What Has Nokia Done Right and Wrong?

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A colleague asked me very recently, regarding Nokia being in the headlines with Elop’s recent internal memo, what has, in my opinion, Nokia done right and wrong over these years. After all, they achieved a massively dominant position in mobile phones and are now losing it all.

 

I think they did a lot of things right in the late 1990’s and very early 2000’s.

They were the first ones to focus on customer experience. Even if the processes weren’t very refined compared to best practices today, Nokia phones were considered to be the easiest to use for almost a decade (until iPhone hit the market).

They were very good at logistics and manufacturing tens and hundreds of millions of phones. They won the cost race (and it’s the area they are still very strong, although Elop did mention pressure from Chinese now).

Symbian was a very good platform when resources (energy, memory, processing power primarily) were scarce on phones. Since it goes very close to hardware level (being C++ code), it is possible to control resource use better than in any other environment. Now that none of those things are scarce, it is too difficult and time consuming to develop anything in Symbian (against competition on iOS and Android environments).

Nokia has been focusing a lot on technical specifications (in true Finnish mentality), and many of their products are still technically superior to their competitors. Unfortunately, that was a significant competitive advantage only until iPhone changed the game.

Nokia used to have a lot of really really excellent people. Unfortunately for them, so many of them have effectively been driven out of the company by their unfortunate policies and culture.

In late 1990’s and early 2000’s, Nokia was full of “winner mentality”. They were successful and they were revolutionizing the world. They were the ones who made mobile communication so pervasive as it is today. That elevating goal was driving people and there was a lot of shared commitment to becoming and being excellent. The success and high morale was naturally masking many of the dysfunctions of the organization, which then started hurting the company when they were no longer cruising as the sole winners of the world.

 

Things they did wrong, in my humble opinion

Nokia has a pervasive attitude that creating software is very much like production. Unfortunately, nothing could be further from the truth. Production can be charactized as “same at lower price”, whereas development is “more value faster at any cost”, although “any cost” should be considered as a smart investment against expected returns. Product development is a brains game, and the best brains are costly. However, their value/cost ratio is still much better than for less excellent brains, making them still a very good deal. The Nokia attitude unfortunately discounted the value of good brains, and mistakenly considered low cost development “resources” as a good deal for them.

In this quest to lower prices, they effectively killed their brain-based subcontractors. In the stranglehold, no suppliers were able to pay for their good employees appropriately and keep them developing software for Nokia. If someone tried to maintain reasonable cost structure, Nokia cut off purchasing from them. So in their selfish greed, they effectively cut themselves off from talent and brains.

Also in their quest to lower prices, they moved to India and China with entirely wrong goals and strategy. Therefore, the code quality in Symbian is horrible and they can’t really even keep the system stable anymore. Will they do the same in Meego? Or is that the reason Meego is delivering value much slower than it should to save Nokia?

Their management organization is very bonus driven and hierarchical. People were much more interested in getting their bonus checks than caring for greater good within Nokia. If helping someone else needed compromising one’s bonus goals, the help wouldn’t really happen. Add to that the fact that often these bonus goals were misguided (see above), the effect was often really bad.

Nokia was very focused on measuring individuals and their performance, and driving “performance” with the above mentioned bonus systems. Anyone who’s seen¬†http://www.ted.com/talks/dan_pink_on_motivation.html or read about the topic, should know that external motivator (like bonuses and carrots/sticks) are actually harmful for intellectual work, reducing people’s capability for innovation. Plus they kill the grounds for collaboration for common good.

They were constantly reorganizing, effectively preventing the formation of stable teams. Stability is pretty fundamental for high performing teams. You need to know who you work with, what are their capabilities, and learn how to work together to best benefit from each others’ talents.

In their drive to “low cost option”, they are constantly creating distributed teams and making it very difficult for people to communicate and collaborate effectively. While there are good reasons why you sometimes have to distribute a project, more often it was just in the illusionary quest for “low cost”. I hope I’ve established that quest for low cost -> low quality -> high cost or low value. :( ¬†(the Agile alternative is quest for value and quality -> high speed -> low cost [and not just in relative sense]).

I think it was necessary to change leadership in the company. I’ve not had any confidence in the management of Nokia for the last 5 years. Elop may be the saving grace, but we’ll yet see. He has a massive problem at his hands and a single person may not be enough. I don’t even know if he has the right ideas, but at least he was pretty frank about Nokia’s problems, so I do hope he can turn the ship away from the shoals.

I’m sure there are more good and bad things than those alone, but that’s the best I can do right now. Please add your insights to comments!!

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10 Responses to “What Has Nokia Done Right and Wrong?”

  1. Bob Marshall Says:

    No “Tweet this” button?

  2. Petri Heiramo Says:

    @Bob: Apparently not :(. I’m not very good with this blog technology.

  3. lipichak8 Says:

    Wrong analysis! Just stop the bullshit and get your facts correct! What do you know about operations being moved to India and China ? Do you know which departments actually were moved ? Dont you think development from India/China is tested in Oulu and passed by the quality criteria set by your Finnish standards?

    Do you have any idea how many architects from your so called low-cost countries have contributed and have been greatly treaured in UK and Finland Symbian repositories !! You may have a friend who has a biased opinion but thats not the real picture. Management decisions are taken to keep costs low but Nokia has enough brains to select where to put development centres. How would you explain Samsung or Google’s development centres in India and China ? Are they “horrible” code now as well ?? Intel has the biggest development centre in Bangalore, you think they are wrong as well ? Get your facts, hit reality and come out of your ego.

    What makes you think the move has resulted in “horrible” code ? I wont reveal details, but let me just say that your biased perceptions are wrong. Symbian itself has its architectural concerns which makes it less flexible and less tedious to develop as compared to other mobile systems. You ask a Symbian architect and he would tell you the same. S40 on the other hand is java based, developed in your so-called “horrible” code and is still the leading market leader. Perhaps, its S40 and its java that still keeps Nokia alive, and keeps your Finnish ego intact.

    So, please dont preach what you dont know and last of all, dont enter technical detail discussion, you are not meant for it. Happy Scrumming !

    • Petri Heiramo Says:

      Please don’t take me saying the people in India or China are stupid or something alike. Nothing of the sort – I have no reason to say so, nor does my (albeit limited) experience with the people from there indicate so in any way. I’m not talking about the brains of the people there. There are people in Finland who do not create quality code.

      It doesn’t matter where you distribute, but distribution always causes problems. Nokia has intentionally created problems in its projects by doing so when there has been no need or value to do so. Also, Nokia has been forcing (at least to its subcontractors) cost cuts making it very hard for those companies to attract and keep their most talented people, which does not bode well for outcome in general. It may be different within Nokia itself, but my experience is that it isn’t universal. Also, this isn’t fundamentally a technical question at all, it’s just that the general management’s attitude has effected all levels of the system, including the technical. And I know there are units within Nokia that can do marvellous code and solutions, but are they treated well? Not based on so many comments I hear from many sources, including people who’ve worked at Nokia.

      When it comes to Finnish ego, I’m not using Nokia phones anymore. I’m not saying they are bad, but I feel I get better value from elsewhere.

  4. omer Says:

    An outstanding share! I’ve just forwarded this onto a friend who has been doing a little homework on this. And he actually bought me lunch simply because I stumbled upon it for him… lol. So allow me to reword this…. Thanks for the meal!! But yeah, thanks for spending time to talk about this matter here on your site.

  5. Kristina Says:

    What are your sources for saying that Nokia reward their innovative people with bonuses?

    • Agilecraft Says:

      Hi Kristina,

      I reread my post quickly and failed to spot where I would’ve said that directly. However, I did notice I referred to “people at Nokia” when talking about interest in bonuses. I should’ve been more clear to refer to “managers at Nokia”, not the innovative people :).

      Looking at that text now, after a couple of years since writing, I probably would phrase issues a little differently. For example, I’d emphasize more that it’s not “managers at Nokia” who are really to blame for wanting to get their bonuses. If the system is set up in a certain way, most people play by the rules. The way to influence isn’t to scold the people, but to change the system. People within the system very often want to do “the right thing”, but feel pressured to make adjustments to achieve their goals, even when they disagree with the said adjustments. It’s not that I didn’t think that way then, too, but I didn’t express that appropriately.

      And to answer your direct question, my sources were my colleagues who were directly dealing with these managers and saw the significant changes in behaviour every 6 or 12 months. And I also observed a few in my own encounters with Nokia.

      And to underline, we had great collaboration with many people in Nokia, especially when getting “lower” in the organisation chart. It’s not the people, it’s the system. Which seems to be changing, btw.

  6. Petri Heiramo Says:

    It’s interesting to come back to this article after 2 1/2 years and after the phone unit has been sold off to Microsoft.

    I’m still unsure if Mr. Elop has been a savior or a saboteur. The whole things smells very strongly like a trojan horse, but it may not be that entirely. Or at all. It may be that this whole thing is the best thing that could happen to Nokia phones. I’m curious to see where it goes.

    I believe some of the things I mentioned in the blog have changed, at least a bit. Whether this trend will continue under Microsoft, we’ll see.

    But I wish good luck! I wouldn’t mind seeing a third ecosystem in the smartphone business. And what I’ve seen of the devices lately, they’re genuinely pretty damn good, even the software :).

  7. sks Says:

    This is spot on. I just left the Nokia organisation so can corroborate everything you say here. The people were not the problem, the structure was. The lack of vision, the bonus system and the hierarchy set in place, smothered innovation with politics and destroyed enthusiasm with cheap incentives. Worst is everyone felt powerless to change it. I wrote a manifesto and sent it to the top, so people knew the problems but their response was equally fatalistic. Real systemic change was too much for them, no one wanted to know because the people at the top had too much of a good thing going, they are too blind to see that their lust for power and domination was the cause of the downfall. This was an organisation at war with itself vs. organisations like Apple who are aligned on common goals.

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