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Between 20, a number of decisions were made to attempt to rekindle Nokia’s earlier drive and energy but, far from reinvigorating Nokia, they actually set up the beginning of the decline.
In response, disciplined systems and processes were put in place, which enabled Nokia to become extremely efficient and further scale up production and sales much faster than its competitors.
Between 19, the headcount at Nokia Mobile Phones (NMP) increased 150 percent to 27,353, while revenues over the period were up 503 percent. And that cost was that managers at Nokia’s main development centres found themselves under ever increasing short-term performance pressure and were unable to dedicate time and resources to innovation.
At the same time, the importance of application ecosystems was becoming apparent, but as dominant industry leader Nokia lacked the skills, and inclination to engage with this new way of working.
By 2010, the limitations of Symbian had become painfully obvious and it was clear Nokia had missed the shift toward apps pioneered by Apple.
This led to the departure of vital members of the executive team, which led to the deterioration of strategic thinking.
Tensions within matrix organisations are common as different groups with different priorities and performance criteria are required to work collaboratively.A renewed effort to find the third leg was launched with the Nokia Ventures Organisation (NVO) under the leadership of one of Nokia’s top management team.This visionary programme absorbed all existing ventures and sought out new technologies.It was successful in the sense that it nurtured a number of critical projects which were transferred to the core businesses.In fact, many opportunities NVO identified were too far ahead of their time; for instance, NVO correctly identified “the internet of things” and found opportunities in multimedia health management – a current growth area.The moves that led to Nokia’s decline paint a cautionary tale for successful firms.In less than a decade, Nokia emerged from Finland to lead the mobile phone revolution.But as I argue in my latest book, “Ringtone: Exploring the Rise and Fall of Nokia in Mobile Phones”, this ignores one very important fact: Nokia had begun to collapse from within well before any of these companies entered the mobile communications market.In these times of technological advancement, rapid market change and growing complexity, analysing the story of Nokia provides salutary lessons for any company wanting to either forge or maintain a leading position in their industry.The search for an elusive third leg Nokia’s leaders were aware of the importance of finding what they called a “third leg” – a new growth area to complement the hugely successful mobile phone and network businesses.Their efforts began in 1995 with the New Venture Board but this failed to gain traction as the core businesses ran their own venturing activities and executives were too absorbed with managing growth in existing areas to focus on finding new growth.