Nokia Corporation chief executive Stephen Elop joined the company from Microsoft where he was the head of the business division responsible for the Microsoft Office line of products. He was also a member of the company’s senior leadership team. Under his guidance since September 2010, Nokia’s share price has gone from just above approximately US$15 to just above US$2.
During Elop’s tenure at Nokia, it has lost billions in revenues and profits as well as a significant percentage of market share to rivals, namely Apple and Google’s Android based smartphones.
What is more worrying is that this all seemed to have happened at such a rapid pace not because Nokia’s competitors were aggressive and eating away their market share, but rather as a result of what seems to be a series of terrible decisions by Nokia’s top leadership and specifically the chief executive.
In hindsight, the decline is most likely to have been triggered by the infamous “Burning Platforms Memo” –reported and leaked in February 2011 — which Elop sent internally to Nokia staff. In a bid to “rally the troops,” the memo resulted in undesired effects among the Finnish company’s employees.
February 2011
A memorable paragraph from this memo is where Elop laments and says: “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.”
At this stage in 2011, Nokia was profitable and had over 20 percent market share across all phones.
Later in the month (after the Burning Platforms memo), the chief executive announced that Nokia will be teaming up with his former employer, Microsoft Corporation, and that they will jointly release new smartphones based on the software giant’s Windows Phone 7 operating system. He also announced that the Finnish company will be dumping Symbian — its own mobile phone platform.
Elop further confirmed that there will job cuts in the same announcement.
April 2011
To add substance to the earlier announcement, Nokia further announces specifics around the job cuts.
It states that it will cut 7,000 jobs and outsource its Symbian software development unit and Symbian software-related activities to consulting services firm Accenture.
This move, according to Nokia at the time, was expected to cut 1 billion Euros in costs.The move also included axing 4,000 employees and moving a further 3,000 to Accenture – that number was equivalent to 12 percent of its mobile phone unit workforce.
April 2011 also saw Nokia being downgraded by ratings agencies Moody’s and Standard & Poor’s. At the same time, the MeeGo platform based (developed by the Finnish company) Nokia N9 smartphone was due and ready for launch, only to be released later in the year and a month before the launch of the Windows Phone 7 based Lumia phones (developed in partnership with Microsoft).
September 2011
The company indicates that it will close its plant in Cluj, Romania — axing 2,200 employees — and further slash 1,300 jobs in its location and commerce business unit.
This unit was responsible for the development of maps for mobile phones.
Towards the end of the month Nokia announces the launch of the MeeGo based Nokia N9. The smartphone is then released to a limited amount of countries that Nokia operates. In the same month, the Linux Foundation announces that the Nokia N9 will be the last to run MeeGo as the project has been canned.
Both moves — especially Nokia’s limited distribution strategy for the N9 — are seen as a clear message that the N9 is destined for failure and Nokia doesn’t want it to possibly outshine the soon to be launched (October 2011) Windows Phone 7 based Lumia smartphones.
This launch confuses consumers and commentators alike and proves to be a bad decision.
October 2011
Nokia unveils two new models of the Lumia Microsoft Windows phones in time for the festive season. The sleek smartphones are seen as a possible first step in the company’s fightback against Apple and Google’s Android operating system.
Quarterly financial results are released and Nokia’s Q3 revenues are reported to have declined by 7 percent and the smartphone unit generated 130 million Euros of losses.
Join us in Part 2 of this report as we continue with Nokia’s timeline under Stephen Elop. We will also look at a possible explanation as presented by Tomi T. Ahonen — an ex-Nokia executive — as he speaks about his “Cliff Theory” which seeks to explain why mobile phone manufacturers seem to collapse rather quickly, e.g. RIM and Nokia.
