Why did Nokia fail, while Apple and Samsung succeeded? The answer lies in Transformation not Change. By ignoring Transformation, things quickly went south for Nokia.
At its peak, Nokia was valued at $300bn. Its annual budget was reportedly larger than the government of Finland. For two generations, Nokia cornered the mobile phone market. Nokia 6110 was the first phone that came with the classic snake game pre-installed.
The spectacular success of Nokia’s 6100 series in 1998 helped the company surpass Motorola to become the world’s top cellular phone maker.
Nokia introduced a buffet of mobile phones in new designs and new features. During a period of 150 years, Nokia went on to give us the first car-phone, first hand-held phone, first GSM network, and a plethora of mobile phones.
Nokia was the world leader in the mobile phones market.
The period between 2000 and 2010 brought along a new set of challenges for the company. Multimedia capability - was evolving fast. Wireless and Internet was converging. 3G was where telecommunication was going. iPhone launched in 2007 and saw its sales sky-rocket by around 330%. Android launched in 2008 and Nokia’s Q3 profits nosedived 30%; while sales decreased 3.1%. In 2016 Nokia’s mobile phone business was sold by Microsoft in two parts for a paltry £350m.
While Nokia may remind most of us of only mobile phones, the company in fact started out as a paper mill, established in 1865 by mining engineer Fredrik Idestam at the Tammerkoski Rapids in south-western Finland.
Change and transformation are used synonymously – but they are not the same thing.
Change is essentially a comparison to something that previously existed. Change seeks to yield more, yield better, or yield something different from what came before. By its very nature, change fixes the past.
Change can be reversed.
Transformation is an act of bringing something forth or inventing. Transformation is something expansive and infinite. It is deliberately created. Transformation is about giving birth to something that didn’t exist. Transformation requires a paradigm shift. The object of transformation takes a radically different look & feel during, and at the end of the process.
A butterfly is such an example of true transformation. To grow into an adult, a butterfly goes through 4 stages of metamorphosis - egg, larva, pupa and adult. At every stage, the butterfly is radically different, with completely different goals.
Transformation can’t be reversed.
In the early days, the leadership at Nokia knew what it took for them to win in the market place - the business was in constant transformation. They continued to adapt and develop and expand until they were the biggest and the best.
When Nokia dismissed touch-screens as a gimmick that used too much battery they forgot their transformation DNA and when the smartphone came of age, Apple & Samsung were there to lead the way. By ignoring transformation, things quickly went south for Nokia.
The challenge that Nokia faced between 2000 and 2010 needed transformation, not change. Challenges are always an opportunity for organizations to review their strategy. Many organizations are failing to address their pertinent challenges because they are merely looking to fix the past.
Organizations looking to digital to solve some of their pertinent business issues will be well advised to pursue the path of transformation, and not change, in order to succeed.