2. ABOUT NOKIA :
• In 1871 Fredrik Idestam opened his second
mill on Nokianvirta river which gave the
name Nokia Ab in 1871.
• Nokia began with making paper –
incidentally one of the first communication
technologies.
• In 1898, Eduard Polón founds the Finnish
Rubber Works, which later becomes Nokia’s
rubber business, making everything from
galoshes to tires.
• In 1912, Arvid Wickström sets up the Finnish
Cable Works, the foundation of Nokia’s cable
and electronics business.
• In 1963, starts developing radio telephones
for the army and emergency services –
Nokia’s first foray into telecommunications
• And by 1987, Nokia is the third largest TV
manufacturer in Europe.
EMSE 6005.10 Organizational Behavior for the Engineering Managers
3. The Mobile Era
• Nokia sets the ball rolling in 1979, creating radio
telephone company Mobira Oy as a joint venture
with leading Finnish TV maker Salora
• Then in 1981, the Nordic Mobile Telephone
(NMT) service, the world’s first international
cellular network and the first to allow
international roaming, is launched.
• In 1984, Nokia launches the Mobira Talkman
portable car phone. Resembling a military field
telephone, it’s a fairly cumbersome piece of kit –
but it’s a start.
• In 1987, GSM (Global System for Mobile
communications) is adopted as the European
standard for digital mobile technology. With its
high-quality voice calls, international roaming and
support for text messages, GSM ignites a global
mobile revolution.
EMSE 6005.10 Organizational Behavior for the Engineering Managers
4. NOKIA IN NEW AGE:
• In 1992, Nokia launches its first digital handheld GSM
phone, the Nokia 1011.
• In 1994, Nokia launches the 2100 series, the first phones to
feature the Nokia Tune ringtone
• The Nokia 2100 series goes on to sell 20 million phones
worldwide. Nokia’s target was 400,000.
• By 1998, Nokia is the world leader in mobile phones.
• Between 1996 and 2001, Nokia’s turnover increases almost
fivefold from EUR 6.5 billion to EUR 31 billion.
EMSE 6005.10 Organizational Behavior for the Engineering Managers
5. Nokia- The leader in mobile technology
• In 1999, Nokia launches the Nokia 7110, a phone capable of
rudimentary web-based functions, including email.
• Then in November 2001 Nokia launches its first phone with a built-
in camera, the Nokia 7650, and in September 2002 its first video
capture phone, the Nokia 3650.
• In 2002 nokia 6650 is launched with the 3g technology.
• In 2005, Nokia sold its billionth phone – a Nokia 1100 – in
Nigeria, and global mobile phone subscriptions passed 2 billion.
Two years later, Nokia is recognized as the 5th most valued brand in
the world.
EMSE 6005.10 Organizational Behavior for the Engineering Managers
6. The tumble down!
EMSE 6005.10 Organizational Behavior for the Engineering Managers
First hit when competition started. Second hit when Competitors took over
7. Competition…
• While it was not totally unexpected, what caught Nokia off-
guard is the rate at which competitors where innovating new
technology.
• Since the launch of the iPhone/Android phones, Nokia failed to
keep up with the industry. While other kept proceeding ahead
aggressively by ‘hook or crook’.
EMSE 6005.10 Organizational Behavior for the Engineering Managers
8. Competition…
EMSE 6005.10 Organizational Behavior for the Engineering Managers
• If analyzed through the Technology Lens, Nokia primarily failed
to innovate attractive technology and features.
• For example, though Nokia had touchscreen phones, it did not
attract customers as much as compared to Apple iPhones.
• The software being developed were using old development
models and newer concepts such as User Experience and User
Interface were being neglected.
• Nokia was clinging onto Symbian OS
for too long. It had reached its peak.
9. EMSE 6005.10 Organizational Behavior for the Engineering Managers
Time for Change?
• With the company facing fierce competition, Nokia started
reporting financial losses and started loosing grip on the
market.
• Olli-Pekka Kallasvuo, as President and CEO, saw the company's
rise to become the world's preeminent mobile brand — but
was also at the helm as Nokia fell distantly behind a new wave
of competition.
• He was seen off by the management and he was succeeded
by Stephen Elop on September 21, 2010.
10. EMSE 6005.10 Organizational Behavior for the Engineering Managers
Human resources?
• Market share fell
drastically from 45% to
34% in 2011
• Nokia posted a loss of
368 million euros for Q1
2011
• As per Stephen Elop’s initial memo, which leaked to the
press, the company was on a ‘burning platform’. This was a
reference to the Symbian OS the company had been using for
so long.
• This was regarded as very discouraging and one of the most
damaging memo in corporate governance.
• Although Elop tried his best, the company saw its worst days.
11. Redrafting Strategies
• In 2011, Nokia joined forces with Microsoft to strengthen its position
in the smartphone market.
• The strategic partnership saw Nokia dump Symbian OS and adopt the
Windows Phone operating system and establish an alternative
ecosystem to rivals iOS and Android. But it was too late.
• Under the leadership of the Stephen Elop, Nokia decided to stick to
only and only Windows OS while Android was a free alternative.
• Nokia launched Windows Phones series dubbed as the Nokia Lumia.
Fast-forward to 2013, Nokia has a full portfolio of great Windows
Phone 8 smartphones, from a 520 through the award-winning Lumia
920 and the ground-breaking Lumia 1020, which enables
photography never seen before in a smartphone.
EMSE 6005.10 Organizational Behavior for the Engineering Managers
12. Redrafting Strategies
EMSE 6005.10 Organizational Behavior for the Engineering Managers
• In September 2013, Nokia announces that it has entered into an
agreement with Microsoft whereby Microsoft would purchase
substantially all Devices & Services, the Nokia business which
makes mobile phones and smartphones.
• Stephen Elop facilitated this
deal and his role in it has been
questionable.
• Though Nokia is now
reporting profits, it had lost its
glory in the market it once
dominated single-handedly.
13. What did Stephen
Elop do worng?
Inspecting with the organization and human
performance lens.
EMSE 6005.10 Organizational Behavior for the Engineering Managers
14.
15. EMSE 6005.10 Organizational Behavior for the Engineering Managers
Wrong decisions.
• While the entire smartphone OS industry was
evolving, manufacturers moved on and adopted various
operating systems like Android, Windows, Bada, Meego, et
cetera, Nokia decided to stick to Windows OS only.
• As Android and iOS became more popular, Nokia and its
windows phones failed to attract any attention.
• Though the new technologies
developed by Nokia were ground
breaking, they were not promising
enough.
16. EMSE 6005.10 Organizational Behavior for the Engineering Managers
Results
• During the 3 years Elop was Nokia CEO, Nokia revenues fell
40%, Nokia profits fell 95%, Nokia market share collapsed in
smartphones from 34% to 3.4%
• Nokia's credit rating went from AAA to junk, Nokia's share
price dropped 60% in value and Nokia's market capitalization
lost a minimum of $13 Billion in value.
• The Financial Times calculated that
Nokia shareholders ended up
paying Elop a bonus of 1 million
Euros for every 1.5 Billion in market
capital that Elop was able to destroy
while Nokia CEO
17. Rumor Mill
• Stephen Elop was working with Microsoft’s Business Division
before moving to Nokia.
• He was the first non-Finnish CEO of Nokia and it is argued that
Stephen was sent with the sole purpose of devaluating Nokia
as to make it easier and cheaper for Microsoft to buy it.
• Microsoft being a software giant always had ambitions to
acquire a hardware sector firm and as Nokia dipped to the
bottom, Microsoft announced that it had bought Nokia for
$7.2 Billion.
EMSE 6005.10 Organizational Behavior for the Engineering Managers
• While all this happened, Stephen comes
back to Microsoft as VP of Microsoft's
Devices & Services business unit and gets
a signing bonus of $25 Million
18. Conclusion
• From Technology perspective, Nokia did not deliver as per
expectations based on previous performance
• From the Strategy perspective, though Nokia did eventually
come up with nice lucrative products, it lost in the race against
time due to poor strategies and sly competition.
• From the organizational and people perspective, the new
CEO’s attitude and competency proved to be fatal for the
company.
• The entire Rubik of Organization , people and strategy failed to
deliver for Nokia.
EMSE 6005.10 Organizational Behavior for the Engineering Managers
