Two Lessons Learned from Nokia's Downfall
It was not long ago that the news about Microsoft's buying Nokia's devices business came to light. For years, Nokia was a leader in mobile phone devices before suffering a near fatal fall in the past few years.
In his 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.
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.
In his book The Corner Office: Indispensable and Unexpected Lessons from CEOs on How to Lead and Succeed, Adam Bryant quotes Ursula M. Burns, the CEO of Xerox:
One of the things that I characterize as fearlessness is seeing an opportunity, even though things are not broken. Someone will say: "Things are good, but I'm going to destabilize them because they can be much better and should be much better. We should change this."
The spirit of fearlessness is often needed for an organization to embrace change before it becomes necessary and to eventually make the transformation from good to great.
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. In his book Employees First, Customers Second: Turning Conventional Management Upside Down, Vineet Nayar prescribes an exercise called "Mirror-Mirror" to guard organizations against complacency. The exercise is a metaphor to ensure that people view reality as it exists instead of seeing reality in the rear view mirror—where they can see only positive results and laurels.
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. With Microsoft's bold acquisition of Nokia, it will be interesting to see whether the Nokia brand is able to rise from the ashes like a phoenix.
