R&D communication failure: The fall of Nokia.

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For 14 years Nokia was the largest manufacturer of cell phones. It has now ceded this position to rival Samsung with its stock losing 64% of its value, and another 10,000 employees losing their jobs. Anton Troianovski and Sven Grundberg detail the background in "The Wallstreet Journal".
 
Once the champion in its class, Nokia has lost 90% of its market value in the last 5 years and its market share fell from 40.4% in 2007 to 21% in 2012. In recent years the senior management was changed and job cuts announced reached five digits. However, these personnel measures were of little or no avail. This is surprising since Nokia as a company served for a long time as a prime example of the ability to reinvent itself; starting as a lumber mill, becoming a rubber products manufacturer and later the successful worldwide cell phone giant. The company never avoided spending on Research and Development (R&D) in the last decade. The R&D budget in 2010 was more than US$ 5 bn, twice as much as competitor Apple and 30% of the whole industry. The R&D was fruitful; Nokia's designers had prototypes of phones on their tables which could have been the later iPhone and they worked on several operating systems to compete with Apple. However, the smart phones developed by Nokia were never marketed, internal rivalries and frictions stalling progress in other areas.
 
Big organizations can develop even bigger communication problems and bureaucratic tendencies. The problematic situation now is not the result of one major unfavorable decision but of many smaller ones. Nokia developed into a complex company in which the jewels developed were overlooked and decision making was too slow with collective decision making resulting in a reduced level of risk taking for some new products. Nokia must learn what many car manufacturers realized in the last decade, lean management is a must, as ‘too many cooks’ can be as problematic as too few.