Why Did Nokia Fail?

Nokia was the crusader of innovation in its prime.  But today it is not relevant as it was. Its sales
went down to the point where it had no choice but to sell its mobile phone division.
So, how can a company so successful ever fail? What led to Nokia’s failure?

There are numerous reasons that led to Nokia’s failure. Here are some of the major reasons
among them.

1.Failed To Adapt

Despite knowing that there was more demand for software than hardware, Nokia stuck to their
old ways and didn’t adapt to the changing environment. When Nokia eventually did realize their
mistake, it was a little too late, because people moved on to Android and Apple’s phone.

2. Failed To Innovate

Nokia was the first company to introduce 3G phones, camera phones, and many more
innovative technologies. In the early 2000s, it knew that innovation is the key to stay relevant
and push the boundaries of technology. But as demand for their phones grew, their focus
shifted to manufacturing, to fulfill those demands. It focused less on innovation and more on
mass production and as a result, companies like Samsung, Apple, HTC, etc., started to gain
some market with their innovative & simple OSs.

3. Failed To Reposition Itself

Nokia should have analyzed the market trends and repositioned Itself accordingly. It failed to do
so. It did not focus on the smartphone market and missed the opportunity. Nokia could have
improved their existing software: Symbian.

4. Overconfident

The top management of Nokia thought that nothing could ever go wrong until it did. New
companies arrived with new ideas and technologies and Nokia turned a blind eye to them. They
didn’t consider anyone their competition. In this overconfidence and ignorance, Nokia failed.

5. Changed The Organizational Structure

Nokia shifted to the matrix structure. It was a sudden shift and was done to improve agility. A lot
of stakeholders were upset and people in top management left the company. The people who
helped Nokia to become the best company were no longer there. This is one of the reasons for
how internal working affected their company.

6. Had Internal Issues

“We were spending more time-fighting politics than doing design,” said Alastair Curtis, Nokia’s
chief designer from 2006 to 2009.
Many divisions of the company were not coordinating with each other properly. This lack of
coordination created more issues such as internal rivalries in the top management. The impact
of these problems was not direct but it played a role in the downfall of Nokia.

7. Failed To Compete In The Smartphone Market

While companies like Samsung, Apple, HTC were making software-driven phones, Nokia was
still fixated on the traditional phones. It did try to compete by releasing N97 with new Symbian
OS, but it was too late as Android phones and Apple phones were already established.

8. The Symbian OS Vs MeeGo OS Confusion

9. The company’s R&D division was divided into two. One was working on improving Symbian
and the other on MeeGo. Both teams claimed that their software was better. This competition
resulted in delays in releasing new phones.

10. Frequently Changed The Management

Having stable top management helps the company to stay on one track. But this was not the
case of Nokia, in the span of 5 years, the CEO was replaced 2 times. This frequent change
didn’t give the employees to adjust to the new CEO’s goals and visions. This caused
dissatisfaction among the employees and other stakeholders.

11. Failed To Switch To Android

Nokia had the opportunity to join hands with Google and make android phones but refused to do
so. This was one of the biggest mistakes Nokia made. Android OS was simple, faster, and had
a great collection of applications on its store, which made it so popular. If Nokia had switched to
Android in time, their story would have been different.

12. Decision-Making Was Slow

The top management took too long to make decisions. Frank Nuovo, former vice-president, and
chief designer left the company in 2006. He said that the management was slow to make
decisions that required urgency. Many opportunities were lost due to this. Way before the
release of the iPhone, Nokia’s research department had already come up with the idea. But
because of the corporate culture that was prevailing, it never saw the light of the day.

13. Partnered With Microsoft

In 2011, Nokia announced a partnership with Microsoft. They were going to make windows
smartphones, which didn’t work in the market due to a lack of applications in the windows
store. Nokia was on the brink of bankruptcy, but Microsoft bought the mobile devices division of
Nokia in 2014 for $7.2 billion.  
References: http://www.researchscript.com/wp-content/uploads/2018/07/IJMH050304.pdf

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