Why did Nokia fail and what can you learn from it? THIS CAES STUDY IS TAKEN FROM THE SUBJECT OF LEADERSHIP & MOTIVATION?

Nokias demise from being the worlds best mobile phone company to losing it all by 2013 has become a case study discussed by teachers and students in business management classes.

When explaining Nokias fall many observers found three significant reasons:

1. Nokias technology was inferior to Apples;
2. The arrogance among top-level managers;
3. Lack of vision.

During a study when Nokia professionals were interviewed ( 76 Nokia top and middle managers, engineers and external experts) and conducting in-depth investigations, it was found that :

• At that time Nokia suffered from organizational fear;
• The organizational fear was grounded in a culture of temperamental leaders and frightened middle managers;
• The middle management was scared of telling the truth because they feared being fired;
• Top managers were afraid of the external environment and not meeting their quarterly targets;
• Executives were afraid to publicly acknowledge the inferiority of Symbian, Nokias operating system;
• Top executives were afraid of losing investors, suppliers and customers if they acknowledged their technological inferiority to Apple;
• Top managers intimidated middle managers by accusing them of not being ambitious enough to meet their goals;
• Top management was lied to by middle management who felt telling the truth was useless;
• Top managers lacked technical competence which influenced how they could assess technological limitations during goal setting; by comparison, the top engineers at Apple were all engineers;
• Instead of allocating resources to the achievement of long-term goals such as developing a new operating system, Nokia management decided to develop new phone devices for short-term market demands.

The experts conclusion regarding why Nokia failed to adapt and compete is this:

Nokias ultimate fall can be put down to internal politics. In short, Nokia people weakened Nokia people and thus made the company increasingly vulnerable to competitive forces. When fear permeated all levels, the lower rungs of the organization turned inward to protect resources, themselves and their units, giving little away, fearing harm to their personal careers. Top managers failed to motivate the middle managers with their heavy-handed approaches and they were in the dark with what was really going on.

Q1. What were the reasons of Nokias fall?

Q2. State three findings of Nokias professionals found during in-depth studies?

Q3. Summarize the reasons of downfall of Nokia?