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Nokia Failure: How one of the predominant mobile phone brands collapsed?

Nokia innovation lesson

As a person responsible for your company’s innovation, it’s essential to learn from the mistakes of others in the industry. One of the most significant examples of a business downfall in recent years is the story of Nokia. There are lessons to be learned from the Nokia failure story. Was it because the CEO Stephen Elop’s strategies couldn’t improve for Nokia’s benefit or were the preferences given to politics rather than good service? 

Nokia was once considered the most dominant mobile phone brand in the world. The company launched the first internet-enabled phone in 1996 and it also released a touch-screen mobile prototype. The company was the best-selling mobile phone brand in the world in 1998 with an operating profit of $4 billion. So, when did it all fall apart?

The reasons behind Nokia’s failure:

1. When “fear of change” took Nokia over:

Even after having a huge customer base, Nokia was reluctant to change its existing features. The business was adamant because it thought feature phones would rule mobile technology in the future. Such misinterpretation was the one reason for Nokia’s demise.

Nokia hesitated to upgrade to Android because it thought customers would not switch over and that Android was not the future of the mobile business. Additionally, the management didn’t consider touchscreen smartphones as essential. When different businesses had been enhancing and running on their smartphones, Nokia’s control become beneath the impression affect that people wouldn’t take delivery of touchscreen telephones and might retain the QWERTY keypad layout. 

2. The competitors were smarter:

Shortly after that, Samsung launched its affordable Android phone into the market and gained popularity. In 2007, Apple also introduced the iPhone, which disrupted the market and gained popularity very quickly. The Nokia N95, added in 2007, changed into Nokia’s reaction to the phone revolution and featured GPS, Wi-Fi, stereo speakers, and a five MP camera. These requirements weren’t ground-breaking. Moreover, to compete with Apple, Nokia developed an innovative product known as the “iPhone killer,” which failed miserably in the market, leading to Nokia’s demise and paving the way for Samsung and Apple to dominate the market.

Nokia released its Symbian operating system after recognizing market trends. However, by then, Apple and Samsung had established their dominance. It was challenging for the Symbian operating system to gain traction. This was another reason for the failure of Nokia.

Nokia overestimated the strength of its brand value. The company thought that people would still buy their phones even if they failed to evolve with the current market. While Samsung and Apple released advanced phones every year, Nokia primarily launched a basic Windows phone.

3. Nokia became the ‘latecomer’ in the race:

Even the Nokia Lumia series, which served as a jump-start move, failed due to a lack of innovation. The monotonous and unattractive features failed to attract customers. Nokia didn’t even have 3G-capable phones in the 4G period. Nokia also introduced the Asha series, but it was already too late.

The Chief Executive Stephen Elop told the Finnish national daily Aamulehti,

“We had moments in the past year and a half when we could have done some things differently had we known that the industry was changing so rapidly. It happened so fast that Nokia’s situation has now become difficult, but we keep honing our strategy.”

Nokia adopted an umbrella branding strategy that was unsuccessful. Apple was the first company to employ the umbrella branding strategy, with the iPhone at the top. Year after year, it continued to expand this umbrella with new versions.

4. Nokia’s branding plans were unsuccessful:

When Samsung introduced its Galaxy range, it took a similar approach, but Nokia didn’t follow the strategy. Nokia attempted to introduce completely new models under various brand identities, such as the N series, E series, etc. As a consequence, consumers found it difficult to make a decision. Additionally, it failed to develop a brand attraction for these products.

Nokia’s long-established user confidence was gradually declining. The company’s marketing and distribution strategies were ineffective. As a result of the confusion, Nokia decided to develop some interesting hardware and software advancements. These advancements lacked originality and had already been published by Nokia’s competitors. The reason for failure of Nokia’s marketing and delivery plans was a major factor in the company’s demise from the mobile industry market.

Nokia switched its organizational culture to a matrix-based structure. It was a rapid change that was made to improve mobility. Many stakeholders were upset, and senior management members left the business. This is one of the factors that contributed to the company’s impact on internal functioning. The company’s numerous divisions were not correctly coordinating with one another. Internal rivalries in the top management were one of the additional problems brought on by this absence of coordination. These issues didn’t directly affect Nokia, but they did contribute to its demise. According to Alastair Curtis, Nokia’s chief designer from 2006 to 2009,

“We were spending more time-fighting politics than doing design.”

The impact of the downfall:

Nokia, headquartered in Finland, is an information technology and consumer electronics corporation. The company was the world’s largest vendor of mobile phones from 1998 to 2012. In 2003, Nokia created its best-selling mobile, the Nokia 1100. During the launch of the iPhone, Apple had a mere 5% share of the global market, and half of all smartphones sold worldwide were Nokia’s. In the next 5-6 years, the market value of Nokia declined by about 90%. Nokia shipped only 4.4 million phones in 2013 compared to 463 million in 2007. Finally, Nokia was acquired by Microsoft in 2013.

What did we learn from this story of disruption?

Nokia’s failure story teaches us that businesses must stay ahead of the curve and be open to change. However, it’s easier said than done. To ensure that businesses don’t make the same mistakes as Nokia, it’s essential to have an idea management tool in place. An idea management tool like InspireIP can help businesses stay current by enabling them to collect and manage ideas from employees and other stakeholders. Not only it helps businesses stay innovative and competitive by giving them a platform to collect and evaluate ideas, but it also enables businesses to see the big picture and evaluate the feasibility of different ideas before committing resources to them.

With an idea capture tool, businesses can gather ideas from all levels of the organization, evaluate them objectively, and prioritize them based on the company’s strategic goals. 

In conclusion, the reasons why Nokia failed to serve as a cautionary tale for businesses. It shows the importance of staying innovative and open to change. Idea management software can help businesses stay on top of trends and stay ahead of the competition. As a CIO, CTO, Innovation Strategist or Innovation Manager, it’s your responsibility to ensure that your organization is innovative and forward-thinking. It could prevent your business from experiencing the same downfall as Nokia.

Get started for free today and stay ahead of the curve!

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