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Study Reveals Why Nokia went bankrupt


“We didn’t do anything wrong, but somehow we lost”, said former Nokia CEO , Stephen Elop, wiping away tears, announcing the acquisition of Nokia by Microsoft in 2013.

So, why did Nokia go bankrupt and Microsoft bought it? No one can argue, Nokia was once a world cellphone giant that as if it could never be defeated in the 1990s to early 2000s.

Nokia mobile phones are used by so many people that they are still legendary today. No one expected and thought, why Nokia went bankrupt.

However, Nokia’s prowess began to loosen up when Apple introduced the iPhone in 2007. Its name has indeed appeared again through HMD Global, which holds the license for the brand, but Nokia was a different company.

What exactly caused Nokia’s donation to collapse in the mobile industry? Why did Nokia go bankrupt ? This question has attracted a lot of attention from researchers and academics as a case study. Why did Nokia go bankrupt Of course, there are many factors that are quite complex.

However, several researchers highlighted three main things from the company’s internal factors, namely the quality of technology that lost to Apple, the arrogance of the ranks of managers, and the weakness of the company’s vision.

The three points were then detailed in more depth by Tim O. Vuori, assistant professor of strategic management at Aaltoo University and professor of strategy, Qui Huy, from the INSEAD Singapore business school . They wrote a scientific paper entitled Distributed Attention and Shared Emotions in the Innovation Process: How Nokia Lost the Smartphone Battle .

In this study, researchers conducted interviews with 76 top and middle level managers and Nokia engineers . They also interview external experts and carry out in-depth investigations. Work culture is gripping In their study, Huy and Vuori found that a “gripping” work culture was one of the reasons why Nokia went bankrupt.

At that time, the leaders were said to be quite temperamental and terrified middle- level managers . They are afraid to report the real situation, because of threats of dismissal. Especially about sales reports that failed to meet targets.

On the other hand, Nokia executives were afraid to admit the true quality of the Symbian operating system Nokia devices were running at the time. They worry that if they admit this, investors, suppliers, and especially users, will leave Nokia.

But they realized, it took a long time to build an operating system that could match or exceed the quality of Apple’s iOS. At the same time, top-class managers intimidate middle- level managers , accusing them of being less ambitious to meet targets.

The threat prompted middle- level managers to end up lying to higher ranks because they thought it was pointless to tell the truth. Nokia’s top managers were said to be less competent in technical matters, which influenced the way they assessed the quality of their technology in setting targets and decisions.

Meanwhile, at Apple, leadership positions are filled by engineers . One of the blunders that have been made, Nokia officials decided to allocate resources to develop new mobile devices, to meet market demand in the short term. They just don’t use it to achieve long-term targets, such as developing a new operating system.

Failure to innovate It can be said, internal politics, became one of the main factors causing Nokia’s bankruptcy. Employees weaken each other and make the company more vulnerable to being eroded by the flow of competition. Top-level managers fail to motivate middle-class managers. They choose to use a tough approach without knowing what actually happened.

The overturned culture of “fear” influences interactions among Nokia employees. Gradually, a phenomenon called “temporal myopia” appears due to several accumulated factors.

In simple terms, temporal myopia is defined as the inability to consider long-term outcomes, when making choices. The human factor coupled with the economic and structural factors ultimately made it difficult for Nokia to innovate. Like big companies in general, Nokia also has corporate values, namely Respect, Challenge, Achievement, and Renewal (respect, challenge, achievement, and renewal).

However, Nokia employees perceive their bosses as failing to uphold these values ​​when running operations. Learn to hear This study shows the importance of maintaining shared emotions among employees. Poor employee management can impact the company’s competitive power, as experienced by Nokia, according to the study How Nokia Lost the Smartphone Battle.

According to Leadership Consultant Amalia Sterescu, organizational leaders must have the courage to break the status quo in order to adapt. Leaders must also have a collaborative style and leave behind a “close the door” culture or not accept collaboration with other parties.

“Leaders must learn again how to listen to their customers, partners and employees properly,” said Amelia, summarized by KompasTekno from Medium Brand Minds , Tuesday (30/3/2021). Amalia added that emotional intelligence is needed by leaders to make decisions, especially when workers come from various generations, including the millennial generation and the Z generation.

“In the end, leaders must master how their power to be responsible when making bad decisions, failed innovation, lost market share, while status, roles and bonuses will also be lost,” said Amelia. Nokia then withdrew from the cellphone business after its hardware division was acquired by Microsoft in 2014 for a dowry of US $ 7.2 billion (around Rp. 96.8 trillion). Then in 2016, the Nokia brand license was purchased by a Chinese company, HMD Global