One thing that I learned working in startups with 5 different CEOs is this:
CEO sets the tone.
Every little things that CEO says or does have enormous impact on everyone in the company. Reason is really simpile. It's because CEO is the top boss. Everyone looks for type of decisions that he or she makes and tries to emulate. Everyone takes cues from CEO as to what behavior will be awarded and what won't be.
Therefore it is critically important role for company's success. Depending on how CEO interacts with executive staffs and makes decisions, it will empower executive team, directors and every managers in the company or stifle them.
When I read accounts of what happened at Nokia, I got reminded how important CEO's role really is. WSJ ran an article about how Nokia created smartphone way earlier than Apple and spent much more resources on R&D than Apple, yet it was not able to lead smartphone market. Even worse it could not even recognize the threat that iPhone posed to Nokia's business when iPhone launched.
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| Guess when this Nokia smartphone was released. It was launched back in 1996. That's 8 years earlier than PalmOne Treo 650. |
WSJ article highlights as cultural ailments at Nokia, and they can be grouped as 5 separate problems:
1. No single person with responsibility, i.e. no clear role
"In Nokia's case, the meeting involved gathering about 100 engineers and product managers from offices as far-flung as Massachusetts and China in a hotel ballroom in Mainz, Germany, two people who attended the meeting recall."
2. Culture of politics
"'You were spending more time fighting politics than doing design,' said Alastair Curtis, Nokia's chief designer from 2006 to 2009. The organizational structure was so convoluted, he added, that 'it was hard for the team to drive through a coherent, consistent, beautiful experience.'"
3. R&D should drive the product, not cash cow
"After Olli-Pekka Kallasvuo, Nokia's former chief financial officer, took the helm from Mr. Ollila in 2006, he merged Nokia's smartphone and basic-phone operations. The result, said several former executives, was that the more profitable basic phone business started calling the shots.
'The Nokia bias went backwards,' said Jari Pasanen, a member of a group Nokia set up in 2004 to create multimedia services for smartphones and now a venture capitalist in Finland. 'It went toward traditional mobile phones.'"
4. Allowing inaction rather than action to take more risk
"'What struck me when we started working with Nokia back in 2008 was how Nokia spent much more time than other device makers just strategizing,' Qualcomm Chief Executive Paul Jacobs said. 'We would present Nokia with a new technology that to us would seem as a big opportunity. Instead of just diving into this opportunity, Nokia would spend a long time, maybe six to nine months, just assessing the opportunity. And by that time the opportunity often just went away.'"
5. Letting past failure stop innovation
"...the company [Nokia] started spending billions of dollars to research mobile email, touch screens and faster wireless networks.In 1996, the company unveiled its first smartphone, the Nokia 9000, and called it the first mobile device that could email, fax and surf the Web. It weighed slightly under a pound...
After Olli-Pekka Kallasvuo, Nokia's former chief financial officer, took the helm from Mr. Ollila in 2006, he merged Nokia's smartphone and basic-phone operations. The result, said several former executives, was that the more profitable basic phone business started calling the shots."
All these problems can only be solved at the top. It is not possible without capable board members and CEO who can set the right tone for the entire company to innovate and try new ideas.
Take a look at your boss and your boss' boss. Are they open to new ideas? Are they taking responsibility of making decisions and acting on their discretion? Are they taking risks by innovating? If any of these are not true, chances are high that it's coming all the way from the top.
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