The Incredible Shrinking Nokia

Like one ex-colleague, I wonder what Nokia will look like when the economic dust settles.  I’m told that the last remaining Irving (Dallas, Texas area) building is experiencing a sort of settling– dwindling employees are being shuffled swiftly downward as lower office space opens up, emptying the upper floors.  My prediction of the site downsizing into a regional sales support office appears to be bearing out.  Where else is this occurring?  Offhand I don’t know… but I keep hearing that global roles are heavily impacted, which continues to confound me.  Is this really signalling a retreat back to Finland?

I still see new openings in other areas, but I remain curious about the overall picture, i.e., what is the loss-to-gain ratio?  When a company leaks employees here and there rather than laying them off wholesale, getting a picture of the headcount becomes difficult.  I’m sure that’s by design in this case.

The question is, can Nokia execute well enough or are too many key employees being let go?  The company now estimates that 2009 will see a 10% reduction in global handset sales.  One could argue that such a drop necessitates an equivalent or at least proportional cut in headcount.  But does that factor in the hoped-for area of growth, Internet services?  The slow rollout and misfires of suggest that the venture suffers a resource issue of some sort.  Is it fully staffed, or just running like a skunkworks project?

I know firsthand that the strategy rationalization of 2008 seemed to be “let go of current device-centric people and hire new service-centric sorts”.  Problem is, that mentality blithely ignores the fact that many employees in Nokia’s Device and Market divisions had the skills and connections to leverage into an Internet business.  I may lack the insight and experience of the hiring/firing decision makers but my own experience tells me Nokia may be cutting off its nose to spite its face here.  After all, Ovi is meant to run on mobile devices.

And forgetting Ovi for a moment– Apple’s and RIM’s successes in smartphones, even in the device-saturated US, aptly demonstrate the potential.  Even a downturned economy can’t completely stifle a truly compelling product.  Nokia’s getting close with offerings like the E71 and N97, but effective marketing still remains out of the company’s grasp.

I’m being self-centered of course when I assert that if upper management understood its talent base then I’d still have a job there, doing my passionate damndest to ensure Nokia fulfilled its potential… along with many other employees I believe were also let go by mistake.  That thought leads me to wonder if executive management is really in tune with what the company needs to survive, or if the challenges Nokia is currently facing require a new body of leadership.  On one hand I ask such rhetorical questions as someone released from service, but on the other I wonder as a current stockholder interested in the future of that sizeable investment.  In the past I’ve done well buying NOK at recent price points… but when the share price falls like it did a few days ago and management looks to be stumbling, I tend to become a bit concerned.

Anyway, I have more questions than answers on this subject.  I’m hoping someone out there has some intel they can share, and welcome any and all comments.


2 responses to “The Incredible Shrinking Nokia

  1. One can’t help but wonder, too, if this downsizing will make Nokia a bit more nimble, in the long run? It’s no secret that it’s a lumbering giant, clumsily chasing little Apple and Google and others around in the mobile industry like a chicken with its head cut off. Perhaps cutting that giant down to size will have more long-term benefits than anyone could have guessed.

    Better yet, perhaps they’ll can Ovi altogether, and get back to what they know – hardware. At this point, I’m more convinced that Ovi is Finnish for ‘wait’, rather than for ‘door’.

    • You bring up a good point, and I should have included it in my rant.

      Agility and ability go hand-in-hand. Being effective has more to do with having the right employees than having the “right number” of employees.

      I don’t mean to suggest that Nokia could only execute properly without laying people off– I’m just concerned with how the process is being managed. Are the right people being retained, and transitioned to new roles? My belief is NO. And I’ve seen roles cut that were absolutely essential– but often that need can only be viewed from the bottom up (or side to side); from the top down, it’s often too easy to identify business-critical roles as “nonessential”.

      So again: IS Nokia “cutting off its nose to spite its face”? I’ve seen roles eliminated and the victims told “you can always apply for the new roles that are going to appear soon for Internet Services, et al”. But is that the best approach? I ask, because I’m also seeing resentment from top-notch released employees who swear they will not go back. Couple that with the fact that Nokia got it backwards (layoffs before voluntary reductions) and it looks to me like the staffing situation is being severely mismanaged..,. which leaves me with decreasing confidence that the necessary people are in place to ensure future success.

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