Speed matters (A lot)
Did you know that Nokia started in 1860, as a simple wood pulp mill (on the river Nokianvirta, in Finland), to produce paper?! They started diversifying, initially by producing electricity (from the mill on the river), then rubber for goods, like boots, telecommunication cables, and more. Engineers were given lots of freedom to come up with new product ideas, and Nokia Mobile was born this way, in the late 1990s when Mobile devices took the world by storm: 8 billion humans craving for one, and rapid technology improvements driving new sales cycles every 2 years: Colour screen, internet access, games download, touch screens, GPS and maps, Accelerometers and more.
Nokia became the largest mobile phone vendor in the world, and this for 14 years in a row. It was the pride of the Finish country, responsible for 4% GDP, and hundreds of thousands of jobs.
But in 2007, Apple launched the iPhone. And Google started giving away the Android Operating System for free to Manufacturers. New form factors (clam shell, keyboards,…) were in fashion (or not anymore) every year or so. And the big and proud Nokia just got trapped in the classical Innovation Dilemna : To proud and big and slow to adjust to rapid changes in consumer needs.
To their credit, they tried many bold things, including hiring a non-Finnish CEO, new mobile devices form factors and price points, open sourcing their own Operating System, partnering with Microsoft… But the market was too fast, and these changes took years to yield results: In 2013, Nokia mobile was close to bankruptcy and had no choice but to sell the business to Microsoft, for 7B$, or one third of their peak revenues just a few years before.
Announcing the sale at a big press conference, Nokia’s CEO said, his voice trembling: “we didn’t do anything wrong. But somehow, we lost”. And he started crying.