In 2007 Nokia is the leader in mobile phones and one of the strongest brands on earth. CEO Olli-Pekka Kallasvuo and other top executives are radiating with confidence. Meanwhile, in Cupertino, California, Steve Jobs is putting the finishing touch to a new gadget called iPhone.
When the iPhone hits the market, Nokia’s leaders do not need long to grasp the signifcance of the event. The smartphone will change everything. Countering the threat will be tough. The Finnish giant is strong in mobile technology but not so much in operating systems and applications, which is what makes a smartphone smart.
Nokia’s leaders hesitate to speak out about the significance of the smartphone threat. Doing so would radically tilt Nokia’s image, from undisputed leader to that of feeble challenger, and one with its hands tied behind its back. Kallasvuo and his team are unsure about Nokia’s ability to develop a viable smartphone, and they realise that the financial markets are likely to reach the same conclusion. Nokia’s reputation and share price could quickly suffer. The decision is made to downplay the significance of the smartphone.
Externally and internally, Nokia’s leadership team frames the smartphone as a typical niche product, unlikely to become mainstream. While Nokia buys itself some time by taking this position, it also puts itself in a difficult spot. Now it has to keep investing in its existing line of ‘not so smart phones’ as if nothing has happened. Second, it needs to develop its own smartphone, which – besides massive financial and human resources – requires a set of technological skills it does not possess.
Nokia’s middle managers, kept in the dark about what is really going on, soon find themselves under mounting pressure to deliver new products at impossible deadlines. They are terrified by the brutal reputation of Nokia’s leaders who often shout and threaten to fire or demote those who fail to deliver. Nokia’s status-sensitive culture makes things worse. Middle managers are keen to deliver good news and demonstrate ambition as a bad standing is easily acquired, something that inevitably results in loss of resources, demotion or worse.
Afraid of disappointing their bosses, Nokia’s middle managers start over-promising and under-delivering. Receiving overly optimistic reports on progress, top management is unaware of delays and quality issues. The quality of Nokia’s high-end phones starts to gradually decline, and worse, the intense efforts to develop a so-called iPhone-killer are going nowhere.
In 2011, the newly appointed CEO Stephen Elop decides that Nokia will be better off outsourcing software and he forms an alliance with Microsoft. The market value of Nokia declines 90% in six years. Microsoft ends up buying Nokia’s phone business in 2013.
“Nokia’s middle managers, kept in the dark about what is really going on, soon find themselves under mounting pressure to deliver new products at impossible deadlines.”
Despite its leadership position, resources and technological prowess, Nokia was brought down because
of an extremely poor emotional climate. Nokia’s undoing serves as a poignant illustration of how blocked communication lines can undermine an organisation’s agility, which often proves lethal in today’s fast-changing business environment.
Nokia’s internal communication breakdown is far from unique. Similar patterns were at play in many other corporate debacles such as the scandals at Volkswagen, Wells
Fargo and Enron. All too often it seems that top management, willingly or unwittingly, turns a blind eye to the proliferation of silence, undercutting any chance of timely course corrections.
We tend to see most of these cases as spectacular incidents, caused by the proverbial rotten apple in the basket. Research suggests however that silence is in fact a far more common problem than we usually imagine. In a groundbreaking study, Milliken et al. found that 85% of a sample of employees from an array of industries had experienced at least one situation where they felt they could not speak up. Almost a quarter said they generally felt uncomfortable to speak to their boss about problems or concerns.
The case history, reconstructed by Vuori and Huy, does not mention the role played by Nokia’s communication department, a fact that might be telling in itself. Was internal communication even aware of Nokia’s broken emotional climate? Did they know communication between middle and top management had come to a halt? Would it have made a difference if they had? Who knows how the story would have played out if a trusted adviser would have found a way to raise the issue with Kallasvuo.
This brings us to the question of ‘who we want to be as business communicators when we grow up’, so to speak. Do we prefer to stay in the relative comfort and safety of representing ‘his master’s voice’, always busy shaping and controlling the official narrative? The story of Nokia points to a great opportunity
for internal communication to break out of its narrowly defined role of internal spokesperson and creator of messages. The profession could make a far more meaningful contribution if it were to shed its myopia and redefine its purpose. Embracing a broader focus on the communicative abilities of the organisation as a whole could make a world of difference.
“The profession could make a far more meaningful contribution if it were to shed its myopia and redefine its purpose.”
An organisation is a collective of people working together to accomplish shared goals through myriad networks. The way these networks are organised, and the richness of the conversations that take place within and between them, define an organisation’s vitality and ability to adapt. This is the perspective of the ‘communicative organisation’. It is based on the insight that in the social era, employee engagement, strategic alignment and the organisation’s ability to adapt to its environment are all built on effective conversations, internally and externally. And it is completely at odds with the traditional input/output-model of communication which has dominated the profession since its inception.
Building a communicative organisation shifts the focus towards creating ‘rich’ conversations on all levels and a healthy pattern of communication flows, upward, downward and lateral. This cannot be accomplished without creating the right climate first, a climate in which people feel trusted, free to speak up about their ideas and concerns and to question their own assumptions as well as those of their colleagues and managers. If helping organisations embrace the social era is not the purpose of internal communication, then whose is it?
BIOGRAPHY – Marc B. do Amaral
Marc B. do Amaral is the owner of SPUP, a Netherlands- based consultancy that helps organisations have better conversations.