Facing Management Dogmas: Organizational Agility is a Must, Part II

The phrase “We need to become agile” is frequently heard in executive meetings and has become a new management dogma that is worth investigating.

Since we have concluded that agility is not a binary phenomenon and companies are typically positioned somewhere along a spectrum of agility, we must now address the second question: Is the degree of agility a lasting characteristic? In other words, is any organization consistently successful in adapting to changes, or does its adaptability vary depending on the situation?

To explore this topic further, we turn to Nokia, a once-thriving Finnish company that repeatedly demonstrated its agility by successfully transitioning from one industry to another. Nokia rose to prominence as a stellar mobile phone producer, only to later falter due to its inability to recognize emerging industry trends and adapt accordingly.

Nokia was founded as a pulp mill in 1865 in Finland. By 1902, it had expanded into electricity generation and, in 1922, further diversified into the rubber business. In 1963, Nokia began manufacturing communication devices for the military and emergency services, marking its first step into telecommunications. In 1967, following a merger with two other companies (Finnish Cable Works and Finnish Rubber Works), Nokia Corporation was established and restructured to manage four major business areas: forestry, cable, rubber, and electronics. In the early 1970s, Nokia entered the networking and radio industries.

In 1992, a pivotal decision was made to transform Nokia into a "telecom-oriented" company. By 1994, Nokia had discontinued its earlier products and focused exclusively on manufacturing mobile phones, soon launching the successful 2100 series. This strategic shift proved highly effective, driving rapid growth in the following years.

In 1998, Nokia became the world's leading mobile phone manufacturer. It co-founded Symbian Ltd., a software development and licensing consortium, to promote the Symbian operating system for smartphones and related devices. In 2007, Nokia partnered with Siemens to form a joint venture, Nokia Siemens Networks, which became a leading telecommunications infrastructure manufacturer.

In 2011, Nokia joined forces with Microsoft to strengthen its position in the smartphone market. The company introduced the Windows Phone operating system as an alternative to competing systems like iOS and Android. However, this decision ultimately limited its competitiveness. By 2013, Nokia sold its phone manufacturing division to Microsoft and refocused on three core business segments: network infrastructure and services, mapping and location services, and technology development and licensing.

In the 2020s, Nokia further solidified its position in network infrastructure, emerging as a key player in 5G technology. The company rebranded to highlight its transformation into a business-to-business technology innovation leader.

What this timeline clearly illustrates is a high level of agility that lasted from 1865 to the 2010s. During this period, Nokia demonstrated its ability to pivot relatively quickly from one industry to another, adapting its business and operating models along the way, and ultimately focusing on sectors where it could secure a competitive position and outmaneuver its rivals. However, despite being agile and successful for almost 150 years, there was a period of several years during which the strategic decisions Nokia made were not aligned with market changes. Nokia's decline in the mobile phone market is often attributed to its failure to adapt swiftly to the smartphone revolution. Specifically, its decision to persist with Symbian OS and later partner with Microsoft for Windows Phone, instead of adopting Android early, is regarded as a critical misstep.

This example shows us that even the most successful organizations, in terms of agile longevity, will eventually make decisions that hinder their ability to continue adapting to changes. In other words, their adaptability varies depending on the situation.

While agility has proven to be a valuable characteristic for many successful organizations, the idea that all organizations must become agile is overly simplistic. Even the most agile companies can encounter moments when their decisions hinder their ability to adapt. Therefore, adaptability should be viewed as context-dependent, varying based on the specific challenges and opportunities a company faces. Rather than blindly pursuing agility as a universal goal, organizations should focus on cultivating the right balance of flexibility and standardization that aligns with their unique circumstances and long-term objectives.

So, the next time you hear executives say they want their company to become agile, please explain that this phrase first needs to be clarified – specifically, what is meant by it – and, secondly, the reasoning behind this directive must be rooted in a much broader business context and aligned with the overall business strategy.