An interesting analysis of Nokia’s decline and the importance on the role of Leadership in creating a safe environment – summarised by Annie Whitley

Nokia’s Decline – Key points from a blog by Neil Perkin
Only Dead Fish, UK
Matt Edgar’s analysis of Nokia’s decline. Rather than the complacency and ignorance to which
Nokia’s innovation and competitive failures are usually attributed, the author’s research (based on an
internal perspective from interviews with both senior and mid-level executives and engineers as well
as an external one from experts) puts the blame on an organisational culture that at the time
was dominated by a climate of fear.
The research indicates that, during the time in question, temperamental leaders created an
environment that made it very hard to pass bad news back up the line. The fear that senior
management had of the external environment and of not reaching their quarterly targets in a highly
performance-driven culture seemingly impacted the treatment of their subordinates, making those
middle managers fearful of disappointing the top executives. This ‘froze co-ordination’ between
senior and middle management to the point where the latter over-promised, remained
silent or even directly lied to the former in order to avoid being told that they were not
ambitious enough to meet the stretched goals set for them.
The result was a company-wide inertia. Everyone realised that Nokia needed a better
operating system for its phones in order to respond to the threat posed by Apple. But
middle management, fearful of appearing defeatist and of the reaction of their bosses, avoided
publicly admitting the inferiority of Symbian (their own operating system), and the culture led to a
‘decoupling of perceptions’ between the two groups of top and middle managers about how quickly
Nokia could match the iPhone.
This shared fear was exacerbated by a culture of status inside Nokia that equated resources
with power. This made everyone want to retain status in order to prevent resources being allocated
elsewhere, or to avoid being marginalised by being perceived to be not ambitious enough or willing
enough to take on challenging projects or targets. Over-promising became a route to securing
more resources which in turn was perceived as an increase in status
The conclusion from the authors is that leaders, and particularly those required to lead
transformation (and which leader doesn’t fall into that category right now), need to be able to
identify ‘varied collective emotions’ and develop a collective ‘emotional capability’ in their
companies. In other words to be really sensitive to the emotional fallout and resultant
impact of the culture within their organisation:
“While modest fear might be healthy for motivation, using it indiscriminately can be like overusing a
drug, which risks generating harmful side effects…Fear can only be a useful motivator if
management can provide workers with the means to address these fears.”
See the full article at
http://www.onlydeadfish.co.uk/only_dead_fish/