Nokia - A Strategic Goof Up?

Once someone told me there is nothing as a failed entrepreneur, because till the time an entrepreneur succeeds, all his failures are nothing but part of his efforts. Similarily when I see Nokia, I do not see it as a goof up, but a failure. Was there anything wrong with Nokia, yes, there was, and many things went wrong for them, some were expected, others were not so expected.

Nokia, which started as a pulp, rubber and cable manufacturing company, was the leading manufacturer of mobile devices till 2007. Their mobile phones were known for their reliability and the company who sensed the consumer’s needs quickly. It offered a wide range of mobile devices with a wholesome experience in music, video, imaging, gaming and a lot more to its consumers.

There were two markets, high end and low end mobile devices market. Till 2007 Nokia was dominating High End Market with its N-Series phones, while it gave several products in Low End Market to serve all the market segments. Now to see how from being a market leader how Nokia became a market struggler, these two markets need to be discussed in detail, and the incidents which happened in these markets.

Low End Mobile Devices

Even before any smartphone appeared in the market, it was this market segment which was responsible for major part of Nokia’s profits. The reason behind it is not hard to guess, Nokia evolved with the evolving telecommunication industry, there were rarely any competitors in the market. As a responsible company Nokia should have seen the threats of the future. It was not hard to see even at that time that as the telecommunication industry would grow more and more players would enter the market.

The biggest mistake was to completely ignore the biggest threat, China. Almost whole world is flooded with Chinese products, and sooner or later, appearance of Chinese phones in every market, especially in under-developed and developing markets was not hard to guess. These two factors, just like the shark’s jaw took the chopped off a major chunk of Nokia’s market share.

The problems for Nokia didn’t stop here, to make matters worse, Chinese market was not even organized. Since Chinese companies always came up with ‘look alike’ mobile phones, their R&D for mobile phones was negligible, and coupled with Chinese efficient operations, the mobile phones became at a very low cost, which made it tougher for Nokia to compete at cost.

Nokia failed at many fronts; first of all it could not make barriers for new entrants in the mobile phone markets, and secondly it did not add sufficient value added services in the phones to avoid competition from such low priced, low quality mobile phones. Can it be called a goof up of its own kind, yes, to some extent, but more than that I would blame the short sightedness and complacent attitude of the senior managers of Nokia. This market today is still dominated by Nokia, but its market share is the reminiscence of its glorious past.

High End Mobile Devices

This is the part which has acted like the last nail in Nokia’s coffin. The future for mobile phones was guessed almost by every mobile device manufacturer, and everybody made their own attempts to be the first one and the best one in the future. Apple launched iPhone, while Samsung came with Galaxy. Nokia also came up with its own smartphones; they were somewhat like a low budgeted movie which failed without making any buzz.

The “summer – cottage culture” of Nokia  lacked innovation and Entrepreneurial spirit. Every summer since 2007 while  Apple Inc. shipped a new iPhone, Nokia  managers vacationed at their lake cottages in Finland. This shows and tells many things about the company, being careless and complacent are few of the characters, but even more importantly it shows Nokia has no real leader when the time demands them.

The problem with Nokia was not that the phones were not good enough, they still were of high quality, but the problem was they did not understand the market and its competitors. The battle had advanced to another era, while Nokia insisted to fight in the traditional ways. The new CEO of Nokia, chose following words to describe Nokia’s mistake and the market –

Stephen Elop

“The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren't taking our market share with devices; they are taking our market share with an entire ecosystem. This means we're going to have to decide how we either build, catalyse or join an ecosystem.”

But can we really call it a goof up, I don’t see it as a goof up because Nokia took the necessary steps in the direction which they thought is the current one. It is a mistake, but certainly not a goof up. The Symbian operating system couldn’t sustain itself, it was certainly a bold gamble, but not a goof up. As an afterthought one may say that taking such gambles is not a good idea for a company which is struggling to survive.

These two failure has costed Nokia dearly, while for 2012, the operating losses are at a billion dollar, one fifth of the Nokia’s staff has been shown the exit gate. The new CEO Stephen Elop has taken up the toughest job in his career. As he said “Nokia was standing on a burning platform”, he actually summarized the whole problem, the competition was tough, and competitors were way ahead. Nokia indeed looks like a lost cause as of now. But the real question is “Do you really think so?” I don’t.

The way I see it, Nokia is going through the necessary changes it had to go through. As we all know with ten years of successful run, Nokia had become lethargic, lazy and complacent, it just needs to restructure itself, bring some good values in the system and shed some flab to be the lean auick and agile company which is a necessity in today’s world.

There are many steps which indicate that Nokia is on road to recovery, like collaboration with Microsoft, for using Windows mobile platform. As I see it, it is a clever deal not just because Windows is better than Symbian, but also because it allows risk mitigation. The failure and cost of failure will be shared by both Microsoft and Nokia, and not by Nokia alone as earlier was the case with Symbian. Restructuring will also help in breaking the vices which had covered the original values for long.

Why do I think Nokia is still alive, a late started by all means, but not a hopeless cause. I would like to believe that Nokia is the late bloomers, and it would be what it was, mobile devices leader. I do not want to believe Nokia will ever be out of the game because I have my own memories with Nokia, and I have seen it ever since I started using mobile devices. Nokia fans are still hoping the best for the company, but even if Nokia fails, I think they will be missed dearly by their lovers.

Animal Farm - Not a Book Review

I don’t know if this is truly a review for this book, a major reason may be that most of the people pass out of high school having read a book and written a book report too sometimes; thanks to our education system, somehow I skipped that complete episode. At this age, if I write a book review, it wouldn’t be fair; on the internet there is no shortage of different reviews. One more additional review is not going to make any difference; the difference lies in how and what lessons can be taken away from this classic.

Animal Farm is a satirical allegory – the different characters portray different characters of Russian revolution; given the era in which this book was written, it is obvious. I would talk about two characters who I believe are the two kinds of people we see in our society. First would be the Boxer, one of the farm’s cart horses, the strongest and hardest worker on the farm. Initially, his motto was “I will work harder”, and later when the going got tough he shrugged every bit of doubt out of his mind and made his motto to be “Napoleon is always right”.

On the other hand, Benjamin was the ill-tempered, cynical donkey of the farm. His kind was completely detached from whatever happens in the world, because they have accepted that things would always be the same and would always be bad. He worked as usual, never did anything extra, and never expected anything extra.

Of course Benjamin was right, things did go from bad to worse. Benjamin is the voice of the author, as well as the contemporary strategists who saw the consequences of the Russian Revolution. But it is Boxer that influenced me the most, as it is Boxer who at least tried to believe that his actions and contributions would make a difference to society. I do not say it is the best way to approach a problem or issue, but it is definitely better than doing nothing and simply accepting destiny.

As every author adds irony and a little spice in the story, Orwell made Benjamin and Boxer close friends; though completely opposite, they still had deep mutual respect for each other. I do not know what could have been the reason behind it but as I see it, the author probably wanted to say something like this -

“There are seven billion people in this world, and seven billion unique ways to live life, no one knows which one is the best, so let’s live ours the way we want to, let others live the way they want to.”

Coming back to the book, lots of people say it is about socialism, and how it is bad for the society. But considering the fact that Orwell was himself a socialist, I do not think it is entirely about the evils of socialism. I do not deny that this book cannot be the product of a broken-hearted man who expected a lot from socialism, but still it is about more than just socialism.

To me, the book talks about the two aspects of life: first, about the little seed of corruption which is present in every single one of us, and the other aspect about how history can be changed. The revolution was started with a very good intention; it was the little seed of corruption present in the hearts of everyone, especially the pigs who ended up taking control of the whole farm with Napoleon as the ruler. The second aspect can be justified by the fact that the seven noble commandments were changed from time to time, and ultimately nobody remembered what the actual seven commandments were. It shows how easy it is to change, manipulate and sometimes even wipe out history. A similar message was the main theme behind another Orwell’s classic 1984.

The book also tries to shred to pieces one of the most basic assumptions for any process or action –‘humans are rational animals’. We are not. If someone asks me to explain in one word why the revolution didn’t work, I would say ‘irrationality’. The revolution was too idealistic from the start, there was no room to compensate for our inherent irrationality. The whole story revolves around nothing but the betrayal of ideals.

The irony of life is that despite such a story, full of answers and lessons, similar events continue to occur. In the most recent past, the credit crisis that started in 2008 can be seen as a similar happening. It took place because of our irrational thoughts and greed, which is nothing but a form of corruption.

Companies like Enron, who started so well, and looked so promising does not exist at present, and the reason behind it is obvious - the initial seed of corruption had flourished into a full-blown tree inside those who led the company. From being a company promising solutions in the energy sector, they dreamt of ruling and controlling the energy distribution network. Can we call it a betrayal of ideals, in my opinion yes, in the truest sense.

In a broader sense, I would like to say that this book teaches us only one thing - when the journey is long, and the hurdles are too many to count, there is one thing we should not forget is the reason we took the first step of this journey. Irrationality and corruption are bound to creep in, and there should be mechanisms to avoid or neutralize them. Even then, I do not think a journey can end with the same objectives with which it was started, but the least we can do is try.