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When Dilbert came to Nokia

Fascinating report shows how bureaucratic fear sealed company's fate in 2003

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You may have had your fill of Nokia analysis and features, but I'd like to draw your attention to one more - one that's very special. The Finnish daily Helsingin Sanomat has published a report based on 15 interviews with senior staff. It reads like the transcript to an Oscar-winning documentary where the narrative thread is held together entirely by the talking heads.

The report is very long on detail and short on opinionising - and for those of you fascinated by technology and bureaucracy, something quite interesting emerges. What we learn is that the company's current predicament was fated in 2003, when a re-organisation split Nokia's all-conquering mobile phones division into three units. The architect was Jorma Ollila, Nokia's most successful ever CEO, and a popular figure - who steered the company from crisis in 1992 to market leadership in mobile phones - and who as chairman oversaw the ousting of Olli-Pekka Kallasvuo this year.

In Ollila's reshuffle, Nokia made a transition from an agile, highly reactive product-focused company to one that managed a matrix, or portfolio. The phone division was split into three: Multimedia, Enterprise and Phones, and the divisions were encouraged to compete for staff and resources. The first Nokia made very few products to a very high standard. But after the reshuffle, which took effect on 1 January 2004, the in-fighting became entrenched, and the company being increasingly bureaucratic. The results were pure Dilbert material.

For example, have a look at the section which starts here, with "A novel application or feature has been dreamed up that should end up installed in a phone a year from now. This is the beginning of a long day's journey to nowhere."

Innovations produced by the R&D department and designers could no longer be implemented quickly - one example should have taken just a couple of weeks, but instead took months to be incorporated into phones.

Executive managers interviewed note how the result was a large number of indifferent products.

Another consequence was also predictable. It's what political writers call the most morally corrupting effect of bureaucracies: nobody takes responsibility. With the three divisions covering their own backsides, nobody wanted to make the long-term strategic investments necessary to keep platform software up-to-date. This resulted in the Symbian user interface being neglected. Nokia had developed a touch screen UI called Hildon, which became Series 90, starting in 2001 - and that should have been the basis for Nokia's iPhone competitors today. But it was canned in 2005.

"We produced a quite enormous number of rather average products. It would have been smarter to make fewer - and better," says one interviewee.

The masterplan was ripped up by Ollila's successor, Olli-Pekka Kallasvuo, in 2007, but by then the units had become enormously wealthy fiefdoms, and many of the problems remained. Lots of people could veto a decision, but the leadership required to drive one through was absent. Nokia's product pipeline all but dried up in 2009.

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