In a previous blog I made a link between the reasons why Nokia lost the Smartphone Battle and what I love to call The Chernobyl Syndrome. I promised to write a sequel, dealing with how companies can avoid that syndrome to not only survive dynamic evolving markets, but simply to use the environmental business dynamics as a source of energy to outrun competition.
Chernobyl in Corona Times.
I guess that in this global lockdown time, you have had the chance to watch Chernobyl. No, it is not the most cheerful series you will ever see. This dark series about the devastating happenings in the good old USSR back in 1986 is the perfect illustration of a solid system that fails to deal with the unexpected . I don’t have to explain why in these Corona days that Chernobyl Syndrome is to be avoided at all cost. The virus is a devastating event and many companies and governments seem to be unable to respond. Or respond in the wrong manner.
But what is that Chernobyl Syndrome?
The Chernobyl Syndrome or why did Nokia fail.
How could a company that simply was the best-selling and unbeatable mobile phone brand in the world in 1998 and saw its operating profit explode from 1 billion dollar to 4 billion in between 1995 and 1999, lose it all in just a few years time? In 2007 Apple introduced the iPhone and it took a devastating 3 (three) years for Nokia to launch an ‘iPhone killer’, which was way too late most obviously and was just another free publicity for ‘the real thing’. It is not even difficult to observe exactly the same happening in the automotive industry and the battle between Ford or GM and Tesla in the past decade.(*)
As a result of the Chernobyl Syndrome, Nokia lost about 90% of its market value in between 2007 and 2013.
“We didn’t do anything wrong but somehow we lost.”
Those historic word were being used by Nokia CEO Stephen Elop during a press conference in October 2016, to announce Microsoft’s acquisition of Nokia. Nobody did anything wrong. It was the system that failed. That is what I call the Chernobyl Syndrome: sometimes a system can be so perfect in its own universe that is absolutely unable to respond to an sudden and unexpected happening in its environment no matter what individuals are trying to do. The survival of the system has become more important than what it was designed to do.
(*)Many companies like to hide in the safe and known environment of the controllable world of The Day Before Yesterday. They eat the leftovers of old business models. When they slowly change and finally turn into a Day After Tomorrow Company, they are still two days late… That type of organisations turn blind for the changes out there. They may evolve from Company 1.0 to Company 2.0 in which all processes and procedures are as solid as steel and innovation is being turned into a hollow phrase meaning ‘more operational excellence’. Some companies are more in tune with Today. They are 3.0. Some however, are more forward thinking and focus on Tomorrow. They are 4.0. Very few companies try to be ready for the unexpected Day After Tomorrow. They are 5.0. companies, like Apple or Tesla. Corona will throw the whole business into a 5.0 environment. 1.0 and 2.0 companies are in deep shit.
There is no core, it exploded, the core exploded.
Watch that first episode of Chernobyl again. The similarities are obvious between the chief engineer in the nulear control room and the Nokia CEO Olli-Pekka Kallasvuo brushing off suggestions that Nokia needed to do more to fight back the iPhone and calling the Apple product a ‘niche product’ in April 2008 despite all evidence of the growing success of the iPhone and the obvious decline of Nokia. Think of all those car manufacturers ignoring Tesla as a niche for so many years.
The Chernobyl engineer in command orders ‘to cool the core’ and even when one of the team members comes in with the devastating statement ‘there is no core, it exploded, the core exploded’, he simply ignores that message saying ‘get him out of here, he is in shock’ and orders ‘to cool the core’.
I can imagine the same scene has happened many times in automotive boardrooms all over the globe. Chernobyl is not unique. Not at all.
Our world has been struck by a happening never seen before called COVID-19 at a scale that nobody could have ever imagined. If companies (and governments) suffer the Chernobyl Syndrome, they are in serious danger and so are their employees or citizens. They need to shift gear fast and move from organisation 2.0 to 5.0 asap.
Culture eats strategy for breakfast.
If ever we would be looking for an example for this quote, Nokia and Chernobyl would be perfect. In the previous blog I have been referring to the must read paper with that very scientific title “Distributed Attention and Shared Emotions in the Innovation Process: How Nokia Lost the Smartphone Battle”, written by Vuori (Aalto University) and Huy (INSEAD Singapore) in 2015, after interviewing 76 Nokia top and middle managers, engineers and external experts.
Their conclusions are simple:
“Nokia’s ultimate fall can be put down to internal politics. In short, Nokia people weakened Nokia people and thus made the company increasingly vulnerable for competitive forces. When fear permeated all levels, the lower rungs of the organisation turned inwards to protect resources, themselves and their units, giving little away, themselves and their units, giving little away, fearing harm to their personal careers. Top managers failed to motivate the middle managers with their heavy-handed approaches and they were in the dark with was really going on.”
Ok. It happened. Now what.
Our pre-Corona world was already being dominated by one digital transformation on top of the other. Leaders had to understand that coping with these exponential changes and thus new types of competition that would be more aggressive and divers than ever before, was their challenge in life. Corona has wiped away the old world barriers and digital transformation has turned into a devastating revolution. It is a Tsunami that will destroy all laggards. Our post-Corona world will make or break companies, organisations and countries. It is up to leaders to make this new world happen.
Business and government leaders need to adapt to this new world and they can only do this by focusing on cultural change. They need to connect to their employees, citizens and customers and be aware of their emotions and state of mind to be able to engage.
Connect to Many and Engage Individuals is the basis of the anti-Chernobyl culture in which:
- All people have the power to constantly challenge the status quo and thus allow the leadership to drive a real and genuine culture of change and innovation
- Employees and citizens are being supported by a collaborative leadership that opens its eyes and ears to listen to their customers, citizens and employees and to turn the collected data into information and they share all information they collect.
- Data and information needs to flow free and fast in all directions within the company or the country, without noise being added or whatever bad news being censored.
- Leaders that need to understand their employees’ or citizens’ emotions will have to become more mindful. Emotional intelligence in action will not be just a competence that is nice to have , but will become mandatory. Forgiveness, love and curiosity for each other and the customer are to become core values.
- We will need to learn fast from failures , which will help to repair mistakes, minimize risk and damages and better design services, products and especially experiences for citizens and customers.
- Leaders should master the skill of taking full responsibility for bad decisions without being afraid to lose status, role in the hierarchy or money.
- The energy draining blame culture should be replaced by a very energizing culture based on passionate curiosity about other citizens, cultures, employees, the customer and the world out there.
- All processes start with the customer/citizen and try to optimize the desired Customer/Citizen Experience for each individual customer/citizen
- Leaders dream big and help people to dream big and support them to make dreams come true.
True leadership is about culture
One of the biggest turnarounds in company culture ever made is that of Microsoft where Satya Nadella did the amazing job to create a culture that is about listening, learning and harnessing individual passions and talents, as well as true employee empowerment. The fast growing market value of Microsoft shows that company culture should never be taken lightly. On the contrary. It is the strongest force a company has to cope with fast changing times and turn threats into opportunities. It starts at the top and includes mission and values and expectations, but also the mindset of a company. Leadership has to fully embrace and nurture the new culture and so leaders need to be role models.
Companies will live or (sorry, but I need to be clear) die in the post-Corona world based on the culture of the company.
Business leaders need to focus on the culture. They need to check the readiness of the company to enter the post-Corona decade of uncertainty. In my book “Managers The Day After Tomorrow” I have included a checklist. How can you know whether your company is (not) future proof. When I wrote the book in 2017-2018, I thought companies had plenty of time to change the culture. They have not. It is now or never.
The Day After Corona Checklist
“I would like to set you the following task. Look at your company and your interactions with your customers and complete the checklist you find below. Have you left behind 2.0 thinking? If so, to what extent? If not completely, see this as an objective towards which you can evolve. Apply the insights you have acquired in the preceding pages and, above all, discover how and why everything is interrelated.” (Managers The Day After Tomorrow, p 159)
- Are the knowledge and skills of your entire organization primarily focused on understanding you own products, services and solutions or on understanding the customer better than yourself (and perhaps even better than himself)?
- Do your managers think in terms of limitations and how to get around them or do they think in terms of opportunities and how to seize them?
- Is your management style based on control (the middle man) or on trust (the network)?
- Are you trying to find customers for your products or products for your customers?
- Do you base your actions on assumptions or on big data and AI?
- Are your processes fixed in long-term plans or are they fluid, so that they can constantly be questioned and updated?
- Do you strive for perfection or is occasional failure accepted?
- Do you focus strongly on details or do you view things holistically, concentrating on the big picture?
- Is tomorrow a continuation of today or a first step towards your day after tomorrow?
- Are your KPIs old style inside-out or new style outside-in measuring instruments?
Building the post-Corona model
Let me re-phrase what I wrote in 2018 (p. 155-156) and translate it so it fits our current situation:
When you are drawing up your new post-Corona plan, you have to use the naked resources salvaged from your old plan, stripped of their pre-corona layer of conventions and patterns of thought. This will provide you with a collection of ‘pure’ building block or dots that you can join together in a creative manner, in which new agreements and arrangements can be made in accordance with the rules of a new paradigm. It is not easy to free yourself from your past assumptions and ways of thinking or to see your resources as being completely unfettered. It is especially difficult in Chernobyl-like organizations, where particular habits have become engrained in the culture over many years. A more agile organization will find it easier to join the dots in radical new ways that no-one has previously thought of.
Throw off the shackles of the past. Finally get rid of everything that made you a Chernobyl company, until only the naked dots – your available resources in their purest form – remain. Use them with freedom and invention to develop a new business model in which you can create new and more meaningful interactions and relationships.
This is exactly what companies and governments need to do. They do not necessarily need to invent something new. In most cases, they can simply use and connect existing resources in a different way. They can take customer/citizen needs as their starting point, think of a new way to satisfy those needs, and then see how they can do it efficiently and effectively, without allowing themselves to be deflected or discouraged by ‘old’ conventions that try to tell them what is possible and what is not. They can make maximum use of the possibilities offered by the digital world to give their business model shape and form. They can recycle or up-cycle existing building blocks, use new technologies where necessary, and bring all these resources together in a unique manner.
By now, it should be clear what you must do. Dissect your current business model until only the naked resources remain. Use these as a core for the reconstruction of a new, post-Corona reality. Define your ultimate objective and work back from it. Mirror what once was and change the order of things. Make bottom top and top bottom. Ignore established, common sense thinking and rely instead on your own intuitive logic. Re-arrange the resources at your disposal until you have a new architecture that works. Reconnect the dots.