Can a company manage itself to death? Disruptive innovation and Nokia

James E. Lenz, Xiaolei Zhang, Marianne Hörlesberger (Speaker)

Research output: Chapter in Book or Conference ProceedingsConference Proceedings with Oral Presentationpeer-review

Abstract

Can a company manage itself to death? The situation of Nokia over the past year offers insights into management practices that can open a company to being blindsided by innovation. One year ago Nokia was admired as one of the best-managed companies in the world and a year later they have lost their market prominence and future direction. In February 2011 Nokia CEO Stephen Elop broadcasts a companywide presentation dramatically illustrating that the company and all its employees "must decide how we are going to change our behavior". The analysis of Nokia´s management practices is divided into three separate views of the situation. The first reviews the challenges of New Product Development (NPD) when using the most popular business management practices of large firms today. The second defines Disruptive Innovation and illustrates that the Nokia situation is a model example of this business situation. And the third aspect investigates Knowledge Management metrics to see if quantifiable data was available to Nokia to forecast the rapid loss of market leadership. These analyzes are used to determine what was missing from Nokia´s management practices. Of significance among all these comparisons is the importance of people, more than data rich analysis, for completely new types of problem solving such as new-to-the-world product developments. Nokia, like most large companies, applied all the best management practices to their complete NPD portfolio. Product Creation ideas were in their portfolio but they did not get the decisions to support their introduction into the market. Through an understanding of disruptive innovations and specific knowledge management metrics related to mobile phones it is evident that data rich processes are not the foundation for breakthrough innovations. Knowledge Management metrics for the case of Nokia indicate that as Apple introduced smart phones they did not follow the same innovation management model that Nokia had used to unseat Motorola. As a comparison this issue of innovation management is related to problem solving, specifically the differences between puzzles and mysteries. The major difference in the process for solving mysteries is the dependence on people. Including management practices that rely on people and experience rather than always a data rich analysis process must be a part of a company´s NPD management practices when in a market that is suspect to disruptive innovations.
Original languageEnglish
Title of host publicationIAMOT 2012 Taiwan - Managing Technology-Service Convergences in the Post-Industrialized Society
Number of pages18
Publication statusPublished - 2012
EventIAMOT 2012 Taiwan - Managing Technology-Service Convergences in the Post-Industrialized Society -
Duration: 18 Mar 201222 Mar 2012

Conference

ConferenceIAMOT 2012 Taiwan - Managing Technology-Service Convergences in the Post-Industrialized Society
Period18/03/1222/03/12

Research Field

  • Former Research Field - Innovation Systems and Policy

Keywords

  • New product development
  • R&D management
  • Nokia
  • Disruptive Innovation
  • Product

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