About the book

The book by Yves L. Doz and Keeley Wilson is like a detective story. You know what will happen at the end of the story, but you don’t know where exactly did the crime happen.  

I served the mobile communications industry for 12 years and that’s why the ”Ringtone” book is very interesting piece of analysis to me. It’s like an analytical continuum for books such as ”Good to Great” or ”Leading Change”. I can remember great many historical dates and activities that this analysis presents.

How was the book?

In the case on Nokia and it’s mobile phone business we typically analyze the reasons for failure. But in this analysis there is also presented the reasons for the high-growth of the mobile phone business within Nokia. Somehow it is actually more interesting than the failure of the mobile phone business in Nokia. Wouldn’t you like to learn how to grow businesses more than how administer failure.

What are the key learnings?

I remember when I joined Nokia and the CEO of the company was Olli-Pekka Kallasvuo. One of the most impressing moments was when I heard mr. Kallasvuo to end one of his speeches stating that ”Internet is our quest”. Well said, but it was not only our quest, but it was also our destiny.

Nokia didn’t go from good to great. It went slowly from great to bad and then to worse. The old Nokia was once hit by the Schumpetrian creative destruction and it happened long before the mobile era. So actually Nokia has in it’s 153 years of history met disruption at least twice. And survived from both occasions.

According to Doz and Wilson the reasons for success of the mobile phone business in Nokia were:

·       Porter’s theory of competitiveness of nations is one explanation why Nokia and Finland was struck with the phenomenal success.

·       Planetary alignment i.e. good luck.

·       And fragmented and localized structure on Finnish telecoms market.

I think that Nokia was lucky when it got involved in the development work of NMT and later in the development work of GSM specifications. For example roaming was invented in the NMT standardization process and it led to the service development of other complimentary services than voice calls. GSM Standard in was a great business plan for companies that were hungry enough to execute. Nokia with it’s greenfield operator customers were more hungry than the incumbent state owned telecom operators. Radiolinja was one of the hungry customers and so it became the first customer of Nokia for a digital network.

According to Doz and Wilson the reasons for failure were:

·       It was unavoidable a la Schumpeter.

·       Organizational evolution and adaptation gone astray.

·       Failure of management volition.

There is no single decision that explains the failure of Nokia Mobile Phones. It was merely mixture of different and multiple decisions that lead to prolonged deterioration of the mobile phone business. Nokia was declining way before the arrival of new competitors such as Android and iPhone. These competitors were in platform business, but Nokia was still in hardware business. Nokia was caught up with the ”Red Queen” effect. The Red Queen explained that ”My dear, here we must run as fast as we can, just to stay in place. And if you wish to go anywhere you must run twice as fast as that.” Maybe Nokians should have also tried to learn to run other routes. And smarter?

What could have Nokia done differently in order to save it’s mobile phone business?

·       Create and stick with a software-first vision.

·       They should have create a strategy how to compete against Internet companies.

·       Develop proprietary operating system for Nokia.

·       Nokia didn’t have a theory how succeed.  

·       Integrate interdependent decisions.

·       Behave disciplined as the Good to Great companies did.

At the end of the book Doz and Wilson offers some factors that might have saved mobile phones businesss from total destruction:

·       Nokia kept doing the same thing for too long.

·       The innovation center should have been established much earlier to California.

·       MeeGo should have been developed much earlier and in faster pace.

There is also exhaustive list of management lessons which are by far the best outcomes of the research and analysis. My favorite findings are:

·       Success begets failure.

·       Success also breeds conservatism.

·       A new reality of different nature calls for a new strategy-making paradigm.

How should we change according to the book?

As mentioned this book is like a detective story and you don’t know when or where does the crime take in place. Bearing in mind that ”Nokia’s success in mobile phones was neither the fruit of a repeatable recipe, nor an accident”. Due to that reason the Ringtone is somehow a dull book to read, because I was certain that the research team would have found a repeatable recipe.

But we can learn from the book a great deal:

·       We should invest into the future megatrends.

o  As long as GSM specifications was the business plan everything was well. When they had to become a software-first company, the hardware-first attitude overruled the need for change.

·       Never forget your customer.

o  Time consumed in committees was away from the customer centric work. Key driver in change is that change management must never forget the customer.

·       Organizational changes need presence of management

o  Matrix organization and it’s barons turned against each other. They had to compete from the same resources and the leadership team failed to guide these teams. ”Organizations structures do not fail; management fails at implementing them” (Jay Galbraith).

The idea of matrix organization was sensible for Nokia, but it was poorly implemented. Matrix organization is not a dead end, but there are three ways to run a matrix:

·       arbitration,

·       negotiation,

·       decentralization & delegation.

Because Finns have a strong tendency towards consensus Doz and Wilson suggests that in Finnish matrix organizations there should be clear and speedy rules for decision making

Matrix organization managers needs different set of business skills. For example when matrix leaders pushback decisions to managers he needs:

·       collaborative skills,

·       a careful balance of collective interest and self-interest and

·       structural context to match.

What should I personally do?

Read Gary Hamel’s book called ”Competing for the future”.

Summary

The book in six words – ”Lieutenants should not turn into barons” (Jorma Ollila)