The Process Thinker’s Notes on ‘NOKIA’
Nokia is one of the pioneers in the mobile phone industry. In October 1998, it became the best-selling mobile phone brand in the world. And, completely ruled the market for over a decade.
What made it that successful? Its vision! A vision that involved catering all the sections of the society. It provided phones with multiple price ranges. No millennial can deny the impact, Nokia phones made in their lives.
With such a successful and glorifying history of the organization, it’s really hard to realize that Nokia is no more relevant in the mobile phone industry. But why did Nokia fail?
Top 3 Reasons that Contributed to the Fall of Nokia
We feel Nokia lost the battle, when it lacked the efficient process management strategies. Here’s the top 3 reasons that led to the fall of Nokia:
- Failure to Evolve with the New Technology.
The mobile technological advancements were rapid. Newer brands and competitors rose in the market with better smartphones frequently. But Nokia didn’t evolve accordingly.
Although Nokia was among the first to introduce the smartphones to the world with their ‘Symbian phone’ range. But it couldn’t cope with the rapid advancements of technology.
They undoubtedly focussed on producing good quality hardware for the phones. Unfortunately, that wasn’t enough for the new set of consumers who wanted better features. If they had considered process change and not just their internal values. Then today their market place could have been much better.
The problem with Nokia was that it continued to produce the old versions of the phone. And, other competitors like Apple, Samsung, Blackberry changed their processes and shifted to produce better applications for the phones. They poured the market with highly advanced smartphones.
With time these smartphones got cheaper and easily accessible to every part of the society. Thus, diminishing the target audience for Nokia.
- Being an Outsider in the Ecosystem.
Another important reason for Nokia’s demise as a ‘market leader’, was it not being a part of the ecosystem. Other brands like Apple and Google made conscious efforts to build a community that comprised phone makers, developers, as well as the customers.
Newer brands like HTC, Motorola, Huawei, and Xiaomi also started joining this ecosystem. But Nokia isolated itself from this ecosystem. It tried to make a comeback with latest technology phones which were feature-ready, but unfortunately, they weren’t future-ready.
Due to Nokia’s consistency of producing similar kind of phones, even consumers stopped expecting anything new from the brand. This rigidity didn’t go well since the market choices evolved and it was not enough to serve the consumer’s purposes.
It focussed just on the ‘Inside-Out view’, completely neglecting the ‘Outside-In view’.
Inside-Out View: Strategies made just keeping in mind the working of the internal system within a company. Majority of businesses focus to deliver the services based on their business values only.
Outside-In View: Strategies made keeping the consumers’ needs and preferences in mind. This is the smarter way since our ultimate business objective is customer satisfaction.
You can’t win a game by being out of the field. You have to enter the fields, and destroy your competitions! The same rule applies to the business strategies as well.
Every business needs to adapt with the changing external environments. If the processes are not aligned to serve the purpose of customer satisfaction, then it causes great harm to businesses in the long run. Also, your business strategies must be valid seeing the technological advancement and the outside competitions.
- Mismanagement of the Organizational Culture.
There’s a famous saying that, “Success breeds conservatism and hubris”. This means, with success, pride and commitment to traditional ideas and strategies tend to follow. And, this is what exactly happened with Nokia!
Nokia’s case justifies that internal politics and conflicts can destroy even the top-level companies. Nokia became a victim of ‘organisational fear’. The organisational fear was grounded in a culture of temperamental leaders and frightened middle managers.
Fear permeated at all levels of the organization. The lower management feared of losing their careers, and in order save their own resources they kept away from the truth. The top management feared of not meeting the targets and were afraid of the external competition and environment.
They intimidated middle managers by accusing them of not being ambitious enough to meet their goals; the middle management felt telling the truth was useless and lied to the top managers. Top managers could not motivate the middle managers with their heavy-handed approaches and they were in the dark with what was really going on.
The way employees were interacting with each-other was a result of shared fear atmosphere due to Nokia’s status culture. They didn’t allow proper flow of innovation both in their product and within the system.
This affected the management decision-making, increased bureaucracy, and internal rivalries within the organization. All this accumulated caused major dysfunction in the organizational function.
Conclusion: Our Learnings from This Case.
A business is a system of integrated business processes. If an organization focuses on one process capability, like in the case of Nokia, the focus was much on ‘Quality’ and ‘Robustness’ of the product but ignore other processes like the market research process, in this case, it backfires and many a times, the impact can be as severe as closing down the business.
Nokia’s decline doesn’t have one single explanation, it was the collective mismanagement of processes within the organization. According to these concepts, the maintenance of the right structure in the organization, analysis of the environment risk factors, and the competition are among the most common factors that you should keep in mind as a business owner.
Cultivating and nurturing a good organizational culture is crucial for the business growth. You must focus on eradicating internal rivalries and bureaucracies, as they do no good to your business.
Your business should be able to reposition its target and strategies to yield the best value. Moreover, changing and evolving with the new advancements is the need of the hour. And ultimately, you have to be the part of ecosystem to rule it! An efficient process management ensures delivering the best outcomes in your business without affecting the business values. Comment down what according to you caused the major setback for Nokia’s market? Also, tell us what are your learnings from this case-study?
Let’s work together to make your business smooth and efficient. Reach out to us for any queries and help in managing and making your business process better.