In his column in the Mint yesterday, Niranjan Rajadhyaksha writes about the fall of Nokia in the context of the Schumpeter warning on competition – that it comes not from price, or other players, but from a company’s own inability to keep up with the times and change.
Change, Schumpeter pointed out, will come in the form of new technologies, new processes, and new organisation realities… which if a company, even in a monopolistic or market leader position like Nokia was in, fails to embrace, will eventually not just lead to loss of market-share, credibility and profits, but strike at the very foundation of their existence and hence future.
Basis this theory, and its interpretation of what’s been happening with Nokia over the past couple of years, the Finnish company should be scared, very scared. Unless it suddenly develops new flexibility of strategy, thinking, and reaction to the changing environment, and dramatically breaks free from its own history and past glory.
Really large and successful firms are more likely to be challenged thus, as the “not invented here” syndrome often makes them loath to change.
Of course, Nokia is not alone in this situation, just most prominent today and hence used as an example in the article. Microsoft too is in some ways in the same (Apple) flavored soup with open source side-orders.
Niranjan further points out that Schumpeter drew an important distinction between monopoly and big businesses saying they are not interchangeable.
“…big firms could rarely protect monopoly profits in the long term. Big companies survive because of innovation and organizational agility rather than monopoly status.”
In summary I would like to point out, as one who has bought many Nokia handsets in the past (but not in the past 5 years), and as one who has friends working in senior positions at Nokia worldwide, I would like to see the company wake up and reinvent itself now. Not just in terms of products, but also in its approach to markets and marketing, and of course. I would love to see it break free of the templates of success that brought it this far. And hopefully be another example for us to read about in the future. Albeit a very successful and shining example of change.
- The Real Cause of Nokia’s Crisis (blogs.hbr.org)
- Microsoft and Nokia’s partnership poses challenges, say agency chiefs (prweek.com)
- Why Nokia Fell From Grace (customerthink.com)