nokia culture case study

CASE STUDY: Nokia Turns Two Cultures into One

• January 31, 2019
• Key Concepts: Leadership

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IMPACT : 10% improvement in manager behavior scores, according to direct report surveys

SCALE: 3,500+ line managers

SPEED: 2 years

When people start viewing challenges as opportunities, rather than as threats, they’re using what psychologists call a “growth mindset.” In doing so, research finds they radically increase the chances of succeeding at their given task.

In Nokia’s case, that task was turning two cultures into one.

Shortly after its 2016 acquisition of French telecommunications company Alcatel-Lucent, Nokia partnered with the NeuroLeadership Institute to create culture change by way of Nokia’s approximately 3,500 line managers. The story puts to practice a great deal of research showcased in NLI’s newest white paper,  “How Culture Change Really Happens.”

CONNECT, GROW, DECIDE

NLI knows from its research into culture change that employees must develop their growth mindset before they can do the work of adapting to new ways of behaving. Otherwise, they may shy away from new initiatives or actively fight against them.

Over the past two years, Nokia has rolled out three of NLI’s scalable learning solutions — digitized, science-based learning initiatives that help organizations across a variety of domains in culture, leadership, performance, diversity, and inclusion. 

Nokia’s solutions include  CONNECT: The Neuroscience of Quality Conversations , GROW: The Neuroscience of Growth Mindset , and  DECIDE: The Neuroscience of Breaking Bias . GROW has helped leaders cultivate their growth mindset; CONNECT helps them have higher quality conversations; and DECIDE helps employees use less biased thinking in everyday situations.

Nokia leaders took to the programs almost immediately.

For the pilot CONNECT roll-out, Nokia wanted a minimum participation rate of at least 40%; it got 64%. It wanted a satisfaction score of 5.5 out of 7; it got a 5.7. And it wanted to see signs of positive behavior change from both participants and their direct reports; follow-up surveys showed 90% of the feedback was positive or constructive.

“I recommend it to everybody within Nokia,” Pekka Pesonen, Manager of Organizational Development, told NLI.

Impact across thousands

Since the three programs have started rolling out, direct report surveys show a 10% jump in manager behavior scores. Self-report surveys from managers show a 20% jump.

These kinds of improvements show how important it is to build new habits to shape culture . (In fact, at NLI, we define culture simply as “shared everyday habits.”) At Nokia, those habits include conversations built on principles of social threat and reward , and bias mitigation strategies to make more effective decisions.

Hundreds of managers are still enrolling in Nokia’s three programs, which the company has branded Drive, Dare, Care. As each manager moves through the solutions, the culture as a whole will inevitably become more unified.

“Together with NLI,” says Michael Kirchner, Global Program Manager in Nokia’s  Organizational Development team, “we enhanced our change management capability, and helped our leaders to create an environment of trust and safety.”

Click here to view the full Nokia case study.

This article is the fourth installment in NLI’s new series, Culture Change: The Master Class , a 6-week campaign to help leaders understand the science behind creating — and sustaining — culture change.

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Where did nokia go wrong (and six lessons you can learn from them).

• by Charles Gaudet

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Nokia, once a dominant brand in the mobile phone market, struggled to adapt as smartphones became more popular and ultimately lost market share to competitors such as Apple and Samsung. 

We can learn much from the negative experience and cascading business failures that resulted in Nokia’s eventual downfall.

Despite its former dominance in the mobile phone market, Nokia’s failure serves as a reminder of the importance of staying ahead of industry trends and continuing to innovate in order to remain competitive.

Despite its former dominance in the mobile phone industry, Nokia’s failure serves as a reminder of the importance of staying ahead of market trends and continuing to innovate in order to remain competitive.

It was October 1998, and Nokia was the industry leader in mobile phone sales all over the world. Since the early days of the mobile phone industry, Nokia had been synonymous with business success and quality products. The phones were available worldwide, covering low-end to high-end prices to ensure customer satisfaction.

By 1999, the company’s profit had reached $4 billion. It seemed that they could do no wrong. Even in June 2007, when Apple introduced the first iPhone, Nokia still retained 50% of the customer base. For a long time, its young leadership led the brand to success through loyal customers and repeat business. 

But in 2010, things took a turn for the worse…  It took only six years for Nokia to lose around 90% of its market value, and the company never recovered.  Critical mistakes led to the mobile phone giant’s fall from grace. 

Nokia’s history only serves to prove that no business is infallible, especially in the face of technological progress and changing customer expectations.

What were some of their critical mistakes?

Cocky leadership, a lack of vision, and inferior technology were the unholy trinity of errors that contributed to Nokia’s downfall. They ignored implied customer feedback, lost customer loyalty, and unlike most companies in the mobile phone space, failed to keep up with evolving services and tech. Here’s what you can learn from their biggest mistakes and errors in judgment.

1. Always Account for Customer Expectations.

Even being an industry leader doesn’t guarantee success, as Nokia’s downfall shows. It’s important to continuously innovate and adapt to stay ahead of the competition.

Nokia failed to adapt to changing consumer expectations and reposition itself in the market. After Apple introduced its game-changing smartphone, a large group of consumers saw what the future of the industry could provide. They understood the long-term benefits of developing mobile technology better than Nokia did.

So, here’s one of the first lessons from Nokia that you should learn:  never rely solely on your brand’s reputation to retain customers and acquire new ones.

Nokia repeatedly failed by relying on the same inferior technology, despite changing customer needs… All because it knew that most of the target audience still felt very positive towards the manufacturer.

Being an industry leader will only get you so far.  Once the demand for your product goes away, your reputation will change for the worse if you don’t adapt quickly… And customer retention (and with it, customer lifetime value) will suffer the same fate.

Demand generation is a hot topic among marketers today. But many people believe that demand geeneation and lead generation are somehow the same thing. 

Read more about the difference between the two concepts here in our related piece, “Demand Generation vs. Lead Generation: What’s the Difference?”

2. Marketing is as Important as Your Product.

A strong product alone is not enough to ensure success, as Nokia learned. A solid marketing strategy is just as crucial to reaching and engaging customers.

Nokia never had a strong marketing strategy in the smartphone industry, at least not like its competitors did. 

What did Apple and Samsung do? Each year they announced their new smartphone version – with improved features and services. These marketing messages were all about creating anticipation and generating excitement. It kept people interested and attracted new customers.

Another lesson to take away from the Nokia disaster is that marketing is as important as the product itself.  Create a flagship product, but don’t forget to position it accordingly.

Even if you only make small improvements to your product over time,  strategic marketing  can still generate excitement for minor upgrades too.

3. Ensure All of Your Departments Work in Alignment.

In a business context, it means that different departments, subsidiaries, or divisions within a company can work together in a coordinated way to achieve more than they would be able to individually. Companies that can create and maintain a culture of synergy can improve their competitiveness, productivity, and profitability.

Once the competition in the industry got fiercer, Nokia began to crumble from the inside. Different departments stopped coordinating and began competing – and customer experiences suffered because of it.

So, where did Nokia go wrong?

It failed in its organizational structure and interdepartmental communication. Insufficient coordination among departments often leads to a variety of operational issues. In Nokia’s case, it led to many delays in the development of their OS.

Why is this important to you?

Because departments that are out of sync fall behind in their delivery of products, research, upgrades, and more. This leads to losing out to competitors and contributes to a rapid loss of existing customers. 

4. Don’t Foster a “Shoot the Messenger” Culture.

The failure of Nokia serves as a reminder that a corporate culture of listening and learning is crucial for staying ahead of the curve. Companies must be open to feedback and willing to adapt to changing conditions in order to remain a competitive brand.

The Nokia leadership that once brought success couldn’t adapt to the new trends. By most accounts, the top managers created a dictatorial culture, rather than an addressing customer needs in innovative ways.

When times get tough, you have to adapt… But before you do that, you need to learn how to change.  Always embrace new ideas from employees and nurture a culture of listening and learning.

Remember that the culture doesn’t grow from the bottom up. It’s the other way around. Leaders should establish clear cultural values and lead by example. 

Empower your employees and encourage collaboration and innovation.  It’s critical in establishing a strong foundation and culture, both of which are building blocks of a strong business and changing with customer needs. 

5. Manage Your Company’s Resources.

Nokia’s downfall serves as a reminder that the world is always changing and companies must be constantly assessing their position, exploring new opportunities for business growth. A failure to pivot in response to shifting conditions can lead to a loss of market share and ultimately, failure.

The lack of innovation and understanding at Nokia didn’t come solely from bad leadership decisions and out-of-sync departments. The cellphone maker had experienced massive, rapid growth. In fact, the business model targeted financial growth and not innovation – or evolving buying habits.

Therefore, when it needed to change to meet customer expectations, the company didn’t have the resources to sustain innovation. Nokia didn’t have a vision for the future. Everything was about short-term gains, and nothing prepared them for competing in a new field with new customer needs.

You can avoid this by managing your resources wisely.  Assess your position often and explore new directions you could pivot to through market research, customer feedback, focus groups, and beyond.

Even if you don’t make a dramatic shift, it’s still good to know what your options are… And how much you might have to set aside to compete on a different playing field.

6. Focus on Hiring the Most Qualified People.

The success of a company is not only dependent on the products or services it offers, but also on the people behind it. A great hiring process that focuses on bringing in individuals who can solve existing problems and empowers them to take action is crucial to solidifying a company’s position in the market.

Another aspect of Nokia’s failing was not having the right people in the right places. Its top management lacked the technical understanding to compete in the new market, and middle management didn’t have the motivation to make specific issues and customer pain points about their services known.

A company culture based on open communication can solve some of these problems, but it’s not enough for ideas to reach the ears of upper management. Management needs to have an understanding of those ideas, too.

To solidify your company, you need a great hiring process. Focus on people who can solve existing problems, and place them in positions with the power to do something about those problems that create customer churn.

The downfall of Nokia serves as a reminder that a long string of bad decisions can lead to failure, even for a once successful company. But looking back, none of the company’s mistakes were unavoidable. A strong focus on data-driven decision making, thorough analysis, and a holistic approach to assessing risks and opportunities can help a brand avoid similar pitfalls.

There are many lessons you can learn from the fall of the technology giant to ensure your business will succeed in the face of changing consumer expectations, the rise of new businesses, evolving sales trends, and the different products customers truly want to use.

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Microsoft-Nokia culture clash will be tough to overcome

Professor of Organisational Behaviour, Cass Business School, City, University of London

Disclosure statement

Andre Spicer does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Among Western nations it would be difficult to find two cultures as different as the US and Finland. Americans are stereotypically confident and outgoing; Finns considerably more reserved. This is even reflected in the economies of the two nations: the US is the home of free-market capitalism; Finland is the poster-child of European social democracy.

These are just stereotypes, of course, but they do give you a hint of some of the real challenges that Microsoft is likely to face as it seeks to integrate Nokia’s mobile phone division, which it has purchased for €5.4 billion .

The purchase was announced with great fanfare by both Microsoft and Nokia senior management. For Nokia, the deal is seen as a way to exit from the handset market. Although they once dominated this sector, they are now well behind market leaders Apple and Samsung. For Microsoft, the purchase is a way for them to add a mobile hardware component that will allow them to compete head to head with Apple and Google.

Although the rhetoric around the deal sounds good, the reality is likely to be much messier. The research suggests that most mergers and acquisitions tend to destroy rather than create value.

Indeed, the history of Microsoft during the past decade has served as a remarkable case study of this basic rule. When outgoing CEO, Steve Ballmer, took over in 2000 it was absolutely dominant in its field and its share price was at an all-time high. During Ballmer’s tenure we have seen a stream of acquisitions, uncertain innovation and a stagnation of its shareprice. A New Yorker journalist recently quipped that Ballmer had finally figured out a way to make some money – he quit .

Maybe the acquisition of Nokia should be seen not as a shrewd strategic move, but more like one of the last great acts of the Ballmer regime. Indeed, research suggests that CEOs tend to become addicted to mergers and acquisitions , despite their declining returns.

The hubris of CEOs plays a big role here. Feelings of greatness often lead then to paint a rosy future picture of takeovers. They are also likely to overlook the significant risks that come with any acquisitions. This is all depressing news for Microsoft shareholders – if the research in the area is anything to go by, they are unlikely to see any significant gains from the acquisition of Nokia. In fact, they are actually likely to lose out.

But shareholders are not the only ones who will lose out. The future is likely to be relatively grim for employees in the Nokia phones division. There have already been reports in the Finnish press that many are worried about losing their jobs . This comes on the heels of a stream of layoffs in recent years.

But even for those who hold on to their jobs, life under the Microsoft regime is likely to be difficult. Merging cultures following an acquisition often proves to be difficult, if not impossible. A common outcome is talent staff crucial to the success of the company leave. Those who are left behind are likely to be relatively cynical. This typically leads to companies losing their innovate edge – often precisely what they were purchased for in the first place. This bodes poorly for the Nokia handsets division. Following the Microsoft deal it is likely to become an innovation deadzone, staffed by embittered cynics.

Members of the broader public are the final losers from this deal. Despite all the talk of how competitive the mobile business is, it is actually a market dominated by a few players. The increasing integration of hardware and software has meant a small handful of companies like Apple, Google and now Microsoft are in all our pockets.

This presents big concerns about who owns, controls and watches over our personal data. After all, many of these players are not just funky tech companies, they are also consumer surveillance companies. The purchase of Nokia by Microsoft represents a further step towards the consolidation of this market. But it also may represent a further step towards the consolidation of a few companies’ control over our personal data.

If this deal is likely to create so many losers, why is it going ahead? Well, there are likely to be some big winners as well. For one, Nokia shareholders seem to have benefited significantly with a big jump in share price following the announcement. The senior executives who put the deal together are also likely to do well out of the deal. Research suggests that when CEOs go on buying sprees – even unsuccessful ones - they are likely to get a bump in their reward package as well as a nice ego boost.

A final winner hidden in the wings is the army of advisers and consultants and such like who will gain a significant chunk of the transaction costs involved in trying to knit these two businesses together – and cleaning up the mess afterwards.

• Mobile phones
• Telecommunications
• Mergers and acquisitions

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• January 2014 (Revised June 2020)
• HBS Case Collection

The Rise and Fall of Nokia

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

About The Authors

Juan Alcacer

Tarun Khanna

Related work.

• Faculty Research
• November 2020

The Rise and Fall of Nokia (Abridged)

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

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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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.

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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.

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.

About the series

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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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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:

External 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.

Internal factors:

• 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.

Final Words 

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.

About The Author

Tahir Abbas

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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.

• Organisational culture
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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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Intrapreneurship at Nokia Software, or I at NS, was a program created in 2017 to give Nokia Software’s 10,000 employees the opportunity to submit ideas for products, services, or solutions that delivered new capabilities, solved tough challenges faced by customers, or opened new markets.

I at NS was intended to mimic the experience of founding a start-up, getting it funded, building a product, and taking it to market, with all the potential risk and reward this entailed. Except, of course, this particular start-up experience would occur within Nokia Corporation, a 150-year-old global company with 103,000 employees working in more than 100 countries—a company that described its mission as “creat[ing] the technology to connect the world.”

Given this rather unusual “start-up” environment, the creators of the program had no idea how it would all unfold. But, they went ahead and established it, evangelized it to Nokia Software employees around the world, judged the first round, and then launched a second round, which was still underway at the time this case was written. In the process of creating I at NS, its founders learned many important lessons about encouraging and supporting innovation and a start-up mentality within an established corporation.

The case covers many elements of the design and implementation of an innovation program including:

• Strategic objectives of innovation processes
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• Determining the scale and scope of new ventures
• The staging of the innovation process
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• The definition of the strategic objectives behind the innovation process
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• Identifying and allocation resources
• Recruiting evangelists and mentors
• Team formation and composition
• How the process interacts with and impacts the culture in the organization
• Incentives for innovation
• Career development paths for innovators
• Attitudes to risk

Also see:  SM320B: Intrapreneurship @ Nokia Software (B): Lessons Learned, Feedback Given

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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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Discover how to build a winning team and boost your business negotiation results in this free special report, Team Building Strategies for Your Organization, from Harvard Law School.

A Top International Negotiation Case Study in Business: The Microsoft-Nokia Deal

International negotiation topics in business: merging two distinct corporate cultures with as little conflict as possible.

By PON Staff — on January 25th, 2024 / International Negotiation

We sometimes require counterparts to meet certain conditions before agreeing to enter into talks. Negotiating conditions to your participation in dealmaking can be a powerful move, but it also carries some risks that need to be carefully considered. And international negotiation brings on more challenges than most. 

Let’s look at the international negotiation case study of Microsoft’s decision to purchase Finnish mobile phone company Nokia’s mobile device business for $9.5 billion. The deal, which closed in 2014, quickly proved disastrous: Microsoft wrote off nearly all of the deal’s value and laid off thousands of workers in July 2015. Although there were many reasons the deal was a bad bet for Microsoft, a negotiating condition that Nokia set before agreeing to take part in serious negotiations may have offered one warning sign. 

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International Negotiation Behind the Microsoft and Nokia Deal: Nokia Builds Its BATNA

Microsoft and Nokia had been partners since 2011, when the Finnish firm began installing Microsoft’s Windows Phone operating system (OS) on its smartphones. But Nokia lagged far behind smartphone competitors in innovation and market share, and the Windows Phone OS, used primarily on Nokia handsets, was failing to meet expectations.

In January 2013, Microsoft CEO Steven Ballmer called Risto Siilasmaa, the chairman of Nokia’s board of directors, to raise the possibility of Microsoft buying divisions of Nokia. Soon after, the two men discussed the idea at a conference in Spain. They agreed inefficiencies existed in their agreement and brainstormed solutions, from minor tweaks to business mergers, reports Ina Fried on the technology news website AllThingsD.com . 

Nokia considered letting its deal with Microsoft lapse and trying to revive its handset business by adapting its smartphones to Google’s Android system. By cultivating this strong BATNA , or best alternative to a negotiated agreement, Nokia gained the power to walk away from a subpar offer from Microsoft.

Indeed, after hearing Microsoft’s first formal pitch for an acquisition in New York, Siilasmaa informed Ballmer that they were too far apart on price and other issues, such as which company would own Here, Nokia’s mapping service. Nokia executives believed they needed to hold on to their ability to sell Here to other companies. Meanwhile, Microsoft felt it couldn’t keep pace with competitors without controlling the mapping technology it was using in its phones, tablets, and PCs, and on the web, according to AllThingsD.com. Subsequent meetings between the parties in London and Finland went nowhere .  

A Deal Takes Shape

A breakthrough came when Nokia informed Microsoft that it would proceed with formal talks only if Microsoft agreed to abide by certain negotiating conditions , most notably a commitment to set up a financing source for Nokia and the caveat that Here was off the table. 

Microsoft agreed. At a meeting in New York, the parties happened upon a solution to the question of who would control the mapping service. Why not share the code, with Nokia retaining intellectual-property rights to Here? Nokia realized it could grant Microsoft a license to access and customize Here’s source code and own any improvements it made. Nokia would retain ownership of Here and the power to license the service to other companies. Ballmer and Siilasmaa shook hands on the outlines of an agreement, which was filled out over the next two months. 

The Risks of Setting Negotiating Conditions

A negotiating condition is an “if” statement—such as, “If you agree to take this issue off the table, I’ll negotiate”—that qualifies your entry into a negotiation or acceptance of a deal. Setting negotiating conditions can be a particularly useful tool when it comes to improving the appeal of another party’s onerous request or demand, notes Harvard Business School and Harvard Law School professor Guhan Subramanian

But insisting that the other party agree to certain terms as a precondition to negotiation can be risky. In their 2012 labor dispute, for example, the musicians of the Minnesota Orchestra said for many months that they would negotiate with the orchestra’s management only after a lockout ended. But management was loath to accept this negotiating condition , aware that the players would have little motivation to accept significant salary cuts if they were performing and being paid. 

Before stipulating a negotiating condition , remember that your counterpart will weigh the costs and benefits of accepting your negotiating conditions against their alternatives away from the table. If you have a strong BATNA , as Nokia appeared to, then it may make sense to take this risk. But note that even in this case, Microsoft made inroads on the mapping service issue that Nokia had claimed was nonnegotiable. Microsoft may have salvaged the deal by refusing to assume that Nokia’s negotiating conditions were nonnegotiable—a move Microsoft’s leaders likely later came to regret.

Two key lessons on negotiating terms and conditions emerge from these failed negotiation examples . First, you should demand only those conditions that are truly deal breakers for you. Second, try to craft negotiating conditions in ways that provide benefits or concessions to your counterpart. Even when you have the power to get what you want, your efforts to help your counterparts get what they want will pay off in the form of stronger relationships and longer-lasting deals.

Have you had experience negotiating conditions to a deal within an international negotiation? If so, how did the process work out?

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No Responses to “A Top International Negotiation Case Study in Business: The Microsoft-Nokia Deal”

3 responses to “a top international negotiation case study in business: the microsoft-nokia deal”.

There are no more phones with ‘Nokia Lumia’. They are all ‘Microsoft Lumia’. Microsoft completely scraped the company and rebranded the devices. Nokia got a bad future

There has been a completely mixed response to whether the deal was good or was a decision taken in a hurry. Nokia surely can use this incoming cash flow on some great products, but the issue now is that Nokia was recognized by its Mobile Devices and there will be almost zero difference between a new product category (coz no more mobile phones)coming under the NOKIA brand name or a completely new Brand name because they will both have zero popularity in that field.

It would probably be good for Nokia to come up with a new brand name and leave the Nokia legacy behind in its Nokia Research Department and nowhere else. As you could feel, this deal saddens me 🙁

It’s 2015 now buddy and Nokia’s all of microsoft now. You should be a lot sad now 😛

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Understanding how to arrange the meeting space is a key aspect of preparing for negotiation. In this video, Professor Guhan Subramanian discusses a real world example of how seating arrangements can influence a negotiator’s success. This discussion was held at the 3 day executive education workshop for senior executives at the Program on Negotiation at Harvard Law School.

Guhan Subramanian is the Professor of Law and Business at the Harvard Law School and Professor of Business Law at the Harvard Business School.

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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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Case studies

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25 Jul 2023

MobiFone reduces radio network energy consumption by close to 14% with digital design

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18 Jul 2023

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27 Jun 2023

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18 May 2023

Saudi Arabian operator provides outstanding Hajj experience by trusting in automation

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21 Feb 2023

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12 Feb 2023

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KDDI energy efficiency case study

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China Mobile landslide monitoring and alarm system with IMPACT IoT platform

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23 Dec 2022

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26 Sep 2022

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18 Aug 2022

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27 Jul 2022

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26 May 2022

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18 Feb 2022

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17 Feb 2022

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21 Jan 2022

DISH Wireless 5G Standalone Deployed in the Cloud

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16 Dec 2021

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13 Dec 2021

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23 Sep 2021

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21 Jul 2021

Anyhaul network fabric gives maximum flexibility

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19 Jul 2021

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Telenor & 5G-VINNI: Proving the potential of 5G innovation

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10 Jun 2021

Ooredoo Algeria: Leading the way to digital enablement - cloud-native core solution

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11 Feb 2021

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17 Nov 2020

INEA test the 25G PON technology with Nokia

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23 Sep 2020

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19 Aug 2020

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20 Mar 2020

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23 Jan 2020

POST Luxemburg

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19 Nov 2019

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16 Apr 2019

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29 Nov 2018

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15 Nov 2018

Tele2 4G upgrade: 41 percent lower emissions than conventional roll outs

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School of Planning and Public Affairs

Sppa students win grand prize in ui 2024 global health case competition.

We are proud to announce that our students have received first place and the grand prize in the 2024 Global Health Case Competition for their project, “Improving Sustainability Outcomes in Homa Bay, Kenya.” In addition to receiving the first place monetary awards, they were selected by Dave Okech Okech , CEO of a Kenyan nonprofit, AquaRech Ltd, to implement a portion or all of their plan in that country! The competition is offered through the UI Institute of Public Health Research and Policy.

Their team included three School of Planning and Public Affairs (SPPA) masters students, Farnaz Fatahi Moghadam, Jovana Kolasinac, and Sanzida Rahman Setu, plus UI students Joe Maxwell (undergraduate in political science with an urban planning minor) and Sanya Sami (graduate student in public health). They competed against eight other teams representing a total of nine colleges to capture the win.

The aim of the contest is to train “the next generation of leaders through a unique competition experience built upon a real‐world challenge.” This year’s global health case study was “Sustainable Communities and Nutrition Concerns in Homa Bay, Kenya.” There were numerous aspects the students had to consider, including declining supply of fish as a primary protein source, supply chain issues, cultural implications, food insecurity, health concerns, and climate change. Additionally, they had to take into account complicating factors that were present, such as gender-based issues, economic and environmental impacts, and strategic alliance for policy implications to ensure the sustainability of their proposal. The team spent two months working on their project, incorporating many aspects of urban planning from their graduate classes.

The students’ winning proposal is available for viewing .