Nokia: The Risky Leap at the Tail End of a Company's Life
Case SummaryNokia began in 1865 as a Finnish timber company and later moved into telecommunications. In the 1980s it started making car phones and military communications equipment, and helped push for Europe's unified GSM standard.
In the 1990s, CEO Jorma Ollila boldly divested the chemicals and consumer electronics businesses to focus on mobile phones and telecom networks. Thanks to patents, design, rapid iteration and global production, Nokia overtook Motorola in 1998 to become the world's number one, with a 23% market share. In the 2000s, Nokia was hugely successful in Asia and emerging markets, with annual revenue of more than €50 billion and thousands of patents.
However, after the iPhone launched in 2007, the industry shifted from "hardware manufacturing" to "software ecosystems." Consumer demand moved from "hardware features" to "app experience." Nokia stuck with its own Symbian system; it was slow to react, the operating system was clunky, and developers didn't want to write apps for it. Its rivals' iOS and Android ecosystems grew fast: by 2008 the App Store already had 300,000 apps, while Nokia's Ovi had only 30,000. By 2011, Nokia's smartphone market share had fallen to 25% (from nearly 50% in 2007). CEO Elop issued the "burning platform" memo, announcing that Nokia would abandon Symbian and switch to Microsoft's Windows Phone. But the transition dragged on too long, sales collapsed, and in 2013 the business was finally sold to Microsoft for US$7.2 billion.
Class Notes
- You must know where you are in the life cycle Industry lifecyles
(life cycle chart)
FermentMaturity You have to know what is new; there may not be many ways to growDiscontinuity - very very very dangerous!Dynamic that you have no ideas
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What is changing? How to profit?Uniqueness goes down, Complementary goes up as the company takeoff
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What is changing? OrganizationOperational excellence up, entrepreneurial energy down
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The problem is wanting to be everything at the same time!
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Relearning the 2007 iPhone launchThree things all in oneThe most brilliant part was how it was presented — pure irony. We should present that irony too: it could have been so expensive, so inconvenient, but look how different we can make it!
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Change structurally in the industryOperators changed, shifting from phone calls to Data users: young people prefer texting to calling; many features that lived inside apps were later turned into built-in features by the iPhone — this is also a source of continuous innovation.
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Although Apple has matured, the app ecosystem has kept it innovativeEntrepreneurship does NOT have to be only youBut also someone around you
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Internal barriers to respondAlready Invested in SymbianLate — MicrosoftWhy did Nokia still stick with SymbianIf you go into Android, it made itself a commodity
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How to fight the internal barriersPerception — know your industry!!Don't say “Apple is nothing to worry about.”Motivation — Willingness to changeDo not ask me to change something that’s workingInspiration — find the right solution, at least a solution!Execution — do it, and do it right!