nokia case study on change management

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.

Early success

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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Rahul Tripathi

30/03/2024, 03.42 pm

I found this article on the strategic decisions behind Nokia's failure incredibly insightful! 📉 As someone interested in business strategy and management, understanding the factors that led to Nokia's downfall provides valuable lessons for avoiding similar pitfalls in the future. 💡 The analysis of Nokia's missteps, from failing to adapt to changing market trends to underestimating the competition, highlights the importance of agility and innovation in today's dynamic business landscape. 🔄💡

Moreover, the article offers actionable insights that can be applied to various industries, making it a must-read for anyone involved in strategic decision-making processes. 🌟 Thank you for sharing such informative content! I'll definitely keep these lessons in mind as I navigate my own business endeavors. 👍📚

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Anonymous User

16/03/2022, 10.44 am

Nokia is the one of the oldest phone and also it is existed until now

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)

Sheila Yovita

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!

I'm learning!

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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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.

• 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).

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The Rise and Fall of Nokia

By julian birkinshaw , lisa duke.

The case describes Nokia’s spectacular rise and fall, shedding light on the combination of external factors and internal decisions that resulted in the company’s handset business being sold to Microsoft in 2010.During the successful period of growth (roughly 1990 through to 2006), Nokia’s focus on design and functionality gained it a worldwide reputation. It was acknowledged as the first smartphone manufacturer. Through the early-mid 2000s it was the undisputed leader in the global mobile phone business. The case traces the first signs of trouble and the company’s subsequent decline over the period 2005 to 2010. Pressure in the early 2000s from low-end competitors led to early signs of problems. Then of course the game changed in 2007 with Apple’s iPhone and a year later with phones powered by Google’s Android operating system from HTC, Samsung and others. Nokia was initially dismissive of these new offerings but its proprietary OS, Symbian, was ageing badly and its App store (Ovi) was no match for Apple’s. In September 2010 it was announced that American Stephen Elop, formerly of Microsoft, would become CEO. Not long afterwards a partnership with Microsoft was signed which subsequently led to Nokia’s handset business being sold to Microsoft.

Learning objectives

• Understand why good companies go bad; in other words, see how the assets that enable companies to succeed can also be liabilities when the market turns against them.
• Provide insight into the nature of disruption in an established industry and why incumbent firms struggle to adapt.
• Examine the different paths companies should take to respond to disruptive forces.
• Understand the leadership challenge for executives when their performance starts to decline2. To understand the dynamics of change in a fast-changing industry.
• Identify strategies companies can use to adapt quickly to disruptive changes.

Other cases in Strategy

• Entrepreneurship
• Innovation and Entrepreneurship
• Management Science and Operations
• Organisational Behaviour
• Organizational Behaviour and Strategy’
• Sustainability

Privacy Overview

Nokia: The Inside Story of the Rise and Fall of a Technology Giant

The case examines the downward spiral of Nokia, the mobile technology giant that once conquered the world, seen from the perspective of ‘insiders’ – based on interviews with Nokia executives at top and middle management level. They describe the emotional undercurrents of the innovation process that caused temporal myopia – an excessive focus on short-term innovation at the expense of longer-term more beneficial activities. Nokia’s once-stellar performance was undermined by misaligned collective fear: top managers were afraid of competition from rival products, while middle managers were afraid of their bosses and even their peers. It was their reluctance to share negative information with top managers – who thus remained overly optimistic about the organisation’s capabilities – that generated inaccurate feedback and poorly adapted organizational responses that led to the company’s downfall. The case covers the period from the early 2000s to 2010, with a focus on 2007 (the introduction of the iPhone) to 2010, when the CEO left. Read a related Knowledge article "Who Killed Nokia? Nokia Did" by Quy Huy.

After reading and analysing the case, students will understand (i) how emotional dynamics influence hard technological and strategic decisions in organizations as they translate into challenges for innovation, (ii) how emotional dynamics can undermine innovation and performance.

• Top and middle management
• Mobile phone
• Radical change
• Strategic agility
• Temporal myopia

Quy Huy

Timo o. vuori.

Lisa Simone Duke

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Nokia Change Management Case Study

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
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Company background

Factors influencing organizational change, how organizational change unfolded, reference list.

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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IvyPanda. (2019, July 3). Nokia Change Management. https://ivypanda.com/essays/change-management-in-nokia-company/

"Nokia Change Management." IvyPanda , 3 July 2019, ivypanda.com/essays/change-management-in-nokia-company/.

IvyPanda . (2019) 'Nokia Change Management'. 3 July.

IvyPanda . 2019. "Nokia Change Management." July 3, 2019. https://ivypanda.com/essays/change-management-in-nokia-company/.

1. IvyPanda . "Nokia Change Management." July 3, 2019. https://ivypanda.com/essays/change-management-in-nokia-company/.

Bibliography

IvyPanda . "Nokia Change Management." July 3, 2019. https://ivypanda.com/essays/change-management-in-nokia-company/.

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The Rise and Fall of Nokia

• Format: Print
• | Language: English
• | Pages: 26

About The Authors

Juan Alcacer

Tarun Khanna

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• November 2020

The Rise and Fall of Nokia (Abridged)

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• The Rise and Fall of Nokia (Abridged)  By: Juan Alcácer and Tarun Khanna

• May 4, 2023

The rise and fall of Nokia - lessons from failure

Updated: May 8, 2023

One of the pivotal moments in life as we know it today was the emergence of cellular phones. The emergence of this sector gave rise to a plethora of brands, such as Apple, Redmi, Samsung, and the brand that was leading them all - Nokia. But sadly, what was a behemoth then is now just a footnote.

The once iconic cell phone that we saw in the hands of almost every adult, also named the Best selling Mobile Phone Brand in the world (October 1998), is now rarely even spoken about. So what went wrong? What resulted in Nokia’s downfall? Let’s explore the Nokia case study and find out what factors caused its tragic “from success to failure” story.

The following are the major factors that accounted for Nokia’s downfall:

Resistance to the only constant- Change: With the rapid pace of change, especially in technology, Nokia’s resistance didn’t help their brand. It kept producing older versions of its phones as compared to its competitors, who kept upgrading their phones. As a result, their market shifted to these newer, more affordable ones.

No strategic plan: Nokia’s rivals, such as Apple and Samsung, had a successful marketing strategy that kept their customers and potential ones interested and on the lookout for their new products. They both used the umbrella branding strategy (such as Samsung with their Galaxy series) that kept users hooked. Seeing this, Nokia tried to release its own line of hardware and software, but it already existed in the market because of its competitors.

Innovation: As the demand for their phones increased, Nokia focused most of its resources on its manufacturing rather than its innovation. Even with the release of their Nokia Lumia phone, they provided the most basic features with the dullest visuals compared to their competitors.

Overestimated strength: Nokia’s management believed that their market would wait for them and buy their phones regardless of what they produced and hence, didn’t focus much on what their competitors put out. They got stuck with outdated hardware and buggy software which resulted in Nokia’s downfall.

Check out these links to know more about the rise and fall of Nokia:

https://www.doersempire.com/why-nokia-failed/#:~:text=Initially%2C%20the%20new%20technology%2C%20urge,company%20on%20the%20strategic%20level -The history, fall and what we can learn from it.

https://www.feedough.com/why-did-nokia-fail/ -The rise, timeline of Nokia’s failure and its reasons.

https://startuptalky.com/reasons-why-nokia-failed/ -Reasons for Nokia’s failure and FAQs.

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Case Study 4: The Collapse of Nokia’s Mobile Phone Business

• First Online: 30 July 2018

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This chapter provides a wisdom-oriented reading of one of the most spectacular business failures of recent times: the collapse of Nokia mobile phones between 2007 and 2015. Using executive biographies and other published accounts of Nokia’s organisational patterns, the chapter attempts to offer a more balanced explanation of the processes behind Nokia’s inability to respond to the changing industry circumstances. The following analysis pays attention to the shaping of Nokia’s organisational culture. Company and its new leadership adopted a professional, no-nonsense approach in the aftermath of the problems of the late 1980s and early 1990s. The new generation of managers believed in a rational mindset supported by a bureaucratic organisational form. Leaning on a superior technological competence within the mobile phone sector, Nokia was capable of ultimately becoming the market leader. However, in 2007, with two major players, Apple and Google, joining the business, the established rules of competitive dynamics were irrevocably changed. Focus shifted to software and applications. Nokia’s risk-aversive and closed organisational culture could not respond in a situation where an open search for new innovations and a cooperative internal working mode were needed. An analysis of the development of Nokia’s organisational psyche following the emergence of a new generation of managers and executives highlights the role of local beliefs in using philosophical wisdom in critical circumstances. Nokia and its leadership were not able to abandon the outmoded habits and structures, as these had become integrated with the very identity of the company.

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Peltonen, T. (2019). Case Study 4: The Collapse of Nokia’s Mobile Phone Business. In: Towards Wise Management. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-91719-1_6

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Change Management in Nokia Company: A Case Study

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Organisational behaviour, change management and motivation seen in the case study of Nokia and organisation-wide changes like mergers and acquisitions, employee psycholigical contract (ADKAR, Maslow, Hertzberg, Pink)

MBA student, chichester University Addressing the individual's relationship to change and motivation can allow us to significantly reduce the impact of structural organisation-wide change on the individual worker, through this their associated teams, departments and the organisation as a whole. Applying this to real workforce situations within Nokia, where poignant situations have arisen resulting in increased change resistance due to not addressing awareness and desire creation, change fatigue and failure to address the people side of change.

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Change is the only constant thing both in our personal lives and in every organization. A number of factors are usually considered when deciding when and what level of change should be introduced in any organization, as a result, if these changes are not properly blended into the organizational system, it causes resistance from the people who are expected to effect these changes i.e. the employees, hence, the reasons why employee resist changes being introduced in an organization. While carrying out this study, various literatures were consulted to understand the proper foundation and perspectives of change, resistance to change and how better management can harmonize these changes in their organization if they want the continued success of their organization. The method of data collection in this study are from both primary and secondary sources which will be tabulated in simple percentage table analyses and interpreted. The major findings for this study indicates that employee resist changes because of poor communication of the required change, lack of proper motivation and encouragement to effect such changes and the inhuman nature of the changes being introduced by the management. Conclusively, the conclusion deduced from this study shows that the change management process in Airtel Networks Limited failed, the employees were not properly communicated to as the changes were being introduced, and the management did not put the hazardous nature of the job into conclusion before introducing such changes. It is therefore recommended that employees should be informed about the nature of the changes being introduced in the organization and proper due process should be followed as well as adequate motivation and inventive packages..

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Introduction This case study focuses on a fast growing online business services startup platform in Australia. It operates as its own functioning business unit under the umbrella of News Ltd, who own a cluster of individual digital companies also known as Rupert Murdoch’s News Corporation, one of the world’s largest global media companies. This case study examines a change that occurred when almost the entire senior management staff level was replaced including the CEO two years ago. Organisational change is something that occurs throughout an organisation’s life cycle and effects the entire organisation rather than one part of it. Employing a new person is one example. Change is increasing due to a number of forces including globalisation led by rapidly advancing technologies, cultural diversity, environmental resources and the economy; therefore the ability to recognise the need for change as well as implement change strategies effectively, in a proactive response to internal and external pressures is essential to organisational performance. Internal changes can include organisational structure, process and HR requirements and external changes involve government legislation, competitor movements and customer demand (Wood et al, 2010). Change does not need to be a painful process, as it may seem when observing the amount of failed change management initiatives with reports as low as 10% of researched success rates (Oakland & Tanner, 2007), when successful change management strategies are utilised and planned, including effective communication strategies, operational alignment, readiness to change and implementation, which all lower and overcome resistance (Wood et al, 2010). There is a great amount of literature on the negative aspects and difficult management with employees resisting change, however Wood et al (2010) challenge this notion by questioning the change management process as people do not resist change itself but aspects of the change that affects them personally such as fear of the unknown, status, remuneration and comfort. Resistance to these changes is a healthy reaction and can be managed effectively in the beginning by ensuring communication and using one of the change initiatives described here .

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For any organisation to remain afloat, it must always position itself to competitively struggle for the limited resources from the ever changing and dynamic environment; by not only responding to change but looking out for change. Organisational Change, change management and resistance to change; are tripartite concepts in which no one can be conveniently treated singularly without mentioning the other ones. The methodology adopted in the study is exploratory approach. It examined the literature to present how change management determines the level of change resistance and the eventual organisational change. The paper commenced with the conceptual literature, to the theoretical literature, empirical literature, findings from the literature, the conceptual framework, and the conclusion. Recommendations were made for organisations to avail themselves of the services of experts in human capital management, to handle change implementation programmes for them. Keywords: Organisationa...

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This paper presents a literature review on change management. Change management has been defined as ‘the process of continually renewing an organisation’s direction, structure, and capabilities to serve the ever-changing needs of external and internal customers (Moran & Brightman 2000). Kanter (1992) contends that we live in a constantly changing world, and change has an impact on the individuals and the organisation as a whole. In this context, organisations have to look into the future to find new advantages. New technologies, new products, new competitors, new regulations, and new people with new values and experience is the order of the modern organisation. Nevertheless, theories and approaches to change management are often conflicting, lacking in empirical evidence and based on unchallenged assumptions about the nature of modern organisational change management. This paper looks at some of the main theories and approaches to organisational change management as an important fir...

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The study of change is a major concern at present in all fields of science. Traditionally, in philosophy and socio-human sciences, the concept of change was approached as opposed to that of stability, with intense debates about the desirability and importance of order and stability vs. the unpredictability of change. While in classical approaches to organizational change the conceptions that favoured order, stability, and routine prevailed, modern approaches recognize the decisive role of accepting change for the development and progress of organizations. In the field of organization development and organizational becoming nowadays strategies are sought and devised in order to align the organizations not only with their rapid inner changing, but also with the external multiple, complex, and dynamic environments. Starting from an outline of the factors of change and of the term of change as it has been conceptualized in sociology, the present paper aims to delineate a general framework for addressing organizational change. In this regard, after discussing the relationship between organizational change and the social and economic environment and delineating the main areas and agents of change in an organization, the various types of change in the organization and the models of their approach are addressed. Furthermore, since the resistance to change is a common and omnipresent human and social phenomenon, including at the level of groups and organizations, the paper approaches also the causes and manifestations of change resistance, as well as the possible measures for combating this phenomenon, in situations where the change is beneficial and necessary.

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9 Reasons Why Nokia Failed After Enjoying Unrivaled Dominance

Devashish Shrivastava , Akshat Hawelia

In the annals of mobile phone history, Nokia once reigned supreme with its robust devices and iconic brand. However, as the smartphone revolution took hold, Nokia's fortunes took a sharp turn, leading to a notable decline in its market share and influence. The fall of such a prominent industry leader begs the question: What were the reasons behind Nokia's failure?

This post focuses on the reasons why Nokia failed after enjoying unrivaled 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. By understanding the lessons from Nokia's journey, we can gain valuable insights into the rapidly evolving landscape of the technology industry and the critical importance of adaptation and innovation.

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 had 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 six main reasons behind Nokia's failure.

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Reasons for Nokia Failure: Case Study

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, organizational restructuring at nokia, the symbian vs. meego os dilemma at nokia, failure to adapt and reposition.

In the fast-paced world of technology, companies that fail to adapt to changing trends and consumer demands can quickly find themselves left behind. Nokia, once synonymous with mobile phone supremacy, experienced a significant downfall due to its resistance to smartphone evolution. As competitors embraced the shift towards smartphones, Nokia's reluctance to fully embrace this revolution became one of the key reasons for its failure.

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 touchscreen 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, which was used in its smartphones. It faced usability issues and lacked the app support and developer ecosystem that rival platforms like iOS and Android offered. The clunky user experience and limited app selection hampered Nokia's ability to compete effectively. Also, 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.

Nokia was slow to recognize the potential of smartphones and the shift from feature phones to touchscreen devices. They failed to anticipate the demand for devices with advanced capabilities, such as app ecosystems and touch interfaces. This led to a loss of market share to competitors like Apple's iPhone and Android-based smartphones.

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.

The partnership limited Nokia's ability to differentiate itself and left it dependent on Microsoft's success in the mobile industry . The Windows Phone platform struggled to gain traction, further impacting Nokia's market position. This case study provides valuable lessons for businesses considering similar alliances and emphasizes the importance of aligning visions, complementary strengths, and adaptable strategies.

Marketing plays a crucial role in shaping a brand's success and perception. In the case of Nokia, its decline can be attributed, in part, to failed marketing strategies that hindered its ability to compete effectively in the mobile phone market.

One notable misstep in Nokia's marketing approach was its unsuccessful implementation of umbrella branding . Companies like Apple and Samsung successfully adopted the umbrella branding model, with flagship products like the iPhone and Samsung Galaxy series acting as the focal point for expanding their product lines. However, Nokia failed to follow suit and capitalize on the umbrella branding strategy, missing out on the opportunity to create a cohesive and recognizable brand identity.

Additionally, Nokia's marketing efforts struggled to maintain the user trust that the company had built over the years. Inefficient selling and distribution methods further eroded consumer confidence and made it difficult for Nokia to reach its target audience effectively.

While Nokia attempted to regain momentum by introducing hardware and software innovations, these offerings were often late to the market and lacked the uniqueness that would have set them apart from competitors. Rivals had already released similar features and devices, diminishing Nokia's ability to capture consumers' attention and regain market share.

The failure of Nokia's marketing and distribution strategies played a significant role in its ultimate decline and exit from the mobile industry market. Without a strong brand identity, effective distribution channels, and timely innovations, Nokia struggled to compete with rivals who had successfully aligned their marketing strategies with evolving consumer preferences and market dynamics.

Nokia's failure to keep pace with changing technology and trends played a significant role in its decline. While the company had earned a reputation for its hardware, it didn't prioritize its software lineup, which proved to be a crucial oversight.

Initially, Nokia was cautious about embracing technical advancements in order to mitigate the risks associated with introducing innovative features to its phones. However, this approach hindered the company's ability to adapt to the rapidly evolving market.

The business needed diversification, 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.

This case study shows Nokia's failure to keep up with changing technology and its delayed response to industry trends significantly contributed to its downfall.

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. This turned out to be a misconception, as consumer preferences had shifted towards other brands.

People still make predictions that Nokia will retain 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.

Unfortunately, the market dynamics had changed, and consumers were no longer willing to overlook the shortcomings of Nokia's software. Competitors had surpassed Nokia in terms of user experience and software innovation, leaving Nokia struggling to regain its position.

Nokia's lack of innovation in its products significantly contributed to its failure case study. While brands like Samsung and Apple came up with advanced phones every year, Nokia simply launched the Windows phone with basic features, failing to keep up with the industry's rapid progress..

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 about the decline of the mobile giant. Nokia refrained from adopting the latest tech. Nokia's failure became a powerful 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's failure was not solely due to its lack of innovation but also its shortcomings in leadership and guidance. These factors, combined with its inability to adapt to market demands and technological advancements, sealed the company's fate.

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Nokia underwent a sudden and significant organizational shift by adopting a matrix structure driven by enhancing agility within the company. However, this abrupt change resulted in dissatisfaction among stakeholders, particularly as key individuals in top management departed from the organization. These individuals, who had played instrumental roles in establishing Nokia as a leading company, were no longer part of the decision-making process .

The shift to a matrix structure also brought about internal challenges, as stability in top management, a crucial element for organizational coherence, was disrupted. Over just five years, Nokia experienced two CEO replacements , preventing employees from fully adapting to new leadership goals and visions. The frequent changes in leadership created instability and hindered consistent strategic direction. The lack of continuity in leadership contributed to employee dissatisfaction and impacted the overall cohesiveness of the organization. Employees and other stakeholders found it challenging to align with successive CEOs, leading to a breakdown in communication and a sense of disconnect within the company.

Nokia Changes their Logo After 60 Years

Nokia's problem arose when its R&D division underwent a split, with one faction dedicated to enhancing the Symbian operating system and the other focused on developing MeeGo. The competing claims of superiority between the two teams led to internal friction, causing delays in the release of new phones. The company grappled with the challenge of harmonizing divergent technological directions, impacting its ability to bring innovative products to market in a timely manner. This internal competition within the R&D division created a complex dynamic, hindering Nokia's efficiency and potentially affecting its competitive edge in the rapidly evolving smartphone market.

Nokia's downfall can be attributed to its failure to analyze market trends and adjust its strategy accordingly. The company neglected the burgeoning smartphone market, ultimately missing a significant opportunity for growth. Rather than capitalizing on this evolving landscape, Nokia could have revitalized its position by enhancing its existing software, such as Symbian. Unfortunately, the lack of strategic foresight and adaptability led to a missed chance to stay competitive in the dynamic tech industry.

Moreover, the oversight in market analysis and strategic planning eroded Nokia's market share and diminished its relevance in the rapidly changing consumer electronics landscape. The company's reluctance to pivot and innovate in response to market dynamics ultimately contributed to its decline in the face of evolving consumer preferences and technological advancements.

The fall of Nokia can be attributed to a combination of factors that hindered its ability to adapt, innovate, and stay competitive in the mobile phone market. The resistance to smartphone evolution, missed opportunities, ineffective marketing strategies, and the deal with Microsoft all contributed to its downfall. Ultimately, Nokia's decline serves as a reminder of the importance of staying agile, embracing change, and continuously evolving to meet consumer demands.

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 Nokia's failure.

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.

What happened to Nokia?

Once a dominant force, Nokia clung to outdated software, allowing Android and iOS to surge ahead, leaving the brand lagging. Despite its focus on new technologies, Nokia's legacy now lives on in the realm of Android.

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 smartphones coming in the 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

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 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.

What lessons can other businesses learn from Nokia's failure?

Nokia's failure highlights the importance of embracing change, anticipating market trends, and continuously innovating to meet customer expectations. It underscores the need for effective marketing strategies, strategic partnerships, and an unwavering commitment to adaptation and innovation in today's rapidly evolving business landscape.

Was Nokia's lack of innovation a significant factor in its decline?

Yes, Nokia's lack of innovation in its product lineup played a significant role in its downfall. The company failed to keep pace with rivals who consistently introduced advanced devices and embraced evolving market demands, which resulted in Nokia losing its competitive edge.

Why did Nokia go out of business?

Nokia lost its phone industry dominance by sticking to outdated software, missing the smartphone revolution, and experiencing a significant sell-off. Despite not going out of business, Nokia's cautionary tale highlights the vital role of innovation in a rapidly evolving tech landscape, with the company still present in network tech and patents.

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