Was Nokia's Elop history's worst CEO? Stephen Elop's decision to bet the farm on Windows Phone makes him the world's worst CEO, according to a new book published this week. Operation Elop by Pekka Nykänen and Merina Salminen interviews former Nokia staff and arrives at its judgement based on the decline in Nokia's market value from 2010 to 2013: from €29.5bn to € …
He walked away with millions and a divorce. That's a typical CEO.
Seriously though, Nokia had crippled its ability to deliver long before Elop arrived. It's only when serious competitors came on the scene did Nokia realise the dire situation they were in.
His memo was a complete fucking disaster, but the issues described in it were not his doing.
Nokia's pre-Elop mismanagement was to blame for a lot of their problems, but Elop did everything he could to hasten the demise.
The burning platforms memo was the biggest act of corporate suicide since Gerald Ratner described his own jewellery as a bit shit.
In a lot of cases there are a faceless group of people that never get the blame and deserve a share of it - that's the boards of these companies. Nokia's board should be had up on charges for overseeing such a disaster for shareholders and employing Elop in the first place.
"The burning platforms memo was the biggest act of corporate suicide since Gerald Ratner described his own jewellery as a bit shit."
Yes, he should've been fired right there, on that moment, for melting down 50% of Nokia on the market in ONE F'N DAY. But then again, the board was full of clueless idiots who went along all the way with this incredible hostile corporate value destruction.
"Yes, he should've been fired right there, on that moment, for melting down 50% of Nokia on the market in ONE F'N DAY. "
While I agree with your assessment, who on the board would realistically have pulled that trigger? Firing a brand new CEO with clearly no planned replacement strategy would have only doubled down on the share nosedive, and then the firer has then just committed the same offence as the firee.
Ironically picking a direction and sticking with it come hell or high water was probably at one time the best strategy for Nokia, unfortunately that time was months ago and definitely long before they were brought low enough to have to accept the Devil's coin from MS. That just left them with outsiders effectively setting policy for them.
While I agree with your assessment, who on the board would realistically have pulled that trigger? Firing a brand new CEO with clearly no planned replacement strategy would have only doubled down on the share nosedive, and then the firer has then just committed the same offence as the firee.
I'll say a name here, and you'll know what I'm talking about.
Leo Apotheker.
While HP might not be swimming in the McDuck Moneybin's worth of $$$, the decision to axe Leo after his stupid gaffé is probably the reason we still have an HP vs. having it go down the acquisition route which befell good old companies like DEC, Tandem, or Sun Microsystems. See the difference:
- Elop sends the Burning Platforms memo and kills pretty much Nokia's value overnight. Board keeps him. Nokia Mobile is no more, now Borged by Microsoft and the way things are going, that's where it will die.
- Leo sends the Burning PCs memo, causing an instant 25% drop in HP shares. The board axes him about 1 month after this stupid, stupid move and backtracks on it. HP is still alive.
Operation Elop debunks the weird conspiracy theory that Elop had been brought in to sell the company back to Microsoft cheaply
Actually, I've seen this happen. A CEO is brought in by the board with the (undocumented) understanding that he will make questionable decisions that lead to selling the company to a specific corporation.
Unless you are specifically told what is going on, this is completely impossible to prove as absolutely nothing is documented to prove this. What does happen is that the CEO and certain other complicit managers walk away with millions six months or more after the acquisition, usually covered under money that is kept in escrow for undisclosed purposes.
On the surface it all looks very legal because you can't prosecute intent.
A new CEO doesn't take a major action like canning the future development of an at the time market leading smartphone OS without the board knowing about it and approving (at least tacitly)
How could they fire a CEO for taking a course of action they approved just because the market response to it was pretty negative? That would be admitting they screwed up, and the shareholders would be demanding their replacement. Of course, the shareholders should have done so anyway!
That'd be why the graphs of whatever you care to mention kept going up till the burning platform memo, when devs abandoned Nokia followed closely by customers. That's why he went with WP although neither devs nor customers followed him. That's why the N9 got rave reviews but was sold as little as possible and in hardly any of the markets which mattered. That's why he got a clause paying him millions if he sold the handset division. And that's why he made Nokia X just to force MS' hand after the first attempt to sell Nokia to MS failed.
You're ignoring how mobile operators purchased phones. The orders were placed at least six months ahead of introduction, so reported sales are more to do with buyer sentiment six months previously, rather than right now (Nokia sold 99% of its product to mobile phone operators, not to users).
The drop in sales is down to the botched N8 introduction, not the Windows memo. I believe that the cause of the memo, and the failure of the N9 to secure distribution goes back a year to when Nokia repeatedly delayed N8, then released woefully un-finihsed software on what should have been a blockbuster device. (Remember that its originally-planned launch date predated the iPhone 4)
N8 burned a lot of operators: it was not just horribly late, but when it did arrive it had very high dissatisfaction rates and returns rates from customers. I had one, and I remember it being awful until the first ("Anna") software arrived eight months after I bought it. It only reached a par with Android/iOS with the "Belle" release in February 2012; a sixteen months after I bought the phone. (But realising that lots of users don't ever update their phone firmware, and lots of users change their phone more often than I do, you can see how badly this product damaged Nokia).
From a developer point of view, the story was equally confused: Qt wasn't fully capable on these phones until later in 2011, but realistically, it was only the Belle release in 2012 with Qt 4.8 that gave developers a painless way to write modern applications, but by then sales were already falling. N8 and 808 PureView made up 70% of my app sales (utilities, not photo related), but my sales dried up sharply in 2013 as those phones came up to contract renewal time, and there was no high-end Symbian device to take their place.
Had N8 been a success, operators would have leapt on N9, as it's a beautiful device, and the first phone to be "better than an iPhone" in terms of aesthetics (the gloss-white version in particular is a thing of beauty). But N8 was a disaster, and the operators were not willing to give Nokia another chance to sell them a pup (it didn't matter than N9 wasn't a pup in the end). Even then, there was a deeper problem to deal with: N9 was a stop-gap, because the "MeeGo" software was nothing like as ready as they let on - in the end N9 was Nokia's UI ported back to Nokia's old Maemo platform from the N900. Had N9 worked out, I suspect Nokia would have still told Intel/LinuxFoundation to get stuffed, and instead put their R&D money into bringing Maemo forward (probably eventually building it on AOSP's kernel)
But all that's "might have beens". The truth was that with no appreciable sales for N9 to pay for its completion (a couple of Australian and Central European operators took it up, but nothing like what it needed for success), Nokia needed something, fast, but their internal R&D could only deliver very, very slowly.
Well, more like, sticking to their way of making phones - development teams "competing" with each other for ever more lofty and remote goals, using SymbianOS versions obsolete by the time Nokia set the project up, then burdening it with irrational half-way-wrencharound managerial politicing ...
... and they held on, after the enemies closed in, surrounded them, attacked from all sides, till the last bullet, the last drop of blood, the final breath ...
[ that said, Godwin's law ... let them and the thread rest in piece ]
Qt 4.8 couldn't have fixed anything, Elop had burned Nokia's platforms by that time.
If anyone was ever in doubt after the burning platforms memo, all they needed to do is look at the his CV and they'd have known what was going to happen. And sure enough, it did. It's not a conspiracy theory, it's putting two and two together.
@ Andrew Orlowski
I suppose you have not read the book, nor have I, but as far as I know the authors do write that there are no evidence of Elop being a mole. The burning platform was a silly thing though. Nokias problems started before Elop, that is why he got the job. Personally I think he overestimated Microsoft also as he left his family in Canada I think he never intended to stay on for any lengh of time at Nokia. I find it very difficult to consider him a good choice for Nokia and I would blame the board for a stupid decision, also McKinsey & Company was an odd choice by the board as it is very close to Microsoft. Also they claim that Nokia got a better offer from Google.
The header at Tietoviikko.com is this “Stephen Elop ei ollut myyrä vaan tunari” which translates to “Stephen Elop was not a mole , but a screw-up”.
http://www.tivi.fi/uutisia/stephen+elop+ei+ollut+myyra+vaan+tunari/a1017750
But as they say there is always several reasons for a catastrophe.
Of course Nokia's smartphone market share had fallen, the smartphone market itself had grown.
The figures (60% to 35%) differ from Tomi Ahonen's. You might say he's not impartial but he makes a very convincing argument.
"Erm, in a healthy business with products that people want, they'd have ridden that growth and maintained market share. They didn't."
... or perhaps not? This is precisely Apple's situation, as we are endlessly advised here on the Register. It's harder than you think to manage to ride the market growth and maintain the same market share - it's pretty much impossible I think.
It's a bit of crap consipiracy. I want to buy this shiny company. You go in and bugger it up for me, then they'll sell me it cheap. By which point it'll be a knackered rubbishy company of course...
There's another huge argument against the conspiracy theory. And it's the clincher, so far as I'm concerned.
In order for it to be a conspiracy for MS to eventually eat Nokia, you have to assume that Steve Ballmer is competent, fiendishly clever, and a master or manipulation. You at the back, stop laughing!
Exactly MS has paid a fortune and only got a licence for IP, a brand they will stop using, staff that they have laid off and factories that are closing.
At the end of the MS is losing a fortune, getting really nothing and Nokia got a fortune for a Zombie division.
Any conspiracy must be Nokia's not MS's
Any conspiracy must be Nokia's not MS's
You can be certain that some shareholders profited very handsomely from the deal, which was in cash. Microsoft was able to use some of the tons of non-US cash for the deal that would have otherwise been subject to tax if it had been repatriated and paid to shareholders as dividends. An even more egregious example of an elaborate tax avoidance scheme was the Skype purchase where Microsoft bid against itself to spunk $ 8 bn on a loss-making business with little or no IP. At least with Nokia it got some tangible assets that it could dispose of.
In these deals it's almost always customers and employees who lose out.
Assuming the conspiracy is for that aim.
What if the aim is to remove a few smartphone operating systems that are not subject to the patriot act?
Alternatively handing the chunk of market to Samsung who paid patent royalties on Android to Microsoft, was hardly a bad thing for Microsoft.
>remove a few smartphone operating systems that are not subject to the patriot act?
You do know Intel was fairly involved with Meego right? Based on my experience on how they manage complex software projects that is some of the reason it and its derivatives haven't exactly set the world on fire.
@Andrew Orlowski
Who in their right mind burns the current platform without having the "next" platform ready? I mean on devices ready to be shipped ? Nokia and RimBB CEO's, apparently ... I do think Elop is too stupid to have come up with a conspiracy plot, though, and am really disappointed MS did not choose him as CEO.
The truth is somewhere between the two. Nokia had got their phone business into a complete mess, and could not respond to the newer format from iOS and Android quickly enough. The outsourced Symbian development and maintenance to Accenture who did accelerate the improvement, but nobody had the stomach for a rehash to EKA3. Meanwhile the N9 Linux based phones showed some promise. But Nokia were the wrong side of the drag curve, and a competent CEO was required to minimise damage whilst the downward momentum was slowed. Unfortunately they got Elop who accelerated the downward momentum.
"I believe that Nokia can get back into the phone business in 2016"
They may be allowed to by the end of a non-compete clause, but those clauses are standard fodder that lawyers always insert in commercial agreements.
If Nokia wanted to make phones they wouldn't have sold the phone business. As it is, their board recognised that only two companies were making money out of hardware (and arguably the Company That Shall Not Be Named makes the money on software, and just happens to insource hardware design). If margins are so tight that most other entirely competent hardware makers are losing money, finding somebody to take your own ailing phone business off your hands (and then them paying you for it) is a master stroke of Finnish and or Canadian genius. Although they were admittedly helped by Microsoft's strategic drift, and the fact that MS had a huge cash pile burning a hole in their trousers.
In this view of the world, the words "Trojan horse" do apply, but instead of Elop himself being that horse, in fact the Nokia phones business that was the Trojan horse and Elop's just hauled it into the Redmond fort, where it will turn out to be a big bag of trouble.
I still wonder why such SBT (Stellar Business Talent) as people like Elop\Diamond\Whitman et al undoubtedly are, based on their pay rates. How come they are always working for someone else as an employee? Surely they could make much more money leveraging their skills and starting their own companies.
If I go into a bank and ask for a sizeable loan they want the keys to my house, Do these SBTs lodge their house keys as surety that they will do a good job whilst they gamble with other peoples farms
Or is that their primary skill is to negotiate a good package for themselves and in fact SBT is short for Senior Bullshit Thrower..
"It is a truth universally acknowldeged that a CEO with a vision is the most dangerous employee in the company" 'pologies to J Austen
C level "talent" is hired by the board in order to run the company. The board are given power to do this by the shareholders, who do in fact own the company - it's their farm.
So when Elop comes in and "bets the farm", you are complaining that it is not his farm to bet, how dare he. He is the chosen instrument of the owners, who have chosen to bet their farm via a proxy. If he screws it up, the people who chose him lose their money.
I agree wth your description of the legitimacy of the way CEO's etc are appointed. Plus of course board members need to be regularly re-elected ( even if only by a show of hands).
My point is that the SBT (as I called them) are regularly feted as examples of excellence. But they do not run the same risks as the Jane & John Doe running the sandwich shop outside their corporate headquarters. Where Jane and John may well have remortgaged their homes and are running the risk that no matter how hard they work if it all goes titsup they could be on the street.
In a lot of cases the only downside the SBT seem to run is they may suddenly have more time to to count last years bonus..and not be on the cover of Business Week this year.
Yes, unsurprisingly, people who both own and run their own business have more to lose than someone who simply runs someone else's business.
If Jane and John decide not to actually run their sandwich shop, and ask Bob to do it instead, paying him a wage and live off the profits he produces, then Bob is risking nothing and only Jane and John are risking their business. That's fine though because it is Jane and John's business how they run their business.
With the perfect clarity of hindsight, the writing was on the wall for Nokia when it gave its reaction to Apple's announcement of the iphone; what amounted to the equivalent of a corporate snort of derision suggesting they had not the slightest clue of what the future held, nor - perhaps more importantly - the speed at which things would pan out. They just didn't get that the phone was no longer going to be the main focus of the device.
I also find their decision to go with windows phone hard to understand. Microsoft had been tinkering with handheld devices for a long time, back into the 90s I think with Compaq devices, and to my mind had just never really understood that the format had its own strengths and weaknesses and was not merely a small desktop. The early examples of Windows phone really ought to have given them pause for thought, later problems notwithstanding.
It was a great shame to see such an ignominious end for Nokia; in their day they made great phones that were a pleasure to use, and they 'got' usability when most others in the industry didn't. You can understand the shell shock for some, but they certainly weren't the first to fail to read the crystal ball correctly.
From some perspective, Microsoft understood better what a smartphone is than Apple and Google. For example the "candy icons collection" iOS and Android use as home screens are utterly useless and that design dates back to the Palm devices of many years ago.
At least MS understood the home screen needs to convey useful informations (since WinCE) to the user - and give fust access to them, and just not be a Fisher Price interface with a lot of colorful candies to collect for the joy of the average fanboy luser - which of course is happy to own a phone and show it to others, not to use it really.
Just, MS wasn't able to design a true usable UI for its devices until WP8, trying to backport too much the Windows desktop design (just to go the other way round with W8...)
From some perspective, Microsoft understood better what a smartphone is than Apple and Google.
I don't think so. In fact, they still don't understand it. MS idea is "Windows everywhere" and that's why they fail everywhere else.
...and just not be a Fisher Price interface with a lot of colorful candies to collect for the joy of the average fanboy luser
You are right on Fisher Price interfaces being bad. But MS did exactly that with WP7, and then hobbled their own desktop OS with it in Windows 8!
If anyone had a good idea on how to do a real smartphone UI, it was Symbian-era Nokia. In fact, most of the pre-iPhone smartphone UIs were pretty much good on giving useful information to their users.
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