Case Study of Nokia.
                     Case Study of Nokia
How Nokia lost the smartphone battle?
Nokia fell from the top rank of the dominant phone 
company to being sold to Microsoft within five 
years. Researchers identified several key factors, 
including fear, suppression of information, over-
confidence, low technological competence among 
management, and competing product lines.
Source: Google Images
Fear
Top management realized as early as 2005 that Apple 
is working on a smartphone that is running on iOS. 
Their fears were externally focused and pressure put 
on middle management to react. Middle managers did 
not have this amount of external information, but had 
an internal focus, including internal fears of losing 
status. 
Source: Google Images
Aggressive culture
The Nokia culture accounted for aggression from the top 
management, most notably the CEO, that resulted in fear 
that middle management showed losing status, reputation 
or the job. Middle managers who would raise objections 
were subsequently sidelined or demoted. Nokia’s tendency 
to change its organizational structures frequently led to 
uncertainty with employees
Source: Google Images
Suppression of information
Middle management tended to give overly optimistic 
reports and suppress information that indicated the 
opposite. Top management  discouraged middle 
management’s external focus to ensure effective 
implementation. With those two factors, top management 
created a psychological unsafe environment not allowing to 
raise critical issues, punishment of failure, and preventing 
the creation of trusting relationships.
Source: Google Images
Over confidence
Because of the suppression of information, the fact 
that most middle managers were in Finland and had 
not been directly exposed to many other technology 
companies, and the reinforced notion of Nokia 
employees being the best-of-the-best, Nokia 
employees tended to see their solutions as the best 
and ignored advice that contradicted that image.
Source: Google Images
Poor management
The manner in which middle managers assessed 
competitors’ products was biased by what was 
perceived as relevant for Nokia, and often compared 
Nokia’s future developments to competitors’ past 
products. This way Nokia’s products always seemed 
better than the competition and there was nothing to 
learn from them. 
Source: Google Images
Low technological competence
Top management, including the CEO had only low 
technological competence and could thus not judge 
the real status of development. They did not 
understand the real status when MM showed them 
demos of the current development. Additionally, Nokia 
was ill prepared for the dramatic change in required 
hardware and software competence.
Source: Google Images
Misjudgment
Nokia core competence was in radio technology 
hardware, while smartphones needed computer and 
software competence, competence in touch screen 
interfaces – and user experience design skills. While 
top management realizes that a dramatic shift is 
coming, middle management is mostly not aware of 
that. Latter are isolated in their main manufacturing 
hubs and are over-confident that their set of skills and 
experiences
Competition
The new entrants Apple and Google were seen as low 
threat because of their inexperience in the phone 
business. Given that Nokia had several dozen product 
launches every year, those groups competed for 
resources and forced them to update and patch the 
outdated Symbian operation system to an extent 
where it became unusable for smartphones.
Source: Google Images