Disclaimer:

As we were given carte blanche for

presentation of an essay in Leadership as
Management of Meaning I have modeled this
submission using the format of Harvard
Business Review articles/case studies, aimed at
both educating and entertaining the reader in
equal parts.






Leadership
as Management
of Meaning

Take-Home Exam

Oleg Soldatov

Date: 2013-06-05

Word count: 1999









WHEN LEADERSHIP FAILS:
A CASE STUDY OF NOKIA
UNDER STEPHEN ELOP
The discourse on leadership is often sustained through a perspective of a required set of qualities,
skills, competences, applicable instruments, which in their totality are deemed most likely to
contribute to making a good leader. However, taking a contrasting perspective is equally plausible.
Here, I will briefly explore a case study providing the food for thought about a leadership failure.
Take-Home Exam: Leadership as Management of Meaning // Oleg Soldatov Page 2
On May 7, 2013, during the Annual General
Meeting of Nokia shareholders, one of them,
Hannu Virtanen, talking to CEO Stephen Elop,
voiced the concerns of a large group of company
investors:
1

You're a nice guy ... and the leadership team is doing
its best, but clearly, it's not enough. Are you aware that
results are what matter? The road to hell is paved with
good intentions. Please switch to another road.
Indeed, the last three years of Elops reign at
Nokia can hardly be called a success. When he
was appointed the CEO in mid-autumn 2010,
2

Nokia was the world's largest handset maker
with a 30,8% market share (the nearest
competitor, Samsung, held a 20,1% of the
market),
3
with stocks trading above $10 per
share.
4
By the end of May 2013, its market share
was at record low 14,8%,
5
trailing far behind
that of Samsung and the company stocks were
valued around $3,5 per share.
6

What has caused such devastating effects and
how many hidden rocks awaited Stephen Elop
in his capacity of Nokias CEO?
STANDING ON THE SHOULDERS
OF GIANTS
Elop had to live up to the expectations set by
the previous CEOs, Jorma Ollila (1992-2006),
credited with t transforming the Finnish
company into the world's largest handset maker
7

and Olli-Pekka Kallasvuo (2006-2010), who
managed to keep the company in black
notwithstanding the growing pressures from
other handset manufacturers.
The latter, although being criticized for his
indecisiveness,
8
displayed a number of Level 5
leadership traits,
9
such as humbleness combined
with a vision.
10


Jorma Ollila Olli-Pekka Kallasvuo
In addition, Elop had to deal with the aftermath
of being selected over an internal Nokia
candidate, Anssi Vanjoki, Executive VP Mobile
Solutions, who had a 17-year-long career span in
Nokia, and was universally respected by the
employees
11
. He was the person behind picking
the Nokia tune the world's most widely used
piece of music as of 2009.
12


Anssi Vanjoki
ME NO SPEAK AMERICANO
Edgar Schein describes culture as one of the
most powerful and stable forces operating in
organizations.
13
Apparently, bringing a non-
Finnish CEO to a Finnish company was likely to
result in a whole range of problems rooted in
cultural differences. As Solomon & Schell put it,
like dialects in a language, each country is unique
and has its own way of expressing cultural
dimensions.
14
The US and Finland are far apart
on the axis of motivation/work-life balance: in
the US people tend to put more emphasis on
achievement and status by hard work, while in
Finland employees value their personal time and
activities at least as high as achievements and
status.
Take-Home Exam: Leadership as a Management of Meaning // Oleg Soldatov Page 3
In 2010 the Chairman of the Board expressly
stated that Elops cultural sensitivity to Nokias
Finnish heritage was among the reasons he was
chosen.
15
However, it must have been a press
flick to calm the investors about the appointment
of the first-ever non-Finn to run the most
important company in the Finnish economy
according to Jyrki Ali-Yrkk of a Finnish think-
tank ETLA.
16
The burden proved too heavy for
Elop, who had never previously worked in
Europe, let alone in Scandinavia (please refer to
Elops CV below).
Date Position Industry
Prior to
1992
Director of consulting for
Lotus Development
Corporation (US)
Computer
software
1992
1998
CIO for Boston Chicken in
1992 (filed for Chapter 11
Bankruptcy in 1998) (US)
Fast/casual
restaurant
business
1998
2005
Member of the senior
management at
Macromedia, CEO for 3
months in 2005 (US)
Computer
software
2005
2006
President of worldwide
field operations, Adobe
(US)
Computer
software
2007
2008
COO of Juniper Networks Networking
equipment
President of Microsoft
Business Division,
Microsoft (US)
Computer
software
Stephen Elops CV.
Source: Bloomberg
17
, own research
The situation was exacerbated by two other
factors:
there was a strong internal Finnish
candidate for the position of the CEO
(see above);
Elop had to immediately proceed with
unpopular decisions, such as cutting
thousands Finnish jobs immediately
after the start of his tenure.
18

THE ELOP EFFECT
Every smartphone is essentially a small
computer and when a customer interacts with
one, a piece of software called the operating
system (OS) is at the core of a user experience.
Developing an OS takes a lot of effort in terms of
both man-hours and expenditure. It is the
decisions of Stephen Elop regarding the
operating systems for Nokia phones that made
industry experts and general public alike scratch
their heads in disbelief and confusion.
In February 2011, Elop sent out an internal
Burning Platform memo to the employees of
the company. This document was later leaked to
the outside world and publicly supported by
Elop. In this memo, Elop was extremely critical of
Nokias internal practices, especially of its
smartphone operating system, Symbian, which at
that point was the most wide-spread mobile OS
in the world.
19
He also indicated his dislike of
MeeGo, Nokias another, yet-to-be released
operating system, co-developed with Intel. It is
worth mentioning, that the phones running
MeeGo were, at that time, about six months from
hitting the market.
20

"We poured gasoline on our own burning platform. I
believe we have lacked accountability and leadership to
align and direct the company through these disruptive
times. We had a series of misses. We haven't been
delivering innovation fast enough. We're not
collaborating internally. Nokia, our platform is
burning."
21

Displaying features of pseudo-transformative
22

leadership, Elop focused on staff insecurities and,
arguably, unreal danger of Symbian falling
behind competition. His one size fits all
solution was to abandon both Symbian and
MeeGo in lieu of a strategic partnership with
Microsoft and a switch of Nokias smartphone
products to Windows Phone OS.
23
Interestingly,
in February 2011 Nokias phones running
Windows Phone OS were still at an early
prototype phase and not fit for a public release
for at least another half a year.
In less than a year, the development of an
alternative, simpler
24
operating system, Meltemi,
was also put on hold indefinitely
25
and personnel
Take-Home Exam: Leadership as a Management of Meaning // Oleg Soldatov Page 4
working with Nokias in-house software
development was promptly let go
26
under the
premise of cost-cutting measures.
But let us get back to the immediate aftermath of
the Burning Platform memo. Tomi Ahonen, an
ex-Nokia executive and bestselling author,
characterized the conduct of Elop as combining
the features of two great leadership flops of the
1980s-90s: the Osborne Effect and the Ratner
Effect.
Back in 1981-1982 the Osborne Computer Corporation
was enjoying robust sales of its personal portable
computer, the Osborne 1. In 1983, founder Adam
Osborne preannounced several new next-generation
models, touting how much better the new machines
were comparing to their predecessor. As these
computers were yet to be manufactured, prospective
customers would have to wait before getting their
hands on one. Immediately after the announcement
sales of the existing Osborne 1 plunged and revenue
dried up to the point where the company was forced
into bankruptcy. Currently, the effect where the early
announcements of unfinished products lead to
plummeting sales is known as the Osborne effect.
27

During the public speech on April 23, 1991, attended by
over 6000 business people and journalists, Gerald
Ratner, a co-owner and CEO of a large UK-based
jewelry business, negatively commented on the quality
of his companies wares. At that point his company was
posting record profits. However, within a few hours of
his speech the company lost around 500m in market
capitalization and its sales plummeted. The negative
effect of top brass executives making derogatory
comments about the goods their companies produce is
now known as the Ratner effect.
28

In his Burning Platform memo and during the
weeks that followed Elop combined the
downsides of both Osborne and Ratner effects by
criticizing the present generation of Nokia
phones and announcing a new generation of
phones (not yet ready to be shipped).
Predictably, the sales of Nokia smartphones
plunged to never recover.

Sources: Nokia, statista.com
29

It is worth noting that by the end of 2010,
smartphones generated the biggest part of
Nokias revenue and this management mistake
ended up costing Nokia dearly.
30


Sources: Nokia, statista.com
31

ASINUS BURIDANI INTER DUO
PRATA
Soon after the introduction of the first Windows
Phone-powered smartphones it became obvious
that there is an impenetrable barrier on the way
to power all Nokias handsets with software from
Microsoft: the actual cost of the software.
0,00
5,00
10,00
15,00
20,00
25,00
30,00
Q4
'09
Q1
'10
Q2
'10
Q3
'10
Q4
'10
Q1
'11
Q2
'11
Q3
'11
Q4
'11
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
Nokia Smartphone Sales
(mil units)
-2 000
-1 500
-1 000
-500
0
500
1 000
1 500
Q4
'09
Q1
'10
Q2
'10
Q3
'10
Q4
'10
Q1
'11
Q2
'11
Q3
'11
Q4
'11
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
Nokia Net Profit/Loss
(mil EUR)
Take-Home Exam: Leadership as a Management of Meaning // Oleg Soldatov Page 5
Due to the high licensing price of Microsoft
operating system Nokia could not rely on
Windows Phone OS for its lower-tier
smartphones and feature-phones. Industry
sources indicated that the price paid by
smartphone manufacturers per one license of
Windows Phone was between $ 23 and 30,
32

which then passed on to the final consumer. In
contrast, Googles Android OS is free.
Flagship
smartphones (N-
Series, Lumia).
All-in-one
powerhouses,
capable of handling
multiple tasks at the
same time.

Price without contract: upwards of 250.

Low-end
smartphones/featurephones
(C-Series, Asha). Affordable
smartphones and phones dedicated
to one function i.e. chatting or
photography.
Price without contract: 60-250.
Dumbphones (1xx-Series).
The cheapest option for savvy
customers. Design and performance
centered on the main function:
making calls.
Price without contract: less than 60.



Nokia phone categories.
Sources: Nokia, own research
Having declared Symbian and MeeGo operating
systems dead (and having inadvertently killed
Meltemi through understaffing), the only choice
for Elop to provide savvier customers with no-
frills smartphones was to introduce yet another
operating system, the so-called Nokia Asha
platform. The latter was based on the
groundwork done by a hastily purchased
3
rd
party software developer.
33
Like a proverbial
Buridans donkey, Elops team kept switching
from one operating system to another, wasting
valuable R & D resources in the process. Ignoring
the buildup-breakthrough flywheel
34
advice,
Elop did exactly what Jim Collins cautioned
against: he lurched back and forth with radical
change programs and reactionary moves. These
developments left a lot of Nokia employees
scared, angry and in fear of losing their jobs.
35

Flagship smartphones.









Low-end smartphones/featurephones.









Dumbphones.

Nokia phone operating systems.
Sources: Nokia, own research
In this regard, Stephen Elops work in Nokia is a
good illustration of a situation, where, according
to Alvesson & Sveningsson, a high degree of
ambiguity in organization may undermine the
very idea or essence of leadership.
36


Nokia staff protesting against company strategy
37

Take-Home Exam: Leadership as a Management of Meaning // Oleg Soldatov Page 6
CONCLUSIONS: THERE ARE NO
SILVER BULLETS, BUT
What lessons can be learnt from Elops
unsuccessful efforts at Nokia?
Referring to the title of this course, I would
formulate the failure factors as follows:
- Being culturally unfit for working in the
host organization (inability to
demonstrate cultural sensitivity and
produce the culturally digestible
meaning for Nokias staff);
- Making a PR-blunder by publicly
criticizing the products of Nokia and
announcing new products long before
they were ready to ship (making mess of
the meaning);
- Building his communication on pseudo-
transformational appeals rather than
authentic transformational messages
(using the shallows rather than
managing the meaning);
- Introducing a high degree of ambiguity in
the organization (diluting the meaning).
All in all, the recent developments with Nokia
serve as an extra reminder as to how evasive
the leadership concept in the modern fast-
paced world is, and how a leader
with a seemingly impressive track record will
not necessarily make the right fit for a particular
company with its own cultural patterns and
expectations. Hopefully, the main takeaways
from this case can provide a valuable guidance
for future generations of managers in
knowledge-intensive industries.

1
Ritsuko, Ando. "Nokia Investors Tell CEO Their Patience
Running Thin." Reuters. Thomson Reuters, 07 May 2013.
Web. 05 June 2013.
<http://www.reuters.com/article/2013/05/07/us-
nokia-agm-idUSBRE9460LV20130507>.
2
Virki, Tarmo. "Nokia CEO to Replace Vanjoki as Key Unit
Head." Reuters. Thomson Reuters, 8 Oct. 2010. Web. 5
June 2013.

<http://www.reuters.com/article/2010/10/08/nokia-
vanjoki-idUSLDE6971IH20101008>.
3
Haselton, Todd. "Nokia, LG Lose While ZTE, Apple Gain Q4
2010 Market Share." Mobile Burn, 28 Jan. 2011. Web. 05
June 2013.
<http://www.mobileburn.com/news.jsp?Id=12703>.
4
"Nokia Corporation (NOK) Historical Quotes." Investor
Guide, 5 June 2013. Web. 05 June 2013.
<http://www.investorguide.com/stock-
historical.php?ticker=NOK>.
5
"Nokia Market Share Falls." MarketMinute.com Stock News.
Market Minute, 14 May 2013. Web. 05 June 2013.
<http://blog.marketminute.com/financial_stock_news/
2013/05/nokia-market-share-falls.html>.
6
NOK Historical Quotes, ibid.
7
Lawton, Christopher, and Ian Edmondson. "Nokia
Chairman to Step Down in 2012." The Wall Street
Journal Online. Dow Jones & Company, 15 Sept. 2010.
Web. 5 June 2013.
<http://online.wsj.com/article/SB1000142405274870
3376504575491360239171870.html>.
8
Burrows, Peter. "Stephen Elop's Nokia Adventure."
Bloomberg Businessweek. Bloomberg, 2 June 2011. Web.
5 June 2013.
<http://www.businessweek.com/magazine/content/11
_24/b4232056703101.htm>.
9
Collins, Jim. "Level 5 Leadership." Harward Business
Review Jan. 2001: 67-76. Print.
10
See, for example, a 2010 interview: "Connecting People: A
Discussion with Nokia's President and CEO." Briefings
Magazine Autumn 2010: 54-60. Print.
11
Ahonen, Tomi. "Obituary for OPK: Wall Street Is a Cruel
Mistress." Communities Dominate Brands. N.p., 21 July
2010. Web. 05 June 2013. <http://communities-
dominate.blogs.com/brands/2010/07/obituary-for-
opk-wall-street-is-a-cruel-mistress-nokia-searching-for-
ceo.html>.
12
Virki, Tarmo. "Nokia CEO to Replace Vanjoki as Key Unit
Head", ibid.
13
Schein, Edgar. "Culture: The Missing Concept in
Organization Studies." Administrative Science Quarterly
41 (1996): 229-41. Print.
14
Solomon, Marmer, and Michael Schell. Managing across
Cultures: The Seven Keys to Doing Business with a Global
Mindset. New York: McGraw-Hill, 2009. Print. Page 224.
15
Ward, Andrew. "Nokias New Chief Commits to Finnish
Culture." FT.com. Financial Times Ltd., 12 Sept. 2010.
Web. 05 June 2013.
<http://www.ft.com/intl/cms/s/2/debd3dce-be8a-
11df-a755-00144feab49a.html>.
16
Palmer, Maija. "Nokia Falls to Third on Finnish Exchange."
FT.com. Financial Times Ltd., 12 Apr. 2010. Web. 05 June
2013. <http://www.ft.com/cms/s/0/199c5406-84b5-
11e1-b4f5-00144feab49a.html>.
17
"Stephen Elop: Executive Profile." Bloomberg
Businessweek. Bloomberg, 4 June 2013. Web. 05 June
2013.
<http://investing.businessweek.com/research/stocks/
people/person.asp?personId=133681>.
18
Korhonen, Miki. "Thousands of Nokia Workers Lose Their
Jobs." Whats Up Finland English. WhatsUpFinland.org,
14 June 2012. Web. 05 June 2013.
Take-Home Exam: Leadership as a Management of Meaning // Oleg Soldatov Page 7

<http://whatsupfinland.org/english/thousands-of-
nokia-workers-lose-their-job/>
19
"Top 8 Mobile Operating Systems." StatCounter Global
Stats. StatCounter, 05 June 2013. Web. 05 June 2013.
<http://gs.statcounter.com/#mobile_os-ww-monthly-
201012-201305>.
20
Fried, Ina. "Nokia to Exit Symbian, Low-End Phone
Businesses in North America." All Things Digital.
AllThingsD.com, 9 Aug. 2011. Web. 05 June 2013.
<http://allthingsd.com/20110809/exclusive-nokia-to-
exit-symbian-low-end-phone-businesses-in-north-
america/>.
21
"Full Text: Nokia CEO Stephen Elops Burning Platform
Memo." Tech Europe, Dow Jones & Company. 09
February 2011. Web. 05 June 2013.
<http://blogs.wsj.com/tech-europe/2011/02/09/full-
text-nokia-ceo-stephen-elops-burning-platform-
memo/>.
22
Bass, Bernard, and Steidlmeier Paul. "Ethics, Character,
and Authentic Transformational Leadership Behavior."
Leadership Quarterly 10.2 (1999): 181-217. Print.
23
Milian, Mark. "Nokia Partners with Microsoft on Windows
Phone." CNN.com. Cable News Network, 11 Feb. 2011.
Web. 05 June 2013.
<http://edition.cnn.com/2011/TECH/mobile/02/11/n
okia.microsoft/index.html>.
24
Gupta, Sahil Bones. "Nokia's Meltemi Was Supposedly a
Bridge between Asha and Lumia Devices." BGR India.
PMC/Zee Enntertainment Enterprises Ltd., 05 Mar.
2013. Web. 05 June 2013.
<http://www.bgr.in/manufacturers/nokia/nokia%E2%
80%99s-meltemi-was-supposedly-a-bridge-between-
asha-and-lumia-devices/>.
25
Ahonen, Tomi. "Analysis of Smartphone Wars Part 2."
Communities Dominate Brands. N.p., 06 Oct. 2011. Web.
05 June 2013. <http://communities-
dominate.blogs.com/brands/2011/10/analysis-of-
smartphone-wars-part-2-of-news-meltemi-what-nokia-
is-back-in-the-os-wars-already.html>.
26
Boehm, Mirko. "Leadership, Strategy and Qt." Agile-
workers.com. Agile Workers Software UG, 23 June 2012.
Web. 05 June 2013. <http://www.agile-
workers.com/web/2012/06/leadership-strategy-and-
qt/>.
27
Niu, Evan. "Nokia, RIM, and the Osborne Effect. Oh,
Apple's Here, Too." The Motley Fool. Interactive Data
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<http://www.fool.com/investing/general/2012/07/07
/nokia-rim-and-the-osborne-effect-oh-apples-here-
to.aspx>.
28
Lytle, Ken, and Katie Corcoran. Lytle. The Little Book of
Big F*#k Ups: 220 of History's Most-regrettable Moments.
Avon, MA: Adams Media, 2011. Print. Pages 179-180.
29
"Nokia Smartphone Shipments Worldwide from Q1 2007-
Q1 2013 (fee-based)." Statista.com. Statista Inc., 01 Apr.
2013. Web. 05 June 2013.
<http://www.statista.com/statistics/12729/nokia-
smart-phones-shipped-worldwide-since-2007/>.
30
"Nokia in 2010. Review by the Board of Directors and
Nokia Annual Accounts 2010." Nokia.com. Nokia, 2011.
Web. 05 June 2013. <https://i.nokia.com/blob/view/-
/263824/data/1/-/Request-Nokia-in-2010-pdf.pdf>.

31
"Nokia's Net Profits Q1 2009-Q1 2013." Statista.com.
Statista Inc., 01 Apr. 2013. Web. 05 June 2013.
<http://www.statista.com/statistics/190410/developm
ent-of-net-income-of-nokia/>.
32
Mathews, Lee. "Windows Phone Licensing Cost Revealed
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<http://www.geek.com/mobile/windows-phone-
licensing-cost-revealed-by-zte-23-30-1460401/>.
33
"Nokia Buys Feature Phone OS Developer." Cellular-
news.com. Cellular-news, 07 Jan. 2012. Web. 05 June
2013. <http://www.cellular-
news.com/story/52518.php>.
34
Jim Collins "Level 5 Leadership", ibid.
35
Agrawal, Rajat. "One Year On: Nokia-Microsoft
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<http://www.bgr.in/manufacturers/nokia/one-year-
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36
Alvesson, M., Sveningsson, S. (2003) "Good visions, bad
micro-management and ugly ambiguity: Contradictions
of (non-)leadership in a knowledge-intensive
organisation", Organization Studies 24: 6 pp. 691-988
37
"Nokia Employees Walk out in Protest of Microsoft Deal."
CNMO. AOL Inc., 12 Feb. 2011. Web. 05 June 2013.
<http://english.cnmo.com/8/84728.html>.