Nokia has been riddled with controversy. Their stock has collapsed and despite still being the biggest mobile phone manufacturer by far, they continue to slide down when it comes mindshare. A lot of us believe that they can come out better, stronger and more efficient from the hole they are in, but why in the first place did they go down that hole? Why did a company that was the pinnacle of innovation suddenly become the one doing all the catching up, for years at that?
Mikko-Pekka Heikkinen of Finland’s Helsingin Sanomat sat down with 15 former Nokia employees to try and find out what really happened over a four part series of interviews. It makes for a very interesting and thought provoking read, specially if you’ve followed the company for a long time. Here a few key sections from the series that I think you must read.
Lets start with what stifles innovation.
A designer responsible for the mobile phone’s integrated digital camera works out how the picture quality could be improved by a change in algorithm that would demand a couple of weeks’ work to sort out. He reports on this to his immediate superior, who then feeds the matter into the requirements analysis matrix.
A week later the matter is noticed at an RA follow-up session and further information is sought: if this were to be done, what other things would be omitted or would come in behind schedule as a result? The team replies that their error-fixing capacity would temporarily be reduced. Another week goes by. The next RA follow-up session looks at the answer and decides to send the request on for prioritisation.
After a week, the requirements are examined in a prioritisation meeting, and a decision is made to go back to the team to check out the errors status, in order to be able to understand what the scale of risk involved in reducing error-fixing might be.
The team comes up with a risk analysis in a day or two. Another week goes by. A prioritisation meeting resolves to approve the initial request, if a suitable “lead product” can be found for it – in other words, a phone model into which the improved algorithm can be installed.
A month later, one product reports back that, yes, we could take the improvement on, if it does not add to the risk of a timebox overrun. Back to the team. Is there an increased risk of the timebox not being met? The team replies that no such risk exists if work is started straightaway. Another week goes by, and the prioritisation meeting gives the second-highest priority to the camera request. It determines that the algorithm change can be embarked on ,just as soon as any more important work has been completed.
The more important matters take two months.
By the point when the algorithm team should then be getting down to work, it turns out that the scheduling of the lead product has progressed too far and the timebox window has closed. Another lead product must be found instead. And so it goes on, until a competitor gets rave press reviews for the improved image quality of its integrated camera.
And someone expresses shock, and wonders why it is that Nokia has not come up with a similar improvement.
“Sometimes one got the sensation that people were more concerned about how what we were doing and the product we were working on related to rival groups within the company than about the relationship to our real competitors. The products using a certain software platform were not permitted to implement the newest or the cleverest things, because this might make the device in question a competitor to some other Nokia phone using a different platform.”
The man recounts a “thoroughly typical” example: A novel application or feature has been dreamed up that should end up installed in a phone a year from now. This is the beginning of a long day’s journey to nowhere. The first thing that is missing is the conceptualisation of the feature in question, and then comes the design phase, and after that the bedding of the feature into the phone.
People have to sign off on actions at every stage in the process for it to go forward.
According to the ex-manager, everybody who knows anything about this particular feature approves of the idea, albeit with one or two modifications.
“But then you run up against some Vice-President who gets cold feet, because he doesn’t know the subject-matter. The innovation is going to tie up money and resources if it gets the go-ahead. He is very aware of this, and he sits on it. He might for our purposes be an engineer with a background in HVAC or systems engineering. He doesn’t know squat about user interface software design.”
“What he does know, mind you, is that developing this particular feature is going to require the input of fifty people for the next year ahead. He does not dare to commit people to the project, because they might be required elsewhere. For him, it is safer to freeze the innovation process or at least keep the handbrake on. Then in time the innovation will no longer be so novel after all, and it will not make any sense to carry it forward.” According to the ex-manager’s own calculations, there are around 300 vice-presidents and SVPs within the Nokia organisation.
But if we are to believe the former Nokia staffers and executives interviewed for this piece, Nokia’s woes began years before Olli-Pekka Kallasvuo’s tenure at the helm, back at the beginning of this decade.
During Chairman and CEO Jorma Ollila’s time.
And in 2003, Ollila did something that put the Finnish mobile phone giant onto the wrong tracks. In the considered view of the ex-Nokia man, “the key reason” for Nokia’s present problems is there: Jorma Ollila’s matrix organisation, which came into effect from January 1, 2004.
“What emerged was a leadership vacuum. Right there and then the seed of gradual internal decay was planted. The various units began to compete tooth and nail with each other for the same resources and the same markets. By contrast with the brickbats dealt out for the management structure, the former manager has nothing but praise for the people working at the coal-face, Nokia’s engineers.
“Nokia has a complement of totally outstanding engineers! It’s not down to their skills.”
“But it is the product management side of things that has been so weak and so diffused. And the CEO ought to have recognised this. There should have been a product director. and a strong one at that.” “But there was none.”
So neither Jorma Ollila nor Olli-Pekka Kallasvuo was the sort of corporate water-bringer for the 2010s that Apple enjoyed in its own CEO, Steve Jobs.
Said like this it is quite easy to understand what happened and not only that, it is also easy to see how a big company could easily fall into the same trap as Nokia. Come 2010 we have started to witness visible changes in how Nokia’s changing, this realization would (should?) have come internally much earlier and also acted upon. If that were to hold true, we’re in for a very interesting 2011.
I know a bunch of brilliant, hardworking, dedicated and forward looking people working around the world at Nokia, I can imagine how frustrated they must feel, riddled with layers of management and of course Power Point!