On November 1992, Nokia entered the mobile phone market with its launch of model 1011. In 1996, it rocked the world with the first smartphone. And by the end of the 90s, it even introduced the Internet-enabled phone to the vast global users. In 1998, it was branded as the best mobile phone, dominating even the brand Motorola. Between 1996 and 2000.
The revenue increased at a colossal rate of 503%. With its launch of the Nokia 1100 in 2003, Nokia gave all the efforts to concretize its position in the global mobile phone market. In 2007, Apple launched the iPhone. But it could only conquer 5% of the market share, and the lion’s share was bagged by Nokia. But since 2010, the beginning of this decade, the scenario changed drastically. Let us take a dip at what went wrong with this giant brand born in the picturesque landscapes of Finland.
Nokia was doing great since its launch. Internet-enabled phones, camera-enabled phones, touch screen, and everything you can find today was revolutionized by this one name. But as they say, the sun never shines throughout the day; Nokia had to face severe turmoil in its business management models, obstructed organizational communications, inferior Symbian technology (the operating system of Nokia), the cut-throat competition of iPhone and Samsung and technical incompetence.
By 2013, the brand touched the ground, and it was merged with Microsoft in the same year. By 2012, the operating systems like iOS and Android have captured the market successfully. And standing in this era, Nokia once again misjudged the situation. Instead of updating the operating system and targeting long term goals, the management decided to cater to the short term demands by launching new models. But this step miserably failed.
An organization is built not only on cement and bricks but most importantly the employees. The CEOs, middle managers, staffs etc help in running of any company. If the communication between the various organizational hierarchies is blurred due to the fear, superiority and inferiority complex and other such interpersonal barriers. The top managers pressurized the middle managers for reaching targets; the middle managers were intimidated and afraid, to tell the truth about the market decline as they feared being fired. The top officials lacked technical knowledge and skill, whereas the top managers of Apple and Samsung were majority engineers. Lack of smooth upward and downward communications and respectful work culture contributed to the fall of Nokia.
In 2007-2008, when iPhone and Samsung launched their phones with updated operating systems, Nokia was still then basking in the previously achieved glory and continued with its E-series and N-series. By the time, Nokia decided to change the operating system it was too late already. Windows phones could not give tough competition to the above-mentioned brands. Nokia suffered from temporal myopia, they failed to attain the innovative vision and insight to the future, which was successfully done by the other two brands.
The brand strategy failure is evident in Nokia as fear permeated in all the levels of the organization. Samsung and iPhone launch newer under their umbrella series, for instance, Galaxy S series for Samsung. This way, they can create a buzz among the mass and retain the interests of the consumers. Nokia tried to follow the same path with it N-series but failed again. Nokia was overconfident and was reluctant to reform its strategies adapting to the changing time of digitization, automation, globalization and the evolution of the new-age consumers.
Google buys Android in 2005, and in 2007, just at the brink of technological revolution, Google announced “Open Handset Alliance”. The initiative welcomed all the mobile phone manufacturers to join hands and build a unified and developed open source ecosystem. All major players like Motorola, Samsung, Sony, etc joined hands, but Nokia did not. It was still sticking to Symbian technology, with no step to update. While the iOS and Android were updating regularly bringing in more features for consumer convenience, Nokia was lagging behind in the game. Within a few years, Nokia was in a critical situation with no ray of hope. Nokia tried its best to regain the lost throne by developing Ovi in 2011, following the path of Android Playstore and iPhone Appstore. But once more, it did not do any good, by that time the consumers were already reaping the benefits of the competitors’ models.
Nokia has always been aware of the Third Leg, i.e. an innovative domain to match the pace of the growing mobile network. Nokia launched the New Venture Organizations to develop newer concepts like “Internet of Things”. But the time was yet to come, and this way the long term business vision took a backseat. According to a report published in the Wall Street Journal (2012), Nokia spent US$ 40 billion on Research and Development, which was nine times higher than the same as Apple. Unfortunately, all these efforts went in vain for Nokia.
We can learn several lessons from the story of Nokia, let us have a look.
- Respectful and ethical work culture is essential: If the employees are not happy and satisfied, then their performance will be severely hampered. Such was the case with Nokia. Microsoft learnt the lesson, and in 2014, the new CEO Satya Nadella reformed the work culture, emphasizing on better communications, cooperative work environment and honing individual talents and passion.
- Adapt faster to reach the target: The time is ever-changing and the market condition is in a continuous state of flux. In such a scenario, sticking to the older policies and business strategies, like Nokia, will do no good. Adapt to the changing time to optimize business growth.
- Technical competence is of foremost importance: Nokia, being mobile phone manufacture lacked technical innovation, and this is the height of irony. Nokia failed to understand that the changing market preferred software more than the hardware. Technology penetration and internet explosion are the most prominent changes that took place in this decade, while brands like Samsung embraced the transformation, Nokia lacked the vision.
This decade has seen several changes in the market conditions and rise and downfall of many business ventures like BPL etc. The rise of the gig economy and soloprenuers is going on in full swing, and this competitive and crowded market can be a challenge for your growing business. You want to avoid such mistakes, but who can guide you? Google will give you hundreds of websites, but an expert will guide you thoroughly in your journey.
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