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Competition Isn’t Always Good

October 14, 2010

I was worried because I forgot my nice coffee mug at home today, so I wondered what I’d do without my normal coffee routine today.  Never mind, this one woke me upThe report from which the article originates is a detailed interview of Nokia management, which went through a reorganization in 2003.  This was back when Nokia was king of the cell hill, and it was intended to set up internal competition to make things go faster at the company.

In Ollila’s reshuffle, Nokia made a transition from an agile, highly reactive product-focused company to one that managed a matrix, or portfolio. The phone division was split into three: Multimedia, Enterprise and Phones, and the divisions were encouraged to compete for staff and resources. The first Nokia made very few products to a very high standard. But after the reshuffle, which took effect on 1 January 2004, the in-fighting became entrenched, and the company being increasingly bureaucratic. The results were pure Dilbert material.

Organization styles come and go.  In fact, the matrix organization is always something that seems attractive, since it ensures oversight while theoretically putting the actual decision in one person’s box.  Nokia went a bit farther to add oversight in terms of a corporate office as well as to squeeze the budgets of the organizations so they had to not only compete, but fight.

Another consequence was also predictable. It’s what political writers call the most morally corrupting effect of bureaucracies: nobody takes responsibility. With the three divisions covering their own backsides, nobody wanted to make the long-term strategic investments necessary to keep platform software up-to-date. This resulted in the Symbian user interface being neglected. Nokia had developed a touch screen UI called Hildon, which became Series 90, starting in 2001 – and that should have been the basis for Nokia’s iPhone competitors today. But it was canned in 2005.

“We produced a quite enormous number of rather average products. It would have been smarter to make fewer – and better,” says one interviewee.

It goes on to say one final, damning thing: “Nokians fought each other harder than they fought the competition.”  I’d encourage anyone who runs a business to look at the full report.  It’s often fun to think of pitting two people or two organizations against each other.  If it’s done in fun, and both realize that they benefit from the success of the other as much as their own success, then it helps encourage people to work harder.  When it’s done to bring out the daggers and force people to win only by making the other side lose… well, that’s something different.

This can be an unconscious act as well.  Tight budgets create environments like this all the time.  The key is to show how the company is getting better by making organizational decisions.  Turning it into a performance issue or a competitive fight only exacerbates the feeling of helplessness that the organization faces.

So competition is good… when it’s designed to drive a hunger in the organization to succeed.  Maybe it’s not so good when the only food is your co-worker.

2 Comments leave one →
  1. October 14, 2010 7:55 am

    In prior companies, I’ve seen this Darwinian process work at smaller scale and break at larger scale. Many tech companies in the valley have the notion of competition to have the best ideas survive. Good in theory. Combine that with matrix management and it becomes a nightmare.

    Simple tends to be better. Kill the matrix so to speak. Ask leaders and teams to collaborate, if it doesn’t work, you’ve got the wrong people doing the jobs.

    Nokia will be fascinating in that the new CEO is a systems thinker and has a massive challenge on his hands. I wonder what Nokia wants to be when it grows up? Let’s hope they don’t continue to throw Donner party like dinners!

    • October 14, 2010 4:42 pm

      If they do, it’s likely they’ll be the ones on the plate given Samsung’s rise.

      I’m even okay w/ competition in bigger places if there’s a budget to grow with it. Google doesn’t seem to have any problems yet. Let’s see what happens when earnings level off.

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