Unlearning Business Innovation
Once upon a time, not all that many years ago, Nokia—the Finnish telecommunications company—was the King of the World when it came to mobile phones. After developing the first GSM mobile network (with Siemens), and introducing the first commercially available mobile phone (the Nokia 1011, in 1992), Nokia was at the forefront of the mobile phone market by 1998, turning the lights out on electronics titan Motorola to become the largest manufacturer of mobile phones in the world. And there it would sit, happily ever after.
After growing annual revenue from €6.5 billion in 1996 to €31 billion in 2001—mostly on the back of its rapidly expanding mobile phone business—and with 30.6 percent market share (over twice the size of its nearest competitor) and market capitalization close to $250 billion, Nokia’s dominant position and sales began to fall in the late 2000s. By 2012, the company’s share price had slipped below $2 (a 95% drop from its peak), and Nokia flirted with bankruptcy. Finally, in 2014, Nokia sold off its money-losing mobile phone business to Microsoft, retaining its still-profitable telecom network business.
What went so wrong so fast for Nokia?
In a word, the iPhone, which was introduced to the world in 2007. But there was far more to Nokia’s colossal crash than just the birth of Steve Jobs’s electronic bundle of joy. For a company that could seemingly do no wrong, there was actually a lot going very wrong within Nokia’s leadership team.
According to Frank Nuovo, former head of design at Nokia, the company became a victim of its success.
Says Nuovo, “I look back and I think Nokia was just a very big company that started to maintain its position more than innovate for new opportunities. All of the opportunities were in front of them and Nokia was working on them, but the key word is a sense of urgency. While things were in play there was a real sense of saying “we will get to that eventually.”
But the truth was they didn’t, and so the endless innovation streak dating back to their humble beginnings as a paper mill before moving to rubber, electric cabling, and eventually electronics in 1960 came to a crashing end. Nokia stopped breaking new ground—settling for the security and certainty of their comfort zone. They stalled on taking chances instead of pushing their knowledge boundaries and continuing to seek new avenues of growth and impact, as it had so many times before.
By 2010 (the same year the iPhone 4 was released), Nokia’s leadership team realized the company was in deep trouble. They threw money at the problem, in the process spending $5 billion a year on research and development—30 percent of the entire mobile industry investment at the time. But there was no clear direction, nor accountability for where the business was going.
On November 3, 2013 Nokia CEO Steve Elop ended his speech announcing the sale of Nokia’s mobile phone business to Microsoft with these fateful words: “We didn’t do anything wrong, but we somehow lost.”
But did they really not do anything wrong?
Online retailer Amazon—with 2016 revenue of $135.9 billion, an increase of almost 20 percent over the previous year—is an entirely different story. Founder and CEO Jeff Bezos understands that for his company to succeed over the long run, he needs to continually reinvent his perspective and his business, and to constantly fight the complacency and fear that creeps into most every large organization today. What began in Jeff Bezos’s garage as an online discount bookseller, has mushroomed into a tremendously innovative and fast-growing company that is disrupting every market it gets into.
Bezos so believes in the importance of his company never standing still that he named the Amazon building in which he works “Day 1,” to remind him (and Amazon’s more than 500,000 employees) that every day at Amazon is Day 1. Presuming there is a Day 2 is not acceptable. According to Bezos, “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
In addition to endeavoring to make every day Day 1, Amazon has adopted a set of 14 leadership principles to help guide employee decision making and behavior. Several of these principles are specifically designed to discourage employees from settling for the status quo, when what is needed are new ideas and consistent and bold action.
Learn and be curious. Leaders are never done learning and always seek to improve themselves. They are curious about new possibilities and act to explore them.
Amazon employees intuitively know that what brought them success past is unlikely to bring them success in the future. Jeff Bezos is constantly curious to discover what they are not doing well, and to get better. The company’s employees are driven to reconsider and rethink everything they do, to constantly improve and make products and processes better, and to never rest on their laurels.
Think big. Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers. It’s only by thinking big that we can achieve big results.
A big vision inspires purpose, provides direction, and encourages growth. It challenges leaders to think differently, unlearn and let go of the past to achieve extraordinary results—often using new, unknown, and unfamiliar ways to get there. This requires embracing uncertainty and leaving their comfort zone, knowing there is a supportive environment to encourage leaders to realize their aspirational results. However, Amazon employees also know that while thinking big is crucial, they must start small and learn fast—taking steady steps to reach their objective.
Bias for action. Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.
Success requires taking risks and taking action—both work hand in hand to lead to extraordinary results. Leaders know they must try numerous experiments and learn quickly from their mistakes, and their successes, to achieve their aspirational vision. As the speed of business continues to increase, so too do companies—and the men and women who lead them—need to move faster, learn faster, and act faster. There’s no time nor empathy to sit back, bask in your glory, and let complicity settle in. Each lesson learned feeds the next cycle to unlearn, and propels us forward to further of growth and wider impact.
Amazon’s leadership principles are more than just words—they are a mindset and behaviors lived and breathed throughout the organization, most especially by Bezos himself. When Amazon launched its Fire Phone in 2014 to compete against the iPhone and Google Android-based phones, it was a big, bold bet for the business—one that completely bombed in the marketplace, resulting for a loss to the company in the hundreds of millions of dollars.
Industry analysts jumped at the opportunity to kick Jeff Bezos off his lofty pedestal and predict the coming end of Amazon. Yet, Bezos’s response only served to further demonstrate the mindset and behaviors of Day 1 thinking within the company: “If you think that’s a big failure, we’re working on much bigger failures right now. And I am not kidding. And some of them are going to make the Fire Phone look like a tiny little blip.”
In the case of Nokia, Day 1 was long past when Apple dropped the iPhone into the marketplace, and the results were as Bezos predicted: irrelevance, excruciating and painful decline, and ultimately, death. As Bezos says, What we need to do is always lean into the future; when the world changes around you and when it changes against you—what used to be a tailwind is now a headwind—you have to lean into that and figure out what to do because complaining isn’t a strategy.
Highly effective leaders are constantly searching for inspiration and for new ideas. But before any real breakthrough can happen, we need to step away from the old models, outdated mindsets, and behaviors that are limiting our potential and current performance. We must stay curious, get uncomfortable and have courage to unlearn much that brought us success in the past to find continued success in the future.