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Who Killed Nokia? Nokia Did: Strategy

Nokia's fall from dominance in the smartphone market was due to a culture of fear within the organization that paralyzed its ability to respond to the iPhone. Middle managers at Nokia were terrified of its temperamental leaders who would shout and threaten firings. Additionally, top managers feared admitting weaknesses in Nokia's operating system or missing quarterly targets. This created a climate where bad news was suppressed and the company remained inert as the iPhone disrupted the market.

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Raisul Islam Nayan
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233 views1 page

Who Killed Nokia? Nokia Did: Strategy

Nokia's fall from dominance in the smartphone market was due to a culture of fear within the organization that paralyzed its ability to respond to the iPhone. Middle managers at Nokia were terrified of its temperamental leaders who would shout and threaten firings. Additionally, top managers feared admitting weaknesses in Nokia's operating system or missing quarterly targets. This created a climate where bad news was suppressed and the company remained inert as the iPhone disrupted the market.

Uploaded by

Raisul Islam Nayan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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STRATEGY

Who Killed Nokia? Nokia Did


Quy Huy, INSEAD Professor of Strategy and Timo Vuori, Assistant Professor of Strategy, Aalto University |
September 22, 2015

Despite being an exemplar of strategic agility, the fearful emotional climate prevailing at Nokia
during the rise of the iPhone froze coordination between top and middle managers terrified of
losing status and resources from management. The company was wounded before the battle began.

Nokia’s fall from the top of the smartphone pyramid is typically put down to three factors by executives
who attempt to explain it: 1) that Nokia was technically inferior to Apple, 2) that the company was
complacent and 3) that its leaders didn’t see the disruptive iPhone coming.

We argue that it was none of the above. As we have previously asserted, Nokia lost the smartphone
battle because divergent shared fears among the company’s middle and top managers led to company-
wide inertia that left it powerless to respond to Apple’s game changing device.

In a recent paper, we dug deeper into why such fear was so prevalent. Based on the findings of an in-
depth investigation and 76 interviews with top and middle managers, engineers and external experts, we
find that this organisational fear was grounded in a culture of temperamental leaders and frightened
middle managers, scared of telling the truth.

Deer in the headlights

The fear that froze the company came from two places. First, the company’s top managers had a
terrifying reputation, which was widely shared by middle managers—individuals who typically had titles
of Vice President or Director in Nokia. We were struck by the descriptions of some members of Nokia’s
board and top management as “extremely temperamental” who regularly shouted at people “at the top of
their lungs”. One consultant told us it was thus very difficult to tell them things they didn’t want to hear.
Threats of firings or demotions were commonplace.

Secondly, top managers were afraid of the external environment and not meeting their quarterly targets,
given Nokia’s high task and performance focus, which also impacted how they treated middle managers.
Although they realised that Nokia needed a better operating system for its phones to match Apple’s iOS,
they knew it would take several years to develop, but were afraid to publicly acknowledge the inferiority
of Symbian, their operating system at the time, for fear of appearing defeatist to external investors,
suppliers, and customers and thus losing them quickly. “It takes years to make a new operating system.
That’s why we had to keep the faith with Symbian,” said one top manager. Nobody wanted to be the
bearer of bad news. However, top managers also invested in developing new technological platforms that
they believe could match the iPhone platform in the medium term.
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“Top management was directly lied to”

Ok

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