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Why the Nokia email was vital, and why the people calling “hoax” are part of the problem.

By on February 11, 2011

Outside of Nokia, everyone thinks Nokia has a problem. It is losing smartphone share to pretty well everyone else. It has lost its status as an aspirational brand. It has not understood the importance of software, ecosystems, appstores and developer friendliness.

That’s not just my view, that’s the view of the CEO.

Nokia logo

In his now-infamous “burning platform” memo, Nokia CEO Stephen Elop sets out in detail why Nokia is a burning platform, beset on all sides, ready to be consumed if it doesn’t made radical solutions – and soon.

"We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally. Nokia, our platform is burning."

Former Nokia executive Tomi Ahonen didn’t believe a word of it. In a detailed article, he sets out why the “burning platform” memo is a hoax. He uses statistic after statistic to say that, despite the perception, Nokia is in fact doing brilliantly.

The market doesn’t believe in Mr Ahonen’s analysis. Nokia’s share price stood at €9.25 on January 4th 2010. It hit a peak of €11.69 on March 29th 2010. It currently stands at €8.16. In that same period, Apple has gone from $211.98 to $359.38.

Mr Ahonen is part of the problem. No, scratch that, it’s people like Mr Ahonen that explain why Stephen Elop had to write the memo in the first place.

Nokia is struggling. It’s a featurephone manufacturer in a smartphone era. It’s a controlling player in an open era. It’s a hardware company in a software era.

And it is a company in denial. If you didn’t think that, then Mr Ahonen just proved it. He may no longer seem internal, but it strikes me that if Mr Ahonen was blogging about it, Nokians were thinking it.

Big companies are bad at accepting their competitive position. Employees believe their own internal hype. They don’t stick their heads out of the window to see what else is going on. They resist change. They resist the need for change.

Huge kudos to Stephen Elop for being brave, open and straightforward about the problems. And congratulations to Mr Ahonen, for pointing out why a CEO needs to be so direct and hyperbolic in order to have any chance of changing a company culture.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
  • Anonymous

    The main bones of contention amongst the Nokia apologists of late has been that

    a) Most analysts / commentary on the smartphone market is overly biased towards the US
    b) Nokia sells more smartphones than anybody else.

    a) Might well be true but it doesn’t mean they are wrong. The problem with b) is that what Nokia terms a “smartphone” is a vastly different consumer proposition than those powered by Android, iOS etc. Nobody likes the term “superphone” but it at least demarcates things properly.

    If you consider Nokia’s actual marketshare in terms of devices that can compete with the iPhones and HTC Androids of this world they are absolutely nowhere.

    Like HP yesterday, their biggest problem is that right now it’s all talk about the future. By the time they rock up with a product and a price, things may very well have moved on again.

  • http://www.gamesbrief.com Nicholas Lovell

    The key for me is that Nokia denied it a strategic problem. And as long as that was true, it coudl not change

  • http://twitter.com/mode7games Mode 7 Games

    It must be hard for larger companies to understand the true nature their own competitive advantage sometimes. For quite a few years, one of the key differentiating factors of Nokia phones was their UI: they simply had a much more intuitive thoughtful UI that kept users coming back through successive generations. They should have been on alert for any competition or potential competition in that arena, but that would have required a massive degree of honesty and humility in how they viewed their market position. Very difficult – understandable that they weren’t able to keep up, and equally understandable that there is still a significant amount of denial, as you point out. I just think it’s incredibly hard for bigger companies to stay practical and focus on user experience.

  • http://www.gamesbrief.com Nicholas Lovell

    I agree. the thing that comes out from the Elop memo is that he was both honest and humble. But Lucy Kellaway points out in the FT that it is much easier to be humble when you are a new CEO, blaming the previous incumbent.