How Lack of Effective Strategy and Leadership Lost Nokia its Lead in the Mobile Phone Market

“We didn’t do anything wrong, but somehow we lost,” the CEO of Nokia said this tearfully in September of 2013 in their last press conference after the sale of Nokia to Microsoft. But we beg to differ. The CEO and his team actually did everything wrong.

They ignored the fact that in life, change is constant. Every individual and organization need to adapt to change to survive. Nokia had the technical competence, but they underestimated the competition and failed to adapt to change.

Adapt to the Market Conditions

Technology of yesterday will be replaced by tomorrow’s trend. While other phone companies concentrated on software, Nokia did not do anything with it. This was the new world order where the content is king. To download all the content, phones needed storage, bigger display, and other features.

When others focused on providing content, Nokia failed to adapt to the market despite taking a nosedive in sales. They invested in new technologies like touch screens, and internet enabled phones, but not the ones that customers needed.

Apple’s genius was not the iPhone, or the iPad, but the business ecosystem it built, full of software and applications.

Companies Must Not Rely on Past Performance

The past performance and the fantastic press a company gets does not guarantee future success. Market conditions will always change and not responding to it is a mistake. Nokia's management was overconfident of staying successful with their sturdy brick handset and their aging Symbian OS.

Secondly, they believed that due to the size of their market share, they need not be where the crowd wants to go. Meanwhile, Google and Apple began developing an ecosystem around their products. People who used Google’s free service, or bought Apple products, they could use their content and products they had on cloud.

When Google bought Android in 2005 and made it sync with Google’s products, developers could build apps for Android and let people pay for it or use it for free. Google was not a phone company and neither did they make mobile phones, until few years later. Nokia, with their Symbian OS, did not have such an ecosystem.

Corporate Hubris Will Lead to Downfall

In order to succeed, you need to be in the market because that's where successful companies are. While confidence is good, corporate hubris will take you nowhere. In Nokia's case, the market they had to be was software, not hardware. When people started buying Android phones, they refused to see the potential of Android.

By keeping their faith in their Symbian OS, they isolated themselves. Because the company’s leadership did not catch up on latest developments, the company became redundant. It was too late to learn a lesson.

Developers could not build an app easily for Symbian. Nokia sat on a huge pile of cash in 2005 and had the money to buy Android, but they did not. Owners, developers, and manufacturers became interdependent on Android thus creating an ecosystem.

When time came for a change, Nokia went for Microsoft instead of Android, isolating themselves. This was because of corporate hubris who did not want to be where the crowd was. No one was making apps for Windows, and they could see that.

The Last Years of Nokia

Instead of cutting off Symbian, Nokia cut off their workforce and let 1000s of employees in Finland go. When every phone company started using Android, Samsung, which had its own operating system called Bada OS, went for Google’s Android.

Nokia’s market share went from 52% in 2007 while they sold half a million phones to roughly 2% in 2011. Like Google who bought new companies to extend their capabilities, Nokia failed to strategize and they did not buy companies that could help them get back their market share.

In 2014, Microsoft bought Nokia for $7.2 billion and wrote it off few years later for $7.6 billion in which Nokia’s brand and patents were sold to another company. They lost out on the race and failed because they did not adopt strategies to catch up with the latest business and technological trends.