In my opinion, the CEO touched on all elements of James’ operations management. These elements are broken up into two categories (James, 2011). The first is Transforming Resources, which consists of Facilities and Staff. For instance, there were references to facilities. He talked about phones at various price points, including MeeGo and Symbian. He also referenced the element of staff, which he lambasted for their lackluster attitudes. He also blames at the feet of management, saying that they lacked leadership and accountability.
The second area of resources that the CEO touched on are the transformed resources (James, 2011). These include materials (be they manufacturing, transportation, retail, and warehousing), information, and customers (James, 2011). In terms of materials, he talked about how the Chinese would producing decent, low-end phones at lightning speed compared to Nokia, thereby drastically cutting into their emerging markets share (Ziegler, 2011). Regarding information, he explained that the iPhone was vastly superior to any product that Nokia was offering and that they were also being eclipsed by android. Finally, touched on customers, saying that their changing tastes were impacting sales, as they had dropped from 28% to 20% first preference with British customers, in a single year.
Hill talks about the importance of Step 3, Asses how different products win orders against competitors, going so far as to label it, “the crucial stage (James, 2011). The CEO spends the majority of his time discussing Nokia’s problems with this stage. He mentioned how their products were simply not making the cut in the mobile phone market and how Apple and Android operating systems were leaving them in the dust. He did mention that the company was creating some innovative products, but that they simply weren’t getting into customer’s hands in any sort of meaningful way. This hints at problems with the fifth step, which is to provide infrastructure to support operations. Creating innovative products is only part of the equation; if they aren’t being manufactured, transported and marketed effectively (Marketing is step number two, determine marketing strategies to meet objectives), then you are destined for failure. He also made references to Step 1, Define Corporate Objectives when he stated that the management lacked leadership and accountability. The only aspect of Ops strategy that he didn’t really touch on in his memo was step four, Establish the most appropriate mode to deliver products.
Nokia was plagued by a wide variety of internal and external factors. From an internal standpoint, there was conflict over resources and decision making (Doz and Wilson, 2018). This leads to management infighting and lost production. As the CEO alluded to, they were also bogged down by excessive product development. This proliferation, with too many new models and designs at once, prompted corporate cost-cutting, which sparked a noticeable decline in quality (Doz and Wilson, 2018). Nokia was also constantly in organizational reshuffle mode, which made it difficult to gain any sort of traction in the increasingly competitive phone market. Between 2004 and 2013, Nokia underwent four major corporates restructures (Doz and Wilson, 2018). External factors were also at play here. Nokia was simply left in the dust by Apple’s iPhone and Google’s Android operating system. Both redefined the smartphone market and wrestled away most of Nokia’s market share. The CEO also made mention of improved manufacturing processes in China, which competitors were using to manufacture phones at a much quicker rate than Nokia.
The burning platform and jumping from a high distance into the cold, dark, terrifying North Sea creates a strong wave of emotion. I would like these images and harsh words as a form of “shock treatment” for Nokia. If there were any employees that thought they could downplay their current situation, or that if they stayed the course, things would eventually get better, they would be massively rattled by this imagery. The CEO makes it crystal clear that Nokia is in a desperate situation and that it will take equally desperate and decisive action to get things back on track. The advantage of this wording and imagery is that it jars people out of their comfort zone and encourages decisiveness and action. It also forces individuals to look within, assesses their own performance and sees where they can improve. In some instances, this introspection and call to action can trigger new and exciting advances. On the downside, however, this kind of shocking imagery can frighten employees and really rattle their sense of security and morale. For some employees, they will read this memo and fearing the worst, will start heading for the exits. Some of your best talents could be lost, as some employees will start pursuing more promising employment elsewhere. As well, people can start putting unbearable amounts of pressure on themselves and others, which produces haphazard work and can strain relationships.
When I read this, I do feel motivated, but I am also struck by the desperation that must have driven the CEO to write this memo. He must have looked at the situation, studied all of the options and decided that this was his only real option. For me, if I worked at Nokia, I would have knuckled down and produced my best possible work, but to be perfectly honest, I simultaneously would have started exploring alternative employment options, as it is clear to me that this company is in a deep danger zone. Ultimately, this failed, as they proceeded to sell their phone division to Microsoft in 2014 for $7.2 Billion.
References
Doz, Y. & Wilson, K. (2018, February 2). Why the Mighty Fail – Lessons from Nokia. South China Morning Post. Retrieved from https://www.scmp.com/business/companies/article/2131615/why-mighty-fail-lessons-nokia
James, T. (2011). Operations Strategy. Bookboon.com.
Ziegler, C. (2011, February 8). Stephen Elop rallies troops in brutally honest ‘burning platform’ memo? (Update: it’s real!). Retrieved from https://www.engadget.com/2011/02/08/nokia-ceo-stephen-elop-rallies-troops-in-brutally-honest-burnin/
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