CEO reads riot act to 'burning' Nokia in staff memo

NOKIA was "standing on a burning platform", its new CEO, Stephen Elop, said in an unusually blunt memo to his staff this week.

Issued to employees days before he presents a plan to turn around the Finnish cellphone giant tomorrow, his memo painted a picture of a culturally moribund company besieged by fleet-of-foot rivals.

"The first iPhone shipped in 2007, and we still don't have a product close to their experience. Android came on the scene just over two years ago, and this week took our leadership position in smartphone volumes. Unbelievable."

His candid assessment could serve to warn shareholders of a turnaround plan far more radical than they had been expecting.

The 1300-word memo is rich in allegory and contains references to the need to "take a bold and brave step into an uncertain future".

Indeed, Mr Elop's "man on a burning platform" eventually decided to jump into the sea.

"It was unexpected," Mr Elop wrote. "In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times ' his platform was on fire.

"How did we get to this point? Why did we fall behind when the world around us evolved?

"This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia."

Mr Elop is Nokia's first non- Finnish CEO, and came to the firm from Microsoft's business division.

He wrote of Apple's "tremendous growth". "In 2008, Apple's market share in the 300-plus price range was 25% ; by 2010 it escalated to 61%," he said.

He also described the growth of Chinese companies at the lower end of the market. "Chinese OEMs (original equipment manufacturers) are cranking out a device much faster than, as one Nokia employee said only partially in jest, 'the time that it takes us to polish a PowerPoint presentation'. They are fast, they are cheap, and are challenging us."

"Nokia is burning," he said .

The website Engadget, which first published the memo, said it was "one of the most exciting and interesting CEO memos we've ever seen ' and we're absolutely dying to see how Elop plans to shake things up".

The memo did not predict whether Nokia would ditch existing software platforms and adopt either Windows Phone 7 or Android when it announces its new strategy tomorrow.

But Mr Elop warned that a new mindset was required .

"The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, e-commerce, advertising, search, social applications, location-based services, unified communications and many other things.

"Our competitors aren't taking market share with devices; they are taking our market share with an entire ecosystem. This means we're going to have to decide how we either build, catalyse or join an ecosystem.

"This is one of the decisions we need to make. In the meantime, we've lost market share, we've lost mind share and we've lost time."

Arthur Goldstuck, MD of World Wide Worx, said Nokia was "paying the price for corporate arrogance".

"In the past, when I've asked Nokia people how they will respond to various moves by their competitors, their response was usually that they concerned themselves with what their customers wanted, not with what the competition was doing," he said.

"That is a classic strategic error in business in general, let alone in a hi-tech environment.

  Nokia CEO's full memorandum