Nokia CEO Elop: Company Must Make 'Radical Change'

A document written by Nokia CEO Stephen Elop to employees describes a do-or-die scenario necessitating a "radical change in behavior."

It's time for a "radical change" at Nokia, new company CEO, Stephen Elop emphatically insisted in an internal note to employees, posted Feb. 8 by Engadget and reviewed by the Wall Street Journal. A Jerry McGuire-style, 1,200-plus-word manifesto, the document arrives just days before Elop's Feb. 11 date with investors in London, where he is scheduled to detail his plans for turning around the phone maker, which last quarter lost its long-held title as the world's leading smartphone platform to Google's Android.

In the document, Elop offers an anecdote of a fisherman forced to choose between the burning platform he's standing on and the frigid, dark waters of the North Sea. Circumstances caused by Nokia's own poor decisions have put the company in a position, the document suggests, where it similarly must either do something previously unthinkable or else be consumed.

"How did we get to this point? Why did we fall behind when the world around us evolved?" Elop said in the document, continuing:

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

Elop goes on to explain how Apple came to change the game and now commands its highest end, as well as how Google's Android, in just two years, similarly grabbed a great portion of the market's high end and is now focused on midrange products. ("Google has become a gravitational force, drawing much of the industry's innovation to its core," Elop said in the document.) Additionally, Chinese vendors, helped by MediaTek, are churning out devices to emerging markets-stealing Nokia's bread and butter.

"The truly perplexing aspect is that we're not even fighting with the right weapons. We are still too often trying to approach each price range on a device-to-device basis," Elop wrote, adding:

"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 our 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, catalyze or join an ecosystem."

Nokia has been steadfast in its support of the Symbian operating system, which has steadily lost popularity and market share to Android and Apple's iOS. A year ago, at the 2010 MWC (Mobile World Congress) in Barcelona, Nokia announced support for an additional OS called MeeGo-an amalgam of its Maemo and Intel's Moblin. With the 2011 MWC approaching, however, it has yet to release a smartphone running the platform.

Is it time for Nokia to acknowledge Android's winning formula and get on board? Or, as rumors have suggested, team up instead with Microsoft?"This is one of the decisions we need to make," Elop wrote. "In the meantime, we've lost market share, we've lost mind share, and we've lost time."It was expected that Nokia would finally introduce its first MeeGo smartphone at MWC, which begins Feb. 14. However, Reuters-citing two sources "close to" Nokia-reported Feb. 9 that the company "stopped developing its first smartphone using the MeeGo operating system."The Nokia document similarly suggests an issue with product development. "We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough," it states. "We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market."The document seems to indicate that in Elop, the company may finally be in the good hands of someone who recognizes the direness of its circumstances. The remaining question, now, is if he can identify an alternative to the "burning platform" quickly enough."We are working on a path forward-a path to rebuild our market leadership. When we share the new strategy on February 11, it will be a huge effort to transform our company," Elop wrote. "But, I believe that together, we can face the challenges ahead of us. Together, we can choose to define our future."