Why Did the Legendary Brand Nokia Fail?
Why did Nokia fail, mark the early 2000s with its durability and long battery life phones? Of course, there are many factors in the failure of Nokia. We can briefly summarize these factors as follows.
How did the Finnish company disappear? How is it that such a big company about mobile phones cannot be called next to Apple, Samsung, Huawei today?
Of course, there are many factors in the failure of Nokia. We can briefly summarize these factors as follows:
The sale of Nokia to Microsoft raised the suspicion that the company was not able to manage itself well and there was a management problem in the company.
Failure to focus on issues such as touch screen, accessing the internet from the phone, software-hardware compatibility, could not follow the trends accurately.
Although Android has been adopted by brands such as Samsung, Sony, HTC, Nokia is not included in the Android family.
We can say that these factors caused Nokia to be suspended from the market, but we need to examine the issue in a little more detail.
We must first look at the golden days of Nokia.
What Was Nokia's Success Secret?
Nokia was a living legend, especially in the late 90s and early 2000s.
It was led by a young, motivated and hardworking team. Behind this success were approaching digitalization and liberalization in the telecommunications sector with an innovative technology and taking bold and visionary steps.
Despite the danger of collapse of the supply chain since the mid-1990s, thanks to its disciplined management approach, Nokia adopted a highly productive and efficient understanding in the fields of production, research and development. It expanded its production network and carried out much better marketing campaigns than its competitors.
Between 1996-2000, 27,352 people were working at Nokia, and the company's profit increased by 503% in this period. Of course, such rapid growth would come at a cost. During this period, managers in Nokia's product development centers were under the pressure of short-term performance decline, and the importance and attention given to R&D gradually decreased.
The company was now satisfied with minor improvements, but Nokia's data department, which has a relatively small team, adopted the innovation approach.
In 1996, the world's first smart phone Nokia Communicatıor was launched. In 2001, the world's first camera phone 7650 was produced.
Nokia started to need a third leg. In other words, it was believed that the company should operate in a new field besides its mobile phone and network businesses.
In 1995, a board called "New Enterprise Board" was established at the company. However, Nokia's current business was growing so successfully that new initiatives were not given due attention.
In the following period, such a "new initiative" move was made. In this highly visionary program, many new technologies were examined and many of these technologies were used in existing products.
In fact, this initiative has managed to see beyond time. In other words, "internet of things" was determined by Nokia in this period. Or technological health management applications and technologies were the areas that were seen to be future by Nokia executives and engineers.
However, due to the conflict between the company's long-term research and short-term needs, Nokia could not keep up with the future, despite its vision.
In other words, we can say that he saw 500 meters beyond, but could not see 50 meters beyond.
Beginning of the end
During this period, Nokia's sales were very good, it was successful in the stock market, its customer base was satisfied and loyal.
But Nokia CEO Jorma Ollila worried that such rapid growth would make the company cumbersome and kill the entrepreneurial spirit.
Between 2001-2005, various attempts were made for Nokia to gain the energy and excitement of its first period, but the end was the beginning.
During this process, important seats in the company were changed, the new organization plan of 2004 was mismanaged, and influential names from the management and technical staff left the company. Strategic thinking mechanisms were getting weaker in the company.
Various tensions were experienced within the company as the matrix organization approach was adopted. If you ask what is matrix organization, let's answer immediately.
“Matrix organization; It is used to tackle some of the increasing decision-making, coordination, and control problems in large, complex organizations. The matrix plan can be a temporary organization system to handle specific projects or a permanent organization to handle ongoing activities. "
This new management approach did not fit perfectly in Nokia, which has been working as decentralized initiatives until that day. Middle managers lacked the delicate experience and skills required for a successful matrix organization.
In 2004 and the following period, the company's senior management did not and could not do what was necessary to set a priority, to eliminate conflicts and chaos within the company.
Market segmentation has failed due to increasing cost-cutting pressures, resulting in a noticeable decline in the quality of the products.
Despite everything, the board of directors of Nokia, which had its most financially successful period in a period such as 2007-2010, could not find an answer to the changing technology and habits.
Software was as important as hardware now. The mobile application ecosystem has become one of the realities and requirements of the day. However, Nokia, which had dominated the industry until then, could not respond to such an understanding and information.
In the 2010s, the inadequacy of Nokia's own operating system, Symbian, was struck by Apple and Android.
Nokia's strategic options were limited, and the products it offered had no appeal.
In the next period, the failure was acknowledged and Nokia realized that it had nothing to say in the mobile phone field. New CEO Stephen Elop could also do nothing but re-orient the company's focus on network infrastructure and equipment.
Why Did Nokia Not Keep Up With The Smartphone Market?
Samsung, for example, was one of the first brands to adopt Android. Realized that Android was an ideal platform in terms of cost and functionality.
Touchscreen technology was also in the development phase during this transition period.
It was here that Nokia thought the touchscreen concept was a temporary trend and people would not abandon the mechanical keyboard easily.
Nokia's misconception and inability to realize its mistake quickly caused Nokia users to switch to Android-based phones and never return to Nokia again.
When he tried to come back from the Nokia bug, it was too late this time. Also, Nokia's own Symbian operating system and the Microsoft Windows-based operating system that it later adopted were not as good as Android.
Nokia's use of the Windows operating system was also very effective in its failure. With Nokia, which was part of Microsoft, Windows, which had been disgraced at that time, was wanted to be revived, but this plan also failed.
When Nokia realized the situation, brands such as Apple and Samsung were busy working on R&D and trying to dominate the market.
Nokia; Samsung was also experiencing a major failure in the entry-level phone market when it realized that it lagged far behind such giants as Nokia, HTC, and Apple.
In the face of this landscape, Nokia accepted the situation and thought it was necessary to focus on hardware. During this period, Asha launched the series. Unfortunately, this attempt did not work.
Why was Nokia Marketing Strategy Problematic?
Nokia's marketing strategy could not clearly see the requirements and realities of the day. Customers' trust was earned by other brands, and Nokia's sales and distribution methods were not working properly.
In this period, Nokia was left empty in the face of attractive features offered by many brands, especially Apple and Samsung.
When Nokia decided to focus on hardware, it was too late, as other brands had come a long way in software and hardware.
Who is Responsible for Nokia's Failure?
It can be said that Nokia made the biggest mistake by joining Microsoft. Because why would a company in its golden age go and join another firm? This thought devastated Nokia's image.
It was also a big mistake to think that touchscreen technology was just a fad. When it was realized that the situation was not what Nokia thought it was, it did not take a share of the cake, because while Nokia insisted on its own opinion, many companies have made great improvements in smart mobile phone technology. In other words, Apple, Samsung, HTC, Sony have grabbed the cell phone cake that Nokia owned almost all of it for a while.
What Can We Learn From Nokia's Failure?
Not just one factor but a combination of many factors contributed to the failure of Nokia.
We can say this: Many successful companies experience the mentality (conservatism and arrogance) of Nokia in the process going bankrupt. However, when the situation is intervened early, the salvation plan works.
If it weren't for Nokia's conservatism and arrogance stemming from its success in the early 2000s; it would be open to new ideas and new experiments.
As you can understand, being unable to keep up with the developing world and technology, not being able to analyze trends correctly, and making strategic managerial mistakes caused Nokia to be swept from the market.
In this context, we can say that a brand should attach great importance to change and innovation in order to hold on to the market.
"I'm at the top." or "That's how people love me." No matter how strong you are, an idea like this has no validity in business or private life.