sector.
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Long history of successful change and innovation Adaptable to shifts in markets and technologies.
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- 1. NOKIA CASE STUDY KEERTHANA B S SOWMYA C L AKSHAY M R GAWLI SOPAN BALIRAM SHARAN G VARUN B SAMBIT MISHRA SUBMITTED BY :
- 2. Nokia History Long history of successful change and innovation Adaptable to shifts in markets and technologies. Humble beginning One Paper Mill Cables Paper Products Industrial Electronics Telecommunication
- 3. Timeline 1960 • Nokia first entered the telecommunications equipment market • Electronics department was established at Finnish Cable. 1967 • Nokia took its current form as Nokia Corporation • rubber, cable, forestry, electronics and power generation. 1982 • Nokia introduced the first fully-digital local telephone exchange in Europe.
- 4. 1990 • Nokia made a strategic decision to make telecommunications as a core business. • Goal of establishing leadership in every major global market. 1991 • The first GSM call was made with a Nokia phone over the Nokia-built network of a Finnish operator called Radiolinja. 1998 • Nokia was the world leader in mobile phones, a position it enjoyed for more than a decade 2011 • Nokia joined forces with Microsoft to strengthen its position in the highly competitive Smartphone market.
- 5. Nokia’s Entry in India • Nokia entered India in 1995. • Nokia’s arrival came a year after India’s telecom sector opened up to private companies and the first cellular services licenses were given out.
- 6. Nokia Success story • First Indian ringtone “Saare Jahan Se Accha”– on a Nokia 5110 handset. • The ring tone was popular at that time. 1998 • Introduced its first phone with a user menu in Hindi, in Nokia 3210 handset. 2000 • Introduced its first camera phone – Nokia 7650.2002 • Introduced its Nokia 1100 – the company’s first made-for-India phone. 2003
- 7. • Nokia introduced text messaging in Hindi. • Introduced the first Wi-Fi enabled phone – Nokia Communicator N9500 2004 • User interfaces in other Indian languages. • First firm to set up a manufacturing unit for mobile phones at Sriperumbudur, Chennai. 2006 • Launched its first regional news portal in India • In May 2007, Nokia chose India for the global launch of its handset – Asha 501. 2007 • It launched Nokia Life – information tools on mobile phone handsets – for the first time in India. • Nokia had 500 million mobile subscribers in India. 2009
- 8. Strengths 1. Experience 2. Largest network of selling & distribution 3. Strong customer relation 4. The biggest strength of the company is their brand name. 5. Wide range of products for all class 6. High Resale value compared to other competitors 7. Durability 8. Long battery life
- 9. Weakness 1. Low voice quality. 2. Less stylish in low priced products. 3. Heavy sets. 4. Unlike I phone apple, Nokia N97 is complex, tough and not user friendly. 5. Took a long time to enter the highly productive and booming Smartphone market. 6. Some of Nokia’s products are not affordable for middle and lower class consumers.
- 10. Opportunities 1. New growth markets. 2. Well designed and styled sets. 3. Increase their presence in 3G & edge market 4. Mini notebooks 5. The Microsoft-Nokia deal is a win-win situation for both companies. The deal possesses great opportunity if both utilize resources in a proper way. 6. Opportunities to expand the range of products and their prices. Also bring in new features and applications on to Windows OS.
- 11. Threats 1. China mobiles – It has made exact copy of Nokia N96 and they provide more features in less cost. 2. Sales may decline due to global economic downturn 3. Strong competition from other Smartphone companies will make it hard for Nokia to maintain and expand their market share.
- 12. SWOT Analysis of Nokia Models
- 13. Failures Of Nokia Failure of Symbian OS : - lack of applications and UI (User Interface). Wrong Deal with Windows : - Windows which was new in the field to regain its status was the biggest mistake the company made. NOKIA Became Laggard in Smartphone Market : - Stiff competition from Samsung and Apple, and lack on focus on innovation was the big reason of collapse.
- 14. Contd… Failure to Implement the Right Umbrella Branding Strategy: Apple was the first phone to use the strategy of umbrella branding using iPhone as an umbrella brand and then building subsequent models each year. Samsung was quick in identifying this concept and they started building their high end phones with Galaxy S series. Nokia on the other hand used an umbrella brand in the N series and recently the Lumia series, but they failed to create buzz among customers
- 15. Make In India A major new national program. Designed to facilitate investment. Foster innovation. Enhance skill development. Protect intellectual property. And build best-in-class manufacturing infrastructure. There's never been A better time to make in india.
- 16. Wow ! Made In India 1. Giant assembly plant of VIs and component suppliers, by hand with cheap labour 2. 8,000 full time jobs out of a figure of 30,000 ; mostly women 3. Effective transportations cost, flown via cargo jumbo jets 4. Jijits and widgets from Shenzhen and Dongguan in China 5. India production share ; cardboard packets i.e. less than 5% of unit cost 6. Even components as simple as keyboard and charger and other low tech items are not in fortune of Sriperumbudur plant.
- 17. Sriperumbudur Plant Assets Freeze
- 18. Timeline Of Chennai Issue 8-Jan-13 • India’s Income Tax department inspects the Chennai factory 21-Mar-13 • The Income Tax Department issues Rs 2,080 crore tax demand (later rectified to Rs 2,649 crore) on Nokia India. 17-Apr-13 • The Delhi High court asks the Income Tax Department to re- examine its claim against Nokia and not to take any further coercive action.
- 19. 8-May-13 • At Nokia India’s request, Finland invokes the Mutual Agreement Procedure (‘MAP’) under the DTAA, asking the competent authorities in India to seek an agreement on the application of the DTAA 31-May-13 • The Commission er of Income Tax (Appeals) dismisses Nokia India’s appeal 3-Sep-13 • Nokia announces that it intends to sell its Devices & Services division to Microsoft 25-Sep-13 • India’s Income Tax Department freezes all assets of Nokia India
- 20. 12-Dec-13 • The Delhi High Court agrees to unfreeze Nokia India’s assets in return for the deposit of Rs 2,250 crore into an escrow account 12-Feb-14 • Nokia India announces it will appeal the decision of the Delhi High Court to the Indian Supreme Court 14-Mar-14 • India’s Supreme Court dismisses Nokia India’s asset freeze appeal, allowing the Delhi High Court order to stay in force.
- 21. 21-Apr-14 • Nokia confirms that the Chennai factory will be excluded from the Microsoft deal, due to the asset freeze imposed by the Income Tax Department 25-Apr-14 • Nokia globally completes the sale of substantially all of its Devices & Services business to Microsoft. 6-Oct-14 • After Microsoft ends its transitional services agreement (TSA) , Nokia announces from November 1 operations will be suspended 31-Oct-14 • The last working day of the Chennai factory.
- 22. Conclusion Nokia has been an industry leader for many years however the market has changed quickly and Nokia must right itself. There is a significant risk for Microsoft it should deliver a world class OS or otherwise the customers will turn to Apple and android. The main reason for why Nokia Can’t MAKE IN INDIA is the Chennai Scam.
- 23. Thank you
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Jul 24, 2018
Why did Nokia fail and what can you learn from it?
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.
Nokia’s culture of status has led to an atmosphere of shared fear which influenced how employees were interacting with each other. The human factor was added to economic and structural factors and together they have generated a state of “temporal myopia” that hindered Nokia’s ability to innovate. Employees stated that top managers and directors were no longer abiding by Nokia’s core values of Respect, Challenge, Achievement and Renewal. This study points out the paramount importance of shared emotions among employees and their powerful impact on the company’s competitiveness .
We asked Amalia Sterescu , Leadership Consultant what steps should leaders take to keep themselves connected to their employees and be aware of their emotions and state of mind.
In a world dominated by digital transformation, leaders should understand that operating with the old mindset will not help their companies face customer behaviour changes or new types of competition — more aggressive and more diverse.
- Having the power of constantly challenging the status quo will allow leaders and their organisation to embrace a culture of change;
- Collaborative leadership style will be mandatory, the policy of closed doors will die quickly — innovation process should be encouraged at all levels but for this leaders have to learn again how to properly listen to their customers, partners and employees;
- Before being able to understand their employees’ emotions, leaders will have to become more mindful. Emotional intelligence in action will not be just a competence nice to have — will become mandatory especially when at the decision table leaders will have a mix of generations including Millennials and Z;
- In the end, leaders should master the power of taking responsibilities for bad decisions, failed innovation, lost market share despite the danger of losing their status, role, bonuses. Learning fast from failures or from other companies’ failures will help leaders repair, minimize risks & damages and design better services & products;
- Middle managers will need more courage to challenge the CEO or Sr. Leadership for the benefit of the whole organisation and to accomplish this HR should act as a real business partner and mitigator.
Microsoft learned from Nokia’s mistakes and changed its culture.
In 2014, Satya Nadella became the current CEO of Microsoft, following Bill Gates and Steve Ballmer.
The most important change that Satya brought to Microsoft was shifting the company’s culture . He says that his job as CEO is to create a culture that focuses on listening, learning, and harnessing individual passions and talents. Satya also placed employer empowerment at the core of Microsoft’s culture.
Company culture is not to be taken lightly . In fact company culture is a major factor that contributes to the company’s development and ability to compete and be successful.
Company culture starts at the top and grows at the bottom. It includes mission, values, environment, ethics, expectations, overall mood, goals etc. But unless the company’s leadership fully embraces them, they are just beautiful but empty words. Leaders must embody the company’s values and be role models for their employees.
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The Strategic Decisions That Caused Nokia’s Failure
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In less than a decade, Nokia emerged from Finland to lead the mobile phone revolution. It rapidly grew to have one of the most recognisable and valuable brands in the world. At its height Nokia commanded a global market share in mobile phones of over 40 percent. While its journey to the top was swift, its decline was equally so, culminating in the sale of its mobile phone business to Microsoft in 2013.
It is tempting to lay the blame for Nokia’s demise at the doors of Apple, Google and Samsung. But as I argue in my latest book, “ Ringtone: Exploring the Rise and Fall of Nokia in Mobile Phones ” , this ignores one very important fact: Nokia had begun to collapse from within well before any of these companies entered the mobile communications market. In these times of technological advancement, rapid market change and growing complexity, analysing the story of Nokia provides salutary lessons for any company wanting to either forge or maintain a leading position in their industry.
With a young, united and energetic leadership team at the helm, Nokia’s early success was primarily the result of visionary and courageous management choices that leveraged the firm’s innovative technologies as digitalisation and deregulation of telecom networks quickly spread across Europe. But in the mid-1990s, the near collapse of its supply chain meant Nokia was on the precipice of being a victim of its success. In response, disciplined systems and processes were put in place, which enabled Nokia to become extremely efficient and further scale up production and sales much faster than its competitors.
Between 1996 and 2000, the headcount at Nokia Mobile Phones (NMP) increased 150 percent to 27,353, while revenues over the period were up 503 percent. This rapid growth came at a cost. And that cost was that managers at Nokia’s main development centres found themselves under ever increasing short-term performance pressure and were unable to dedicate time and resources to innovation.
While the core business focused on incremental improvements, Nokia’s relatively small data group took up the innovation mantle. In 1996, it launched the world’s first smartphone, the Communicator, and was also responsible for Nokia’s first camera phone in 2001 and its second-generation smartphone, the innovative 7650.
The search for an elusive third leg
Nokia’s leaders were aware of the importance of finding what they called a “third leg” – a new growth area to complement the hugely successful mobile phone and network businesses. Their efforts began in 1995 with the New Venture Board but this failed to gain traction as the core businesses ran their own venturing activities and executives were too absorbed with managing growth in existing areas to focus on finding new growth.
A renewed effort to find the third leg was launched with the Nokia Ventures Organisation (NVO) under the leadership of one of Nokia’s top management team. This visionary programme absorbed all existing ventures and sought out new technologies. It was successful in the sense that it nurtured a number of critical projects which were transferred to the core businesses. In fact, many opportunities NVO identified were too far ahead of their time; for instance, NVO correctly identified “the internet of things” and found opportunities in multimedia health management – a current growth area. But it ultimately failed due to an inherent contradiction between the long-term nature of its activities and the short-term performance requirements imposed on it.
Reorganising for agility
Although Nokia’s results were strong, the share price high and customers around the world satisfied and loyal, Nokia’s CEO Jorma Ollila was increasingly concerned that rapid growth had brought about a loss of agility and entrepreneurialism. Between 2001 and 2005, a number of decisions were made to attempt to rekindle Nokia’s earlier drive and energy but, far from reinvigorating Nokia, they actually set up the beginning of the decline.
Key amongst these decisions was the reallocation of important leadership roles and the poorly implemented 2004 reorganisation into a matrix structure. This led to the departure of vital members of the executive team, which led to the deterioration of strategic thinking.
Tensions within matrix organisations are common as different groups with different priorities and performance criteria are required to work collaboratively. At Nokia,which had been acccustomed to decentralised initiatives, this new way of working proved an anathema. Mid-level executives had neither the experience nor training in the subtle integrative negotiations fundamental in a successful matrix.
As I explain in my book, process trumps structure in reorganisations . And so reorganisations will be ineffective without paying attention to resource allocation processes, product policy and product management, sales priorities and providing the right incentives for well-prepared managers to support these processes. Unfortunately, this did not happen at Nokia.
NMP became locked into an increasingly conflicted product development matrix between product line executives with P&L responsibility and common “horizontal resource platforms” whose managers were struggling to allocate scarce resources. They had to meet the various and growing demands of increasingly numerous and disparate product development programmes without sufficient software architecture development and software project management skills. This conflictual way of working slowed decision-making and seriously dented morale, while the wear and tear of extraordinary growth combined with an abrasive CEO personality also began to take their toll. Many managers left.
Beyond 2004, top management was no longer sufficiently technologically savvy or strategically integrative to set priorities and resolve conflicts arising in the new matrix. Increased cost reduction pressures rendered Nokia’s strategy of product differentiation through market segmentation ineffective and resulted in a proliferation of poorer quality products.
The swift decline
The following years marked a period of infighting and strategic stasis that successive reorganisations did nothing to alleviate. By this stage, Nokia was trapped by a reliance on its unwieldy operating system called Symbian. While Symbian had given Nokia an early advantage, it was a device-centric system in what was becoming a platform- and application-centric world. To make matters worse, Symbian exacerbated delays in new phone launches as whole new sets of code had to be developed and tested for each phone model. By 2009, Nokia was using 57 different and incompatible versions of its operating system.
While Nokia posted some of its best financial results in the late 2000s, the management team was struggling to find a response to a changing environment: Software was taking precedence over hardware as the critical competitive feature in the industry. At the same time, the importance of application ecosystems was becoming apparent, but as dominant industry leader Nokia lacked the skills, and inclination to engage with this new way of working.
By 2010, the limitations of Symbian had become painfully obvious and it was clear Nokia had missed the shift toward apps pioneered by Apple. Not only did Nokia’s strategic options seem limited, but none were particularly attractive. In the mobile phone market, Nokia had become a sitting duck to growing competitive forces and accelerating market changes. The game was lost, and it was left to a new CEO Stephen Elop and new Chairman Risto Siilasmaa to draw from the lessons and successfully disengage Nokia from mobile phones to refocus the company on its other core business, network infrastructure equipment.
What can we learn from Nokia
Nokia’s decline in mobile phones cannot be explained by a single, simple answer: Management decisions, dysfunctional organisational structures, growing bureaucracy and deep internal rivalries all played a part in preventing Nokia from recognising the shift from product-based competition to one based on platforms.
Nokia’s mobile phone story exemplifies a common trait we see in mature, successful companies: Success breeds conservatism and hubris which, over time, results in a decline of the strategy processes leading to poor strategic decisions. Where once companies embraced new ideas and experimentation to spur growth, with success they become risk averse and less innovative. Such considerations will be crucial for companies that want to grow and avoid one of the biggest disruptive threats to their future – their own success.
About the author(s)
Yves L. Doz
is an Emeritus Professor of Strategic Management and the Solvay Chaired Professor of Technological Innovation, Emeritus at INSEAD.
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16/03/2022, 10.44 am
Nokia is the one of the oldest phone and also it is existed until now
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17/09/2021, 07.41 pm
Why does Nokia fail
26/06/2021, 09.54 pm
Someone really should dig into the tale of Nokia Music, that of OD2, a successful independent company bought by Nokia in 2007. In less than four years through marketing bodges, strategic failures, interference from gormless management in the USA, and even more nepotistic and mostly incompetent management in the UK, a profitable company with numerous high profile corporate customers was brought to its knees by talent free people who should never have been promoted into the positions they were in. Well worth digging into, just don't interview the management or you will never get to the truth.
03/06/2021, 01.56 am
As I read through many of these comments, the word "dillusional" kept coming to mind. For starters, Windows OS was as good as either Android or iOS. The main thing lacking were just a few more core apps. That was really it.
Sure, they could easily have run Andoid, and as soon as that idea was floated, Microft instantly shuttered their offices.
The fact that Nadella had his trojan horse Elop do the deal on Friday and hand everyone their walking papers on Monday is proof positive that Microsoft never had any good intentions for Nokia.
MS could have easily thrown one of their legions of Devs onto the task of writing apps. which would have solved the app. store issue in a hurry.
Instead, Nadella destroyed Microfts own eco-system by loosing that lucrative and Crucial market sector. A permanent wound that still haunts them to this day, and showcased Nadella as being far Inferior to Ballmer as well as Gates.
While my first inclination is to assume some nefarious reason for this, I do have to acknowledge however the old addage: "Don't attribute to maclice, what can easily be explained by stupidity"
30/10/2020, 04.23 pm
Why only Nokia there are a number of business world wide which have failed because of its own Founders/CEO/COO lapses some of the reasons which I contribute are as follows.... 1. Lack of vision future 2. Innovation in new age computing revolution 3. High Salary package 4. Founders cannot be pushed out or replaced easily. 5. Management Decisions 6. Dysfunctional Hierarchy 7. Growing Bureaucracy 8. Internal rivalry
21/01/2018, 12.17 am
Captain of the ship knows how to sink the boat. Stephen (the first non Finnish CEO in history of Nokia) joined in 2010 from Microsoft and made a deal to use Windows only despite the fact that Android was growing and already captured huge market share. There was a lot of pressure from Nokia employees to move to Android but he ignored all. He fired a lot of people. It was famous in Nokia Espo office (H/Q) that he is a Trojan Horse. He later sold Nokia mobile business to Microsoft and earned millions of dollars in the deal. Later, he joined Microsoft again. Looks like the plan was to promote Windows Mobile at the cost of Nokia (that failed badly)
13/01/2018, 04.20 am
If the company is at crises, what should the managers do? Could it be one of the option go for advices from top management consulting firms or any other third parties that can help to formulate better strategies to save the company? Assuming they went for consulting firms, then the firms were failed to help Nokia as well?
22/12/2017, 02.34 am
I would love to also see something similar about Blackberry. They were the prime brand for many early adopters and business users of cellular phones here in the USA. Similar to Nokia they also had/have secure network platform. I wonder if their demise was also due to strategic mistakes, and if similar to Nokia they also got bogged down with tactical activities and lost sight of overall strategy.
21/12/2017, 05.00 am
I agree with everyone, broadly. Nonetheless we should NEVER FORGET that Nokia would be far far better (as a Smartphone maker), than it is today.
Another illustration of a North American Corporation that did so well from its foundational years in the 19th Century and well into its first centenary is NORTEL Networks... I read a book about the rise, growth and maturity of NORTEL and it became one great role model for me... Unfortunately, NORTEL failed to go the length any longer than the beginning of the 21st Century; NORTEL collapsed for reasons that are too embarrassing to speak openly abbout - or even in privacy!
I'm working on to establish a Corporate and Product Branding Consultancy in town (Accra, Ghana), and this article on Nokia, like others, is what I've been looking out for, to help learn and know how to start and grow an enterprise and keep it growing and succeeding decade after decade, century after century!
17/12/2017, 07.59 pm
"While Symbian had given Nokia an early advantage, it was a device-centric system in what was becoming a platform- and application-centric world." Well, actually Nokia pioneered the app-centric world. Go check. Only it's User Interface didn't keep up with the emerging competition.
07/12/2017, 05.51 am
Nokia is still alive... and much more than a mobile phone manufacturer. Nokia is the biggest network equipment maker in the world, employees +100k people and ~25 billion € in revenue in 2016...
30/11/2017, 05.40 pm
Good article. Thanks.
Interesting side note: While working in Japan around 2002, I heard "on the street" that Nokia ran a research center in Japan. Intended to tap the vast and growing Japanese mobile market. They saw everything that was coming in the Western world. Good cameras. Apps. Cost effective mobile internet & services. Mobile email messaging on a mass scale. Multi media devices. Long before the iPhone was invented. Nokia deemed the Japanese market too challenging and closed their research center. Turned a blind eye. The competition was already too far ahead.
28/11/2017, 03.21 am
Another consideration is that Nokia stayed committed to hardware-based human-computer factors as differentiation far longer than it should have: optical strip for scrolling, buttons for menus, buttons for navigation, etc. What the iPhone showed is that software-based UX was the more flexible and powerful approach.
26/11/2017, 04.40 pm
Just imagine, if Nokia had seen the future and adopted Android operating systems before 2009-10, perhaps the horizons of the mobile Eco system would have been very different today. Similarly, Blackberry also failed to see the shift in the mobile market from a communicating device to a multi Media device. Phones transcended the mere communication and functional level to take control of our social lives and presence. The social sites and e commerce growth were trends and changes that both these behemoths failed to see or gauge. They still remain extremely hardware centred, building very physically robust devices but perhaps falling short on the imagination part. I think this is entirely a matter of leadership vision and imagination.
25/11/2017, 12.00 am
Unless I am misremembering, I am sure I had a Samsung phone in the early 2000s. It was nothing like the Samsung mobiles of today. It was not user friendly, the operating system was a mess and I soon went back to Nokia but it's not true to say that Samsung hadn't entered the mobile communications market, they just hadn't entered the smart phone market. (Not that I don't agree with the thrust of the article - Nokia's downfall was very much of its own making).
24/11/2017, 11.53 pm
I think a similar story can be told about Microsoft under Ballmer. What Symbian was for Nokia, Windows was for Microsoft at one time. Nadella came in just at the right time to lift the company out of that slumber and made it take a leap of faith in the Cloud world. The results are evident. Microsoft is sailing at its lifetime best share prices. On the contrary, when we look at Apple, they seem to be following the footsteps of Nokia. Slowly but surely they are becoming a victim of their own success.
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How Nokia Bounced Back (With the Help of the Board)
Quy Huy & Timo Vuori
Why Successful Companies Usually Fail
Yves Doz & Keeley Wilson
Spanning the Boundaries That Limit Organisational Innovativeness
The curse of agility: The Nokia Corporation and the loss of market dominance in mobile phones, 2003–2013
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- A short history of Nokia
Discussion and conclusions
Acknowledgements, disclosure statement, additional information, original articles.
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We investigate how and why the Nokia Corporation failed to develop a successful strategic response to the threats of Apple and Google in the smartphone business and instead worsened its situation through several badly timed decisions. We identify key choices in technology and organisational design that jointly constituted sufficient cause for the abandonment of the mobile phone business. By focusing on choices instead of attributes (e.g. fear or hubris), we make progress in strategic failure research and simultaneously emphasise the strength of oral history methods and the philosophy of history as fruitful starting points for such an inquiry.
- technology management
- business history
- oral history
In business history, we can think of very few other cases in which new competitors so quickly and forcefully dethroned an overwhelmingly dominant market leader (cf. Langlois, Citation 1992 ; Finkelstein, Citation 2006 , Van Rooij, Citation 2015 ) as the case of the Nokia Corporation between 2007 and 2013. Nokia was by no means a passive follower of the novel competitive landscape dominated by the emergence of the smartphone. Nevertheless, its major strategic decisions towards the end of the period of analysis made the situation worse and aggravated the company’s plight. In this article, we provide an historical analysis of the strategic decision-making process at the Nokia Corporation. Considering its technology and organisational design choices, we examine how and why Nokia failed to safeguard its strong market leadership in the global mobile phone market between 2007 and 2013. Earlier research on Nokia’s misfortunes has found both simple answers (Vuori & Huy, Citation 2016 ) and very complex ones (Cord, Citation 2014 ; Doz & Wilson, Citation 2017 ; Risku, Citation 2010 ) to this question. Following Van Rooij’s ( Citation 2015 ) lead, we aim to find a solution that is both theoretically sound and respects historical reality from Nokia’s strong technological dominance in the early 2000s – being global market leader with almost 40 per cent share from mobile phone markets in 2008 (see Appendix 3) – to the divestment of its entire mobile phone business unit to Microsoft in 2013.
Our empirical focus is thus on technology choices and decisions concerning organisational design. By technology choices, we refer broadly to stop-go decisions concerning specific technologies and research and development processes and by organisational design we refer to choices concerning organisational structure and incentives. With respect to technology choices, we ask the following question: Why did Nokia invest so heavily in its own more or less outdated Symbian software platform even after major competing smartphone platforms – iOS and Android – emerged in 2005–2007 and quickly proved themselves hugely successful? Subsequent question – if and when Symbian development was so difficult and expensive – is the reason why Nokia at the same time also invested in other platform options (at least MeeGo, Maemo, Android, and Meltemi platforms)? Further, all this happened during the critical years after iPhone’s emergence and would have required building extensive technological capabilities to implement any of these alternatives accordingly.
Regarding organisational design choices, we focus on Nokia’s dominant management philosophy of the era, called ‘strategic agility’ – and its antecedents and consequences. Doz and Kosonen ( Citation 2010 ) define this concept largely based on their experience at Nokia through the organisational capability to quickly change strategic direction using strategic sensitivity, resource fluidity, and top management leadership unity. The paradox we address is that mentally, Nokia’s top management was fully prepared to meet new competitors with an ‘agile’ mentality and willingness to keep the organisation in a constant state of ‘structured chaos’ (Brown & Eisenhardt, Citation 1997 ). However, the organisation actually regressed to sluggish decision-making at the top and fierce internal competition between alternative technological platforms at the lower levels of the organisation. Nevertheless, we want to emphasise that Nokia’s failure in the mobile phone market is not a story of defunct leadership at the top of the corporation per se . On the contrary, we see Nokia as a prime example of the performative aspects of contemporary management thinking in its search for an agile organisational form and its use of top-tier professors and prominent management consultants as catalysts in the process. However, sometimes an organisation is ill prepared for this type of novel thinking, and the resultant new ways of working may severely distort the functioning of some of the core processes of the organisation, in this case technology management (including more traditional research and development activity). This tension makes the history of the corporation very interesting as a natural experiment of the performative effects of strategic management ideas and fashions (Abrahamson & Fairchild, Citation 1999 ).
Our research makes two contributions. First, it joins earlier critiques of causal inferences in case studies by showing the complex nature of strategic failure processes and the consequences of that complexity. Essentially, without access to company archives, all research on Nokia (or any other corporation) remains tentative. This is not a problem if we realise the limits of our research, but most of the similar case studies published even in top management journals ignore these limitations when seeking theoretical explanations, contributions and ‘being interesting’ (Barley, Citation 2016 ; Davis, Citation 1971 ). Second, we identify key choices in technology and organisational design that jointly constitute sufficient cause for the abandonment of the mobile phone business. By focusing on choices instead of attributes (e.g. fear or hubris), we make progress in explaining strategic failure research and simultaneously emphasise the strength of oral history methods and more broadly the philosophy of history as fruitful starting points for such an inquiry.
One key question in both business history and strategic management is to understand why firms differ in their investment choices and subsequent performance (Kornberger, Citation 2013 ). Consequently, firms’ failure to make choices that result in long-term positive economic performance is a central research topic. Ever since some seminal contributions (Ghemawat, Citation 1991 , Mokyr, Citation 1990 ; Henderson & Clark, Citation 1990 ), researchers have turned their attention to different industries and analysed cases of failure, for example, in manufacturing (Lorenz, Citation 1991 ; Magee, Citation 1997 ), service industries (e.g. Bakker, Citation 2005 ), and high-tech industries (Cusumano, Mylonadis, & Rosenbloom, Citation 1992 ; Langlois, Citation 1992 ). The research on failed technology adaptation and erroneous technology choices typically frames incumbent firms as particularly slow in making radical changes to their products (Ansari, Garud, & Kumaraswamy, Citation 2016 ; Christensen, Citation 1993 ). The Beta vs VHS video standard is a classic case in which customer needs (e.g. video rentals and recording time) and ecosystem building were the major determinants in VHS’s victory over its competitor (Cusumano et al., Citation 1992 ).
Beginning by explaining performance problems through hindsight is problematic in terms of causal explanations. For example, the well-known case study on the demise of Polaroid (Tripsas & Gavetti, Citation 2000 ) highlights the role of top management cognition as a crucial impediment to strategic renewal. Similarly, Danneels ( Citation 2011 ) frames the failure of the typewriter manufacturer Smith Corona to adapt to computer-based word processing as a cognitive problem – managers of Smith Corona could not adapt their mindsets to the new technological era. Both case histories have been important in developing our theoretical understanding of strategic failures; however, they are problematic as causal explanations (see Cornelissen and Durand ( Citation 2012 ) for a thorough discussion; Denrell, Citation 2003 ; Rosenzweig, Citation 2008 ). First, by stating that biased or narrow ways of thinking by the top management team (i.e. in managerial and organisational cognition) resulted in organisational collapse is not the same as inferring a bullet or a shooter pulling the trigger caused a person to die in a shooting incident. In the shooting case, A causes B, but in both the Smith Corona and the Polaroid cases, we know that A (top management team cognition) and B (organisational collapse) may co-occur , but this has little to do with a causal explanation and probably not even with a causal inference (see Mahoney, Citation 2000 ; Pearl, Citation 2000 ).
In general, causal reasoning is especially challenging in disciplines such as business history or strategic management. The challenge originates from the philosophical difficulty of making theoretical generalisations from empirical findings (Ketokivi & Mantere, Citation 2010 ). In principle, all inductive reasoning is speculative, as researchers cannot control all alternative explanations (Mahoney, Citation 2003 ) or run a counterfactual analysis (Morgan & Winship, Citation 2015 ), which is the strongest test of causality. In single case studies in which the motivation for the study is to explain backwards from the outcome, causal inference becomes very difficult, if not impossible. Thus, studying Nokia’s unfortunate years in 2007–2013 with the CEO and Chairman of the Board, Jorma Ollila, or some other absent factor would pose a great analytical challenge, excluding simulations (compare Harvey, Citation 2012 ). However, this type of approach would be the only way to arrive at the causal conclusion that Nokia was managed deficiently.
As Ketokivi and Mantere ( Citation 2010 ) describe, scholars have taken different positions as a consequence of the dilemma of causal inference in inductive studies. One group of scholars has adopted an explanatory viewpoint, emphasising the value of theoretical explanations in science. For example, a study may be valuable because it is interesting and provokes new ideas (Davis, Citation 1971 ), even though its empirical grounding is not solid. In contrast, a Spartan view starts from a premise that truth (Seale, Citation 1999 ) or the search for truth-like explanations (Danermark, Ekström, & Jacobsen, Citation 2005 ) is the only acceptable virtue in science. This approach motivates the critical realists in business history (Kipping & Lamberg, Citation 2016 ) and social sciences in general (Mahoney, Citation 2000 ) and is something that our research aims to achieve.
Literature on Nokia’s drift towards the divestment of its mobile phone business in 2013 is a miniature of the problems related to retrospective causal inference in general. At the end of 2018, ex-managers, journalists, business scholars, and other writers published at least ten (see Appendix 2) articles, reports, teaching cases, and books offering specific explanations for Nokia’s failure to maintain its competitive position in mobile phones. The explanations fall into two broad categories. On the one hand, some publications (e.g. Van Rooij, Citation 2015 ; Ali-Yyrkkö et al., 2013) see the process as a relatively deterministic evolutionary struggle during which Nokia tried but failed to adapt to the new competitive situation catalysed by players such as Apple and Google. On the other hand, the remaining basket of books and articles (e.g. Cord, Citation 2014 ; Salminen & Nykänen, Citation 2014 ; Doz and Wilson, Citation 2017 ) focus on Nokia’s internal leadership problems as causing the failure. From this category of studies, Vuori and Huy’s article in Administrative Science Quarterly (Vuori & Huy, Citation 2016 ) was the first to blame Jorma Ollila, the CEO (1992–2006) and Chairman of the Board (1999–2012). Ollila’s aggressive temper and confrontative managerial style was presented as the root cause of many internal misfunctions and Nokia’s ultimate failure to renew itself. Siilasmaa’s ( Citation 2018 ) (member of the Nokia board of directors since 2008 and chairman of the board since 2013) recent book echoes Vuori and Huy’s ( Citation 2016 ) results and frames Ollila’s ultra-formal way of managing the board as an important factor in Nokia’s failure. Likewise, Ollila’s memoirs (Ollila & Saukkomaa, Citation 2013 ) blame his successor, Olli-Pekka Kallasvuo (as CEO in 2006–2010), for failing to manage the process of strategic renewal. Overall, the publications focusing on Nokia’s internal struggles mainly belong to the explanatory view of inductive reasoning. The main aim of these studies is to offer a dominant theoretical explanation such as fear, faulty management, or challenging organisational design (Doz & Wilson, Citation 2017 ), not to study Nokia’s history to discover more robust causal relations between doings and undertakings on the one hand and key organisational outcomes on the other. 1
Historical research is relatively distinct from theory-motivated case studies in the management field (Decker, Kipping, & Wadhwani, Citation 2015 ), especially in terms of causal reasoning. As Mahoney, Kimball, and Koivu ( Citation 2009 , p. 124) characterise, ‘Historical explanations […] explain the specific past occurrences; the question of whether and how the resulting explanation might then be generalised is a secondary concern. Accordingly, if generalisability is not the primary driver of research, it needs to be the primary driver of how causal inferences are made. Most historical reasoning works with INUS conditions, 2 referring to how ‘[…] multiple causal factors combine together to produce particular outcomes. The individual causal factors are neither necessary nor sufficient; rather, they are part of an overall combination that is sufficient for the outcome (Mahoney et al., Citation 2009 , p. 129)’. Accordingly, the research motivation is to find combinations of factors that are sufficient but not necessary to explain the outcome (e.g. inability to build a better phone in our case). For example, it is possible that there may be some other explanation (such as CEO Elop truly being a Microsoft mole who engaged in a disguised plot to cause trouble for Nokia), of which we do have evidence and cannot predict. We essentially follow these principles and Van Rooij’s (2015) lead in looking for a more balanced and causally believable explanation for strategic failure based on an understanding that there is no necessity for one or even few explanations:
Success may be due to chance and luck in this perspective—and failure outside a firm’s control. Consequently, we are left with irony: a good-humoured fatalism that puts success and failure in business down to a bit of luck and perhaps some hard work—but as something outside management’s control. (Van Rooij, Citation 2015 , p. 203)
Our mission is to move towards a more analytical and causally plausible understanding of Nokia’s loss of market dominance in mobile phones. We ask why the corporation was unable to make a transformation from feature phones (with a tactile keyboard and static software) to smartphones (with a touchscreen and dynamic software, including numerous new functionalities for the use of a phone). Compared to the above-identified problems in earlier research, ours aims to be less subjective and certainly less emotional, and it aims to follow the principles of causal inference in judging the strengths of the identified causal mechanisms. These principles are all features of good historical research, and in this sense, we offer nothing more or less than an analysis of Nokia’s evolution based on evidence, an understanding of ex ante causal factors, and the strengths and limits of causal inference. Likewise, before the Nokia archives open to researchers, the best we can do is to follow the advice of Collingwood ( Citation 1951 ) to first study choices (i.e. the outer realm) before rushing to understand the behavioural and motivational factors driving these choices (i.e. the inner realm). Accordingly, we hope that our study will serve as a model for business history scholars who will have the archival access currently lacking or who identify similar turning points in other contexts. We start our inquiry with a short reading of Nokia’s recent history.
A short history of Nokia 3
At the turn of the 1980s and the 1990s, Nokia Corporation faced a severe crisis and was forced to make a corporate turnaround. In the process, the company quickly concentrated on mobile phones and telecom networks and by the mid-1990s, had divested itself of dozens of other lines of businesses. By the late 1990s, mobile phones clearly produced the majority of both the net sales and the operating profit of the company (Appendix 3). In 1982, Nokia introduced the world’s first car phone for the Nordic Mobile Telephone (NMT) analogical standard. In 1991, the GSM standard for digital cellular networks was adopted as the pan-European digital standard – again, Nokia played a key role in the related technology development and standardisation process (Manninen, Citation 2002 ). While mobile communications evolved rapidly throughout the 1990s and the early 2000s, Nokia was able to establish itself as the clear global market leader in mobile handsets, with sales peaking in 2007 and remaining in that position until the second quarter of 2008 (Appendix 3).
The success of Nokia in the early 2000s and its technology development was linked to the Symbian operating system. In June 1998, Nokia, Ericsson, Motorola, and Psion established Symbian Ltd., which became the developer of the operating system Symbian OS. 4 The company’s main strategic focus during the early 2000s was to expand to both the mobile voice market and the multimedia business. As we will see below, these targets were sometimes conflicting rather than complementary in terms of technological and organisational choices and strategies. For example, in 2004 alone, Nokia introduced 36 mobile device models 5 in all price ranges and with a wide variety of functional features. Market penetration was impressive – Nokia sold its billionth phone in 2005, 6 and its peak global market share reached 39% in early 2008 (Appendix 3).
After the introduction of Apple’s iPhone in 2007, Google’s announcement that it had formed an Open Handset Alliance to develop standards for mobile devices and, most importantly, Android OS, the situation in the mobile phone device market quickly began to agitate. For the first time in its recent history, in the latter half of 2008, Nokia’s global market share in mobile devices declined. In only two years, Nokia’s operating profits shrank; by 2011, the corporation as a whole was unprofitable.
In 2008, Nokia’s top management made a decision to acquire the full ownership of Symbian Ltd., which was still the world’s leading smartphone software platform. 7 In 2010, Nokia launched an ‘iPhone killer’ – the flagship N8, which was the first product to run on the improved Symbian^3 OS, but with no success in challenging iPhone. Moreover, in February 2010, Nokia and Intel officially announced joint plans to build a new software platform, MeeGo, which would support multiple hardware architectures. 8 In the fall of 2010, the former head of the Microsoft Business Division, Stephen Elop, was appointed as the new CEO of Nokia. The strategic intent of Elop’s new top management team was to regain product leadership in the smartphone market and to retain the market leader position in low-end mobile phones. To do so, Elop and Nokia announced a collaboration between Microsoft and Nokia ‘to form a broad strategic partnership that would use their complementary strengths and expertise to create a new global mobile ecosystem’. 9
Contrary to its earlier strategy, Nokia decided to adopt the Windows Phone operating system (OS) as the primary smartphone platform for Nokia devices for (at least) three years. This decision also meant the end of the development of Symbian OS, MeeGo, and other OS projects an area in which literally thousands of software developers and engineers were still working at full steam. In September 2013, after two years of close cooperation between Nokia and Microsoft, the companies announced that Microsoft would purchase Nokia’s Devices and Services business. 10 In hindsight, the Microsoft acquisition was only a cosmetic change to the market battlefield, as the Android camp and to a lesser extent, iOS/Apple had seized the dominant position ( Figure 1 ).
Figure 1. Smartphones sold globally according to their operating systems, 2009–2015, million units. Source: https://www.statista.com/ (retrieved 15 September 2016).
Our study is a part of a larger oral history programme called ‘Memory of Nokia’ (for similar programmes see, e.g. Alexander, Citation 2015 ; Giertz-Martenson, Citation 2012 ; Kroeze & Keulen, Citation 2013 ). We started a research and oral history collection after several (technology) managers who had worked at the Nokia Corporation contacted us as researchers and urged us to start collecting the memories of Nokia’s former employees. We started data collection in 2010 first by arranging manager and expert interviews and continuing with an analysis of the rapidly accumulating accounts on social media, where former Nokia employees often share their memories. For the purposes of this study, we primarily use the first set of interviews conducted in 2010–2014.
We followed best practices of oral history research tradition, emphasising that oral history is both a (subjective) research methodology (conducting interviews) and a result of the research process (see especially Abrams, Citation 2010 ; Portelli, Citation 1998 ). According to the Oral History Association’s guidelines, 11 we started our inquiry by collecting academic publications on Nokia’s history (see also Friedlander, Citation 1998 ; Heehs, Citation 2000 ). We used this collection to create a timeline of the main historical events in Nokia’s evolution and to obtain an understanding of how other researchers have approached Nokia’s technology management and key organisational choices. At the same time, we systematically collected hundreds of newspaper articles, business magazine reports, and other public material that we triangulated with the academic research reports. After this initial phase of data collection, we assembled all available public material produced by Nokia. This material included the full series of annual reports, CEO letters, and internal company magazines. All of these data have been deposited in a specific research repository available to other scholars.
After creating a solid collection of publicly available material, we entered into the second phase of our data collection. We interviewed 28 former Nokia executives and experts from the telecommunications industry. Our informants included six former members of the top management team and/or board of directors, 11 executives from corporate headquarters, five middle-level managers who had worked in important positions during the Symbian era and seven experts who had consulted for or worked with Nokia in software and application development. The selection criteria for whom we wanted to talk with were as follows. First, following the guidelines of the oral history research process (Friedlander, Citation 1998 ), we looked for technology experts with a long tenure either at Nokia or in its proximity (at supplier companies, consulting companies, etc.). All of our informants (one board member excluded) had considerable Nokia experience and knowledge since the early 1990s and even earlier from the Mobira era in the 1980s (for the history of Mobira see Aspara, Lamberg, Laukia, & Tikkanen, Citation 2011 ). Long tenure was crucial, as we were interested in the ‘life-stories’ of each individual (László, Citation 2008 ; Portelli, Citation 2010 ). Second, we focused on people with a strong technological background. Executives have already had many opportunities to tell their versions of the process (starting with CEO Jorma Ollila’s memoirs and widespread media attention since 2013); we primarily wanted to talk with middle managers and technology experts who understood (a) the strategic challenges of the corporation and (b) the limits of Nokia’s internal technological competencies to build better smartphones. This allowed us to avoid the ‘narrative imperialism’ (Maclean, Harvey, & Stringfellow, Citation 2017 ) and intersubjectivity problems prevalent in earlier research on Nokia and in the oral history tradition more generally (Summerfield, Citation 2000 ). Finally, we had no personal links with the informants. This is important since many compatible longitudinal studies are based on ‘casual ethnography’ (Westney & Van Maanen, Citation 2011 ) – that is, they are conducted by scholars who are familiar with the context and are even friends with the key actor-informants (see, e.g. Burgelman, Citation 1994 ; Doz & Wilson, Citation 2017 ).
In the interview process, we again followed the guidelines of oral history research. We started with questions concerning personal background and attributes (e.g. the length of tenure at Nokia, education, and other similar information). However, we primarily provided an opportunity for informants to freely tell their life histories concerning the Nokia Corporation and the mobile phone business in general. Interview sessions lasted from two to three hours and were recorded and transcribed. Our analytical strategy built on the strength of the oral history method (compared to, for example, in-depth interviews). As Hesse-Biber and Leavy ( Citation 2005 ) describe, this allows the study of processes instead of attributes and understanding processes in a holistic way:
What is really underlying the strength of the method is that you can study process. If you are studying a woman’s life from childhood through college in order to understand her body image issues at the present time, what you will learn about is not only what she is currently experiencing and her perspective on that, but the process that lead her there. Likewise, historical processes and circumstances will underscore her narrative in ways that help us understand individual agency within the context of social and material environments. So, while oral history focuses on the individual and her narrative, it can be used to link micro- and macrophenomena and personal life experiences to broader historical circumstances. Accordingly, oral history is a critical method for understanding life experiences in a more holistic way as compared with other methods of interviews. (Hesse-Biber & Leavy, Citation 2005 , p. 153)
In this spirit, we aimed to document Nokia’s final 10 years in the mobile phone business as it was told to us while simultaneously being conscious of the problems of subjectivity and intersubjectivity. Accordingly, we weighted all information against other sources and the narratives we had accrued, attempting to avoid ‘ready-made’ narratives given, for example, in earlier research and popular media texts. We started our analysis phase by synthesising Nokia’s history with the larger societal and market evolution. At the same time, we built a chronological database of Nokia’s historical evolution, focusing on key strategic decisions, changes in the top management team, and changes in the corporate structure. In the second phase of our analysis, we mapped the evolution of Nokia’s technology management. During this process, we held a workshop in which all members of the research team analysed the same data by reading the material, taking photographs and making photocopies of individual documents, and finally drawing figures and system descriptions that resulted in an explicit understanding of the key characteristics of technology evolution over time and across organisational sub-units. Consequently, we focused on the rhetorical and textual representations of strategic technology-related decisions by analysing key documents and interview transcripts that included explicit statements related to our research framework focusing on technology choices and organisational design (see Vaara & Lamberg, Citation 2016 ). We report our findings in the following pages. The interview excerpts are intended to demonstrate the personal memories and narratives of our informants rather than to be interpreted as ‘evidence’. Our reasoning is based on our extensive historical work based on source triangulation and represented, for example, in numerous timetables, figures, and depictions of key decision-making points along the evolutionary processes analysed in our study.
Technology choices concerning new business challenges
In the following, we focus on two causal factors that we argue combined with organisational design decisions as a sufficient cause of Nokia not producing a better smartphone between 2007 and 2013. The two factors are (1) continuing with Symbian and (2) deciding to abandon Maemo and build an alliance with Intel to develop MeeGo, among other software experiments. Together these two factors – making one decision slowly and others too fast – are sufficient cause – we argue – for why Microsoft OS in 2010 was the only available option after Symbian became outdated and MeeGo and Meltemi were not ready for commercial use. These technological choices were part of the company’s internal decisions – and, to a certain extent, internal political struggles – regarding its future technological focus areas. Figure 2 presents the causal structure of this argument in graphical format and Table 1 lists the OS projects in which Nokia invested between 2007 and 2013.
Figure 2. Causal structure of technology choices.
Table 1. Nokia’s (known) operating system projects after iPhone launch in 2007.
Earlier literature lists the development of the Symbian software platform as the most crucial technological issue in the rise and fall of Nokia’s mobile phone domination. 12 Nokia was locked into a strong path dependence, 13 ‘[…] outcome in any period depends on history and can depend on their order’ (Page, Citation 2006 , p. 97), with the Symbian software platform and hardware development simultaneously being a captive of the company’s major telecom operator customers. However, the evolution and importance of the Symbian OS cannot be understood without considering the interdependence between software and hardware development – and the targets of technology development from the perspective of strategic marketing. Our informants suggest that throughout the early millennium (approximately from 2001 to 2010), hosts of high-level executives engaged in intra-firm competition to direct the corporation’s technology strategy. This competition regressed in three alternative directions: (1) whether the company should maximise profits by lowering costs (the ‘low-cost’ strategy); (2) whether the aim should have been to develop software and hardware to enable high-end features (the ‘smartphone’ strategy); and (3) whether the company should emphasise security and target emerging business markets (the ‘enterprise solution’ strategy). Over time, these three competing strategies led Nokia to establish separate units with conflicting interests within the company:
There were no gaps in know-how or competence—it was all about choosing between three options: optimizing costs and volume, maximizing performance, or maximizing security. And we moved toward optimizing costs. The hardware decisions based on cost optimizing made it impossible to achieve performance in software. (Ex-Nokia executive)
After the appearance of iPhone and Android phones, the rivalry culminated between low-cost and high-end phones. At the time, the key rival technologies were Series 60 and Series 90 (and their variants) – and, again, in practice, the two technology views of the company: whether to focus on Series 60 (which required less expensive hardware) or on high-end smartphones (which would have been better enabled by Series 90 than by S60). The low-cost strategy won in 2010 and was driven by Nokia’s top management for economic and organisational reasons: low-cost mobile phones brought in the bulk of Nokia’s revenues, and the corporation’s centralised software development wanted to concentrate on one main platform instead of two with their different variants.
The very beginning of the tripod strategy among low cost, smartphones, and enterprise solutions occurred when three major mobile phone producers (Nokia, Ericsson, and Motorola) and Psion founded Symbian in 1998. Symbian’s governance structure was peculiar, considering its role as the leading mobile operating system before 2007. Each company had the same number of shares in Symbian, but at the same time, each had its own strategic agenda. Our material emphasises that the ownership structure made it impossible to strategically develop Symbian during its first years, as the owners had different views on the basis for this development. These differences of opinion resulted in three different types of Symbian operating systems and their varieties. In practice, this rivalry continued for ten years, until Nokia bought Symbian in 2008. As one of our informants concluded, ‘Symbian was handicapped from the beginning due to this fracturing [between owners]’.
The major problem for Nokia was to simultaneously pursue three objectives with the same platform. Over time, these divergent development processes resulted in a situation in which the software was complex and difficult to manage while the hardware was kept as inexpensive and simple as possible. This was satisfactory for ordinary phones, but impossible for high-end products that required maximal performance. For Apple and Android, development was performance- and feature-driven from the beginning in terms of both hardware and software. The computational power of CPU is not the only story involving what makes some phones better than others. However, the comparison below ( Figure 3 ) illustrates the result of Nokia’s decision to focus on cost instead of excellence: Nokia lagged behind in computational power, which had concrete effects on the features and functionality that the company could offer to the high-end market segment.
Figure 3. CPU speed of high-end smartphones (Nokia, iPhone, Samsung/HTC). 23 Source: http://www.gsmarena.com/ (information retrieved 12 October 2016).
It is wrong to demonise Symbian in hindsight. In its heyday in the early 2000s, Symbian was the most advanced, efficient, and power-saving mobile OS, and it quickly became the core element of Nokia’s R&D processes. This dependence became stronger in 2008, when Nokia acquired full ownership of Symbian Limited and initiated plans to create an independent entity that would lead the development of the platform. 14 In other words, one of Nokia’s reactions to the changing market situation was to accelerate the development of Symbian:
They bought Psion <…>, and Symbian Foundation was established after that. So, at the time, it looked like a very wise move, but you have to remember that the competition was basically calm. But, yes, it was a blessing and a curse because it was already an old operating system. (Industry expert)
The good thing about the Symbian was that it used much less memory and resources than the other operating systems. And, because we selected Symbian, we were able to bring the smartphone to the marketplace […] But I think that if we had not selected Symbian, we would have not have gotten that far; we would have had much less knowledge of applications and the software development kit that Symbian people were familiar with. They understood the market in the same way as corresponding American companies. (Industry expert)
Although the Symbian OS was recourse-efficient, reliable, and worked well with the early smartphone devices and later with devices for developing markets, there were serious impediments to Symbian’s success in the new competitive situation: limitations in creating apps and the absence of an Apple-type app store, the fragmented ecosystem, and poor user friendliness. Under Nokia’s ownership, the Symbian ecosystem aimed to overcome these obstacles. However, changes took too long and efforts were not always as expected. The key challenges with Symbian were, first, its complicated structure, which made development difficult, and, second, the fact that there were numerous versions of Symbian.
In the telecommunications industry, the modularity of the software platform became crucial after smartphones with hundreds of applications emerged. Modularity enabled rivals – especially firms making Android phones – to enter markets quickly, undermining Nokia’s production efficiency, distribution, and logistics. The central architectural problem with the Symbian software was that it was not modular. Therefore, devices were tightly coupled with the release of each software version and the performance enabled by the hardware. At the same time, dozens of different Symbian software versions were available, but they were not entirely compatible with one another. Thus, there was de facto no common platform. The main difference between Symbian and today’s most popular operating systems, such as Android or iOS, was that device development drove platform development – the product-specific software was only compatible with that device in many cases. A built-in software upgrade function was not available (the first Symbian Anna update of Symbian^3 was only available in 2011), and different parts of the software could not be developed and sold. This method of organising software development was similarly reflected in Nokia’s organisational structure, which made decision-making about key technological choices complicated, slow, and resource-intensive.
The question of software design was interlinked with decisions about CPU features and prices. Around 2007, Nokia’s top management needed to choose between two competing hardware (microprocessor architecture) solutions: Nomadik and Rapuyama. Nomadik was the choice of managers willing to focus on high-end products, whereas Rapuyama was optimal for the low-cost strategy. Top management (Olli-Pekka Kallasvuo and his inner circle) opted for Rapuyama. As a result, only Nokia N96 used Nomadik microprocessors in 2008, 15 whereas the bulk of Nokia phones were based on Rapuyama architecture. The decision resulted in a situation in which Nokia attempted to offer the same features (cameras, etc.) as its rivals with less powerful CPUs and inferior software.
At the same time, when Nokia’s top management clashed when choosing the optimal OS/CPU combination, the development of the new Maemo OS had already started, although according to our informants, resources were still mainly allocated to Symbian:
The best people applied for the Maemo developing team [around 2007/8], as they saw it as a future. This further messed up the Symbian development. (Ex-Nokia executive)
Coupling software and device development may have led to perfectly tailored software for a certain device; however, by 2010, it proved inefficient and overly resource-intensive. The tightly wired and coupled development and matrix organisational structure, which was changed constantly, led to a situation in which no one in the organisation was able to speed up the development process independently:
[…] it was very difficult to develop applications, generic applications for the Symbian platform. Because there were so many product-specific releases and product-specific software, it was not at all sure that when you developed an application, it worked across the whole Symbian product portfolio. (Software developer)
[By 2003,] as a group of organisational development people, we realized that the Symbian development was too heavy. It was inflexible; it was not doing what the software would be doing. (Consultant)
According to our informants, developing applications on the Symbian OS was substantially more difficult than on iOS or Android. Nokia’s developer community grew steadily until 2008 and involved some 8,500 developers, approximately 2,500 of whom were independent subcontractors or developers. 16 However, after 2008, the situation changed, and as more attractive open-source systems became available, Nokia was unable to maintain its developer community: device-specific releases, uncertainty, and constant delays destroyed the confidence of Symbian OS developers.
The developer problem partially explains another major reason why Symbian did not prevail – Nokia failed to provide and nurture a functioning Symbian ecosystem . In the telecommunications industry, the number of users determines the possibilities for building a credible ecosystem and, thus, the possibility for achieving network effects (Griva & Vettas, Citation 2011 ). Nokia’s early ecosystem-building attempts included close cooperation with network operators. However, with the rise of Internet-based services and ecosystems, it became apparent that operators were unable to provide that kind of service. Nokia and the operators were constantly bickering over whose prerogative it was to create online stores, applications, and downloadable content:
The only difference in what Steve Jobs understood is that neither Nokia nor operators understood software. Nokia was pretending; all the operators were pretending. All the operators’ CEOs were telling Ollila or Kallasvuo that ‘Nokia does not do a product that has an application store’ […] Typical telecommunication ecosystem behavior in which operator is the king. And the operator pretends to be the king of things it does not understand either. (Ex-Nokia executive)
As the industry’s dynamics changed after the iPhone revolution, the power of network operators plummeted. Downloadable applications and content for Nokia’s Symbian, MeeGo, and Series40 mobile devices became available at the Nokia Store. In March 2012, the store offered more than 100,000 applications and attracted more than 13 million downloads per day, 17 but the iOS app store and Google Play store offered millions of applications and attracted billions of downloads per day. Nokia lost the app game, as it was not able to build an attractive business ecosystem. Nokia was and remained a telecom company, unlike its rising rivals Apple and Google – with origins in computing and the Internet – and thus presented a different view of the industry. This difference was also continually noted by the informants in this study:
I think it (Internet services) was disruptive, but the smartphone itself – I don’t think that was the actual thing. It was the mobile Internet that came before the smartphones. And probably the second disruptive things were the applications that came on top of that. (Supplier)
Again, the issue was not one of the capability to understand trends: Nokia’s management realised the value of downloadable content early on: by the turn of the 21st century, Club Nokia services were available and offered products such as ringtones and background pictures – but they were not applications in the sense that was common to smartphones a decade later. The main obstacle to generating more user content was that Symbian OS was not an open-source system; external developers had to wade through numerous legal procedures to bring their apps to the market. Even after Nokia made the Symbian OS fully open source, the platform was unappealing to the developer community:
The Symbian ecosystem was driven by the manufacturers and the operators, while the other ecosystems that emerged then were dominated by the applications and the service developers. That was the fundamental difference. (Ex-Nokia executive)
The end of the Symbian era came on 11 February 2011, when Nokia announced that it was joining forces with Microsoft and making Windows Phone its primary smartphone platform.
It is important to note that Nokia’s top management and technology specialists recognised rather clearly and realistically the challenges of the Symbian OS and the new ecosystem-based competition logic. Management discussed multiple options for a new technology strategy in terms of both software and hardware. One option that was widely discussed in the media was whether Nokia should have used the open-source Android operating system and dismissed the ongoing development with Symbian – and, in the end, not allied itself with Microsoft at all. If Android had been selected, Nokia could have become the quality leader, better than Samsung, HTC, or any other manufacturers using the same software. However, top management attempted to avoid becoming a software-agnostic hardware vendor at all costs and thus wanted to avoid the open-source option. In 2010, one of Nokia’s top managers, Anssi Vanjoki, made it clear that choosing Android OS would have solved only short-term problems and would have not provided any solution for the company’s long-term strategic problems. 18 Even with Android, Nokia would not have had a dominant operating system under its control. Accordingly, although the decision to adopt the Microsoft platform was controversial, many of our informants agreed that it was the logical choice.
[…] the only alternative was the old archenemy Microsoft, which had to get a credible platform to go into the market. It wasn’t the perfect decision, but in many ways, it was the only decision that they could make. (Industry expert)
Although Microsoft did not possess an outstanding market share in the mobile phone market, it did – in theory – possess the software muscle to push development forward. Additionally, Microsoft had a strong presence in the enterprise sector in which Nokia attempted to win back lost corporate customers. MeeGo, Maemo, Meltemi, and newly coded versions of Symbian were options before the Elop regime, but they never obtained enough support and network effect to break in commercially.
In summary, the picture of Nokia’s technology strategy from 2003 to 2013 is confusing. In the beginning, Symbian became an endogenous element in practically all high-end phone development, and when its inferiority in the new competitive setting was later recognised, Nokia launched a series of development processes (new versions of Symbian, Maemo, MeeGo, Meltemi, Nokia X, other prototypes with Android, Microsoft, etc.), each requiring attention and other resources and even resulting in fierce internal competition ‘between factions’, as one of our informants described the last years of mobile phone production at Nokia.
As the above narrative and Table 1 demonstrate, Nokia executives made many peculiar decisions concerning the technology strategy of the corporation. For example, Nokia had already launched a number of commercial products using Linux-based Maemo OS (e.g. the Nokia N900). For unknown reasons, the development of Maemo was stopped and switched to the MeeGo project in 2010 and simultaneously to the Meltemi project. MeeGo was a joint operation between Nokia and Intel and proceeded slowly. It is possible that Maemo had such technological challenges that it came to a dead end. However, the decision to enter into the mentioned alliance in a situation in which urgency was very high is unusual because of the well-known risks of inter-firm alliances. It is possible that the competitive threat was not seen as a true strategic challenge, as Nokia had already succeeded in besting its competitors’ innovative new products with its superior production capacity and logistics – or simply by copying products (such as the Motorola Razr and the RIM Blackberry earlier). Thus, management clearly thought that copying the iPhone would also be possible, for example, by using the emerging MeeGo platform, but it was not ready yet to compete without having developers and applications for MeeGo devices:
I think it was a classical type of thing that Symbian was hoping that MeeGo would come earlier and MeeGo was hoping that Symbian would last longer, and kind of neither happened. And there was a clear mismatch of what was needed in the market and what was available from Nokia. (Ex-Nokia engineer)
[The dismissal of MeeGo] …was basically because it was felt at that time that there was not a proper ecosystem supporting MeeGo—to make MeeGo successful in a global marketplace, you would have needed these 4.5 million application developers. And there was not a single one at that point when it was introduced to the markets. And the overall development was slowed down in the latter part of 2000. (Ex-Nokia executive)
Overall, Nokia’s technology development stretched to many directions and lacked a clear strategic vision: the corporation was not in paralysis but just tried to do too much in a short period of time. We are left with two open questions important for our understanding of how and why Nokia was left behind in the OS competition: (1) Why did specialists and decision-makers in Nokia believe and invest in Symbian for such an extended period of time; and (2) why and how did key decision-makers engage in making a series of stop-go decisions concerning alternative technologies in a situation that would have required focused action?
Organisational design both unfrozen and disunited
In the previous section, we identified two causal conditions (Symbian and the number of alternative technologies) as having a direct causal relationship with the effect that Nokia was unable to produce a competitive smartphone after iPhone and before the business was divested. Next, we demonstrate the inconsistency in Nokia’s organisational design that logically affected the two conditions related to technology management. Because we do not have data, for example, on individual-level movement from one business unit or R&D project to another, we do not know the exact causal mechanism, but we assume that the causal conditions are not separate. Instead, they jointly configure a set of conditions that explains the ‘no iPhone killer’ effect. Our material also highlights the role of political conflicts. However, this condition remains a latent condition, as it is neither necessary nor sufficient to directly explain any of the other conditions and effects. Figure 4 illustrates this causal reasoning in graphical format:
Figure 4. Causal relationship between organisational design and technology choices.
Our inquiry into changes in Nokia’s organisational design starts from the observation that Nokia attempted to be a modern, flexible (aka agile) company. Since the early 2000s, Nokia’s managerial culture specifically emphasised flexibility and internal competition as the key antecedents of its competitiveness. This agility principle was duly communicated in the literature associated with Nokia’s interests (Doz & Kosonen, Citation 2010 ; Steinbock, Citation 2003 , Citation 2010 ) and in public speeches given by the firm’s top management:
Being fast is significantly more important than foreseeing what happens in the market. This is our key competitive advantage. (CEO Olli-Pekka Kallasvuo in Suomen Kuvalehti, 10/2006)
So, on all three key dimensions of strategic agility – strategic sensitivity, collective commitments, and resource fluidity – Ericsson was outmanoeuvred by Nokia when it came to mobile communication opportunities. (Doz & Kosonen, Citation 2010 , p. 4)
When examining the period of 2006–2010, the dominant picture is that these ideas materialised in a near-hysterical corporate climate. As the preceding sections have demonstrated, during the first intense encounter with a new type of competitor, Nokia was inconsistent in its reactions, launching numerous projects and strategies to counterattack its emerging rivals. We now turn to two key organisational aspects that correlate with the erratic top-level strategising at the Nokia Corporation: top management team dynamics and decisions on strategy and corporate structure.
In a flattering report in Fortune magazine in 2000, Nokia’s success was centrally linked to its experienced and close-knit executive team (CEO Jorma Ollila’s ‘dream team’), which had a shared history at the corporation going back to the early 1990s. By 2010, most of these dream-team executives were long gone, and Nokia’s strong self-confidence in the early years of the 21st century had turned into near panic at the top of the corporation, which was registering heavy quarterly losses. One interpretation regards Nokia’s evolution as a series of unrelenting management interventions regarding both strategy and structure. The competitive challenge posed by Apple and Google was not the only, or perhaps even not the foremost, worry at Nokia’s corporate headquarters during the formative smartphone years of 2006–2008.
As Figure 5 illustrates, even without considering external competitive threats, Nokia seems to have experienced high internal turbulence. There was a high rate of turnover in its top management team, post-merger integration challenges related to the amalgamation of Nokia and Siemens’ telecom networks businesses in 2006 were obvious and far-reaching (to create a unified Nokia-Siemens network), and the corporation consequently undertook a series of major strategic and structural changes. Accordingly, the new CEO, Olli-Pekka Kallasvuo, took over from Jorma Ollila in a highly demanding situation, given that the attention of the top management team is a key resource for any company (Joseph & Ocasio, Citation 2012 ). Changes at corporate headquarters, business-related challenges other than mobile phone competition, and Kallasvuo’s conservative leadership mentality produced three outcomes: inadequate technological understanding among the top management team, a corporate strategy heavily based on investor expectations (including, e.g. considerable stock buybacks), and cost-focused conservatism in the launch and implementation of competitive counter-moves against emerging competition from smartphone players such as Apple and Google.
Figure 5. The number of employees from 2000 to 2015 and the timing of major changes in the organisational structure and executive team
Symbolically, one of the first decisions in the Kallasvuo era was to dissolve the Future Technologies team, which had focused on analysing future technological trends and related business opportunities and threats. At the same time, the position of the Chief Technology Officer (CTO) disappeared from the top management team around 2007, when Pertti Korhonen 19 left the executive team with long-term CEO Jorma Ollila (although Ollila chose to remain chairman of the board until 2012). The top management team was consequently revamped, and the CTO position was re-established in 2010 under new CEO Stephen Elop; however, some of the earlier literature (Cord, Citation 2014 ; Salminen & Nykänen, Citation 2014 ; Risku, Citation 2010 ) and our informants are almost unanimous regarding the impossibility of running a technology company without strong tech-specific leadership at the top of the corporation:
[…] at the same time the CEO changed, a lot of technical skills disappeared from the top management, and it became more and more businesspeople with business backgrounds and no technical skills. […] there was not enough understanding in the top management or the layer underneath about what is realistic and where the real problems are. They were living in the bubble and were very focused on the new strategy of doing the services and totally ignored the devices. Because it was ‘we are No. 1 in the world, and we don’t need to care about it’. (Ex-Nokia technology manager)
It is an exaggeration to say that there was no technical know-how in the top management team, even during the turbulent years; that simply is not true. However, Kallasvuo was not knowledgeable in technology. (Ex-Nokia executive)
There is no need for the CEO to be an expert in software development or technology. Instead, she or he must be passionate about learning the basic technological logics and willing and capable to find the right people for the right positions. Nokia was unable to find managers who would have built it as a software company. Nokia was phlegmatic and powerless with Symbian […] when Pertti Korhonen left Nokia in 2006, the software-specific understanding of business in the top management team decreased dramatically. (Ollila & Saukkomaa, Citation 2013 , p. 458)
The interpretation here is not that the Nokia of the era lacked technological capabilities per se – rather, Kallasvuo and his closest strategy officers had quite different strategic objectives. They wanted a streamlined corporation that would look good to investors and other financial market actors. This was necessary since the gross revenues of the corporation had been flat due to the saturation of the (non-smartphone) handset markets for a couple of years. They were convinced that Nokia would outcompete its rivals with its operational excellence in the future. Earlier, Jorma Ollila had not been particularly interested in technological detail either, 20 but he had a top management team that had hands-on experience both in research and development and in technology strategy.
The diminishing emphasis on technological capabilities in Kallasvuo’s regime is understandable from a strategy process perspective. Salminen and Nykänen ( Citation 2014 ) and Cord (2014) reveal that Nokia employed a colossal strategic planning team in its Espoo headquarters that involved hundreds of people in various roles. However, this team was not empowered either to challenge the corporate strategy or to help the top management team renew its strategic focus. In contrast, the team was part of Nokia’s unrelenting efforts to match investor expectations – ‘to produce marketing materials for the stock market’, as one of our informants described the role of the strategy staff. This logic permeated the organisation and its culture:
Nokia was a product company, where all the targets were set to product making and these software development kits and third-party ecosystem and apps were a second priority. We were pretending that they were the first priority, but in the actual action and the actual target setting for people and the actual compensation systems, they were not the primary target—they were the secondary target. And that was pretty much due to the target setting of Mr. Ollila. It was completely inadequate to combat the iPhone. (Ex-Nokia executive)
There was no finance, no budget to keep the software platform good, and it was not analyzed as an important business component. […] I can explain that the core target setting was why many new products appeared each year—I mean hardware products, new model numbers. (Ex-Nokia executive)
The emphasis on keeping investors happy created a chasm between corporate headquarters and the technology development teams lower in the organisational hierarchy. Most importantly, emerging substantive conflicts particularly affected software. An engineer in the Symbian development later described a total communication breakdown between organisational layers:
[…] the Nokia leadership responsible for the Devices unit’s execution of Symbian Open Source products and initiatives was told directly that the ecosystem (consisting of manufacturers and suppliers) and our efforts would falter if we didn’t have commitments to 1) relocate and improve developer tools under our open model, 2) to have an effective app store strategy, e.g. not one homegrown by Nokia alone, and 3) to secure our operating budget. We asked for their direct support on all three…The Foundation and our ecosystem initiatives didn’t get any support for those initiatives, despite sitting down with the leadership at the key moment. Quite the opposite, the rug was pulled out from under us at almost every turn. (Interview with Lee Williams, Forbes , 3 September 2013)
Why was Kallasvuo unable or unwilling to change Nokia’s technology strategy to more aggressively counter the ascension of Apple and Google? The stream of strategic decisions from 2006 to 2010 illustrates an essentially conservative strategy that emphasised stock market reactions and neglected crucial technological issues, which would have been essential for the generation of powerful feature phones in the emerging smartphone market. Key reasons for this conservatism were that Kallasvuo and his team had invested a considerable amount of their time and energy to launch and implement major structural changes. A key outcome was the neglect of a comprehensive but focused technology strategy. The tantamount strategic objectives were financial performance and market share:
Kallasvuo was absolutely the best possible CFO, but he was unfortunately the CEO at a time when technological decisions were more important (Ex-Nokia executive)
Nokia said a ‘substantial’ portion of savings [from the merger with Siemens network] was expected to materialize in the first two years. [Kallasvuo:] ‘These changes are expected to result in a headcount adjustment over the next four years in the range of ten to fifteen per cent from the initial combined base of about 60,000’. (Financial Times, 19 June 2006)
It was extremely difficult to bring in any innovations or new business opportunities that did not align with the mainstream Nokia strategy—unless it was pushed down from the top management. The top line—Symbian devices—were showing outstanding sales figures and any activities that might have threatened the existence of the top-selling line were considered cautiously. (Ex-Nokia executive)
An elemental part of ‘Nokia agility’ involved reacting to changes in the market by changing the company’s organisational structure. The threat by Apple and Google from 2007–2013 was not the first competitive challenge Nokia had repelled during the 2000s. In 2003, the company faced increased competition, such as Motorola’s slim and appealing Razr phone using cheap component producers in Asia, resulting in its market share dropping from 35% in 2002 to 31% in 2004 (Appendix 3; see also McCray, Gonzalez, & Darling, Citation 2011 ). In response, Nokia’s top management, led by Jorma Ollila, restructured the company and further optimised its production and logistical processes, which significantly reduced costs and time-to-market while increasing the range of devices produced. 21 Moreover, new models and the introduction of the first Symbian 60 series phone with a camera returned Nokia rather quickly to its previous market leader position in most target markets globally. The new decentralised matrix structure brought about positive changes and helped boost Nokia’s sales. In 2004, Nokia’s Chairman and CEO Jorma Ollila stated, ‘We are energized by our reorganization into four business groups, which better reflect our strategy to expand mobile voice, drive consumer mobile multimedia and mobilize enterprise solutions ’. 22 However, even in 2003 and 2004, ideas about the matrix organisation were questionable; one of our informants claimed that the organisational changes in 2003 and resulting insufficient investments in marketing were the main reason for this market share decline, not the appearance of competitors such as Razr (compare Doz & Wilson, Citation 2017 ).
The idea of the value of constant structural changes, however, was deeply rooted in Nokia’s management culture. Accordingly, combined with the requirements of the Siemens merger and the Navteq acquisition, Kallasvuo’s response to engage in incessant rounds of major organisational changes and restructuring was logical. However, this time, the changes damaged Nokia’s competitiveness and resulted in increased slowness in Nokia’s competitive actions against the new competitive threats in the smartphone market. The most apparent problem with Nokia’s habitual use of organisational restructuring to change or implement a novel strategy was the high frequency of such changes. Between 2000 and 2013, Nokia launched three larger changes in its organisational structure, and practically every year included some major adjustments. As a consequence, the importance of the informal organisation grew exponentially as organisational process development ground to a halt and was constantly manipulated by top management. In some sense, the more hierarchical organisation structure from the 1990s continued during these organisational changes, but without centralised power:
[…] we decided to become a global company that would be open to those new ideas, and we therefore introduced this matrix organisation. But, in practice, it became very difficult to implement. Because people tend to still think in terms of hierarchy, they tend to think in terms of silos and in their own terms and agendas, and it’s difficult. It fights against some of the basic ways that people behave. (Ex-Nokia executive)
I would say that [the organisational structure] wouldn’t have been a problem if there had been enough coordination between the different business units. But there was no sufficiently strong technological leadership in a context where the different business units were driving in different directions. (Ex-Nokia executive)
The manner in which Nokia’s top management redesigned the organisational structure presented another problem: the matrix organisation consisted of a constantly changing quantity of business units (Mobile Phones, Multimedia, Networks, and Enterprise Solutions in the 2004 corporate architecture, for instance) on the one hand and numerous horizontal units that linked and served functional units on the other hand. While the core rationale for this decision may have been sound and in line with Nokia’s agile image, the result was the gradual emergence of serious functional problems: cannibalistic internal competition between business units and even individual development projects, fierce rivalry between competing technologies (especially between Symbian and Maemo/MeeGo), and a highly complex decision-making environment that was sensitive to politicking.
Internal competition was hard-wired into Nokia’s organisational culture. Nokia typically nurtured dozens of competing product programmes and focused on product-specific software designs and the wide diversification of market segments. This policy created tensions between functional and development project managers, scattered authority, and blurred responsibilities. These negative outcomes appeared not only in strategic planning but also in execution, in which employees ended up with more than one functional supervisor and became frustrated with reporting and fulfilling heterogeneous requirements that did not serve their core responsibilities in the organisation.
The matrix organisation generated novel practices in the workplace such as the formation of virtual teams and increased telework, along with the creation of decision-making teams based on a concrete problem and project teams formed in a temporary, ad hoc fashion. However, the scattered and ambiguous chain of command required more meetings and internal bargaining, which resulted in considerably longer procedures for any minor decision. Most importantly, the matrix only aggravated the fragmentation of technology development, as different organisational units began to concentrate on certain defined characteristics of the operating systems, which meant that different product development programmes needed additional adjusted software, resulting in copious product-specific software releases linked with certain devices:
Having three business units made no sense. They all made the same stuff, and that just increased internal competition […] and the other thing was that the technical skill was so low that the top management couldn’t specify any technical criteria for how the Enterprise product or the Multimedia product would be different. There were no technical guidelines for the Research and Development people due to the laziness of the top management and their lack of understanding of even products themselves. (Ex-Nokia executive)
Nokia’s problem was that Nokia had three competing factions inside the company: the MeeGo faction, the Symbian faction, and the Series 40 faction. And all these other factions tried to harm the MeeGo faction. Because you don’t want even your internal competitor to survive; your objective is to kill them. And it’s also that these low-level managers or medium-level managers were left to do is that the management didn’t understand anything about the software […] So, the MeeGo failure is completely in-house politics because they were not allowed to put the telephone in. They were not allowed to put the chip that had the telephone into the product. (Ex-Nokia executive)
Internal competition was intensified by the aggressive incentive scheme for middle and top managers (Palmu-Joronen, Citation 2010 ) and constant formal changes in corporate structure. In addition, the complex organisational architecture resulted in an increasingly slow and arduous decision-making environment. The agility-based management ideology simply stopped working when serious competitive threats emerged. Although Nokia’s top management was acutely aware of the major competitive threats that it faced, it is paradoxical that few opportunities were available to make major strategic interventions without risking even more organisational dysfunction (Jacobides, Citation 2007 ). Furthermore, Nokia employees were already frustrated with the organisation and its dysfunctional horizontal decision-making. The reasons for this frustration lay in the dispersed and unclear chain of command when the organisation removed some levels of the hierarchy:
Because of the structure, all the product projects developing some device were always dependent on some other program or platform. They were not able to develop anything by themselves. (Ex-Nokia executive)
Some key employees felt that they had no influence whatsoever over important decisions or vice versa – they had too much influence on less significant matters, and negotiations on petty details required too much effort. Forming cross-functional project teams was a productive way of moving forward, but only as long as they were supervised by a strong chain of command. At Nokia, the lack of technological capabilities in the top management team, the complex and unclear organisational structure, and the culture of internal competition resulted in slow and inefficient decision-making and ultimately in an inability to catch up with competitors’ novel offerings, which were often superior from the perspective of the consumer. The remaining questions for future research focus on the process resulting in these outcomes and decisions: Why and how did Nokia’s executives make the decisions they made and what was the role of internal (e.g. a strategic planning task force) and external (e.g. consulting firms and investment bankers) advisers in this process; and what were the specific mechanisms that transferred inconsistency in organisational design to technology management issues and processes?
The key lesson of our study can be summarised as follows: there can be no short cuts in explaining complex causal processes. Nokia did not lose its market leader position because of middle manager fear and anxiety, internal politics, or because of deteriorating top leader competence. Such simple explanations originate from the strong tendency to formulate compacted narratives and novel theoretical explanations in both academic management research and popular management literature (Barley, Citation 2016 ).
The initial motivation for our study was to collaborate with Nokia engineers to collect oral histories focused on software development and the ill-fated Symbian platform. This article is a by-product of that project, with the goal of critically analysing the related evolutionary process as studied by business historians with a philosophical background in critical realism. While we do not argue that we found the truth concerning Nokia’s history (or a piece thereof), our study should be seen as a step towards cumulative knowledge about Nokia’s loss of market leadership and similar failure cases (cf. Finkelstein’s Citation 2006 study on Motorola).
Consequently, our key finding was the causal relationship between choices concerning technology and organisational design, as illustrated in Figure 6 :
Figure 6. Causal model of the process ending in Nokia’s inability to produce better smartphones.
The above causal model illustrates that the agile management philosophy materialised in a constant flow of changes in organisational structure, allowing multiple incompatible technology platforms and development projects to compete for resources at the same time. The organisational outcome was a profound inability to use the still-abundant resources Nokia possessed effectively and efficiently to retain market leadership. We have to remember that during our period of analysis, Nokia used almost €19 billion for its own share buybacks instead of investing this enormous sum in the development of new technologies, products, processes or entirely new businesses (Hämäläinen, Citation 2012 ).
There are many questions that our study could not answer: why was the development of the Maemo platform halted and the resources transferred to a risky joint project with Intel; why did top executives believe in the future prospects of the Symbian platform for so long; and how did Nokia use external advisers in making various platform decisions? Naturally, our main argument is not that agility would be a strategic management concept generally and univocally harmful for corporate performance in all possible contexts or that organic evolution and incremental learning would be beneficial for each and every firm. What we aimed to demonstrate through the Nokia case is that the corporation chose the worst possible time for the simultaneous implementation of both strategic agility and high evolutionary variation in its technologies. Speedy decision-making (Stieglitz, Knudsen, & Becker, Citation 2016 ) accompanied by ruthless, effective and efficient architectural product innovation (Henderson & Clark, Citation 1990 ) would have been required to win the smartphone game (if that could have been won at all, cf. Roiij, 2015). The logic underpinning this somewhat counterintuitive notion is the need for fast and ruthless response to the quickly emerging competitive threat that would have been best achieved by relying on established routinised technology management processes. Nokia’s history clearly demonstrates the earlier superiority of its technology management and product rollout processes. However, during the critical opportunity window to beat the competition in 2007–2010, these processes were essentially broken.
Our historical study reported in this article gives rise to a few important avenues for future research. First, Nokia is among many failed telecom companies: Motorola, Ericsson, Sony and many of the pioneers of the 1980s also dropped out of the competitive struggle. An obvious topic for a comparative historical study would be to focus on the anatomy of these failures. Second, and relatedly, the regimes of the successive CEOs Ollila, Kallasvuo and Elop and their top management teams should be investigated more in depth from the viewpoint of exercising strategic leadership. More generally, the question of top management regimes as an explanation for organisational evolution would open important theoretical and empirical avenues of research. Third, we hope that our work could be used as a sample of how oral historical methods can be used in cases in which archives are either non-existent or non-accessible. This might be of utmost value in future when massive digital archives become available; namely, to be able to use those archives (i.e. ‘ask the right questions’), one might first have to pursue oral historical methods to make sense of the organisation (i.e. to be able to ‘ask the right questions’). This might turn the process of oral history upside down, as current methodological guides usually emphasise the need to familiarise oneself with the object before beginning interviews.
Sources: Press releases, SEC filings 2007–2013; oral history database; technology oriented web-collections such as http://mynokiablog.com/2014/11/25/mythbusting-nokias-meltemi-part-1-n9-elop-android-safest-best/ [retrieved 25 July 2018].
Source: Nokia Annual Reports 1994–2014; for market share: Statista.com (accessed 29 September 2018).
Notes: Million Finnish Marks 1994–1998 and Million Euros 1999–2013; for year 2013 excluding those businesses which were sold to Microsoft.
We gratefully acknowledge the comments received at the 2016 Industry Studies Conference and the feedback from Jukka Luoma. The project has been funded by the Academy of Finland project ‘Learning from the past for the future’, which focuses on the narrative explanation and causal inference of failures of large telecommunication firms and especially Nokia, Apple, Motorola, and Ericsson.
No potential conflict of interest was reported by the authors.
Academy of Finland, Kulttuurin ja yhteiskunnan tutkimuksen toimikunta.
Notes on contributors
Juha-antti lamberg, sandra lubinaitė, henrikki tikkanen.
1. For example, Huy, the senior member of the research team of Vuori and Huy ( Citation 2016 ), had studied emotions and fear in organisations long before doing fieldwork at Nokia (see e.g. Huy, Citation 1999 , Citation 2011 ) so the hammer existed before the nail.
2. INUS refers to ‘ I nsufficient but N ecessary part of a condition which is itself U nnecessary but S ufficient for the result’ as defined by Mackie ( Citation 1965 ) (cited in Mahoney et al., Citation 2009 ).
3. Nokia’s history has been written many times. We essentially built on Häikiö’s ( Citation 2001 ) commissioned history, Lindén and Nykänen’s ( Citation 2016 ) analysis of Nokia’s societal impact, Aspara et al.’s ( Citation 2011 , Citation 2013 ) studies of the company’s 1990s corporate turnaround, the meta-analysis by Lamberg, Laukia, and Ojala ( Citation 2014 ) and Laamanen, Lamberg, and Vaara ( Citation 2016 ), Van Rooij ( Citation 2015 ), and Ollila’s memoirs (Ollila & Saukkomaa, Citation 2013 ). In terms of facts and figures, we mainly use Nokia’s SEC filings and annual reports. On popular histories of Nokia during the 1990s and early 2000s, see especially Bruun and Wallén, ( Citation 1999 ), Steinbock ( Citation 2001 ), Häikiö ( Citation 2002 ), and Skippari and Ojala, ( Citation 2008 ). Appendix 1 summarizes the main developments of Nokia.
4. http://developer.nokia.com/community/wiki/Symbian_OS [Retrieved 2.2.2014]
5. Nokia Corporation Annual report 2004, p. 31.
6. http://www.independent.co.uk/news/business/analysis-and-features/microsoft-buys-nokia-150year-history-of-finnish-company-with-humble-beginnings-8795907.html [retrieved 31.1.2014]
7. Nokia Corporation press release, 2 December 2008.
8. Nokia press release, 15 February 2010.
9. Microsoft press release, 10 February 2011.
10. Microsoft press release, 3 September 2013.
11. See http://www.oralhistory.org/about/principles-and-practices/ . Retrieved on 14 August 2018.
12. The central role of Symbian is described in almost all of the ten Nokia studies listed in Appendix 2.
13. The literature on path dependence is extensive. Our work is based on conceptual research in organisation studies and applied mathematics. See, for example, Sydow, Schreyögg, and Koch, ( Citation 2009 ); Page ( Citation 2006 ); Arthur ( Citation 1994 ).
14. Nokia Corporation Annual Report 2008.
15. https://en.wikipedia.org/wiki/Nomadik .
16. Research Institute of the Finnish Economy 2014.
17. Nokia Annual Report 2011.
18. http://www.engadget.com/2010/09/21/ce-oh-no-he-didnt-anssi-vanjoki-says-using-android-is-like-pe/ [Retrieved 24.9.2014]
19. CTO Pertti Korhonen worked at Nokia in different positions from 1986 to 2006 and was a key actor in numerous essential technology development projects.
20. An excerpt from the Fortune magazine article illustrates Ollila’s attitude toward technological details: ‘Jorma Ollila is standing before a small group of analysts and investors at the Mark Hopkins Hotel in San Francisco, failing to answer some increasingly arcane questions about technological developments in the wireless industry. “You beat me with the technical details there,” the CEO tells one interrogator. “I’m sorry, my mind was wandering,” he says as he asks another to repeat his question. Then Mark McKechnie, a wireless industry analyst at Bank of America Securities, asks about something that actually matters to Ollila: Will Nokia extend its market-share lead this year?’ (Fortune 1.5.2000).
21. Nokia’s governance model was such that even major shareholders could not effectively intervene in the strategic management of the corporation. According to the official SEC filing description ‘…the control and management of Nokia is divided among the shareholders at a general meeting, the Board of Directors (or the “Board”), the President and the Group Executive Board chaired by the Chief Executive Officer’. For example, in 2008 Jorma Ollila was the Chairman of the Board (having previously also been both CEO and Chairman for many years) and CEO Kallasvuo was a member of the board. What is more, the board was a mix of internal and external members and in practice strengthened the power of both Ollila and Kallasvuo, the latter of whom also acted as the President of the Group of Directors. This situation changed only in 2010 when Risto Siilasmaa became the Chairman (i.e. being the first ‘outsider’ Chairman since 1999) with Stephen Elop as the CEO and President of the Group of Directors.
22. Nokia press release, 2004.
23. We counted N95, N96, N97, N8, n9, Lumia920, Lumia 1520, and Lumia 929 as Nokia’s flagship phones. For Android, every new variant of the Galaxy series was included, except for 2008–2009, for which we used HTC’s best models.
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Appendix 1: Timeline of the events at Nokia Corporation and the mobile communications industry
Appendix 2: earlier literature focused on nokia’s fall, appendix 3. key financial information of nokia and its mobile phone business unit, reprints and permissions.
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Nokia Case Analysis
Nokia Corporation is a Finnish multinational telecommunications, information technology, and consumer electronics company, founded in 1865. Nokia’s headquarters are in Espoo, in the greater Helsinki metropolitan area. In 2017, Nokia employed approximately 102,000 people across over 100 countries, did business in more than 130 countries, and reported annual revenues of around €23 billion. Nokia is a public limited company listed on the Helsinki Stock Exchange and New York Stock Exchange. It is the world’s 415th-largest company measured by 2016 revenues according to the Fortune Global 500, having peaked at 85th place in 2009. It is a component of the Euro Stoxx 50 stock market index.
The company has had various industries in over 150 years. It was founded as a pulp mill and had long been associated with rubber and cables, but since the 1990s focuses on large-scale telecommunications infrastructures, technology development, and licensing. Nokia is a notable major contributor to the mobile telephony industry, having assisted in the development of the GSM, 3G and LTE standards (and currently in 5G), and is best known for having been the largest worldwide vendor of mobile phones and smartphones for a period. After a partnership with Microsoft and market struggles, its mobile phone business was eventually bought by the former, creating Microsoft Mobile as its successor in 2014. After the sale, Nokia began to focus more extensively on its telecommunications infrastructure business and on the Internet of things, marked by the divestiture of its Here mapping division and the acquisition of Alcatel-Lucent, including its Bell Labs research organization. The company then also experimented with virtual reality and digital health, the latter through the purchase of Withings. The Nokia brand has since returned to the mobile and smartphone market through a licensing arrangement with HMD Global. Nokia continues to be a major patent licensor for most large mobile phone vendors. As of 2018 Nokia is the world’s third largest network equipment manufacturer.
The company was viewed with national pride by Finns, as its successful mobile phone business made it by far the largest worldwide company and brand from Finland. At its peak in 2000, during the telecoms bubble, Nokia alone accounted for 4% of the country’s GDP, 21% of total exports, and 70% of the Helsinki Stock Exchange market capital.
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Nokia Change Management Case Study
Company background, factors influencing organizational change, how organizational change unfolded, reference list.
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Nokia Corporation is an international communication firm whose headquarters are situated in Espoo. The company is popular for manufacturing mobile phones. In addition, the company manufactures other consumer products like mobile networks, set-top boxes, and apparatus for broadband internet.
Moreover, Nokia Corporation supplies the motor industry with car speakers (Kautto 2009). Currently, the company dominates the mobile phone market with a market share of over 38.6 percent. In 2010, Nokia’s financial income was $2.6 billions. Engineer Fredrik Idestam established the company in 1965.
During this period, the company dealt with paper products, which it exported to Great Britain and Russia. In early 20 th century, the company concentrated on manufacture of wheelchair frames and rubber boots. Even today, some brands of bicycle tires bear the company’s name.
The modern Nokia Company was established in 1967. The management brought the former paper mill section and the rubber works together to establish a technological company. In 1981, a mobile network was launched in Scandinavian, prompting Nokia Corporation to manufacture its first car phones.
In 1987, the company manufactured its first mobile phone. At the same time, Nokia Corporation helped Finland, Germany, China, Poland, Italy, and Mexico to repair network for their entertainment industries (Ropponen 2008). In 2010, Stephen Elop joined the company’s management team.
Nokia Corporation merged with Siemens to form one of the biggest telecommunication networks dubbed Nokia Siemens Networks.
Currently, Nokia Corporation is among the companies that manufacture quality smart phones globally. The company continues coming up with novel inventions in line with the emerging technologies.
In 2004, Nokia Company started restructuring its operations as a way to satisfy customer aspirations. The company came up with a program dubbed “the Nokia Booster program”, which aimed at bringing together online customers and the company’s strategic development (Schienstock 2004).
A number of factors contributed to the restructuring process. Among them include desire to, attain global coverage, embrace employee empowerment, promote co-creation, and support the community.
One of the key factors that prompted Nokia Corporation to come up with the Nokia Booster program was the pressure to exploit the global market. The company was in need for establishing a single access point through which it could communicate with all its target consumers, and employees worldwide.
Prior to the program, the company relied on a communication structure where information was conveyed from the top management, down to the employees through a number of senior staff (Schienstock 2004).
Such a communication structure was slow. Consequently, the company required a communication structure that could keep pace with the contemporary marketplace.
To enhance its performance, Nokia Corporation required having a platform through which it could share its agendas with employees. Previously, employees made limited contribution to organizational policies (Krell 2000).
To make sure that employees backed the company’s agendas, Nokia Corporation had to come up with mechanisms that would captivate the employees. The company learnt that employees could be active if allowed to manage debates that fascinated them.
To achieve this, the company assigned different employees to different agendas and requested them to share the agenda with the public. This helped the company to gather information from the public, therefore, aligning its operations with customer needs.
The program helped the company to reach its target customers in remote areas where it was hard for employees to reach (Nonaka & Teece 2001).
Through the program, customers shared their views about the company and changes they wish the company to make, thus, spurring employee creativity. Indeed, the program led to numerous innovations in the company.
Management team in Nokia Corporation maintained that, for the company to perform, it required exploiting the vast experience and knowledge; its employees possessed. Nevertheless, it could hardly achieve this without fostering cooperation between the employees.
Senior managers came up with ideas concerning the innovations they would like to introduce into the company (Masalin 2003). The company then disseminated the ideas to employees and customers through the Nokia Booster program.
The program helped the company to establish a platform by which it could get opinions from all the stakeholders, therefore, coming up with products that meet all the desired specifications. Besides, the company needed to be sure that its employees are aware of the value of the projects the company initiates.
Nokia Corporation could achieve this by involving the employees in formulation and implementation of the projects (Masalin 2003). The Nokia Booster program acted as an avenue through which the company fostered cooperation between employees in different departments.
In a span of six months, the company had started witnessing inventions as employees seek to enhance organizational operations. In addition, employees shared ideas on changes they considered unfeasible, thus, helping the company pursue feasible goals only (Masalin 2003).
In 2004, Nokia Corporation made it public that it intended to begin organizational change, which aimed at helping the company meet changing consumer needs. The company reduced the number of its business units to four. It implemented the entire change within one week.
To implement the change, the company required a hundred employees taking new jobs. All the other employees retained their original jobs. Nokia Corporation reconstructed its initial modular teams (Ropponen 2008).
The company established a common platform through which all employees shared their ideas to help the company to address customer ambitions.
Ropponen posits, “The genesis of the Booster Programme, launched in late 2008, could be traced to the wide involvement of the strategy-planning process and to the flexibility and project orientation of the modular structure” (2008, p. 163).
The program started with a design team led by Ian Gee and Maximilian Kammerer. The design team argued that the traditional system of communication made it hard for the company to achieve its goals. Hence, the company required a platform that would help it involve all its stakeholders in pursuing organizational goals.
The design team resolved to organize a workshop “with team leaders followed by the much broader involvement of the whole community through an online social network community” (Masalin 2003, p. 69).
The corporation organized for workshops in different cities across the globe. At least a hundred change leaders participated in every workshop.
After the workshops, participants went back to their organizations, where they recruited employees into the adopted change processes. Online community took the centre stage in steering the changes.
This mishmash of traditional communication mechanisms and novel forms of relations established an upsurge of fervor (Masalin 2003). The Booster led to open discourse between frontline workers, community members, and managers about challenges affecting the company.
The online community furnished employees with information concerning potential changes that could benefit the company, therefore, helping them initiate innovations.
Kautto, P 2009, ‘Nokia as an environmental policy actor: Evolution of collaborative corporate political activity in a multinational company’, Journal of Common Market Studies , vol. 47 no. 1, pp. 103-125.
Krell, T 2000, ‘Organizational longevity and technological change’, Journal of Organizational Change Management , vol. 13 no. 1, pp. 8 – 14.
Masalin, L 2003, ‘Nokia leads change through continuous learning’, Academy of Management Learning & Education , vol. 2 no. 1, pp. 68-72.
Nonaka, I & Teece, D 2001, Managing Industrial Knowledge: Creation, Transfer and Utilization , SAGE Publications Ltd, London.
Ropponen, T 2008, ‘The Nokia story of using action learning’, Action Learning: Research and Practice , vol. 5 no. 2, pp. 161-165.
Schienstock, G 2004, Embracing the knowledge economy: the dynamic transformation of the Finnish Innovation System , Edward Elgar Publishing, Northampton.
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The Rise and Fall of Nokia Case Study Solution & Analysis
- Harvard Case Studies
The Rise and Fall of Nokia Case Study Solution & Analysis
In most courses studied at Harvard Business schools, students are provided with a case study. Major HBR cases concerns on a whole industry, a whole organization or some part of organization; profitable or non-profitable organizations. Student’s role is to analyze the case and diagnose the situation, identify the problem and then give appropriate recommendations and steps to be taken.
To make a detailed case analysis, student should follow these steps:
STEP 1: Reading Up Harvard Case Study Method Guide:
Case study method guide is provided to students which determine the aspects of problem needed to be considered while analyzing a case study. It is very important to have a thorough reading and understanding of guidelines provided. However, poor guide reading will lead to misunderstanding of case and failure of analyses. It is recommended to read guidelines before and after reading the case to understand what is asked and how the questions are to be answered. Therefore, in-depth understanding f case guidelines is very important.
Harvard Case Study Solutions
STEP 2: Reading The The Rise and Fall of Nokia Harvard Case Study:
To have a complete understanding of the case, one should focus on case reading. It is said that case should be read two times. Initially, fast reading without taking notes and underlines should be done. Initial reading is to get a rough idea of what information is provided for the analyses. Then, a very careful reading should be done at second time reading of the case. This time, highlighting the important point and mark the necessary information provided in the case. In addition, the quantitative data in case, and its relations with other quantitative or qualitative variables should be given more importance. Also, manipulating different data and combining with other information available will give a new insight. However, all of the information provided is not reliable and relevant.
When having a fast reading, following points should be noted:
- Nature of organization
- Nature if industry in which organization operates.
- External environment that is effecting organization
- Problems being faced by management
- Identification of communication strategies.
- Any relevant strategy that can be added.
- Control and out-of-control situations.
When reading the case for second time, following points should be considered:
- Decisions needed to be made and the responsible Person to make decision.
- Objectives of the organization and key players in this case.
- The compatibility of objectives. if not, their reconciliations and necessary redefinition.
- Sources and constraints of organization from meeting its objectives.
After reading the case and guidelines thoroughly, reader should go forward and start the analyses of the case.
STEP 3: Doing The Case Analysis Of The Rise and Fall of Nokia:
To make an appropriate case analyses, firstly, reader should mark the important problems that are happening in the organization. There may be multiple problems that can be faced by any organization. Secondly, after identifying problems in the company, identify the most concerned and important problem that needed to be focused.
Firstly, the introduction is written. After having a clear idea of what is defined in the case, we deliver it to the reader. It is better to start the introduction from any historical or social context. The challenging diagnosis for The Rise and Fall of Nokia and the management of information is needed to be provided. However, introduction should not be longer than 6-7 lines in a paragraph. As the most important objective is to convey the most important message for to the reader.
After introduction, problem statement is defined. In the problem statement, the company’s most important problem and constraints to solve these problems should be define clearly. However, the problem should be concisely define in no more than a paragraph. After defining the problems and constraints, analysis of the case study is begin.
STEP 4: SWOT Analysis of the The Rise and Fall of Nokia HBR Case Solution:
SWOT analysis helps the business to identify its strengths and weaknesses, as well as understanding of opportunity that can be availed and the threat that the company is facing. SWOT for The Rise and Fall of Nokia is a powerful tool of analysis as it provide a thought to uncover and exploit the opportunities that can be used to increase and enhance company’s operations. In addition, it also identifies the weaknesses of the organization that will help to be eliminated and manage the threats that would catch the attention of the management.
This strategy helps the company to make any strategy that would differentiate the company from competitors, so that the organization can compete successfully in the industry. The strengths and weaknesses are obtained from internal organization. Whereas, the opportunities and threats are generally related from external environment of organization. Moreover, it is also called Internal-External Analysis.
In the strengths, management should identify the following points exists in the organization:
- Advantages of the organization
- Activities of the company better than competitors.
- Unique resources and low cost resources company have.
- Activities and resources market sees as the company’s strength.
- Unique selling proposition of the company.
- Improvement that could be done.
- Activities that can be avoided for The Rise and Fall of Nokia.
- Activities that can be determined as your weakness in the market.
- Factors that can reduce the sales.
- Competitor’s activities that can be seen as your weakness.
- Good opportunities that can be spotted.
- Interesting trends of industry.
- Change in technology and market strategies
- Government policy changes that is related to the company’s field
- Changes in social patterns and lifestyles.
- Local events.
Following points can be identified as a threat to company:
- Company’s facing obstacles.
- Activities of competitors.
- Product and services quality standards
- Threat from changing technologies
- Financial/cash flow problems
- Weakness that threaten the business.
Following points should be considered when applying SWOT to the analysis:
- Precise and verifiable phrases should be sued.
- Prioritize the points under each head, so that management can identify which step has to be taken first.
- Apply the analyses at proposed level. Clear yourself first that on what basis you have to apply SWOT matrix.
- Make sure that points identified should carry itself with strategy formulation process.
- Use particular terms (like USP, Core Competencies Analyses etc.) to get a comprehensive picture of analyses.
STEP 5: PESTEL/ PEST Analysis of The Rise and Fall of Nokia Case Solution:
Pest analyses is a widely used tool to analyze the Political, Economic, Socio-cultural, Technological, Environmental and legal situations which can provide great and new opportunities to the company as well as these factors can also threat the company, to be dangerous in future.
Pest analysis is very important and informative. It is used for the purpose of identifying business opportunities and advance threat warning. Moreover, it also helps to the extent to which change is useful for the company and also guide the direction for the change. In addition, it also helps to avoid activities and actions that will be harmful for the company in future, including projects and strategies.
To analyze the business objective and its opportunities and threats, following steps should be followed:
- Brainstorm and assumption the changes that should be made to organization. Answer the necessary questions that are related to specific needs of organization
- Analyze the opportunities that would be happen due to the change.
- Analyze the threats and issues that would be caused due to change.
- Perform cost benefit analyses and take the appropriate action.
- Next political elections and changes that will happen in the country due to these elections
- Strong and powerful political person, his point of view on business policies and their effect on the organization.
- Strength of property rights and law rules. And its ratio with corruption and organized crimes. Changes in these situation and its effects.
- Change in Legislation and taxation effects on the company
- Trend of regulations and deregulations. Effects of change in business regulations
- Timescale of legislative change.
- Other political factors likely to change for The Rise and Fall of Nokia.
- Position and current economy trend i.e. growing, stagnant or declining.
- Exchange rates fluctuations and its relation with company.
- Change in Level of customer’s disposable income and its effect.
- Fluctuation in unemployment rate and its effect on hiring of skilled employees
- Access to credit and loans. And its effects on company
- Effect of globalization on economic environment
- Considerations on other economic factors
- Change in population growth rate and age factors, and its impacts on organization.
- Effect on organization due to Change in attitudes and generational shifts.
- Standards of health, education and social mobility levels. Its changes and effects on company.
- Employment patterns, job market trend and attitude towards work according to different age groups.
case study solutions
- Social attitudes and social trends, change in socio culture an dits effects.
- Religious believers and life styles and its effects on organization
- Other socio culture factors and its impacts.
- Any new technology that company is using
- Any new technology in market that could affect the work, organization or industry
- Access of competitors to the new technologies and its impact on their product development/better services.
- Research areas of government and education institutes in which the company can make any efforts
- Changes in infra-structure and its effects on work flow
- Existing technology that can facilitate the company
- Other technological factors and their impacts on company and industry
These headings and analyses would help the company to consider these factors and make a “big picture” of company’s characteristics. This will help the manager to take the decision and drawing conclusion about the forces that would create a big impact on company and its resources.
STEP 6: Porter’s Five Forces/ Strategic Analysis Of The The Rise and Fall of Nokia Case Study:
To analyze the structure of a company and its corporate strategy, Porter’s five forces model is used. In this model, five forces have been identified which play an important part in shaping the market and industry. These forces are used to measure competition intensity and profitability of an industry and market.
porter’s five forces model
These forces refers to micro environment and the company ability to serve its customers and make a profit. These five forces includes three forces from horizontal competition and two forces from vertical competition. The five forces are discussed below:
- THREAT OF NEW ENTRANTS:
- as the industry have high profits, many new entrants will try to enter into the market. However, the new entrants will eventually cause decrease in overall industry profits. Therefore, it is necessary to block the new entrants in the industry. following factors is describing the level of threat to new entrants:
- Barriers to entry that includes copy rights and patents.
- High capital requirement
- Government restricted policies
- Switching cost
- Access to suppliers and distributions
- Customer loyalty to established brands.
- THREAT OF SUBSTITUTES:
- this describes the threat to company. If the goods and services are not up to the standard, consumers can use substitutes and alternatives that do not need any extra effort and do not make a major difference. For example, using Aquafina in substitution of tap water, Pepsi in alternative of Coca Cola. The potential factors that made customer shift to substitutes are as follows:
- Price performance of substitute
- Switching costs of buyer
- Products substitute available in the market
- Reduction of quality
- Close substitution are available
- DEGREE OF INDUSTRY RIVALRY:
- the lesser money and resources are required to enter into any industry, the higher there will be new competitors and be an effective competitor. It will also weaken the company’s position. Following are the potential factors that will influence the company’s competition:
- Competitive advantage
- Continuous innovation
- Sustainable position in competitive advantage
- Level of advertising
- Competitive strategy
- BARGAINING POWER OF BUYERS:
- it deals with the ability of customers to take down the prices. It mainly consists the importance of a customer and the level of cost if a customer will switch from one product to another. The buyer power is high if there are too many alternatives available. And the buyer power is low if there are lesser options of alternatives and switching. Following factors will influence the buying power of customers:
- Bargaining leverage
- Switching cost of a buyer
- Buyer price sensitivity
- Competitive advantage of company’s product
- BARGAINING POWER OF SUPPLIERS:
- this refers to the supplier’s ability of increasing and decreasing prices. If there are few alternatives o supplier available, this will threat the company and it would have to purchase its raw material in supplier’s terms. However, if there are many suppliers alternative, suppliers have low bargaining power and company do not have to face high switching cost. The potential factors that effects bargaining power of suppliers are the following:
- Input differentiation
- Impact of cost on differentiation
- Strength of distribution centers
- Input substitute’s availability.
STEP 7: VRIO Analysis of The Rise and Fall of Nokia:
Vrio analysis for The Rise and Fall of Nokia case study identified the four main attributes which helps the organization to gain a competitive advantages. The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. Therefore there must be some resources and capabilities in an organization that can facilitate the competitive advantage to company. The four components of VRIO analysis are described below: VALUABLE: the company must have some resources or strategies that can exploit opportunities and defend the company from major threats. If the company holds some value then answer is yes. Resources are also valuable if they provide customer satisfaction and increase customer value. This value may create by increasing differentiation in existing product or decrease its price. Is these conditions are not met, company may lead to competitive disadvantage. Therefore, it is necessary to continually review the The Rise and Fall of Nokia company’s activities and resources values. RARE: the resources of the The Rise and Fall of Nokia company that are not used by any other company are known as rare. Rare and valuable resources grant much competitive advantages to the firm. However, when more than one few companies uses the same resources and provide competitive parity are also known as rare resources. Even, the competitive parity is not desired position, but the company should not lose its valuable resources, even they are common. COSTLY TO IMITATE : the resources are costly to imitate, if other organizations cannot imitate it. However, imitation is done in two ways. One is duplicating that is direct imitation and the other one is substituting that is indirect imitation. Any firm who has valuable and rare resources, and these resources are costly to imitate, have achieved their competitive advantage. However, resources should also be perfectly non sustainable. The reasons that resource imitation is costly are historical conditions, casual ambiguity and social complexity. ORGANIZED TO CAPTURE VALUE : resources, itself, cannot provide advantages to organization until it is organized and exploit to do so. A firm (like The Rise and Fall of Nokia) must organize its management systems, processes, policies and strategies to fully utilize the resource’s potential to be valuable, rare and costly to imitate.
STEP 8: Generating Alternatives For The Rise and Fall of Nokia Case Solution:
After completing the analyses of the company, its opportunities and threats, it is important to generate a solution of the problem and the alternatives a company can apply in order to solve its problems. To generate the alternative of problem, following things must to be kept in mind:
- Realistic solution should be identified that can be operated in the company, with all its constraints and opportunities.
- as the problem and its solution cannot occur at the same time, it should be described as mutually exclusive
- it is not possible for a company to not to take any action, therefore, the alternative of doing nothing is not viable.
- Student should provide more than one decent solution. Providing two undesirable alternatives to make the other one attractive is not acceptable.
Once the alternatives have been generated, student should evaluate the options and select the appropriate and viable solution for the company.
STEP 9: Selection Of Alternatives For The Rise and Fall of Nokia Case Solution:
It is very important to select the alternatives and then evaluate the best one as the company have limited choices and constraints. Therefore to select the best alternative, there are many factors that is needed to be kept in mind. The criteria’s on which business decisions are to be selected areas under:
- Improve profitability
- Increase sales, market shares, return on investments
- Customer satisfaction
- Brand image
- Corporate mission, vision and strategy
- Resources and capabilities
Alternatives should be measures that which alternative will perform better than other one and the valid reasons. In addition, alternatives should be related to the problem statements and issues described in the case study.
STEP 10: Evaluation Of Alternatives For The Rise and Fall of Nokia Case Solution:
If the selected alternative is fulfilling the above criteria, the decision should be taken straightforwardly. Best alternative should be selected must be the best when evaluating it on the decision criteria. Another method used to evaluate the alternatives are the list of pros and cons of each alternative and one who has more pros than cons and can be workable under organizational constraints.
STEP 11: Recommendations For The Rise and Fall of Nokia Case Study (Solution):
There should be only one recommendation to enhance the company’s operations and its growth or solving its problems. The decision that is being taken should be justified and viable for solving the problems.
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Table of Contents
Nokia Case Study Assignment Help
Research Problem: The analysis of the case of Nokia leads to the identification of the main research problem which has been the declining market share of Nokia despite having huge R&D investment made by the company. The case analysis revealed that Nokia spends excessively on R&D as compared to entire industry expenditure on R&D, but despite making such huge expenditure, the company is not able to introduce smart phones that can compete against iPhone as produced by Apple Inc. This has adversely affected the market shares of the company and it has become a significant managerial issue for the company to revive its brand name.
Rationale for Investigating the Problem: The main rationale behind investigating this managerial issue is that despite making significant efforts in terms of R&D expenditure, Nokia is not able to present a smart phone that can compete strongly against iPhone. Thus, the investigation of this issue will lead to the identification of the factors that caused company to face such severe threat of declining market share and the actual reasons for the problems could be better identified.
Argument in Carrying out this Investigation: On the basis of analysis of Nokia’s case, it has been argued that R&D activities alone would not enable a company to achieve higher market success; rather, it should be used in combination with the managerial leadership abilities to effectively utilise the findings and investment made in R&D.
An Analysis of the Case of Nokia
The performance of a critical analysis of the Nokia’s case indicates that the major issue with the company is its declining share price because of its inability to bring newer products into the market. The case of Nokia revealed that it spent $40 billion on research and development which is almost equivalent to four times what Apple has spent in the same financial year. Despite making such huge R&D expenditure, Nokia was unable to launch a smart phone that can effectively compete against the iPhone. The managerial issue as evident in the case of Nokia suggests that the management has not been able to introduce the right smart phones in the market that can compete with Apple and Samsung. The managerial problems as faced by Nokia is also clearly evident from the fact that Nokia has actually developed few products and designs, but the managers within the company failed to introduce them into the market on time. This is the major strategic blunder on the part of management of the company. Further, its inability to compete with the iPhone has resulted into the shift in its focus from smart phones to its basic phones. This is the major contributing managerial problem which led to the problem of declining market share of Nokia (Smith, Collins and Clark, 2005).
According to a study conducted by Rosier, Morgan and Cadogan (2010), the principle challenge to firms is with respect to the ways in which strategies developed are implemented successfully by them. The managers within the organisations have a critical role to play in performing the successful implementation of strategies in order to achieve success. But this aspect has been lacking in respect to Nokia in the case, as the management of the company has failed to cope up with the market situation. As per the case, Nokia led the wireless revolution in 1990 and it was the first company to enter into the world of smart phones. However, with the introduction of the smart phone era, the company is racing to roll out the competitive products, as its share prices have collapsed significantly. Instead of bringing new smart phones to the market, the company seems to withdraw as it is unable to launch a competitive smart phone as against Apple iPhone. This aspect clearly indicates that the lack of sufficient ability of the management at Nokia to revolutionise the market through its smart phones (Rosier, Morgan and Cadogan, 2010).
Another major area of problem as identified from the case analysis of Nokia is that the company has recently introduced a series of Nokia Lumia phones which is basically a type of windows phone. But such introduction of Nokia Lumia phones has not been successful in allowing the company to achieve the lost market shares. Despite making huge expenditure over the R&D function, Nokia is still struggling to turn its new ideas into its product and the resulting impact is its further decline in the sales and market position across industry. On the basis of analysis, it has been argued that the innovation is essential to be performed in order to achieve success in the market, as the introduction of windows phone by Nokia has resulted into similar kinds of phones being brought by Samsung into the market. This has affected the performance of Nokia’s Lumia phones significantly and it is clearly evident over the market shares of the company (Bowman and Gatignon, 1995).
The fact that innovation is crucial to a firm’s success is also supported by Panne, Beers and Kleinknecht (2003) by indicating that innovation allows the firms with opportunities to offer something new and distinctive apart from their competitors. However, in order to achieve success in innovation, there are various factors that act as determining factors and these include firm’s culture, the experience with innovation, the multidisciplinary character of R&D team and the support from the top management. The analysis of the case of Nokia suggests that all these aspects are mostly lacking in respect to the company, as the managers were not able to introduce the new concepts into their products, the R&D team failed to utilise the key findings in introducing new products into the market and finally, the management’s approach also seems to be highly laggard, as despite introducing new and innovative smart phones, the management has undertaken decisions to take back their approach from introducing new and highly advanced smart phones to other small range of phones (Panne, Beers and Kleinknecht, 2003).
The analysis of the case leads to the identification of another major significant issue as faced by Nokia is the timely introduction of new products into the market. It has been argued that the higher level of benefits can be achieved from a product provided it has been introduced in the market on timely basis. This requires a proactive approach on the part of management of an organisation, as the important findings from the R&D activities should be reflected in their products on timely basis so as to achieve maximum level of benefits from it (Baker and Sinkula, 2005). However, in respect to Nokia, this aspect has been significantly lacking, as the analysis of the case revealed that Nokia has devised the concept of a colour touch screen phone which is set above a single button and this concept is mainly planned by the Nokia team seven years before Apple Inc. The device was shown locating a restaurant, playing a racing game and ordering lipstick. But the main issue was that it remained a plan for the company, and it never launched its innovative ideas into the market through its product offering. If the company have introduced all such innovations in its product offerings to its customer for the first time, it would have better position throughout the entire mobile industry.
Thus, the analysis of the Nokia case indicates that there are various managerial issues as faced by the company which has resulted into significant decline in the level of market share. Despite making efforts in the form of huge spender in R&D activities, Nokia failed to introduce new smart phones that could compete against iPhone and the inability to introduce its innovative ideas into the market through its product have all caused the mobile phone company to bear significant amount of loss in its market share.
Conclusion and Recommendations
In this report, a critical investigation of the management issues as faced by Nokia from the analysis of a case study has been performed, and the investigation revealed significant number of issues that are faced by the organisation behind its core problem of declining market shares. The analysis of the case leads to identification that Nokia made huge R&D spending and despite such effort, it has not been able to launch a smart phone that can compete in the industry. The major managerial issues as identified from the case analysis suggest that Nokia has failed to successfully integrate the strategies as developed by it into its products. Secondly, it has performed innovation in launching new smart phones, but they were not that innovative to compete against iPhones and other smart phones by Samsung, and thirdly, even after devising important innovative concepts, it failed to introduce them into the markets. This is mainly because of ineffectiveness on the part of management at Nokia, as they failed to create an impact in the market with their windows smart phones.
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Nokia’s Business Strategy in India
January 8, 2010
Case Study Abstract
The focus of this case study is the business strategy adopted by Nokia in the Indian Mobile devices market. This case study summarizes Nokia’s business strategies in India. Nokia has proven itself as one of the most recognized brands in India in the past decade or so. This case also discusses in brief some of the marketing strategies of Nokia in India and examines how the Nokia brand has emerged.
This case study covers the following issues:
- Assess Nokia’s globalization strategies
- Examine and analyze the entry and expansion strategies of Nokia in India
- Analyze Nokia’s efforts to localize its practices in India market.
Nokia – Company Overview
Nokia Corporation (Nokia) is a global manufacturer of mobile devices headquartered in Espoo, Finland. Nokia operates through four business groups: Mobile Phones, Multimedia, Enterprise Solutions and Networks. In Q3 2007, Nokia sold over 111.7 million units worldwide, marking a 26 per cent, year-on-year growth. Nokia India had revenues of more than $3.5 billion in 2006…
Case Study Contents
- Nokia – Company Overview
- Company History
- Nokia Timeline
- Nokia in India
- Locations and Subsidiaries
- Mobile Devices Industry in India – Business Description
- Distribution challenges – Getting to the Rural Market
- Understanding the versatile Indian market
- Nokia – Branding Strategy
- SRK in Nokia ad campaign
- Nokia India Recognitions and Awards
- Related Reading
- View sample pages of this case study
Case Study Keywords: Nokia in India, Mobile devices industry, Handsets, Cellular phones, Expansion and Entry Strategy, Business Strategy Case Study.
Additional Reading: Articles on Nokia
- Nokia to exit expensive Germany, move production to low cost countries
- Nokia’s Acquisition Strategy and Restructuring
- Nokia and its Growth Strategy in China
- Sony Ericsson Mobile Music Strategy not working
- Nokia India – Tapping the Rural Market
- Nokia’s Strategy in the Emerging Markets
- Nokia – A struggling market leader
Essence of Nokia India’s business strategy according to Nokia India’s Managing Director, Mr D Shivakumar (As quoted in “Nokia’s biz strategy to increase India market share” in 2009)
- Do not underestimate competition
- Do not rest on laurels
- Be modest, flexible and open to change
Nokia and the Indian Market
- Nokia’s Entry in India : Nokia entered India in 1995.
- Third Largest Telecommunication Market : India ranks third globally after China and U.S. in terms of the largest telecommunication market.
- 500 million mobile subscribers in India : The Indian market is adding about 10 million users a month. Nokia sees the Indian market as a growth opportunity particularly in the country’s rural areas. Rural penetration in India is still very low at 13%. By 2010, Nokia estimates that there will be around 500 million mobile phone users in India as compared to 427 million. According to Standard Chartered Bank’s annual forecast, India will have signed up its 500 millionth mobile subscriber sometime in December 2009 or January 2010. So, it took India 12 years (from 1997 when the mobile revolution began) to grow from zero to 500 million subscribers. However, analysts estimate it will take only five years to add the next 500 million.
- Nokia’s market share in India : Nokia has more than half the share of India’s mobile handset market. In 2009, an IDC report indicated that there were about 28 new handset vendors in India. Nokia led with a 54.1% market share in the fragmented Indian market, while the new vendors accounted for 17.5%. Samsung and LG followed with markets shares of 7.7 percent and 5.4 percent respectively.
- Update (Mar, 2012) – Nokia had a market share of approx. 38% in 2011 compared to 49.3 per cent in 2010 in India. Its revenues were Rs 12,929 crore in 2010-11 and Rs 12,900 in the 2009-10. The Indian market accounts for 12 per cent of worldwide sales for Nokia.
- Nokia’s manufacturing facilities in India : Nokia’s manufacturing facility in Chennai, Tamil Nadu (South India) exports half its production to more than 59 countries. Nokia has invested $250 million since its launch in 2006.
- Mobile Microfinance – In 2009, Nokia piloted a scheme in two Indian states where it sold handsets on a weekly installment of 100 rupees ($2) over 25 weeks. Nokia planned to rollout the microfinance offer in 12 Indian states.
- India not a low-end market segment – 81 percent of the India’s mobile users are in urban areas. Nokia anticipates such customers would drive demand for high-end phones.
- Increasing Competition from new mobile handset manufacturers’ entry into India : In one quarter of 2009 alone, twenty-seven new mobile handset manufacturers entered the Indian market to introduce entry-level models (and other models with features such as dual SIM cards and full QWERTY keyboard) for the price sensitive Indian consumer.
- Mobile handset sales in India : By year ended June 30, 2009, mobile handset sales in India was 100.9 million compared to 94.6 million, a year ago.
- Nokia’s strong distribution in India : In India, Nokia has 2 lakh retail outlets and 700 support centers across 400 cities and towns.
- Nokia’s competitors in India : Motorola, Sony Ericsson, Spice, MacroMaxx, Karbonn, Lava, Lemon, Oscar. Maxx Mobile – In less than two years after entering the Indian mobile phone market, Maxx Mobile captured around four percent market share by offering around 45 models and having a presence across India with its 500 service centres. With such a strong distribution network the company wants to increase it market share to about 10 percent in the next two years (by 2012). In 2010, ‘Micromax Mobiles’ was second on the list of fastest rising search terms and the fourth most searched brand name on Google India website (Zeitgeist 2010).
- Nokia’s ‘Made for India’ phones : In 2000, Nokia introduced the Nokia 3210 with a Hindi menu. In 2003, Nokia launched the Nokia 1100, a first Made for India phone.
- India’s Most Trusted Brand : Nokia ranked as India’s topmost trusted brand in the The Economic Times-Brand Equity’s annual ‘Most Trusted Brands’ survey for 2010. In 2004, Nokia ranked 71 and moved to 44 in 2006 as India’s most trusted brand. In 2007, it ranked in the top ten at number 4. Nokia has since held the number one slot for three years consecutively.
- Nokia’s biggest advertising/marketing campaign in India : In December 2011, Nokia launched its biggest ever campaign in India called the ‘The Amazing Everyday’. The idea behind Nokia’s global campaign is to engage customers with the idea that “hidden away in the everyday landscape are billions of little adventures”.
- In February 2011, Nokia entered into an alliance with Microsoft. Nokia began using the Windows operating system on its smartphone range called Lumia.
- In June 2012, Nokia announced that it plans to cut 10,000 jobs and close 2 research facilities in Germany and Canada and a factory in Finland after its sales decreased by 29 percent with losses at $1.2 billion in the first quarter. However, India operations are unlikely to be affected by the job cuts, a spokeswoman from Nokia India confirmed./li>
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Organisation Structure at Nokia
Organisation structure at Nokia Introduction Nokia is an international producer of computer software, internet and telecommunication equipment, it is one of the major candidates competing in the smart phone industries (Studymode2013). Dominating the market around 15 years, Nokia was perceived as the more dominant and relentless brand within its industry. However, due to a number of problematic issues within the company, Nokia was forced into making implosive and drastic design resulting in the “down fall” of the company.
One of the major issues which contributed to Nokia down fall was the lack of organisational structure within the Nokia organisation. The organizational structure had become so convoluted that it was hard for the teams to work as a coherent group being consistent in their products as information often took long to process and correspond too. The lack of organisational structure within the company left Nokia exposed to external rivalry such as Apple and Samsung, as crucial decisions were either made too early or too late.
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Another issue is that separate departments within the organisation focused on different goals and objectives, as other sectors were more concerned politically instead of focusing on the future development of the company. Organisational structure and innovation are key component in the success or prosperity of a company and can be the difference between being prosperous and coming up short. This report will argue that Nokia’s organisational structure was of a poor quality and led to poor decision making and lack of innovation.
Furthermore, this paper will provide recommendation for implementing a stronger and more effective organisational structure. Analysis a Critical Evaluation The organisational structure is an important foundation, for organising and managing function within the company; as it establishes a system of task, workflow, reporting relationships and communication channels that link to the work of diverse individuals and groups (Schermerhorn, John, R, 2011, 244). Chimay, Catherine and Malik (2002) agree, placing emphasis on team structure being an absolute essential component of an effective organisational structure.
It has been well documented (Lambert, E, G, Hogan, N, L, Allen, R, I. 2006; Stok, K, M, MArrkic, M, Bertoncelj, A, Mesko, M 2010) that successful organisation have gain competitive advantages through an effective organisation structure. However, there is no ideal structure for an organisation, as each company will have to implement a structure which caters for the personal needs. Organsational structure has been changing fast in recent years and it seems likely that this will continue (Siobhan, T, 1993).
It can be seen that in today modern westernized society, companies need to be flexible with their organisational structure in order to gain competitive advantages. For instance, large organisations such as Westpac are frequently publicized throughout the media, when implementing new organizational culture. In the case the organisational structure was ineffective, as different sectors found it hard to work as a group. It was noted that the team struggled as a unit, to the extent in which the company spent three days trying to develop new ideas and concepts.
The poor organisational structure led to lacks C communication between the different departments within the company. As a result of this, Nokia was left with insufficient within the organization information in time of crucial decision. Thus, Nokia was forced into making implosive and meager design in order to respond too external rivalry and up hold a competitive advantage. It is clearly evident that a lack of organisational structure is present within the organization and has been one of the major factors which influenced Nokia down fall.
However, a lack of organisation structure was not the only factor which contributed to Nokia’s downfall, as there was a clear inconsistency in productivity as a lack innovation was also present. Innovation is an important aspect of communication (Fagerbery, J. 2003), as it provides institution the sufficient freedom needed to experiment with new ideas, concepts and knowledge’s required when facing new challenges. Moreover, it is a crucial role which influences the development of idea generator, information gatekeepers, product champion, innovation leader and project anager (Schermerhorn, John, R, 2011, 404). Further studies (Roper, S. 1996) found that company with higher levels of success, employed and placed emphasizes on communicate and innovation with the work place. Innovation is not new phenomenon (Fagerbery, J. 2003), it has been commonly utilized throughout the business environment to obtain a competitive advantages. Another problem found in the case, is that separate departments within the organisation focused on different goals and objectives, as other sectors were more concerned politically instead of focusing on the future development of the company.
It can be seen that because of all the internal fighting the company lost sight of its goals and prospects and didn’t place enough emphasis on product innovation. As an example of this the case states that Nokia spent nearly four times the amount as its competitor Apple in research and development. The company spent more time fighting politics than working on the design of the phone. On the other hand the company produce a number of good products however, were released too early. For instances, Nokia release their new lines of smart phone when wireless internet wasn’t available for the public.
In spite of releasing product to early, Nokia also released products too late. The company released products too late which resulted in the consumers purchasing the competitors’ products, as a majority of the market was dominated by Nokia’s competitors. As such, a lack of innovation resulted in; external competitors inherited market shared which Nokia could never recover, the company was unable to make sufficient judgment (analysis) on external environment and weren’t able to identify passing opportunity’s.
Additionally, the lack of innovation and communication within organization, strongly contribute to the downfall of Nokia. Recommendations Nokia must act immediately to implement a more effective organisational structure. The company must ensure that both short and long term Goals and objectives can be clearly visual throughout the entire company. In order to implement a clear goals and ambitions into the company, Nokia should establish new board which consists of members from different depart and sections. The board should consist of two members from each department.
Prior to the selection, the board of member should include a selected member throughout the department, which should be determined through a democratic vote along with the head of the department. Therefore, the two selected employees from each department will establish the new board. However, the selected employees can only be once every second month. The board should meet on a monthly basis and discuss the goal and of objective of the upcoming month and if they comply with the company future ambitions, as well as, applying with the S.
M. A. R. T goal principle. The S. M. A. R. T principles include; Specific, Measureable, Achievable, Realistic and Time appropriate. The board should further discuss the future goal of company and evaluate if the current goal and objectives are relent and to what extent they were achieved. Additionally, the board will provide recommendation to better approve the company efficacy and effectiveness. Furthermore the establishment a new board will help monitor the goals and objectives of the Nokia Company.
This new board will also aid the company into achieving its overall ambitions. Conclusion This report has argued that Organisational structure plays a vital role within any organisation and company around the world. A brief description outlining the issues and problems within the Nokia organisation has been discussed, including some recommendations on how the Nokia Company can fix relevant issues. It is clear that organisation structure is a crucial element which contributes to an organisation helping it function and expand.
It is important that Nokia act immediately to implement the recommendations previously discussed, in order to improve the overall organisational structure of the company. References Anumba, C, J, Catherine Baugh, C, Khalfan, M, M. A. (2002), “Organisational structures to support concurrent engineering in construction”, Industrial Management & Data systems Fagerberry, J. 2003a, “Innovation: A Guide to the Literature”, New Oxford Handbook and innovation Lambert, E, G, Hogan, N, L, Allen, R, I. 2006, “Correlates of Correctional Officer Job Stress:
The impact of organizational Structure”, Southern Crminal Justice Association Roper, S. 1996, “Production and Small Business Growth:A Comparison of the Strategies of German, U. K. and Irish Companies”, Kluwer Academic Publishers Schermerhorn, John, R, 2011, “Managament Foundations and Application, 1st Asia-Pacific Edition,” John Wiley & Sons Ausrtralia, Ltd Siobhan, T, 1993, “Innovations in organisation structure”, British and Administrative Research Stok, K, M, MArrkic, M, Bertoncelj, A, Mesko, M 2010, “Elements of organizational culture leading to business excellences”, Preliminary communication, vol. 8. Studymode(2013)“Telecommunications Industry Analysis, Wireless Telecommunications Industry Analysis, Indian Telecom Industry Analysis” 27april <http://www. studymode. com/subjects/nokia-industry-analysis-page1. html>
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CASE STUDY: Nokia: Enabling 5G and DevOps at a Telecom Company with Kubernetes
Nokia 's core business is building telecom networks end-to-end; its main products are related to the infrastructure, such as antennas, switching equipment, and routing equipment. "As telecom vendors, we have to deliver our software to several telecom operators and put the software into their infrastructure, and each of the operators have a bit different infrastructure," says Gergely Csatari, Senior Open Source Engineer. "There are operators who are running on bare metal. There are operators who are running on virtual machines. There are operators who are running on VMware Cloud and OpenStack Cloud. We want to run the same product on all of these different infrastructures without changing the product itself."
The company decided that moving to cloud native technologies would allow teams to have infrastructure-agnostic behavior in their products. Teams at Nokia began experimenting with Kubernetes in pre-1.0 versions. "The simplicity of the label-based scheduling of Kubernetes was a sign that showed us this architecture will scale, will be stable, and will be good for our purposes," says Csatari. The first Kubernetes-based product, the Nokia Telephony Application Server , went live in early 2018. "Now, all the products are doing some kind of re-architecture work, and they're moving to Kubernetes."
Kubernetes has enabled Nokia's foray into 5G. "When you develop something that is part of the operator's infrastructure, you have to develop it for the future, and Kubernetes and containers are the forward-looking technologies," says Csatari. The teams using Kubernetes are already seeing clear benefits. "By separating the infrastructure and the application layer, we have less dependencies in the system, which means that it's easier to implement features in the application layer," says Csatari. And because teams can test the exact same binary artifact independently of the target execution environment, "we find more errors in early phases of the testing, and we do not need to run the same tests on different target environments, like VMware, OpenStack, or bare metal," he adds. As a result, "we save several hundred hours in every release."
Today, Nokia is building telecom networks end-to-end—from antennas to switching and routing equipment—serving operators in more than 120 countries. "As telecom vendors, we have to deliver our software to several telecom operators and put the software into their infrastructure, and each of the operators have a bit different infrastructure," says Gergely Csatari, Senior Open Source Engineer at Nokia. "There are operators who are running on bare metal. There are operators who are running on virtual machines. There are operators who are running on VMware Cloud and OpenStack Cloud. We want to run the same product on all of these different infrastructures without changing the product itself."
Looking for a way to allow its teams to build products with infrastructure-agnostic behavior, the company decided to embrace containerization, Kubernetes, and other cloud native technologies, a move that is being made across the telecom industry. Since early 2018, "when people are picking up their phones and making a call on Nokia networks, they are creating containers in the background with Kubernetes," says Csatari. "Now, all the products are doing some kind of re-architecture work, and they're moving to Kubernetes."
Nokia's cloud native journey began about two years ago, when Csatari's team was building the company's Telephony Application Server (TAS). "We wanted to have a service execution engine in the product, which was a totally separate function from all other parts," he says. "There, we had the possibility to think about new architectures and new tools that we could use. We created this particular product based on Kubernetes, and we liked the work, so we started to talk about cloud native and containers and all of these things. We did a very extensive research of different container orchestration tools. We knew that we have some, let's say, strange or different requirements because of the special environment that our software is running on."
For one thing, Nokia's software serves millions of people, and is required to have the carrier-grade "five nines" availability: to be up 99.999% of the time. "If you turn it to minutes, this means we're allowed to have only 10 minutes of downtime in a whole year," says Csatari. "Downtime here means that you are not able to serve the person to full capacity, which means that we cannot fail. This includes software upgrades, everything, because when you call 911, you're using our software, and you expect that it will work."
That meant that they needed to be able to set affinity and anti-affinity rules in their orchestration tools. "You cannot put all of the functions to the same physical host because physical hosts are failing," Csatari explains. "If you fail with one physical host, then you lose all of the core processing processes. Then there are no calls going through. So we have to divide them among the different physical hosts. At that time, only Kubernetes was able to provide these features. The simplicity of the label-based scheduling of Kubernetes was a sign that showed us this architecture will scale, will be stable, and will be good for our purposes."
The TAS went live in early 2018, and now Kubernetes is also enabling Nokia's foray into 5G. The company is introducing microservices architecture and Kubernetes while adding 5G features to existing products. And all new 5G product development will be on top of Kubernetes. "When you develop something that is part of the operator's infrastructure, you have to develop it for the future, and Kubernetes and containers are the forward-looking technologies," says Csatari.
There have been real time savings thanks to Kubernetes. "By separating the infrastructure and the application layer, we have less dependencies in the system, which means that it's easier to implement features in the application layer," says Csatari. Because teams can test the exact same binary artifact independently of the target execution environment, "we find more errors in early phases of the testing, and we do not need to run the same tests on different target environments, like VMware, OpenStack or bare metal," he adds. As a result, "we save several hundred hours in every release."
Moving from Nokia's legacy cluster management system, which had been built in-house more than thirty years ago, to a Kubernetes platform also meant that "we started using Linux as a base operating system, so we just opened the window to all of these open source projects instead of implementing everything in house," says Csatari. (From CNCF's ecosystem, the team is already using Helm , gRPC , CNI , Prometheus , and Envoy , and plans to implement CoreDNS .) "Our engineers can focus more on the application level, which is actually the thing what we are selling, and not on the infrastructure level. For us, the most important thing about Kubernetes is it allows us to focus on value creation of our business."
The company has a long-term goal of moving the entire product portfolio into the Kubernetes platform. To that end, Nokia teams are working together with other companies to add the features needed to use Kubernetes with the real-time, nanosecond-sensitive applications close to the edge of the radio network.
And the CNCF community is proving to be a great forum for that collaboration. "I had some discussions at KubeCon with people from the networking SIG and the resource management working group, to work together on our requirements, and that's very exciting for me and my colleagues," says Csatari. "Previously, everybody had the same problem, but everybody just did it in his own, and now we are trying to solve the same problem together."
Perhaps the biggest impact that Kubernetes is having on Nokia, Csatari believes, is that people are starting to think about how a telecom company can do DevOps. "We are building a DevOps pipeline, which reaches from the actual developer to the customers, and thinking about new ways how can we digitally deliver our software to our customers and get feedback from the customers right to the engineers," he says. "This is something that will fundamentally change how telecom companies are delivering software, and how quickly can we develop new features. This is because of the usage of containers and, of course, the usage of Kubernetes."
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Nokia Case Study Sep. 16, 2015 • 45 likes • 50,189 views Download Now Download to read offline Education Long history of successful change and innovation Adaptable to shifts in markets and technologies. Sambit Mishra Follow Summer Trainee at The State Trading Corporation of India Ltd Advertisement Advertisement Recommended Nokia Failed, Why?
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