Nokia change management failure offers a key insight into the fall of the world’s leading mobile phone manufacturing organization. It raises so many questions how on earth did the world’s top mobile brand fail to implement the changes; why it didn’t follow in the footsteps of its competitors? Today, we’ll discuss the brief historical record, and Nokia change management failure or Nokia leadership failure.
Brief Historical Record of Nokia
The brief historical record of the rise and fall of Nokia in chronological order are as follows;
- Oct 1998 – Nokia achieved the status of becoming the world’s top-selling mobile phone company
- 1995 to 1999 – Nokia’s profitability moved from 1 billion US dollars to 4 billion US dollars
- 2003 – Nokia launched its model 1100 and it became the top-selling phone of all time
- 2007 – The birth of Nokia’s top competitors when Apple launched its first iPhone model
- Dec 2007 – the global market share of Apple’s iPhone was 5%, and Nokia sold half of the world’s smartphones
- 2010 – Nokia launched the “iPhone Killer” phone but it didn’t win the market competition
- 2010 to Onward – the profitability of Nokia’s smartphones kept on decreasing
- 2007 to 2013 – the market share of Nokia decreased by roundabout 90%
- 2013 – Microsoft purchased Nokia
Nokia Change Management Failure – Top Reasons
Some of the top reasons for Nokia change failure are as follows;
Limited Work on Software Development
Those who have used Nokia’s mobile phones would accept the fact that the hardware of its phones was muscular and strongly built. But Nokia’s software was poor and the company didn’t invest resources for the development of innovative and creative software. Poorly built and outdated software gave Nokia’s competitors a competitive edge in the market.
Android smartphone system has already done a lot of work in its development when the Symbian operation system launched its first version. Tech employees were aware of the fact that the Android OS was far more advanced and developed than Symbian OS. But they didn’t convey the exact problem to the top management, because they knew that the non-tech management won’t pay heed to their suggestion.
Wrong Marketing Strategy
Nokia was following and implementing the wrong umbrella marketing strategy. The umbrella marketing strategy is when businesses and companies offer their products and services under the same brand. Just like Samsung sells its smartphones under different sub-categories like Galaxy Series, Note Series, S Series, and so on. Nokia tried the same model of launching the Lumia Series, but it didn’t offer any USPs and failed to attract the attention of customers. The Lumia series of Nokia faced the issues of distribution and branding, and it decreased the company’s sales.
Partnership with Microsoft
Nokia started a partnership with Microsoft to launch Windows phones. It was the time when Microsoft’s Windows phones were already making losses. When the two negative factors combined, they didn’t deliver any positive results.
The Windows phones have got nothing new in them that would compel customers to buy a new model. It led to the failure and demise of Nokia, and the company was on the verge of bankruptcy because of great losses. On the other hand, Samsung and Apple were launching new product lines and following the creative and innovative approach.
Android OS was growing and attracting the attention of customers because of its simplicity, convenience, and user-friendly features. Nokia believed in the fact that the customers liked keypads rather than touchscreen phones. On the other hand, companies like Motorola, iPhone, and Apple were developing low-cost touchscreen smartphones; their sales increased.
Soon, Nokia realized its mistakes and launched Symbian OS smartphones. Compared to Android OS, Symbian OS was very inferior and outdated. Brands like Samsung and Apple were making a strong impact in the market with their latest model.
Dysfunctional Organizational Structure
Nokia chose to implement the matrix organizational structure within the company in 2004. Resultantly, it created a lot of conflicts among managers because they all had the same power and authority. Power struggle issues among various departments of the company caused organizational dysfunction.
However, many visionary executives and tech experts left Nokia because the management didn’t have the trust and confidence of employees. The tagline of Nokia said “connecting people” but the company was failing to connect with its employees and workforce.
Lack of Innovation & Creativity
Samsung and iPhone were on the right path of innovation and creativity and they were launching one flagship once a year with the latest cutting-edge technology and new features. On the other hand, Nokia was falling behind in the growth and development of the latest technology, and the competitive brands were getting ahead.
Considered Too Big To Fall
Nokia had a strong database of loyal customers when the company was at the top of its game and dominating the mobile market share. The company’s management thought the customers would favor the brand, but they didn’t. Finally, when Nokia adopted the android OS, it was difficult for the company to update the software at its core.
Short Term Strategies
In order to maintain its customer market share, the company launched new Nokia Lumia models every year that wasn’t working. Instead of thinking about the long term like developing a new OS or launching new technology; the focus of the company was to meet market demand in the short term.
Management has No Tech Knowledge
The top management of Nokia didn’t have the technical expertise and knowledge, and they didn’t understand the company’s tech weaknesses and limitations. On the other hand, the top management of Apple and Samsung were engineers and tech experts, and they were aware of their capabilities and what they should produce.
Middle Managers Fearful To Speak the Truth
Nokia had a very strict chain of command and coerced culture, where the middle and lower managers were fearful of the top management. The top leadership was blaming the lower managers for not meeting their goals; if they tell them about the company’s incapabilities.
Embarrassed to Accept Their Tech Inferiority
The top leadership of Nokia felt it embarrassing if they acknowledged the technology of Apple as superior to theirs. There were fearful that they would lose the trust and confidence of suppliers and investors if they accept their tech inferiority. It would have taken them years to develop a new OS similar to Android and Apple, but their focus was to increase short-term sales rather than focusing on the bigger picture.
Rigid Organizational Structure
Nokia had a rigid organizational structure where the lower managers were fearful to speak up their minds and tell the truth to the top management. The top managers only wanted to hear the good news; if the lower managers tell them their weaknesses, they would put the blame on them.
Conclusion: Nokia Change Management Failure
After an in-depth study of Nokia change management failure or Nokia leadership failure; we have realized that Nokia’s management didn’t accept the change on time. If you are learning about the Nokia leadership failure, then you should keep in mind the abovementioned top reasons.
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