Nokia lost out to Apple and Samsung, even though company management knew well in advance of the threat.DADO RUVIC/Reuters
KARL MOORE – This is Karl Moore of the Desautels Faculty of Management at McGill University, talking management for The Globe and Mail. Today, I am delighted to speak to Quy Huy, who is a professor at [international business school] Insead in France.
Quy, one of the great success stories back in the 2000s was Nokia. Just a worldwide leader, yet it came into trouble.
What exactly happened with Nokia?
QUY HUY – The Nokia executives, thanks to very, very sharp market indications, knew very well of the threat that was coming from Apple and Samsung. They knew that, and they were so alerted and scared of it that they pushed [their] organization to work much faster in order to develop the same products to match the iPhone because they knew enough in advance what the iPhone would be doing, and they knew it would be market disruptive and Nokia should be able to match the product.
So by pushing, they were putting a lot of pressure – we talked about the notion of fear and pressure in commanding styles – on all the vice-presidents of all the groups who do the development of software and hardware inside of Nokia to work faster in developing products. So they were asking these people, "Do you think that we will be able to match Apple two or three years from now?" And under the fear factor, most of these people said, "Yes, we would," because there was a big line, as you know, that failure is not an option.
You cannot say no, because in their organization the CEOs gave us the report of the account, and as a vice-president, if I said no, the CEOs and executives would say, "If you don't think you can do it, then we will find somebody else who can do it. There are a lot of people who would like to have your jobs. You are very highly paid for so you better push your people to do that."
So there was a lot of pressure, and because people felt this pressure, they had to give optimistic reports to the senior executives. So the senior executives, by listening to those optimistic reports that they would be able to match Apple, put even more pressure on those vice-presidents to work even faster to develop products.
That created, as you can see very easily, a vicious cycle.
Now how do I connect that to emotional capital? Respectful authenticity. There was no respectful authenticity, it was inauthentic information. Instead of actualizing content, it was about fear. Instead of deserved pride, it was about shame tactics.
All of these collective emotions and negative emotions can exert, and produces inevitably all those harmful behaviours that collectively can lead organizations to sink within three years.