Case 2: Nokia
With humble beginnings from a small Finnish town, Nokia became a household name in the world of mobile phones. So successful was it that in 1991, it made a profit of $1bilion. In 1998, it made sales of $20billion, posting profits of $2.6billion. Nokia did everything right – it was innovative and launched new handsets every year. It was the first to introduce radio and music capabilities into their handset and even toyed with the touchscreen idea with is Nokia 7710 model in 2004. In the area of gaming, some may remember the “snake” game and even now, I struggle to think of a phone which compares with Nokia in terms of battery life and durability.
Going back to a statement I made earlier – Nokia did everything right! Perhaps I should qualify it a little bit better. Nokia did everything right in making their phones more suited to making calls, however they missed a trick – its customers wanted more from their device; they didn’t just want to make calls, but to have an all-purpose device at their fingertips.
So, it wasn’t surprising that in 2007, at the height of Nokia’s dominance where it had a 51% market share of mobile phone sales, it faced its first threat with the launch of the Apple iPhone. Slowly, Nokia lost its dominance and continued to slip in rankings. Sales dwindled and eventually, Nokia had to be sold in 2013. In just 6 years, all the hard work of many years prior had been undone…
Many business scholars have tried to explain how this came to be – some blame it on the fact that Nokia’s headquarters was not based in Silicon Valley, hence it didn’t have the ability to benefit from knowledge spill overs. Others have said it was the rigidity of Nokia and its lack of speed in responding to market needs and the one I particularly like is that Nokia did not possess the dynamic capabilities needed, meaning it couldn’t sense the market needs and didn’t seize opportunities to innovate correvtly. I believe Nokia’s downfall was more a combination of all three.
In relation to our life, we are not immune from making the same mistake as Nokia. There is a place we all love to dwell – it’s a place more commonly known as a “comfort zone”. The sad truth is the comfort zone is mostly arrived at after a period of prolonged success. We enjoy the success so much and rather than choose not to rest on our laurels and take a leap forward to the next level, we plateau. Sadly, as the adage says: “standing still is equivalent to going backwards”.
To continually be relevant, we must learn to constantly be aware of our surrounding and what skills need to be developed and adapted to remain relevant. The simplest example I can think of is social media, which cost me a lot in my business because I took too long to learn how to use it. For some of us, its out-dated work skills, yet for others it could be new lingo used in the market place. Whatever it is, we must learn to have our feelers out to sense new opportunities and seize the opportunity to be transformed through adapting our learnings. This is what business scholars refer to as using dynamic capabilities and is key to ensuring we stay relevant and on the constant path of success.