Individual Assignment

Submitted in partial fulfilment of the requirements of the course

Elephants and Cheetahs: Systems, Strategy, and Bottlenecks

(EC)
Term -IV

INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD

Instructor
Professor Saral Mukherjee

Academic Associate
Ms. Anjali Abichandani

Submitted by
Ashis kujur (18314)

Date of Submission: 02/09/2019

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Table of Contents
Executive summary...............................................................................................................................3
Introduction...........................................................................................................................................4
Brief History..........................................................................................................................................4
Road to success and market dominance...............................................................................................5
 Strategic leadership:....................................................................................................5
 Capabilities:.................................................................................................................6
 Organizational Dimension:...........................................................................................7
 Environment:...............................................................................................................7
The transition of Nokia’s soul................................................................................................................8
Decline of Nokia in iPhone’s Era..........................................................................................................10
 Strategic leadership:..................................................................................................10
 Capabilities:...............................................................................................................11
 Organizational Design:...............................................................................................12
 Environment:.............................................................................................................12
Conclusion:..........................................................................................................................................13
Exhibits:...............................................................................................................................................14
References:..........................................................................................................................................18

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Executive summary

Nokia’s journey is a fascinating one as it leaves the observers enthralled and intrigued to probe into
the whys and hows of its journey and to find out who or what was responsible for its spectacular
ascent and equally startling decline. I have tried to deconstruct the factors leading to its early success
and its ultimate demise. However, the most essential part of the write up is the transition phase, i.e.,
why, how and when did Nokia’s soul change, as to what led to the fall of a mighty corporation such as
Nokia. Looking at it from a management’s lens, there are in total three distinct lines of reasoning that
come across:

1) Was Nokia’s decline unavoidable, i.e., was the disruption caused primarily by Apple and
Google the only reason?
2) Was it an instance of failure from organization evolution and adaptation point of view in the
face of disruption?
3) Or, was it all linked to poor management decisions – wrong strategies, poor choices of
organization, weak leadership, cumbersome procedures?

In the following write up, I had focused on the managerial errors that made it handicapped when it
needed to face the disruption challenge and respond strongly like a dominant market leader. The
foundation was becoming weak, and signs were visible when it was at its peak. The 1995-2005
decade was one of its best decades with phenomenal sales and its also in this period where
problems started to appear. The roots of Nokia’s failure can be found in multiple small mistakes,
which seem manageable when viewed in isolation. However, repeated ignorance of these minor
mistakes can converge to create more significant problems. Nokia’s management failure,
therefore, cannot be ascribed as “single wrong decision” but an accumulation of many wrong
decisions, made for what appeared for the right motive, but with a narrow perspective. I have
stressed upon the various errors and leadership weakness during the transition phase and also in
Nokia’s post-peak era.

Unfortunately, Nokia had undergone such a massive transformation from an innovative and
experiment-driven company to a mechanical, play by the analytics, zero deviations company as
described later in detail, that it failed to even respond to the threat, let alone adapt to it. Instead,
Nokia kept on following its success mantra, which had boosted Nokia to the forefront in the
industry, but those were stable times, and foolishly ignored all signals of inevitable change.

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Introduction

Nokia, a Finnish company, was a leader in the mobile phone revolution, that grew to become one of
the world’s most recognizable, successful, and valuable brands in the world. Nokia’s ringtone, a short
melodic phrase titled “Gran Vals” became most played tune in history signifying its immense
popularity. At its peak during the 90s and early 2000s, it dominated and occupied 40% of the market
share. Nokia was known for its agility and innovation, through which it was able to launch many
novel products, which were instant hits with the consumers. Nokia became synonymous with mobile
phones. However, due to specific changes in the market dynamics and internal environment, it started
to decline by the late 2000s, with the advent of newer, more customer focussed competitors, and
ultimately it was sold to Microsoft for a meagre $7.2 billion when over a decade ago its value was
over $200 billion. The repercussions of the collapse were far and wide- loyal investors who stuck with
Nokia for a long period of time were badly hit, thousands of employees became unemployed all of a
sudden along with dissolution of their stock options. Nokia’s suppliers were left abandoned since it
was a huge customer. Back in Finland, where Nokia’s success also contributed to the nation’s GDP,
suffered as well through Nokia’s decline mid-2010s.

Brief History

Although Nokia came to worldwide prominence in the 1990s when it ventured in the telecom
industry, it was already 135 years old company till then and had seen its fair share of transformations.
Nokia had started as a lumber mill business in 1865 on the banks of Nokia river, from where the name
has been adopted. From its humble beginning as a single paper mill operation, it ventured and
successfully so into variety of different industries including cables, paper products, rubber boots, tires,
television, mobile phones, and telecom equipment. Nokia’s steady and sustainable progress from a
formal old conglomerate in 20th century to one of the world’s most consumer-focused tech company
by the early 21st century was a testament to its entrepreneurial spirit and its ability to adapt to the
changing environment.

Nokia Corporation was formed in 1967, from the merger of forestry, paper and pulp group known as
Nokia Ab, Finnish Rubber Works, and Finnish Cable Works. Nokia’s smart opportunism coupled
with changing geopolitical, institutional and industrial contexts of Finland itself, Post World War II
propelled it away from traditional industries to mobile telecoms. During the 1970s, Nokia decided to
expand its business by diversifying in various electronic products such as mobile telephony. It already
had a presence in radiotelephony. However, a setback due to oil shock in 1973, Nokia had to rethink
its strategy regarding its traditional products. The then CEO, Kari Kairamo, brought out a revolution
in Nokia by setting Internationalisation and Innovation as its future goals, in order to increase the

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share of high-tech products as well as maintaining the competitiveness of its conventional products
like paper, tires, and cables. To attain its goals of high-tech products, it entered the consumer
electronics and computer goods, and got a lucky break, when the Finnish army gave the consignment
to develop a new type of radiotelephones.

It also indulged in acquisition activities. Nokia acquired Salora and Luxor in 1984 to aid in its R&D
competence and small-scale production with a scope of the mass output and different market
orientations. During the 90s, Nokia wanted to extensively focus on its telecommunications business
and closely related business operations. As a result, it divested its cables, machinery and consumer
electronics industry by mid-90s and only held telecommunications and mobile phone in its portfolio.

Road to success and market dominance

Industries are not stable in nature as they will always undergo changes as they evolve, with some
being affected in a more obvious way than the rest, and hence, will affect every industry. Changing
consumer needs, new technological advances influencing growth or decline are some ways through
which industry is affected. Many times, though companies know that change is inevitable, they are
late in realizing, or simply are incapable of taking action. This ability or inability of firms to take
action can dramatically alter their fate. If one observes the fixed and mobile communications
equipment industry, one can quickly notice remarkable changes that took place at the turn of this
century.

Nokia’s success in the 90s can be primarily contributed to the amalgamation of visionary, bold and
well thought after prudent management choices which were made in fortunate circumstances that
developed in Finland. At that opportunistic time, digitalization and deregulation spurred the growth of
mobile phones. Nokia’s entrepreneurial leadership at the helm synthesized with a team of very
complementary skills led to a series of early innovation, early smart strategic moves, influential “can-
do” culture, and collective engagement positioned Nokia as the dominant leader in the mobile phone
industry.
In order to analyse both the success and failure of Nokia, its corresponding attributions have been
categorized into four broad factors:
(1) Strategic leadership,
(2) Organizational design,
(3) Capabilities, and
(4) Environment.

Strategic leadership:

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It is no surprise that leadership of top management can either break or make a firm. Fortunately,
before and in the 90s and before mid-2000s, Nokia was well led by a very able leadership. Decisions
taken by each executive constitute a significant reason for Nokia’s phenomenal early success. If we
take example of Björn Westerlund, considered to be a visionary leader saw the potential of electronics
early on and had accordingly initiated “beyond the scene” effort to master the technology. Although
the operations failed to bear any profits for years, he had good sense of faith in electronics industry,
which paid off massively in the later years. He was also responsible for saving Nokia from adverse
effects of the Soviet Union collapse, by initiating and establishing well balanced international trade.
Kari Kairamo was another visionary leader who succeeded Westerlund and acted as the company’s
CEO from 1977 to 1988 and made vital contributions to Nokia’s success. He was seen as the major
driving force behind the international expansion of Nokia from a domestic company to a global one.
He avidly supported a culture of flexibility, a dynamic organization which was constantly learning
and adapting. Moreover, he also foresaw the new threats from foreign players and hence diversified in
consumer electronics. Foraying into the consumer electronics such as computers though was not
successful and ultimately put a strain on the financial statements, provided Nokia with valuable
lessons- importance and difficulty of mass production, importance of branding and current digital
technologies including the relevance of software.
Jorma Ollila was the next CEO and was responsible for the complete turnaround from bankruptcy due
to risk-taking attitude of previous leaders, to unprecedented growth. Jorma was also known for
leadership personality and skills in public presentations, organizing, vision, innovativeness, and
negotiations. Acquisition by the above-mentioned leaders also paid a crucial role in Nokia’s success.
Many decisions taken were high risk in nature but promised high growth, hence were considered to be
bold, when they led to victory. Early leaders had the courage to take well-calculated, top risk
decisions by acting on strategic foresight. They had the ability to see far ahead in the future and
bolstered Nokia with the true entrepreneurial spirit.

Capabilities:

The merging of the three companies to form Nokia in 1967, gave it the critical mass and specific
useful skills from FCW. Innovation was present since earlier, when it successfully developed DX200,
referred to as the backbone of Nokia mobile network systems, which not only brought more new skill
and knowledge but also opened up new avenues for international market. Deviation counteracting
mechanisms were more prevalent towards the early phases of Nokia. Nokia was more flexible in
terms of market uncertainty by providing full range service and products to the consumers.
R&D within Nokia was primarily focussed on product development with a fraction of it in basic
research. However, during the 90s focus shifted to the basic development of mobile phones and

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mobile data communications. Nokia had in its assets a Nokia Research Centre, 44 additional
international research centres in 12 countries by 1999.
Nokia Research Centre had easy access to highly trained and skilled IT professionals as it was closely
tied up with the Finnish education and research infrastructure. Nokia always looked forward to
collaborating with universities as a part of Nokia’s open innovation policy.
Nokia has been spending a very large amount of revenues in R&D (Exhibit 3) and a significant
number of employees worked in R&D department. Nokia list of innovations is very impressive which
ranged from network components, to handset features, digital camera facilities as well as software
developments.
Involvement in mobile telecommunication standards such as NMT and GSM were viewed as essential
breakthroughs since it gained considerable advantages. In case of NMT, Nokia gained a high market
share by being the first mover and providing itself with a unique testing ground for future mobile
devices as early as 1981. Similarly, Nokia gambled by producing devices on GSM standard, without
actually knowing its success. It did pay off when GSM became widespread, benefitting Nokia
immensely. Nokia’s extensive R&D and global-scale logistics and supply chain were also credited for
giving company an advantage over others. Hence, we can see that Nokia can be compared to a risk-
taker, a gambler, an adventurous firm who had an accurate foresight to anticipate future changes in
technology and adapt itself accordingly. As a result, it grew very fast very quickly, more than it had
expected. In 1992, it's earning increased by 385%, and next year by 510%. However, in a race to
expand production, Nokia faced crises in the form of quality and logistics problems.

Organizational Dimension:

Nokia’s culture was regarded by many to range from humble to innovative and initiative driven to
continuous learning-centered. Nokia’s management tried to keep its process dynamic and flexible just
like an entrepreneurial firm to make it more suitable to face challenges. Extensive coordination and
collaboration between the R&D and Production resulted in better performance, efficient logistics, and
a modern, well-managed supply chain. Ex-CEO Jorma had stressed upon the importance of inter-
organizational communication along with the rapid and smooth flow of information throughout the
company. Employees had the freedom and were ready to take responsibility.

Environment:

As mentioned earlier, the geopolitical, institutional and industrial contexts of Finland, aided in its
growth. Finland Government and state-owned telecom operator played decisive roles in Nokia’s
success. Telecom operator was the leading consumer and was also involved in Nokia’s NMT

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development. Finnish government’s ease of policies and deregulation in the telecom sector boosted
Nokia’s success. Liberalization of the nation’s capital market provided Nokia with the required
foreign funds to invest in telecom and lift its growth.

The transition of Nokia’s soul

With so many factors behind Nokia’s success, it is hard to fathom as to what led to its decline.
However, as we all know, it did and vanished from the market. Apart from rising of Apple’s iPhone
and Google Android, there are hints at organizational inefficiencies and failure of management in
terms of weak leadership. In fact, many observers state that the high growth period itself was the
starting point of collapse. In this part, I will elaborate on the changes in internal scheme of things and
how Nokia changed its soul, that ultimately led to its demise.
It began with the logistics crisis in 1996-96, which exerted sudden brakes on the exploding revenue
growth rate. The company shares plunged down nearly 50%. By this time, the management team had
undergone a complete transformation. In the early 90s, old industrial generation headed by Kari was
taken over by a group of young, internationally focused strategic, marketing and finance experts, led
by Jorma. Nokia had seen its fair share of crisis but managed to survive through bold and radical
decisions. However, these bold decisions were also responsible for bankruptcy near late 80s and early
90s, till Jorma took over. This new generation of leaders cum experts thought of reinventing the way
they operated their business in order to prevent any more crisis. The logistics crisis was the first real
crisis they faced and immediately put some checks and controls over the entire process. The
organization as a whole was trimmed down to become more efficient and uniform in nature, with the
lower-level operations being monitored more precisely and sales forecast compiled more accurately.
They also commissioned an ERP system, which gave them the flexibility to produce at a much faster
rate than its competitors. As a result, financial performance from 1996 to 2000 was exemplary,
making Nokia the market leader in 1998, taking the leadership position away from Motorola. Nokia
launched world’s first smartphone in 1996 and first camera phone, in 2001. Strict norms were levied
on subcontractors, who had performed poorly in 95’ crisis. Nokia’s leadership took to more risk-
averse culture by rationalizing management practices and adopting mechanistic form to produce more
excellent results. As a result of these deviation counteracting mechanism, Nokia underwent a 180-
degree turn from an innovation-led company to zero revolutionary changes in the mobile market.
Change and coming up with new products were the very things that helped Nokia evolve from a small
paper mill company to dominant position in the mobile phone industry. Instead Nokia took to upgrade
the existing features which enabled it manufacture large volumes of different mobiles for a variety of
customers at low costs mainly based on the same Symbian software.
Nokia spend a huge amount of money and had a lot of human resource under the R&D department,
but it was not being channelled in the right manner. Creative ideas were neglected due to the rigid

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control culture and bureaucracy. Innovation cannot be tied down to short term financial goals and
hence even after spending huge amounts of money, no real innovation was coming through. . For
example, Nokia knew that its software was getting outdated and had reached its limit but still did not
spend much time or effort on developing newer software, that could have eventually saved the
company. Afterall it came down to customer friendly software. Although they managed to sell billion
mobile phones by 2005 due to their operation excellence, they missed the opportunity to grow when
they forego innovation. If they had managed to keep innovation alive along with the new strategy of
operation excellence, they would have collapsed the way they did.
The strict structure of the company carried forward to the 21 st century in the form of a rigid P/L
statement-oriented consensus system with the main focus shifted from its mission/vision to further
avoidance of mistake. The new leadership wanted to play safe instead of taking bold decisions that led
breakthrough innovations. The visionary aspect was being overrun by audit and financially scrutinized
culture, which dampened engineers’ creative ideas.
Rapid growth between 1996 and 2000 came at a cost in the form of managers finding themselves
under the increasing pressure of delivering short term profit-oriented goals, which made them
incapable of focussing on the long-term horizon. Unlike the new leadership, the older one had the
foresight and hence focused primarily, on long term goals which can be seen in case of GSM. Kari
had foresighted the success of GSM ten years before it actually launched.
Even when it tried to focus on other growth opportunities to diversify for a long term, by launching a
new unit called as Nokia Ventures organization, it failed to find traction since it had no short-term
performance indicators. This is sufficient to show how narrow mindedness and marketing myopia had
ruined their circumspect soul.
Researchers also point toward signs of fear among employees to conform to the culture of control.
Previously employees used to express their opinions and take responsibility where key values like
trust, loyalty, and commitment mattered. From humble atmosphere that promoted conscious and
continuous thinking, it changed to aggression from the top management that stopped previous
continuous learning model and restricted middle management from raising objections. Senior
leadership had created nervous environment that which led to suppression of information thus,
prohibiting seamless flow of information as was prevalent earlier, punishment of failure- indirectly
preventing innovation or deviation, and thereby losing the sense of trust amongst each other.
With the rapid growth of Nokia, the then CEO Jorma was concerned about the lack of agility and
entrepreneurialism as opposed to flexible, dynamic and lively in the early 90s, and hence introduced a
matrix structure through a reorganization. However, poor implementation of the reallocated important
roles did not sit well with the vital members, and they left soon after in mid-2000s. Matrix structure
now seemed to force employees of different departments having different priorities and performance
criteria to work conjointly, which was contradictory to the earlier decentralized structure. Mid-level
managers were not well equipped or trained to handle such situations, and as a result, the matrix

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failed. Matrix further led to unclear and complicated, and hence slow decision procedures, which
ultimately increased the bureaucracy, with people spending less time on their jobs and more on
meeting to wait for precise instructions.
Jorma had gone so far as to describe Kari’s fast-faced and dynamic leadership as an example of poor
and confused business management reality. One more aspect where it failed was the ability to
anticipate future changes early on and adapt accordingly. Nokia was at the forefront of technology,
but still it failed- reason being it placed too little emphasis on software. Nokia historically had been
hardware company and hence, erroneously underestimated the growing importance of software. In
contrast, Apple engineers saw hardware and software equally important. Nokia’s leadership had lost
the art of foresight and were unable to come up with something radical to tackle these challenges. Not
just software, it also failed to anticipate the importance of transition to smartphones, even though they
had launched world’s first smartphone. All these transpired from change in culture from risk-taking,
gambling attitude to more mechanistic and analytical approach.
It was a classic case where a firm gets blinded by its own past success. It 50% revenue was coming
from non-smartphone category and hence did not want to risk it by investing the high-end low volume
smartphone market. Overconfidence had crept in due to their long history of success. It belittled the
technology of the new entrants. Researchers note that Nokia had become arrogant and egocentric by
the early 2000s.

Decline of Nokia in iPhone’s Era

The same framework will be applied to see the contribution and effect of those factors on its failure
after transition took place.
Important events in this phase include the quarterly losses in 2009, nomination of Stephen Elop as its
new CEO and his infamous “burning platform” speech, resignation of Nokia’s executives, and
negative media discussion regarding Nokia.

Strategic leadership:

Just like the early success was explained by the contributions of the leadership of Kari, Jorma, the
failures would also be emphasized on the wrong choices by current leaders. Stephen Elop, for instance
was seen as a “Trojan Horse,” a “Microsoft Mole” who deliberately made an effort to destroy its
legacy and then sell it off to Microsoft. He was regarded not only as incompetent but malicious as
well. Finns were of the opinion that Elop had come to revamp Nokia’s phones to the new windows
platform to make it perfect before selling it off to Microsoft. He was also blamed for the massive 62%
drop, reducing their market share by half and causing a huge financial loss of € 4.9 billion. Forbes in

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2013, had remarked about Nokia directors as being one of the most corrupt crews to lead a major
firm. Journalists and financial experts alike, blamed former and current executives for their
incapability to take right decisions at crucial times leading to its failure. Nokia’s downfall was
attributed to the following reasons:
1) Neglecting innovations and products that could have been revolutionary, as earlier Nokia phones
used to be.
2) the decision of investing in Symbian as the main software.
3) Decisions not to invest enough in Symbian.
4) Ollila’s decision to make Olli-Pekka Kallasvuo as the new CEO in 2006.
5) The nomination of Stephen Elop as the new CEO in 2010.
6) “Burning platform” infamous speech by Elop to publicly denounce the Symbian software.
7) The decision to forego Symbian and Meego software and choose Microsoft as its smartphone
software.
When Olli became the CEO, the culture of control and number became even more reinforced. Olli
background as a lawyer and CFO of Nokia explained his behaviour to some extent. This control
culture also coincided with the change in the investor portfolio. Ownership shifted from traditional
Finnish investors to the short-sighted American mutual funds with expectations of short-term profits
accompanied by aggressive and active policies and hence drove the entire company from a long-term
approach to short term gains and high-profit margins. In hindsight, one can notice that Olli, with his
background, was an excellent candidate to deal with financial market and optimize production but was
definitely not the visionary leader who was need of the hour. Meanwhile Elop diminished the
credibility and trust in company’s core product- Symbian and Meego platforms.
We can clearly see the change in vision and actions of the leadership in both the eras and how the soul
of the company had undergone a massive transformation. Ex-Nokia executives describe it, during the
later half as a big , corrupt, arrogant, lazy, slow, inconsistent, focused on the internal competition, and
threatened. They further added that even after knowing about the changes in the technology that were
coming up, Nokia still failed to respond because it was busy trying to maintain its leadership position.

Capabilities:

Broadly three arguments can be made with respect to skills that contributed to failure:
 Lack of technological knowledge in the top management team,
 Wrong approach to consumer marketing, and
 Launching of inferior products as compared to those of competitors.
Previous leaders like Westerlund, Kari had vast technological knowledge and hence were able to
decide and drive forward the course for future beforehand. During the latter half, it was felt that there

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was no need for the top brass to an expert in technology. Hence when they needed a capable leader
with knowledge in software in order to help the company to respond to challenges, they were
powerless. This attitude prevented Nokia from finding suitable managers to lead them and as a result
had no other option than to follow Elop and his strategies. Some writers have also pointed out that
combination of the new board and Elop, both inexperienced in industry was the main problem.
Next, consumers began to compare Nokia’s products with Apple and Android and were hugely
disappointed by the inferior quality of Nokia in terms of storage, design and operating system. Nokia
had once produced the best phones in the market, but the quality had been deteriorating ever since,
primarily due to the lack in innovation as Nokia had no intention of changing their winning formula of
Symbian phones. Marketing was considered to be shallow attempt to link product design, concept
building and meeting the customer’s demand.

Organizational Design:

Nokia had undergone a lot of internal changes both in personnel and culture-wise, as mentioned
earlier in the transition part. I will talk about the real reason and through the example bring about the
inefficiencies in the organizational design. Symbian was considered to be one of the system’s most
significant shortcomings. The real reason behind the failure of Symbian was not some technical fault
or limitations in design or capabilities, but in the leadership and the way they altered the structure of
the organization. The ecosystem and foundation for upgrading Symbian were devoid of any support
from the administration at the crucial time, which was the result of slow decision making and highly
bureaucratic structure, with increasing tendencies of stacking up essential decisions. This slowness
was one of the key factors as to why Nokia failed to adapt or even respond quickly. Even Apple’s
CEO credited the organization’s internal bureaucracy for prohibiting efficient software development.
When Elop arrived at the scene, Nokia had already borne huge losses and became an insignificant
player with 3% by 2013 from a dominant market player till 2007. Asa result, Nokia, led by Elop,
underwent massive restructuring to cut costs. Although it was a necessity to cut costs, it failed to
generate revenue as well. As Dan Steinbock described in an interview that successful restructuring has
revived ailing multinational giants, but went horribly wrong in Nokia’s case.
Lastly, ex-managers of Nokia blame the mismatch of the incentive structure with the matrix
organization aggravated the decision-making process by lessening the motivation of managers and
diverting their energy into organization politics.

Environment:

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External environment played a very significant role in deciding the fate of Nokia. In fact, many think
that it was because of Apple’s iPhone and Google’s Android that led to the downfall. Although it is
true that they played their role in the decline, but it is only partially true. Till their entry in the market,
Nokia and Microsoft were indisputable leaders in their respective markets. Since then they were
baffled by the rapid change in digital communication, information systems, electronic goods, and of
course software. This shift broke the incumbent’s stronghold in their markets, as both companies
found themselves in unfamiliar and precarious position. They were forced to re-design their strategies
which would suit the new market dynamics.
Nokia, however, failed to respond. Nokia struggled not only to make better phones but also struggled
to culturally adapt to new business environment. It lacked the required flexibility to face the new
market uncertainty. In fact, market uncertainty was also prevalent during its success years, and the
way leadership handled the situation back then, made all the difference. Nokia’s ability to sense and
manage its environment was outstanding back then, crisis was prevalent even then, but Nokia always
managed to catapult itself to success, due to its agility, flexibility, innovativeness, and adaptability.
This time around, Nokia in spite of having technical expertise and competent engineers with creative
ideas, failed due to its rigidity, cumbersome process, over-confidence, culture of control, rendering it
incapable of responding to new threats.
In order to summarize the causes(s) of the sad state of affairs becomes apparent: Inefficiencies arising
from personal( leaders) and organizational incompetence( inflexibility, slow) and behavioural
actions(fear, laziness, arrogance) , the external threat became too complex and strenuous to overcome,
leading to its rapid decline and entirely faded from the market which it ruled at some point of time.

Conclusion:

The intriguing case of Nokia’s rapid and monumental success and equally fast decline is a lesson,
especially for tech firms dealing in hardware or software. In this high-tech era with short product
lifecycles and cut-throat competition- consumers tend to expect constant innovation. If the company
fails to adapt and innovate, thereby falling behind, consumers are quick to switch over. Nokia was late
and inadequate, self-initiating its destruction.
Nokia’s example demonstrates a commonality between mature and successful companies. Success
often leads to complacency and conservatism, and over time results in degradation of the
organization’s strategy leading to poor management decisions. Where once companies looked for new
ideas and experimentation to stimulate growth, with success, they become more and more hesitant to
take risks and less innovative in the process. Therefore, companies wanting to grow need to be aware
and avoid the biggest chink in their armour- their own success.

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Exhibits:

Exhibit 1: Nokia’s timeline and the fall from success to failure

Exhibit 2: Quantity of Mobile phones produced by selected Mobile manufacturers.

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 Exhibit 3: R&D in Euro (million)

Exhibit 4: Number of patents

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 Exhibit 5: Number of Nokia phones released from 1995 to 2013

Ides tam’s Nokia Mill

(1865)

The First Nokia: The

Paper and Pulp
Manufacturer
Ides tam’s Nokia Mill
(1865)

The Finnish Ropery The Finnish Rubber

Works (1912) Works (1898)
The Second Nokia:
The Diversified
Conglomerate
The Finnish Cable
Works (1916)

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 The Third Nokia: The
Oy Nokia AB
European Technology
Concern (Late 1986)

Salora- Nokia Radio Nokia Nokia Nokia Nokia Nokia

Luxor Phones Cable Rubber Chemical Paper Plastic

Nokia Nokia Nokia Nokia

Telecommunications Information Industrial Engineering
Systems Machinery

Nokia’s Restructuring
begins (1990)

Oy Nokia AB

Nokia Data Tele Nokia Nokia Nokia Cable and Nokia Mobile Nokia Basic
Consumer Machinery Phones Industry
Electronics

The Fourth Nokia: The

Globally Focused Cellular Oy Nokia AB
Manufacturer (Mid- 1990)

Nokia Nokia Mobile Nokia Nokia Nokia Cable

Telecommunications Phones Consumer & Research and Machinery
Industrial Centre
Electronics
Nokia Power
Nokia Tires

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The Fifth Nokia: The
Mobile/Internet
Convergence (2000s) Oy Nokia AB

Nokia Nokia Mobile Nokia Mobile Nokia Nokia

Telecommunications Phones Phones Research Research
Centre Centre

Exhibit 6: Reorganization of Nokia’s Corporate (1865-2000)

References:
1. Bouwman, H. (2014). How Nokia failed to nail the Smartphone market. 25th European
Regional Conference of the International Telecommunications Society (p. 19). Brussels,
Belgium: EconStar.

2. Doz, Y. (2017, November 23). The Strategic Decisions That Caused Nokia’s Failure. Retrieved
from Insead Knowledge: https://knowledge.insead.edu/strategy/the-strategic-decisions-
that-caused-nokias-failure-7766

3. HOW NOKIA LOST THE SMARTPHONE BATTLE. (2017, Dec 3). Retrieved from Enterprise
Garage Consultancy: http://www.enterprisegarage.io/2015/12/case-study-how-nokia-lost-
the-smartphone-battle/

4. Peltonen, T. (January, 2019). The Collapse of Nokia’s Mobile Phone Business: Wisdom and
Stupidity in Strategic decision Making. Turku,Finland: Research Gate.

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