Success, both personal and business, has been the spine of my October blogs. To close out the month, I would like to explore what happens to a successful company that conducts business as usual. Nokia is a great case study.
In 2004, three years before Apple introduced the iPhone, Nokia’s series 60 Sybiam development team presented prototypes to their senior management. The Internet-ready, touch screen smartphone prototypes would give Nokia the world’s largest maker of mobile phones at the time a powerful competitive advantage. The software needed to produce the handset would have added an additional cost of $2.05 to each unit. The team also conceived an early design for a Nokia online applications store similar to what Apple launched in 2007. The design team was shot down. As a result, management’s decision opened the door for Apple, Research in Motion of Canada (BlackBerry phones), Samsung and LG of South Korea.
Why did this happen? Nokia’s early success in mobile phones created a top heavy organization that bred a culture of infighting among management teams with competing agendas. The Sybiam series were considered too costly/risky at the time. In addition, Nokia’s top managers came from the network equipment side of business, thus had little knowledge to keep up with the shift in the industry from communications hardware to software-based services. As a result, innovation was killed, Nokia stayed with its playbook too long, complacency set in.
Where does Nokia stand today? According to research firm Strategy Analytics Nokia controls approximately 40.3 percent of the worldwide mobile market. In the U.S., their smartphone share has slipped to 8.1 percent from 9.1 percent from the previous year according to ComScore. However, despite their shortcomings their smartphones will account for 16 percent (approximately 75 million) of the 475 million phones they plan to produce this year. As a point of comparison, Apple reported selling 33 million iPhones through June 26. Nokia also decided to go outside its management ranks and hired its first non-Finnish CEO, Stephen Elop, a Canadian who ran Microsoft’s business software division. His mission will be to address the company’s suffocating bureaucracy and get it back on track.
Will you be conducting business as usual next year?