The fall of Nokia

Nokia is an awesome brand, let there be no doubt. It’s the first company that I had ever worked for that took its social responsibility in the developing world seriously. We had departments helping disadvantaged communities in India, Africa and South America. People across the world loved Nokia (without being obsessive like Apple fans) because Nokia truly lived up to its brand promise of “Connecting People”. It’s like your first girlfriend. You remember her fondly years later and when you see her you smile because she has become a familiar auntie.

Is it the Business Model?

 

What happened? Some bloggers would like to lay the blame squarely at Elop’s the new CEO’s feet. And personally I feel he has made a few serious mistakes. But none of them really could justify the tailspin that Nokia finds itself in right now. I believe the biggest mistake that Elop has made is more of a cultural clash rather than bad management. Elop is Canadian and has worked for American companies for years where their definition of capitalism is much cruder than in the Nordics. Nokia is a product of Nordic Social Capitalist ethos. The company was steeped in the tradition of having a reason to generate revenue, i.e. making the world a better place from tiny Finland to the global stage. American capitalism is more cut throat. It’s about the last box on the excel sheet where you measure profit and loss and everything else is irrelevant.  But once again, not really a reason for the company to fall flat as it has.

Is it the Software?

It can’t be Windows Phone because it is a fantastic mobile operating system and anybody that says otherwise is probably a super user but not somebody who can have a valid opinion about mobile operating systems. At least I would not take that person’s opinion serious.

Is it the hardware?

It can’t be the hardware. Anybody that has held a new Lumia range in their hands can attest to the fact that it is some of the best hardware engineering on the planet. Quality and construction wise it’s up there if not higher than the iPhone.

The Bozo Explosion

I believe that a bit of Nokia’s fall is because of the Bozo Explosion as expounded by Steve Jobs:  “The Bozo Explosion colorfully described by Steve Jobs is what happens to companies who make the mistake of hiring B-grade managers. Hire a B-grade manager, turn your back for a few months and then watch your business, once a shining example of excellence, get over-run by hordes of well-meaning incompetents, from the top right down to the tip of its toes. And the spectre of the unwelcome Bozo Explosion usually portends an inevitable decline in decision making, product quality or design, customer service – you name it, everything turns to mush. And unless you’re very lucky, say good-bye to your business. Oh, and that’s just for starters. Getting rid of a Bozo Explosion in your business is a whole other world of HR pain for which there’s unlikely to be a quick fix. “http://blog.xero.com/2012/05/bozo-explosions/

But once again Nokia has some of the most awesome inspirational people that I have ever met and they are still there so yes the Bozo explosion has affected Nokia but not to this disastrous level they are now.

Nokia has forgotten about the consumer

Nope, I think the main reason why Nokia failed and is still failing is because they have forgotten about the consumer. They have forgotten to understand WHY they do what they do. Nokia was never about forcing customers against their will to be uber brand loyal while peddling second rate products. Nope Nokia helped consumers connect. It was a calling and that calling led to financial success.

They have also forgotten that the new generation of consumers is of the fact that you DON’T pay for an operating system. We have Android and iOS who have taught the customer that it

FEELS LIKE FREE

and that the OS generally is an enhancement to great hardware. Now go and ask LG, SAMSUNG, HTC, etc. why they do not push their windows mobile phones. Because they do have them. Fact is, the new Samsung Ativ is a beautiful device but the margins on their Windows 8  Phones are minuscule compared to their android devices because the software licensing costs reflect 20th century software thinking. And as with all products , these products need to carry their own  marketing cost. IE the more an operator orders these products the more marketing investment they get. And the operators are not ordering it.

Because the consumer has moved on.

Now rationally. When Elop decided to go the Windows Mobile route I believe there were a few think tanks inside Nokia that must have analyzed the reasoning and made a good decision. But they over estimated the Nokia brand and they completely underestimated what consumers wanted. (Did they even ask them? Did they track to which platform they were being swopped out for?) One of the fundamental changes in the New Business Economy is that consumers are pushing the revolutions these days not the industries. (see my other blog post The evolution of the retail revolutionhttp://www.itgdigital.com/the-evolution-of-the-retail-revolution/ )You can’t tell consumers what they want any more when there are alternatives. That’s very paternalistic. That was quite easy when the Nokia N95 came out because there were just NO alternatives. No, industries need to listen to what consumers want and they will let you know: I will buy your product if it lives up to the following….

Nokia is down but not out. Maybe they should take a time out and talk to some people that still love their brand. A good consumer study never hurts any one. And if Samsung can have Android, Tizen and Windows  Phones so can Nokia. And then see which products the consumer wants.

It’s easier done than said.

Erich Hugo