What Leaders Do

Volume 11 Letter 7

Leading involves looking out into the future and defining how your company will prosper from it. In times of turmoil when traditional approaches begin to fail great leaders see new opportunities, adapt to the changing reality and adjust their course accordingly. Nokia, originally a paper mill, transformed itself into a market leader in the mobile telecommunication industry. More recently, the leaders at Nokia have been struggling with the idea of market turmoil yielding new opportunities.

As recently as 2008, Nokia garnered a 40% global market share of mobile handsets but the once star recently posted a 523 million dollar loss in the second quarter of this year. Overall phone shipments are down by 23.5 million handsets and Nokia has fallen to third place from first in smart phone sales losing out to Apple and Samsung. Nokia has now gone into a major cost cutting mode to save a billion dollars by 2013. From market dominator to market dog in a few short years – what happened?

To answer that question you have to go back a few years. Nokia saw their market share of the global mobile phone market eroding at the low end as cheap cell phones were being introduced to emerging markets. Believing they had the high end market sown up Nokia became obsessed with defending their market leadership and turned their attention to developing low end inexpensive phones. Meanwhile, at the high end of the market, Nokia has struggled to develop an impressive Smartphone! Consequently they have relegated to the sidelines while the high end market has passed them by. Now losing market share at both ends, Nokia is cutting costs and changing managers faster than a politician changes his mind. Saving a billion dollars by 2013 will certainly be a great accomplishment but it’s hardly the lofty vision needed to inspire the software and development engineers to restore Nokia to profitability.

What can we learn from Nokia and leadership in times of turmoil?

  1. Admit errors: Great leaders are realistic (and humble) enough to see painful truths when calamity occurs (Remember Bill Gates re-focusing Microsoft to web development)
  2. Define the vision: Cutting costs is not a vision
  3. Build a workable strategy: In articulating what the future will look like leaders must define where the company is and highlight the gaps that need filling to prosper in the future.
  4. Communicate and motivate – great leaders lift the rest of us up – they make us see what’s possible

When old answers no longer suffice and new questions present themselves, leaders find new solutions. Be a leader!

1. Some lessons from WSJ July 30th 2011 Dr. Ghaemi first rate madness – leadership and mental illness from Depression in Command

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