Given the engineering skills, experience and resources of the company, the Nokia ship could change its course. But the decision was made too late.

Nokia has long been practically synonymous with the cell phone. The company boldly experimented with the format of devices, prided itself on its flexibility and seemed to always be one step ahead.However, everyone knows the sad ending. In this article we will talk about Agile at Nokia and why agility did not save, and perhaps ruined, the Finnish legend.

In the Agile community, Nokia is remembered for its Nokia Agile Test, a simple and straightforward methodology for assessing how agile your team is.

The Nokia test was originally developed by Bas Vodde, author of the LeSS approach and many books.

But if Nokia used this test, teams were pumped by Bas Wodde himself, and the company constantly declared “flexibility” as its main capabilitiy, then why did it lose to Apple and Android?

First in everything: what was the heyday of the Finnish giant

Nokia was founded back in 1865 and throughout its history its existence has produced literally everything from toilet paper, tires and rubber boots to telecommunication cables, plastic, aluminum and electronic components. As an innovative technology company, Nokia opened up by the early 1970s, introducing the first civil car radiotelephone, thus connecting Finland with a wireless radio network.

In 1992, Nokia became the first in the world to introduce a cell phone with GSM. But the company quickly realized that the phone is more than just calls and SMS. And already in 1996, the first Nokia 9000 smartphone appeared with a web browser, the ability to receive faxes and emails and many other things that we still use now. Legendary snake - the first ever mobile game appeared on the Nokia phone at the same time!

Realizing the importance of the software, in 1998 Nokia, already being the leader of the mobile phone market, decides to focus on creating a mobile operating system. The EPOC operating system from Psion was taken as a basis. Together with her, Nokia, Motorola and Siemens created the Symbian Foundation.

At the beginning of the zeros, Nokia produced up to a dozen and a half models in different price categories and for different audiences: cheap but convenient handsets, camera phones and smartphones. By 2007, the company occupied an incredible 37% percent of the entire global mobile market, selling 400 million devices a year!

No one will ever return to 2007. And Nokia too

However, within the company, the contradiction between expensive smartphones and cheap phones for the mass market gradually grew. The company, known for its technological superiority in the past, under pressure from investors, began to look more at the mass market, which showed significant growth. Nokia began to lose focus, at the same time more and more models were launched in an attempt to embrace the immense. But the company could not return to 2007.

In the world, 2007 was remembered not only by the flowering of informal subcultures, but also by a landmark event for the entire industry - the release of the first iPhone. Nokia did not attach much importance to this event, because the new device lost to the Nokia flagship in terms of characteristics. It was an expensive device that worked on already outdated 2G networks, the camera did not know how to shoot videos, there were few applications. In addition, the product was aimed exclusively at the US market, as it worked only on AT&T networks.

"It took us many years to understand what is needed to create a decent phone. The guys from Apple who create PCs have no idea how to achieve it. They haven't moved in this direction," - Anssi Vanjoki, head of strategic Nokia planning.

But already in 2008, problems in Nokia began to grow like a snowball. The global financial crisis has caused serious supply problems and a drop in sales, Apple has released a new model with 3G, where they have successfully fixed children's diseases of their device and set themselves up for sales around the world! And as if it wasn't enough, but in the same year the first smartphone running Android was released - HTC Dream.

An interesting fact is that even after that, the company did not move on to active actions. The company still had self-confidence, because Nokia had so far dominated the market of budget pipes.

What was the flexibility in the style of Nokia really?

Nokia considered itself a flexible company.

"Being fast is much more important than anticipating what will happen to the market. This is our key competitive advantage," said Nokia CEO Olli-Pekka Kallasvuo in 2006.

But just being fast was not enough! Fast and frequent phone launches have led to the fragmentation of the Symbian platform, the accumulation of technical debt and the fragmentation of knowledge within Nokia.

Flexibility only within the framework of projects. The teams gathered for a specific phone and the firmware was written for it. As a result, software problems solved by the team on one phone persisted on another model released at the same time as it.

Software used to be the strong point of Nokia phones. But then the platform from the 80s ceased to correspond to the times, technology stepped far forward. Besides, Symbian was no longer just Symbian. Let me remind you that the Symbian consortium was created by 4 companies: Nokia, Siemens, Motorola and Psion. And almost immediately Symbian was developed in several product directions. Then they were joined by a dozen more companies, including Samsung, LG, Panasonic, Ericsson. As a result, the platform became so fragmented that at one point 53 architects worked on it.

Android had a much less difficulty, which made it easier for external developers and vendors to work with it. By 2008, Nokia became the sole owner of the Symbian consortium, having spent a lot of money to buy out the shares of former competitors. But at the same time, the company lacked a clear Symbian development roadmap, the developers did not understand the prospects of how the platform would develop - and eventually went to Apple and Android.

Tough internal competition. Internal competition between teams was actively encouraged, which did not create a good ground for knowledge exchange. For comparison: Apple's structure was functional and gathered around a flagship product with a clear strategy. This structure was clear, manageable and allowed specialists to exchange information and work on innovations in their technological field.

Organizational short-sightedness. Nokia focused on short-term financial results that had an impact on the value of shares. The management did not agree to invest in any new product or service if it did not promise a quick revenue of 100 million euros. In addition, decisions on the launch were highly centralized and made at the very top. At that time, most initiatives were launched only with the approval of Jorma Ollila, Chairman of the Board and former CEO.

Stamination of management levels and opacity of the structure. This management style, promoted for decades, has formed a specific corporate culture of Nokia - the gap between departments, stratification of management levels and opacity of the structure. Some employees, working in one part of the company for many years, did not understand at all what was happening in another.

Technological myopia. The role of technical director in the company was abolished in 2007. This is a vivid illustration of the course of senior management, which was not interested in the technical side of its business.

Were there any chances?

In 2010, when sales of Nokia tubes began to fall, and former Symbian Foundation partners were actively switching to Android, Nokia finally woke up. And at once they launched not one, but two of their own platforms at once - MeeGo based on Linux and Meltemi for budget phones. In addition, work with the Windows Phone platform and experiments with Android were carried out.

This is how Nokia showed their understanding of flexibility. But, unfortunately, the effect was the opposite. Parallel development did not provide the necessary concentration of resources. There was a struggle for budgets, and the motivation of employees was low. And the Symbian division continued to work on new versions until 2012, although it would seem that everyone understands that there are no prospects. The result is sad. The Android phone never saw the light, the MeeGo project lasted a year, Meltemi - two years.

Unfortunately, even the change of CEO did not help the company regain its former positions. Stephen Elop, a competent manager and ex-employee of Microsoft, quickly understood the scale of the problems with processes within the company, strategy and Symbian platform. He began to actively change the company's culture, launched training and process change programs.

But he also had cons. Stephen, according to some colleagues, did not have a strategic vision of the future in the style of Jobs. In addition, he was close to Steven Ballmer, who held the position of Microsoft CEO at that time. It was said about him that he "looked at the world through Microsoft glasses".

In 2011, Elop announced that Nokia would make phones only on the Windows Phone platform, once and quite suddenly crossing out the efforts spent on Meltemi, which had already been installed on 17 Nokia models. In addition, Symbian was still alive. But Elop's statement in London at a conference in February 2011 sharply collapsed sales of a hopeless but still income-generating platform. It was such a dramatic decision that it was reported personally to the Prime Minister of Finland Mari Kiviniemi the night before the performance. It had such an inflent on the Finnish economy. First of all, mass layoffs - about 20,000 high-paying positions in the hi-tech sector were closed for several years. It's just a disaster for a relatively small country.

We all know the end of history. The entire Nokia mobile division was sold to Microsoft. For some time, the giant from Silicon Valley tried to win the market with the Lumia line, but eventually abandoned the unpromising direction. After some time, Nokia began to make phones again, but it was just a shadow of what the company once was. And in 2023, it was announced that the Nokia brand is leaving the mobile phone market for the second time.

What conclusions can be drawn from all this

The first one is disappointing. Most companies are not ready for self-disrupt. This is especially difficult for large companies: they have great inertia, obligations to shareholders and high complexity of internal structure. As practice shows, it is often easier to build a new company nearby than to transform an old one.

The second is Nokia Agile Test focuses only on the team level. At the same time, the history of Nokia is a vivid example of a situation when management does not adhere to the values of the Agile manifesto: there was no cooperation between business and IT, no attention was paid to technical perfection, and the principle of simplicity fell victim to corporate interests. Therefore, at the time of the described events, Nokia was not the flexible company it considered itself to be.

Third, it is important to correctly define the product, gather flexible teams around it, as well as set common goals and help teams cooperate. Steve Jobs at one time focused specialists on a single product - the iOS platform and devices on it. Thus, the whole company had common clear goals. At the same time, Nokia considered each individual model, at most a line of phones, as its product, and assembled a matrix structure around them. As a result, the teams did not focus on the overall strategy. On the contrary, there was a competitive struggle between them for resources.

Agile approaches allow companies to quickly learn and change direction. Nokia's problem was not that they did not know how to adapt, but that the management did not see the need for it until the last. Given the engineering skills, experience and resources of the company, the Nokia ship could change its course. But the decision was made too late.