Hindsight is a wonderful thing. Reading this book it is clear that Nokia’s future as a leader in the mobile handset business was doomed once Apple and Google entered the business with superior platforms and supporting business models. Perhaps the most amazing thing about the Nokia story is how their dominance of the handset business could slip away so quickly. However, the clue is in the word “handset” – the mobile world was moving to software being the dominant driving force for innovation and growth. Good handsets were just table stakes for any company entering the market – a vibrant software platform that encouraged developers and exploited network effects was where the action would be and Nokia did not have that.
This is an excellent book; well written and paced by its author and Nokia Chairman, Risto Siilasmaa. Risto joined the board of Nokia in 2008 when the company was at the height of its power as a global mobile phone powerhouse but also the time that Apple and Google were starting their moves into the smartphone sector with iOS and Android. In 2008 Nokia and Apple had similar market caps but by 2012 Nokia’s market cap had shrunk to €10 billion while Apple’s had grown to almost €600 billion. Risto’s book charts this descent downwards for his company and his struggles to change Nokia’s culture and business to avoid bankruptcy. I particularly liked his account of the ups and downs of the negotiations with Microsoft to first develop phones for their operating system and then to sell their handset business to the company. This seems to have worked out better for Nokia than Microsoft.
Transforming Nokia works as a compelling read for anyone interested in how a company can fall from grace so quickly and then rebuild its fortunes through massive corporate restructuring and a change in focus. It would also be useful for any leader wanting advice on how to motivate others and lead people to make difficult but necessary changes. At the end of each chapter Risto presents his thoughts on how the lessons he learned can be applied to other situations. My key takeaways from these sections are:
- Encourage employees to be honest with their managers about what is going wrong in the organisation and what needs to be done;
- Managers should always be looking over their shoulders for potential problems. This is particularly true when things are going well within an organisation as that is when there is time and the resources to do something about it. He talks about the need for “paranoid optimism”; look for problems but have a positive attitude that they can be fixed;
- Trust is essential both within organisations but also with customers and suppliers. Building this trust takes time and every interaction is an opportunity to do this;
- The importance of scenario planning to map out possible outcomes and how they can be dealt with. This means that, if and when problems do arise, there is a plan for solving them.
What comes out of the book is the sense of Risto’s emphasis on fairness when dealing with employees and suppliers/partners/customers:
“The right thing comes down to fairness. It’s about simple human decency and treating people the same way every time.” (Page 256)
This may sound rather trite but, taking him at his word in how the negotiations with Microsoft’s Steve Ballmer went, Risto’s fair approach and attempt to build trust seemed to have paid off. Of course, this book is one person’s description of events and he will not be entirely objective but a sense of fair dealing and honesty does emerge.
While reading this book I started thinking about what current large technology companies might be in a similar position that Nokia was in 2008. Facebook perhaps? It is hard to imagine Facebook ending up like MySpace did 10 years ago but it is quite possible. Growing concerns over personal privacy and the development of distributed technologies could push the company into a terminal decline.
Whatever the future for the technology sector, I can recommend this book for anyone interested in innovation, corporate restructuring or organisational change.