Where Did Nokia Go Wrong? (And Six Lessons You Can Learn from Them)

Nokia logo on a building

Join Thousands of CEOs Getting Free Daily Business Coaching Videos

It was October 1998, and Nokia was the industry leader in mobile phone sales all over the world. Since the early days of the mobile phone industry, Nokia had been synonymous with success and quality products. The phones were available worldwide, covering low-end to high-end prices.

By 1999, the company’s profit had reached $4 billion. It seemed that they could do no wrong. Even in June 2007, when Apple introduced the first iPhone, Nokia still owned 50% of the market. For a long time, its young leadership led the company to success. 

But in 2010, things took a turn for the worse… It took only six years for Nokia to lose around 90% of its market value, and the company never recovered. Critical mistakes led to the mobile phone giant’s fall from grace. 

Nokia’s history only serves to prove that no company is infallible, especially in the face of technological progress.

What were some of their critical mistakes?

Cocky leadership, a lack of vision, and inferior technology were the unholy trinity of errors that contributed to Nokia’s downfall. Here’s what you can learn from their biggest mistakes and errors in judgment.

1. Always Account for What Your Customers Want

Nokia failed to adapt to change and reposition itself in the market. After Apple introduced its game-changing smartphone, consumers saw what the future of the industry could provide. They understood the long-term benefits of developing mobile technology better than Nokia did.

So, here’s one of the first lessons from Nokia that you should learn: never rely solely on your brand’s reputation to retain customers and acquire new ones. Nokia repeatedly failed by relying on the same inferior technology, despite customer demands… All because it knew that most target audiences still felt very positive towards the manufacturer.

Being an industry leader will only get you so far. Once the demand for your product goes away, your reputation will change for the worse if you don’t adapt quickly.

2. Marketing is as Important as Your Product

Nokia never had a strong marketing strategy in the smartphone industry, at least not like its competitors did. 

What did Apple and Samsung do? Each year they announced their new smartphone version – with improved features. This marketing strategy was all about creating anticipation and generating excitement. It kept people interested. 

Another lesson to take away from the Nokia disaster is that marketing is as important as the product itself. Create a flagship product, but don’t forget to market it accordingly.

Even if you only make small improvements to your product over time, strategic marketing can still generate excitement for minor upgrades too.

3. Ensure All of Your Departments Work in Alignment

Once the competition in the industry got fiercer, Nokia began to crumble from the inside. Different departments in the company stopped coordinating and began competing. So, where did Nokia go wrong?

It failed in its organizational structure and interdepartmental communication. Insufficient coordination among departments often leads to a variety of operational issues. In Nokia’s case, it led to many delays in the development of their OS.

Why is this important to you? Because departments that are out of sync fall behind in their delivery of products, research, upgrades, and more. This leads to the company losing out to its competitors and contributes to a rapid loss of market value. 

4. Don’t Foster a “Shoot the Messenger” Culture

The Nokia leadership that once brought success couldn’t adapt to the new trends. By most accounts, the top managers created a dictatorial, rather than an innovative, culture.

When times get tough, you have to adapt… But before you do that, you need to learn how to change. Always embrace new ideas from employees and nurture a culture of listening and learning.

Remember that the company culture doesn’t grow from the bottom up. It’s the other way around. Leaders should establish clear company culture values and lead by example. 

Empower your employees and encourage collaboration and innovation. It’s critical in establishing a strong foundation and culture, both of which are building blocks of a strong business. 

5. Manage Your Company’s Resources

The lack of innovation at Nokia didn’t come solely from bad leadership decisions and out-of-sync departments. The cellphone maker had experienced massive, rapid growth. In fact, the business model targeted financial growth and not innovation.

Therefore, when it needed to change, the company didn’t have the resources to sustain innovation. Nokia didn’t have a vision for the future. Everything was about short-term gains, and nothing prepared the company for competing in a new field.

You can avoid this by managing your resources wisely. Assess your market position often and explore new directions you could pivot to. Even if you don’t make a dramatic shift, it’s still good to know what your options are… And how much you might have to set aside to compete on a different playing field.

6. Focus on Hiring the Most Qualified People

Another aspect of Nokia’s failing was not having the right people in the right places. Its top management lacked the technical ability to compete in the new market, and middle management didn’t have the motivation to make specific issues known.

A company culture based on open communication can solve some of these problems, but it’s not enough for ideas to reach the ears of upper management. Management needs to understand those ideas, too.

To solidify your company, you need a great hiring process. Focus on people who can solve existing problems, and place them in positions with the power to do something about those problems.

Conclusion

A long string of bad decisions led to Nokia’s downfall, but looking back, none of the company’s mistakes were unavoidable. There are many lessons you can learn from the fall of the technology giant to ensure your business will succeed. 

what now?

Continue reading for more resourceful information.