The reasons behind the fall of Nokia´s cellphone business

The main newspaper in Finland - Helsingin sanomat - wrote about a new study on Nokia company, which was made at the University of Oulu. It reported that Nokia´s cellphone business failed because of moving its production from a long-time collaboration company Elcoteq to East Asia. 

That resulted in considerable problems including a loss of quality, which led to a bankrupt of Elcoteq and loss of most European ICT jobs. Also, the close collaboration of the Nokia and its subcontactors ended as company´s relationship with Elcoteq had been highly open and mutual. 

The rules in East Asia were completely different, and Nokia never learned them well enough.

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I have had many friends who have worked in Nokia company, and according to their views the company had an even bigger problem. That was its practice to provide each R&D project to two different R&D units. 

It worked nicely during the rise of the cellphone company, as competition accelerated innovation. However, later the competition between groups became more and more negative - each group trying to decelerate competitors efforts instead of speeding up their own. And that led to extremely negative atmosphere among the R&D units. 

Furthermore, Nokia did not only try to make cellphones as cheaply as possibly - that is why the subcontracting was moved to East Asia - but also R&D. Thus, its leaders did not understood that the engineers are not freely convertible. And definitely, the engineers behind the rise of the company were not mainstream of their profession but an exceptional source of innovation and passion not cheaply available anywhere. 

Thus, the R&D of Nokia halted - compared to its competitors, especially Apple - and even worse, the leaders of Nokia did not believe in phones with touchscreens even though they had been offered such a phone already in 2003 - well before Apple had its own. 

Thus, the end of Nokia cellphones was a story of misunderstandings, detrimental leadership and arrogance. Today, the company is again in rise - although not in mobile phone business - and hopefully has learned from its past failures. At least, more of its R&D is today in Europe and it is even making decent profits to its owners.

Previous thoughts on the same topic:
Microbial solution to malnutrition?
Vikings and the technological cutting edge
Voisikohan olla... (my view about Nokia during its ongoing fall - in Finnish but google translatable, year 2010)