RISE AND FALL OF NOKIA – BUSINESS LESSONS TO BE LEARNT: (Article written as Content writer for IndiaFilings.com Learning Center)

Who can ever  forget  their  first ever cellphone?

         Mine was the Nokia 1108. By today's standards, it was bulky and embarrassingly lacking in features. It made phone calls and played the game "Snake." Forget a HD Display; it boasted a monochromatic screen with a white backlight. And how's this for fashionable. It was damage proof, fall proof as my mom as well as myself have let it slip off of our hands at innumerable instances causing not even a single scratch on its body.

Yes It was perfect!!!

Nokia served as our ambassador to the wireless world, letting us experience for the first time what it truly meant to be unfettered from landlines and payphones for over a decade. So it's with a fair bit of melancholy that we bid farewell to Nokia. Nokia had confirmed that it had completed the sale of substantially its entire devices and services business to Microsoft. Microsoft said the unit, now named Microsoft Mobile Oy, would fall under its devices group.

This is for a company that, just six years back had a market capitalization of US$ 145 billion, and US$ 20 billion a year ago. Microsoft's $7.5 billion acquisition is a sobering reminder that even the strongest companies can fall. Next to Motorola, which invented the mobile handset, there was no bigger name in the business than Nokia. The company has been on such a steady downward slide over the past six years that it's easy to forget how dominant and long-lasting its reign was over the cellphone business.

But when Nokia was on top, nobody could ever even dream to touch it. But its vulnerability was exposed first by the Motorola Razr, and then more fully by Apple's iPhones and Samsung’s Android Platform mobiles. Its imperative to say that Samsung had virtually shaken off the grass roots of Nokia mobiles.

LESSONS TO BE LEARNT:

The fact that Nokia could fall so low serves as a lesson to all handset vendors. As dominant as Samsung and Apple are, Nokia was even bigger in its prime.

“Be a Roman when you are in Rome”

     says a proverb and the big plunder that Nokia made was it was adamant to adapt to change and that has laid foundation to its fall.

In recently published memoir, former Nokia CEO Jormal Ollila admitted that Nokia made several mistakes in recent years. Key among them were its failure to identify changing consumer demands and compete against Asian manufacturers, which led to the company's eventual downfall. Analyzing Nokia's fall has become a part of management studies, but there are some basic lessons in this case that professionals cannot ignore.

LESSON 1: FAILING TO SEE FAILURE AS A PHENOMENON:

The first lesson from Nokia's decline is that failure, in most cases, isn’t an instant phenomenon. Failure is often the last stage of a process that begins with the first mistake. And it is often the magnitude of the first mistake that goes unrecognized. This is what happened in the case of Nokia when they failed to recognize the disruption that Apple's launch of the iPhone in 2007 was going to cause. Failure, like success, happens as a process.

LESSON 2:  BEING OVER COMPLACENT:

 The second lesson is that complacency slowly but surely kills. Frank Nuovo, an industrial design guru who worked with Nokia, commented on Nokia's decline:Nokia became more of a maintainer, more of an iterator, whereas innovation only comes in re-invention and Nokia waited too long to make the next big bold move.Organizations, quite naturally, have the habit of resting on their past laurels and most often do not see the need to change. It has been said that “failure can be simply an inability to sustain success and not just an inability to achieve it in the first instance.” Nokia's case is more akin to the former. 

LESSON 3: BAD BUSINESS DECISIONS:

Nokia's mobile phone division's downfall has to do with not taking Apple's iPhone seriously enough and not reacting strongly and quickly enough. But they were too deeply invested in Symbian, both financially and technically to make a quick reaction to market change. They tried to develop the Linux-based Meego and abandoned it, but they should have continued toward the path to an OS like Sailfish. It's easy to attribute the downfall of Nokia's mobile phone division to bad business decisions.

LESSON 4: NO CLEAR TECHNICAL UNDERSTANDING:

 It's even more important to understand the technical background behind their products. As a start-up entrepreneur: learn when to abandon something when the market clearly changed, even if it means losing tons of existing time and resource invested.Nokia's Symbian platform is rooted in EPOC, which was used in early PDA like Psion 3, 5 series back in the mid to late 1990s. The OS was designed for real time application to fit inside very limited hardware resourec. Keep in mind that the phones in the 1990s had memory in Kilobytes instead of Megabytes.

           As the hardware improved, Symbian evolved and became more complicated with each iteration. Eventually it just became a lybrinth that is very difficult to work with. For a long time, to develop for Symbian, you need to use a special SDK provided by Nokia, and tedious task like string handling, memory allocation had to be done manually. The third-party application release process was another major obstacle to most independent developers as one had to certify an application with Nokia at the cost of several thousand dollars for the purpose of security. It also didn't help there were three incompatible versions of Symbian.

            It was only around 2005 Nokia began experimenting with Python to make rapid prototyping and development. Compared to the Symbian C++ variation, Python was much easier and faster to use for application development on Symbian, but by the time it just began to take a hold in the Symbian developer market, iPhone came out which was more friendly to develop and use for both developers and average users.

LESSON 5:  NOT GAUGING THE COMPANY’S INTERNAL EMOTIONS

“Strategy is 5 percent thinking, 95 percent execution. Strategy execution is 5 percent technical, 95 percent people-related.”

Nokia lost the smartphone battle despite having half of the global market share in 2007 mainly because of  neglecting collective emotions within the company. Leaders who are able to identify and manage patterns of emotions in a collective are better able to make their ambitious strategies a reality.  Our argument centres around the idea that the emotions felt by a large number of people within an organisation can determine the success of strategy implementation even when these feelings go unexpressed. In such a fast-paced changing environment, it was unsurprising that Nokia’s top executives drew on the best practices of strategy implementation and Nokia’s famed strategic agility was certainly impressive in terms of acquisitions and mobile device development, but the emotional climate within the organisation was overlooked during this turbulent period.

LESSON 6: NOT ANTICIPATING THE FUTURE:

Symbian was never the OS of future. Nokia failed to see the future coming. The world was moving from keypads to touch phones, hardware excellence to ecosystem prudence, closed system to open system software. When Nokia woke up from slumber, it was too late to do the correction. The market slipped irreversibly to Apple iOS and Google Android.

Brands should always keep a keen eye on future and remember, that their current plans should be driven by future strategies and in this front Nokia failed miserably.

LESSON 7: NOT CANNIBALIZING OWN BUSINESS:

Nokia needed to cannibalize its own businesses to make the way for future. It seemed to stuck in time warp. Steve Jobs once said

“If you don’t cannibalize yourself, someone else will”.

Apple masters this strategy. Samsung follows. Brands should cannibalize their own business to make place for better successors. If they don’t do this, some other brand will do.

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