The purpose of this case study is to gain insights in understanding the true reason behind Nokia’s failure in the telecom industry.

1. NOKIA FAILURE: A STUDY IN RISK
MANAGEMENT
A Case Study
2-JAN-22
Varun Rajasekaran

2. Synopsis/Executive Summary
• The purpose of this case study is to gain insights in understanding
the true reason behind Nokia’s failure in the telecom industry.
• The field of research is strategic, operational and technological
risk management in the telecom industry.
Some factors that were considered in selecting this topic were -
• Agility in strategic decision making and product innovation
• Risk Management - Nokia should have responded quickly to
disruptive technological changes

3. Assumptions & Finding
• Nokia will attempt to re-enter the smartphone market
• Data sources have correct information
• The finding is “Nokia failed as a market leader in
smartphones”

4. Case Study Analysis
• The major factor which was responsible for Nokia’s demise was -
“Reorganizing for agility”.
• Between 2001 and 2005, in order to bring back agility into Nokia,
the then CEO made a number of decisions, which instead of being
a blessing, started the end of Nokia as a market leader.
• One of these decisions was the reallocation of important
leadership roles and poorly enforced matrix structure.
• This resulted in the leaving of very important members of the
leadership team, which in turn, led to the decline in quality of
strategic thinking.

5. Case Study Analysis
• Antagonism within a matrix set up is a common feature as
different groups with different priorities are required to work
collaboratively.
• This new way of working proved to be a curse at Nokia,which
had been used to localized initiatives.
• The following years marked a period of infighting and
strategical inaction that successive reorganizations did nothing
to relieve. This led to Nokia not responding quickly to Apple’s
introduction of iPhone in 2007, followed by Android OS.

6. Case Study Analysis
• Also, it was too dependant on its home-grown OS, Symbian.
• Unfortunately, it was device-centric, compared to iOS (which
was platform-centric) and Android (which was application-centric).
• On top of that, Symbian accelerated further delays as
developers had to develop and test new sets of functions for each
phone model, resulting in launch of 57 incompatible versions of its
OS!
• Thus, Nokia had lost to growing competition. Then, the new CEO
Stephen Elop and Chairman Risto Siilasmaa learnt from this
failure and refocused on the other core business, network
infrastructure equipment.

7. Potential Alternative Solutions
• Adopt Android OS quickly - The primary advantage of this
would be increased purchase of Nokia smartphones as Android is
the leading OS with the largest market share I.e. 73%.
• To grow and avoid the biggest challenge to their future I.e. their
own success, Nokia needs to adopt new ideas and continue to
experiment with new products/ business models to spur
growth.
• Focus on being agile - The advantage of this will be that Nokia
will be able to respond to disruptive threats quickly and effectively.

8. Conclusion
• The primary reason behind Nokia’s decline in mobile phones
was incorrect management decisions, which led to
subsequent side-effects like bureaucracy/ deep internal
rivalries, which all played a part in preventing Nokia from
recognizing the need to move to platform-based smartphones.
• The biggest risk in this case was not disruptive technologies,
competition or market forces, but arrogance, which resulted in
Nokia becoming complacent and less innovative.

9. Recommendation
• The best solution for Nokia would be to focus on adopting new
business models/ new ideas because its primary success in the
initial years was a result of bold and focused leadership along with
centering on both incremental and disruptive innovation-related
opportunities.

10. References
• www.knowledge.insead.edu/strategy/the-strategic-decisions-that-
caused-nokias-failure-7766
• www.cio.com/three-reasons-nokia-failed
• https://www.linkedin.com/pulse/nokia-failure-story-ibrahim-abd-
elaziz
• https://www.wired.com/2012/04/5-reasons-why-nokia-lost-its-
handset-sales-lead-and-got-downgraded-to-junk/