Hey! I don't mean Waterloo Ontario Canada (RIM). Yes, lets think a bit about the worst. Ever. And yes, on my mind I have the song Waterloo, that launched Abba 38 years ago - boy was that really so, so very long ago? Waterloo, I was defeated, you won the war.
WARNING - I often write long detailed blogs. So be prepared, this is not something usually found on a blog. 29,000 words would be three chapters in a regular printed book. This article could even be published as a booklet or definitely as an ebook all by itself. So this is massive even by my blog standard. I am serious, get a big cup of coffee before you start, this will take you maybe half an hour to read. But if you are interested in Nokia, or of management failure, or the competition in smartphones, or of Microsoft's mobile strategy, this will be worth your while.
So yeah. Napoleon had the perception of being an invincible commander, yet at Waterloo he was defeated. You probably have to be a bit of a war history nut to remember the name of the commander who beat him - that was the Duke of Wellington (and as his ally, from the Prussian army, von Blucher). Waterloo has become one of the classic synonyms of total defeat. The reality is not quite so obvious. Did you know that Napoleon faced considerably larger forces. He brought 72,000 French troops to the small town in Belgium, while the Duke of Wellington and von Blucher amassed 118,000 troops. So the Duke of Wellington had a 63% bigger army. Perhaps its not such a surprise then that Napoleon went down in defeat that time.
WHEN I SAY BATTLE, I MEAN BATTLE AS IN ACTUAL COMBAT
And that had me thinking. What has been the most lopsided victory, where a general actually had a smaller army, and defeated a bigger opponent. And I mean in battle - so lets not count the 12 aircrew on Enola Gay who dropped Little Boy on a city in Japan, the B29 Superfortress bomber that dropped the first atomic bomb on a town in Japan called Hiroshima. When 12 guys kill at least 130,000 (practically all civilians) in one day without any 'losses' to their own 'side' that is obviously a hideously one-sided massacre.
And I also don't want to count any other obvious massacres where there was a decisive technological advantage on one side, like the Battle of Blood River (Ncome) where 470 Voortrekkers led by Pretorius faced - get this - over 10,000 Zulu warriors led by Dambuza. Zulus had their classic warrior shields and spears. The Afrikaaners or Boers had .. muskets (guns). So you are outnumbered more than 20 to 1, what happens? 3,000 of the Zulus are dead. Three of the Voortrekkers were 'lightly wounded'. As far as I can find, this is the most lopsided victory of actual battle engaged where the smaller army won. But this is not a fair measure by any reasonable standard.
So we have to eliminate the clear cases of one-sided victories, where British colonial armies used breech-loading rifles or Hitler's Wehrmacht rolled over several divisions of the Polish infantry with 300 tanks in Tuchola Forest (incidentially, it is a myth that the Polish cavalry charged against tanks. Yes, there was famous cavalry charge in that battle, in the Battle for Krojanty, but that was a victory for the Polish cavalry, they were not foolish to charge horses against tanks, they charged German infantry. After that, some German armored units fired at some of the last mounted troops, killed a few and then Hitler made a big propaganda lie about how foolish the Polish were to attack his invincible panzer army and a myth was born). And yes, lets also skip the astonishing conquest of the mighty Inca empire by 169 Spanish soldiers led by Pizarro in totally different level of technology in the mid-1500s.
THE RUNNERS-UP ARE..
(Yes yes yes, I'm getting to my point. This all makes sense, hold on, follow with me.) What I want to find is the commander, in fair battle, who faced a larger enemy, and defeated it, who can be considered the greatest battle commander of all time, and against that, then, rather obviously, would be the worst commander in recorded human history, the losing commander who managed to take the greatest overwhelming force into battle and then quite literally snatch defeat from the biggest jaws of victory even seen. You see where I am setting this up for, related to Sun Tzu and the Art of Nokisoftian Microkia?
Digging through Wikipedia and all sorts of history sites, there are astonishing cases of military heroism and of daring victories, as well as of sheer stupidity of the commander in astonishing losses when holding considerable advantages. The US Civil War has several, obviously, in the style of say Fredericksburg where Confederate General Lee faced Union General Burnside who held 1.5 to 1 superiority. The First World War has several cases like Gallipoli where Sir Ian Hamilton of the Allies had nearly 2 to 1 superiority over the Turks led by von Sanders. Who can ignore the First Day of the Somme where Field Marshall Douglas Haig slaughtered 19,000 dead in just one day and earned the nickname The Butcher of the Somme, when we reognize Haig and his French counterpart Foch on the Allied side had a huge superiority, and those 19,000 dead were not from the German side led very well by von Below. No. He held the superior position and butchered 19,000 of his own troops! Instantly von Below joins our list of candidates of greatness and conversely Haig goes on the side of the worst commanders ever in military history. Or we have the battle of Kolubara where the Serbians outnumbered by 2 to 1 and led by Putnik defeated the Austrian army led by Potionek. And we have to mention Gaucamala ie Arbela where Alexander the Great defeated Darius III the second time, and so forth. You get my point, right. I could go forever on this topic (being just a bit of a history buff also, as some may have noted haha).
So lets get to the good stuff. I will have a couple of the more famous/notorious commanders mentioned in a bit more detail, at the end of the blog, but I do need to move on. So jump to the envelope. Who were the finalists? Lets go to.. Kharkov! Not the first, but the second battle of Kharkov in World War 2, somewhat South of Moscow on the Eastern front. Timoshenko commanded 760,000 men in the Red Army vs Paulus's 350,000 men in the Wehrmacht. Thats 2.2 to 1 advantage. Soviets also had air superiority of about 1.5 to 1 and tank superiority of 1.1 to 1. Paulus counterattacked and won the battle. German losses 20,000 casualties, Soviet losses.. 270,000 casualties. Yes, Paulus attacked, against odds of 1 against 2 and with technologial inferiority, yet the Germans lost just over 5% in casualties and the Soviets four out of 10 of their army. This is a dominant victory!
But wait, lets go to the other side of the planet. What of Singapore? A disgraceful loss if there ever was one? Singapore was considered an impregnable fortress. British general Arthur Percival commanded 85,000 troops and Japanese general Tomoyuki Yamashita had only 36,000. Thats 2.4 to 1. And Britain had everything on its side, the island was truly a fortress with mightly giant naval cannon defending it. British had several airfields and lots of fighter planes, Japanese had to fly long range bombing missions etc. And Yamashita not only had to attack, but this was over water, to invade an island. Yamashida used cunning and tricked Percival into thinking his army was far bigger than it was in reality, so Percival surrendered. 80,000 surrendered. This is a very strong candiate for best commander ever, known as "The Tiger of Malaya" and conversely, the worst rival. Percival famously said not to bother to prepare defenses for Singapore (against the tanks that Yamashida had managed to run through the Malayan jungle) "Defenses are bad for morale." If you want a candidate for worst commander ever, this is a very strong contender.
You can see the context. I really really REALLY tried to see the most lopsided battles ever and research this from a hobbyist historian angle, and looked at long lists and chatrooms listing worst generals and most lopsided battles etc. But it seems the best we can find, when its a fair fight, the war is ongoing already, and there is no overwhelming technological advantage, that we hit a clear ceiling at about 2 to 1 odds. No matter how magnificent the general and inept the opponent, you don't find attackers who have worse than about 1 against 2 odds (obviously, 1 against 2.4 in case of Singapore) where the smaller army was still able to win. Except for one.. Check out this case.
YOU WON'T BELIVE THIS IS TRUE
An army of 11,000 in the Second World War. Met an enemy of 45,000. Defending? No, attacking! Yes the smaller army, one quarter the size of the enemy, attacks. The defender must be weak in technology? No. Defender has an air force - the smaller attacker does not. The defender had 90 tanks, the attacker has none. Defender has more guns, more trucks, more ammunition, there is no handicap here. This is genuine 1 against 4 odds.
This is a suicide mission right? Let me tell you about the Battle of Suomussalmi from December 7, 1939 to January 8, 1940. The first Christmas in the war, and this was the Northern front, of what is commonly known as the Winter War. So you go to cold Finland, and then head up North where it is colder still. This is literally on the edge of Lapland close to the arctic circle. THAT is the level of coooooold we are looking at. This was Colonel Hjalmar Siilasvuo of Finland, who was ordered to go and kick out the invader Soviet 9th Army led by General Mihail Pavlovitz Duhanov which had settled into the small Finnish town of Suomussalmi near the Soviet border a week earlier. And yes. Siilasvuo's army had no tanks. The Soviet side, 90 tanks. You have 11,000 troops. The Soviet army has dug one of his divisions in and around the little town and in total his number of troops is that 45,000.
There is no way. If the next best victory achieved in thousands of years of literally human conflict, was 2.4 to 1, and here you face 4 to 1 odds. And he has tanks and you have none. He has an airforce and you have none? And he's had a week to entrench himself into a small town. A town in a forest and at a lake. This is no Napoleon marching on Moscow in the cold without winter uniforms, these were Soviet arctic troops from Murmansk and this is wintertime. And one of the other Soviet divisions was among the most experienced of the war, that took part in combat in Poland while the Finnish troops mostly had not yet experienced serious combat. The Soviets had technological advantages in everything from more machine guns to hundreds of trucks to move their troops. Finns had to ski to move around. There is no f*cking way this can happen. Hollywood scriptwriters can't come with this outrageously unbelievable ideas.
Siilasvuo won. He used his smaller army of a few brigades, and attacked - and encircled - the far bigger Soviet 163rd Division (with tanks) in the town of Suomussalmi, and attacked it repeatedly defeating it. And simultaneously while the other Division of the Soviet 9th Army, the 44th was rushing (with more tanks) to try to rescue the embattled 163rd, Siilasvuo was able to send enough of his few troops to go stall them - hold them off, only a few miles away - and after destroying the first target, he then captured weapons from the 163rd and rushed his tired worn soldiers to take on another bigger unit, and encircle those, and defeat the Soviet 44th Division as well.
The 11,000 strong Finnish brigades under Siilasvuo saw 1,000 deaths (10% of his force) in this overwhelming victory. The Soviet side lost two divisions at least 13,000 deaths (some counts as high as twice that number) or at least 29% of the enemy was killed. The Soviet army deaths alone were bigger than Siilasvuo's total army!!! And 2,100 Soviet troops were taken prisoner. 43 tanks were captured - and to really make the point, as the war started two months earlier (by unannounced Soviet sneak attack bombing of Helsinki and other cities, like Pearl Harbor was unannounced sneak attack) Finland had at the start only a total of 30 tanks of its own in its army. Siilasvuo's victory more than doubled Finnish tanks just by his war spoils.
It is no contest, nothing at any other battle comes close. The Battle of Suomussalmi is the most astonishing lopsided, 'small guy wins' victory of all time. The greatest military battle commander ever? Siilasvuo by far, by far, by far. Patton, pah! Rommel, please. Stormin' Norman. Nah. Guderian. Nope. The Tiger of Malaya. Not even close. Colonel Hjalmar Siilasvuo won the most against-all-the-odds battle ever and is undoubtedly the greatest military commander to have seen combat. And like all the best examples on this blog, there has to also be a truly aweful counterpart, the worst enemy commander ever. That was General Mihail Duhanov, who already at the half-way of this month-long horrendous military disaster was removed by Stalin who replaced him by none other than Vasily Ivanovich Chuikov, yes the General known as 'The Stone' who eventually became the Marshall of the Soviet Army and who personally took Germany's surrender in Berlin. THAT Chuikov was sent to try to fix the mess Duhanov had created. Even this man of Soviet army legend was unable to prevent the carnage at that late stage.
Duhanov was removed of command and demoted and assigned staff political duty. Not only that, but one of the commanders of the destroyed divisions, General Alexei Nikolajevitz Vinogradov was seen so incompetent and inept, a Soviet central army command tribunal was sent to investigate and four days - four days - after the battle ended, they concluded Vinogradov was guilty - and that very same day only hours later, he was executed by firing squad with some of his top commanders - on an icy lake on 11 January 1940, in view of the remains of his troops who had survived the battle.
I think you see my point why the story. There can only be one 'greatest battlefield commander of all time' just like there can be only one 'greatest business leader of all time' (not Henry Ford or Bill Gates, obviously that was Steve Jobs). And there will only be one 'worst battlefield commander of all time' just like there will be one 'worst CEO of all time'. And now we get to Stephen Elop of Nokia.
So just one quick thought. I am a Finn, fiercely proud of our history and that truly astonishing feat of Siilasvuo snatcing victory while facing 4 times bigger enemy. I will return to the Battle of Suomussalmi at the end of this blog for a few afterthoughts. But lets now talk about Elop.
CALLS FOR ELOP TO BE FIRED
Did you notice recently the sentiment is starting to grow. Elop was already listed by CNBC as a candidate for one of the worst CEOs. Now we just heard former HP and Apple exec, and now Silicon valley bigshot and French tech industry giant, Jean-Louis Gassee calling for Elop to be fired! Gassee accusses Elop (And the Board) of blatant mismanagement and very interestingly, Gassee draws conclusions that Nokia has seen its products 'Osborned' twice and Ratnered (sounds like my blog!).
Then there is the Times of London whose Finace Editor Ian King already suggests Elop may be worst CEO ever. He is not yet willing to call it, he warns this is possible. Meanwhile essentially all Finnish and several other Scandinavian newspapers and other media have started to be critical of Elop and have expressed views by various experts that Elop is not competent, or should be fired, or has made very expensive mistakes (and several have also quoted me, thank you!)
Here I really don't want to say 'I told you so' while I was one of the first 'thought leaders' or 'experts' of the mobile industry to call for Elop's firing one year ago. What I do want to point out, where I was a lone voice last June and many thought its not time (or that things can't be that bad, or they can't get any worse) now there is an increasing call for Elop to be fired. And increasingly there are noises talking of the Elop Effect and that he may be the worst CEO ever.
Which now brings this whole generals and battles point into focus. Remember last summer as Steve Jobs stepped down from his post as Apple CEO (before his death) me writing about him being the best CEO not in tech or of our time, but the best CEO of all time in corporate business (and the many reasons why). I want to lay my case, why Elop is indeed the worst CEO ever seen in corporate governance and he truly must be fired immediately.
BEAR FALSE WITNESS
Elop quotes Sun Tzu in Business Week interview 6 June 2011: "First you must believe in yourself"
No. Sun Tzu never said anything even remotely like that. This sounds like some motivational rubbish written by some business guru trying to adapt Sun Tzu to modern life and somehow Mr I-read-a-lot-of-Sun-Tzu can't even quote him anywhere near correctly. This is probably what Elop was referring to. This is from The Art of War, Chapter 3, Attack by Strategem, rule 18:
"If you you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not your enemy, for every for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle."
There is nothing about 'first believe' in anything. Nothing about 'believing' as in motivational BS - anywhere in his classic textbook! The textbook is not a self-help guide. It is a strategy textbook. General Sun Tzu in The Art of War is specific about knowing things not 'believing' anything. Then its not 'first me' not first yourself anything. It is not first, it says 'and'. Know the enemy and know yourself. BOTH. Not first me. BOTH. Know the enemy. And. Know yourself. Nothing about believing you and nothing which is first. If anything, Sun Tzu mentions the enemy first, not yourself.
This man quotes bogus Sun Tzu to journalists. His comments are of course read by Nokia staff - many of whom are actual officers in the Finnish reserves, some senior level officers even, and have actually studied and been tested on the real Sun Tzu not this bullshit. They know immediately - like I did - when reading this quote, that no amount of mangling of translations can get it so wrong. Elop thinks Sun Tzu wants the general to be some kind of over-optimistic motivational hero 'if I can believe it, and can make my men believe in the appearance of what I project, I can win'. Total absolute complete rubbish and most definitely NOT what Sun Tzu teaches.
Some who read this blog will know who Sun Tzu was, and why that is a ridiculous statement. I am pretty certain that the majority reading this blog do not. (Don't worry, you don't need to). But let me show you how ridiculous that statement is. We all know who Jesus Christ was. And if someone said, yeah, I am a big fan of Jesus's teachings, I like especially his advice of "Do onto others, before they have time to do onto you". (And for non-Christian readers, obviously Jesus would never say that, it is a perversion of what the Bible teaches, where in Matthew 7:12 the actual quotation is "Do unto others as you would have them do to you".) If anyone claimed to be a big fan and then quoted him completely wrong - suggesting the exact opposite of his teachings - as of suggesting we need to be selfish, when in fact Jesus taught that we need to be unselfish, any true fan of Jesus's teachings (regardless of religious belief in him) would know instantly, that the person was a fraud.
And just a quick note, Sun Tzu 'is' as close as is possible, to military teachings, what Jesus was to Christian beliefs. Sun Tzu's book The Art of War from 2,500 years ago (!!) at a time of no airplanes, no tanks, no submarines, no aircraft carriers, no guided missiles, no guns, is so totally valid today, it is taught at (as far as I know) every single military school in the world, with the other classic more modern strategy masterminds like Clausevitz and Machiavelli etc. Also The Art of War is mentioned as a personal favorite by recent famous generals almost universally. It also is very broadly referenced in modern business management and read in many MBA schools.
And Mr Elop is quoted - in Business Week - claiming Sun Tzu taught us that the leader must somehow project an image of confidence. He dressed it in language that might seem to the casual audience that yeah, I vaguely remember the Chinese philospher/strategist, and that sounds 'exactly' like him. In reality this is nothing like what the Master teaches anywhere in any line in his book. Not once does he suggest this kind of pretend illusions. But we will get back to Sun Tzu a bit more towards the end. I will, however, since Mr Elop claims to be a big fan of the teachings of the Master, take one appropriate short quotation from General Sun Tzu to each accusation I make, to show, that according to the greatest strategic military mind that ever was, and whose teachings 2,500 years ago have guided modern Generals like Patton, McArthur, Rommell, Eisenhower, Schwartzkopf and Colin Powell etc, and show how 'closely' Mr Elop's strategic decisions to steer Nokia have coincided on Sun Tzu's teachings (..or not)
And lets see how well the Nokia CEO follows his Sun Tzu. After all Elop likes to be called by close friends using the nickname 'The General' (ah, so he is Mr Pretend-Patton apparently) according to the early profile of him at Helsingin Sanomat Finland's biggest newspaper in 2010. He certainly doesn't seem to have had a long decorated real military career to go with that peculiar nickname so this is quite a bizarre self-glorified view of Mr E. General E. Yeah. Lets see how his Suomussalmi stacks up. Will we discover a magnificent Siilasvuo out of Stephenboy or will he turn out to be a Duhanov?
REASON 1 - DELUSIONAL ANALYSIS
Sun Tzu taught us: "If you know the enemy and know yourself, your victory will not stand in doubt."
So how well did Mr Elop know his true situation at Nokia? If he understood correctly the real problem(s) and what were not problems, and also if he accurately measured his rivals, he would have the 'big picture' facts correctly. That is not yet promise of making the correct strategic choice, but at least he would have his 'facts straight'. Or imagine, if you have the facts wrong and make the biggest strategy decision of the company based on false information. We think the enemy is at the left, lets prepare to defend against him. The enemy is actually on the right, attacks us, we are unprepared, he defeats us. You see, how vital it is to start off by correclty analysing the problem, and that is what of course the Master teaches us in his book too. How did Mr Elop do?
Here is the picture. Note the dotted line. That is when Elop joined Nokia. And look very carefully at the three lines. All have profitable smartphone business, all grew unit sales (actual handset sales) since Elop took over, and all grew revenues. Did I say all are profitable? So which one is in trouble?
No? Anyone? Ok if none is in trouble, which one would you want to be the CEO of, who is in the best position to win in this game? Who is in fact as big as the nearest two rivals - combined? The Blue line, obviously? So that must be Apple. Nope. That is Nokia when Elop took over. Specifically Nokia's smartphone unit vs Apple's iPhone in red and Samsung's smartphone unit in green. You know how big Nokia's lead was in 2010? Nokia was TWICE AS BIG as its nearest competitor !!!! Lets see about some other industries. Cars?
When was Toyota twice as big as its nearest rival? Never !!!
How about General Motors? Never?
Volkswagen? Surely with the VW Beetle and Golf and all those green taxis in Mexico and all the hippie vans? Never ????
Renault ? Never ?
Nissan, Honda, Mazda, Kia, Proton, Lada, Peugeot, BMW, Citroen? Never, never, never, never, never, never, never, never and never.
? Fiat ? Never?
Come on there's gotta be someone? Sure. The last time we had one car manufacturer that big it was twice the size of its nearest rival was 97 years - years - ago, yes year 1915 when Ford was twice as big as GM. Thats still when Ford made the original Model T. And Ford then milked that leadership for another 15 years until GM grew past it in the doldrums of the Great Depression and finally sold more cars than Ford.
How about computers? Sure. So HP is the biggest PC maker. When was it twice as big as its nearest rival? Must be quite recently. No. It never was. What? How about Dell, surely the low-cost specialist.. Nope. Can't be. How about Acer? No. Asus? No. Toshiba? No. Fujitsu? No. Siemens? No. Compaq? No. Gosh. Well, at least IBM was. No, not as a PC maker, IBM was never twice as big as its nearest rival, not even when fronted by Charlie Chaplin in those iconic ads. Ok, I know Apple never did with the Mac, but the Apple 2 was the worlds' bestselling PC once, surely.. no. Never twice as big as its nearest rival. There was one, we have to go back all the way to the pioneering PC days of 1979, when the Tandy TSR-80, sold by American electronics retail chain Radio Shack, did sell more than twice the computers of its nearest rival (Atari).
Do you see how incredibly rare this is? How incredibly powerful it is? How much such a rare, dominating market leadership is worth for you, the CEO, as a rare opportunity to build an empire. Its so rare, that the world's biggest PC maker today by volume (HP) and today by revenues and profits (Apple) never got to enjoy that position. And you, Elop, voluntarily cast it away.
You were not hired to create a new strategy for Nokia's smartphone unit. Nokia's execution had become a disaster under the previous CEO and Nokia profitability suffered. Nokia corporation, mind you, not Nokia smartphones. The Nokia smartphones profitability was fine when you took over - in fact that first quarter you were in charge, Nokia's smarpthone unit set a Nokia record for the jump in profits !!! You were hired to fix 'execution' problems. But that was too much hard work for you, wasn't it? And you thought its more more fun to break the successful strategy and play strategist and gamble with Nokia's future. So what happened? This happened:
That immediate dramatic - in fact record-breaking sales crash by any global industry market share leader - was due to you, Stephen Elop. Your communication. It was not due to a faulty new product (like Mercedes A-Class the car that was too dangerous to drive into corners, or the iPhone 4 which had the antennagate problem, to make calls, you had to hold it the right way). It was not due to sudden problems emerging in an existing problem (Toyota car brakes failing, Sony laptop batteries exploding). It was not due to a sudden shift in consumer tastes (Hummer SUV, Motorola Razr). It was not due to a sudden superior product appearing from a rival (Apple iPod compared to Sony Walkmans, Samsung Galaxy S3 in smartphones). There was no factory strike, no supplier chain disaster, no natural disaster, no transport disruption. Something happened in February 2011, specific to Nokia and its smartphone market that caused strong continued dominating growth to instantly turn into the world-record-setting market collapse. So by process of elimination, that was the Burning Platforms memo. And while many said it at the time (including me) and far more have said it since, yes, the memo is the most damaging memo of all time, Elop himself has admitted it damaged Nokia smartphone sales and that he regrets it.
Sun Tzu teaches you must correctly study the strategy problem in your plans before you make your decisions. Correctly analyze your own and your enemy's situation. Elop tried. He looked at the situation (picture 1) and determined Nokia was about to die, and convinced the Board, the current strategy is so certain death, Nokia must abandon it instantly and totally and try a totally different direction. Any sane person looks at Nokia's smartphone situation at that time (picture 1) and concludes, Nokia is the strongest and its strategy is the best of the three and only a fool could decide at that point to abandon the lead. It is like Microsoft today, looking at its lead in PC software, suddenly freaking out, gosh, my Windows PC busiess dominates and grows and is hugely profitable, but there is this tiny rival called Macintosh and I will instantly stop all Windows development and switch to.. Linux. When you tower over your rivals (doing it profitably) it is the rarest management superiority situation imaginable and if you can't pull 15 years of leadership out of that position - like Henry Ford did in his similar situation - then you are a horrid executive. And yes, Elop convinced the Nokia Board, that Nokia was failing. So Elop is a disasterous leader from this total mis-reading of the Nokia situation.
REASON 2 - BURNING PLATFORMS
Sun Tzu taught us: "When the outlook is bright, bring it before their eyes; but tell them nothing when the situation is gloomy."
Lets not worry now, about what is true and not, what he intended and achieved. Lets just acknowledge Elop issued his Burning Platforms memo and he admits it damaged Nokia smartphone sales. We have also eliminated any other effects that would be normal in smartphone sales, that might have happened in February 2011 from being a possible alternate cause, or even a contributing cause to the collapse. What did Elop say in his memo?
"Over the past few months, I’ve shared with you what I’ve heard from our shareholders, operators, developers, suppliers and from you. Today, I’m going to share what I’ve learned and what I have come to believe. I have learned that we are standing on a burning platform."
He explained further:
"While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind."
He concluded with these thoughts:
"I believe that together, we can face the challenges ahead of us. Together, we can choose to define our future. The burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future."
This was the new CEO, communicating via an internal memo, to all his employees, about the situation, competition, strategy and future of Nokia. The memo may have 'sounded right' to many who were casual observers of Nokia. It sounded particularly pleasing to any USA based investors and analysts who had witnessed Nokia's market share in the North American market dwindle to single digits. But it was absolutely concretely bullshit batshit crazytalk.
Nokia was not 'standing on a burning platform'. Look at that graph, the blue line and remember, his smarpthone unit had just reported a Nokia-record profit. The profits his smartphone unit were making at the time were headed on an annualized basis to bring Nokia's profits into the Fortune Global 100 biggest profits, all by itself, before any additional profits from Nokia's other units !! That was far better than Nokia's own sales-based Fortune 200 ranking.
The competitors had NOT poured flames on Nokia's market share. The exact opposite was true - Nokia's lead to Apple was in fact increasing (slightly), not decreasing. Nokia had not missed trends, had not lost time. Nokia had not 'thought it made the right choices' - Nokia had indeed made the right choices! This is a delusional CEO talking in this memo and any sane Nokia employee will now go get stone drunk tonight, and send out his CV tomorrow in hope of finding a job with a company not run by a certifyable madman. This is their new CEO talking!
Part 1 of this problem. The CEO made an honest thorough analysis interviewing Nokia staff, customers, partners, investors, analysts and experts and somehow, somehow he arrived at the exact opposite of the truth. Then he communicated that false impression as fact, to all his staff. He a) was incompetent to see the clear truth, and b) foolish to change his strategy because of it and c) eager to commit his company to this radical total irreversable change. He was presented with the facts, he willfully disregarded the facts, and substituted an alternate reality out of his own imagination. That is delusion. This CEO, by this action, gave one sign of evidence, he is mentally unfit to run the company. Was this an aberration?
Part 2. On February 13th, 2012, in an interview to Business Day the biggest daily business newspaper of South Africa, a key Nokia smartphone market, when visiting in Africa, Elop said that Nokia was no longer on a burning platform. Let me bring back the second picture:
Look at the end of the blue line on the right. That is when he said Nokia was no longer having a Burning Platforms problem. If there ever was a burning platform, it is Nokia's smartphones situation now in Q1 of 2012. Elop doesn't like to talk of this, because the world knows, it was in fact he - Elop himself, the arsonist, who set Nokia's platforms on fire with that memo. There was no fire. He yells 'there is a fire in this crowded theater!' The audience panics, many die, and for Elop to safeguard himself, he THEN sets the theater on fire!
No more burning. What a load of bullshit. Last year Nokia set the record for biggest drop in any one year by any smarpthone handset maker, or smarpthone OS platform, or any dumbphone handset maker in history. Now in Q1, fresh after setting that world record in market failure, Nokia added to it by producing the biggest ever single-quarter drop in market share. So yes, Nokia is now falling faster than at its worst moment Palm, Motorola, Siemens, Windows Mobile, Ericsson, Blackberry or any other maker. This is now according to Elop 'no longer a Burning Platform problem' for Nokia.
He looks at facts, he refuses to accept facts, he substitutes his own alternate reality out of his on imagination - that is delusion. Saddam Hussein was delusional to think he could somehow win against the allies. Hitler was delusional in thinking he can still win the Second World War when the Soviet Army was entering Berlin from the East and the Americans were entering Berlin from the West. Delusional means madman. I am not claiming Elop is Hitler, he is not committing world wars and genoside, but he is a delusional madman who is perfectly capable of looking at facts, and ignoring them, and inventing his own reality, and then - most worryingly for Nokia shareholders and employees - making decisions based on his imaginary world and - communicating that to his investors, customers, employees and stakeholders. This is a man totally unfit to manage any organization. He is clearly dangerous as a Nokia CEO and must be fired.
Making one mistake early in your CEO career, any new guy could do that. That he now repeats the same problem, it is sign of a pattern. A self-destructive pattern. And whatever you may think of him as a nice guy or effective communicator on TV, if the boss suspends reality and makes his decisions based on some childish pretend Lala-land of his imagination, that CEO is unfit to serve and must be fired.
REASON 3 - COLLAPSE OF EMPLOYEE CONFIDENCE
Sun Tzu taught us "A whole army may be robbed of its spirit; a commander-in-chief may be robbed of his presence of mind."
The moment the CEO issued that memo, his confidence as Nokia CEO collapsed. His memo was full of errors (I won't relitigate it now, read about some of Elop's own retractions here) and Elop now admits the memo did damage his company, and that he regrets it. Others have called it the costliest, most damaging management communication of all time. But remember, Elop inherited the company that dominated smartphones more, than in their industries Toyota, or Airbus, or HP or Sony etc. So while yes, the previous CEO, Olli-Pekka Kallasvuo had made serious mistakes and was deservedly fired 3 years into his job, the smartphone unit bosses had been heroic and supremely successful.
So Elop becomes CEO, discovers amidst his top staff a 'dream team' of smartphone design, marketing, sales and production staff - and related software and services, that has created a global juggernaut. Remember - bigger than iPhone and Samsung combined.. - and this is obviously his most valuable resource. That kind of talent was nurtured and built by Jorma Ollila. What has happened since? Just about anyone of very senior Nokia talent, and definitely all involved in its smartphone business have resigned in protest, or left, or been fired by Elop. The last such exodus was this week with the last of the MeeGo team departed.
The mass exodus of Nokia's top talent was the result of the comprehensive distrust and mistrust of the CEO. He does not hold the respect and trust of his own staff. Started mostly with the delusions obvious in that memo, but Elop was doing mad things already before it and obviously many since.
If your top executive cannot motivate his team, he is unfit to lead. Elop is unfit to lead any company and must be fired. And this certainly qualifies him for one of the worst CEO's ever.
REASON 4 (and first ELE) - RATNER EFFECT
Sun Tzu taught us: "By attempting to govern an army in the same way as he administers a kingdom, being ignorant of the conditions which obtain in an army. This causes restlessness in the soldier's minds." The Master continues a little later to summarize the final effect: "When the army is restless and distrustful, trouble is sure to come from the other feudal princes. Thsi is simply bringing anarcy into the army, and flinging victory away."
..Flinging victory away. The Burning Platforms memo was intended to be an internal memo, it was of course leaked and Elop may have leaked it himself, as he was very quick to proudly take ownership of the memo and has arranged his publicist to push early warm press comments about it on his Wikipedia page (about time for his Wikipedia page to tell the truth by now?). But yes, Elop seemed very proud his Platforms memo got him many press mentions as the bold new CEO of Nokia taking decisive steps and being so 'honest'. So even as he now tries to defend it as being intended as an 'only internal memo' - that won't fly, because when it first leaked in February 2011, Elop was not unhappy about it at the time, in fact Elop jumped at the chance to confirm in public that yes, he did release that memo. And that leads us to the Ratner Effect.
Ratners was a famous successful major British jewelry store chain. Its CEO Gerald Ratner committed one of the most destructive communication errors ever of any CEO, which was duly dubbed the Ratner Effect. He called his jewelry rubbish and when the CEO calls his own prodcuts bad, he is believed. Ratners jewerly store sales collapsed instantly and he was fired, company only saved from bankruptcy by rebranding and is now called the Signet Group.
So about the worst thing you can do in any kind of sales situation is for your CEO to badmouth your own product(s). That quite literally destroys your company. Such a total disaster that no CEO ever even tried this mistake since Ratner in 1991. Until Elop decided to commemorate the 20 year anniversary by repeating the effect. And this is the outwardly, market effect of the Burning Platforms memo. When it leaked, suddenly, globally, in every mobile phone handset retail environment, the sales staff started to buzz about did you hear what Nokia CEO just said yesterday? And immediately - exactly like with Ratners - the Nokia Symbian smartphone sales collapsed. What is worse, in Elop's case, it also severely damaged Nokia's other handset division sales, the 'featurephone' unit ie the dumbphone sales too.
Even Sun Tzu's book The Art of War could not imagine a general so incompetent, to even suggest he would ever signal to his troops and his enemies his true weaknesses. This is such a total management fiasco, so totally 100% certain mistake, it destroyed Ratner when he tried and it clearly started the destruction of Nokia's smartphone unit, plus damaged Nokia's dumphone sales severely. As mistakes go, the outside public communication of the memo is the part of the decision which alone stands as cause to fire Elop immediately. It is an ELE as we saw in the movie First Contact (you remember, Jodie Foster hears the first radio beacon from outer space and then mankind builds the space travel machine to send her to visit aliens..) yes, like the Busta Rhymes album, an Extinction Level Event. If you as CEO pull a Ratner, you by that action have condemned your company to death. Few actions are as total and dramatic - and suicidal and stupid. And most of all, irreversable.
Elop did it with his Elop Effect. So he must be fired for it. But actually, to be really clear - Elop went Ratner one better. Elop not only badmouthed Nokia, Elop made claims of his own company failures that were not there. He called his company and products worse than they were. As a CEO this is a sin that cannot go unpunished - and as we saw from Ratners - it is a sin from which the company cannot even recover before firing the CEO and total rebranding.
Here is the picture summarizing the total market effect to the business of Nokia, the total outside effect to Nokia. I have all the math and analysis and explanation here if you want to read the blog the Final Reckoning about the Burning Platforms Memo, but in short: the cost of one memo was 13 Billion dollars of lost revenues, 4 Billion dollars of profits wiped out ie generating a loss. This is by far the costliest management memo of all time.
I am not the only one calling Elop's actions the Ratner Effect - just look at Gassee this week for example. This is also a failure of the Board. They should have acted last February, or latest in April, when the carnage was revealed in Nokia Q1 results. Every day they waited made Nokia worse. In April 2011 Nokia's massive market share had fallen to 24%. It was 12% by year end. Why did the Board wait after they knew? It is now 8% and the Board is still asleep. The next CEO has to correct for this damage anyway so every day the Board waits, makes the next CEO's job ever more difficult as well as abandons forever yet more of Nokia's once overpowering lead. Elop cannot fix this damage, no matter how much now a year later he expresses remorse for his mistake.
REASON 5 (and second ELE) - TIMING OF MICROSOFT ANNOUNCEMENT
Sun Tzu taught us "O divine art of subtlety and secrecy! Through you we learn to be invisible, through you inaudible; and hence we can hold the enemy’s fate in our hands."
Abandoning Symbian is not cause to fire Elop. The decision to terminate Symbian as Nokia's primary smartphone platform was taken - and communicated - well before Elop came to town. If you want to blame anyone for the end of Symbian - you must blame the previous CEO, Olli-Pekka Kallasvuo who was clearly a bad CEO and caused harm to Nokia.
The decision to expedite Symbian's end, however, that was Elop's decision. He and only he, came out on February 11, 2011, with the bizarre communciation that Nokia would end its development of Symbian and also the end of MeeGo and shift completely to Windows based smarphones. Even that by itself was not necessarily a management blunder, but that he did it before there were any Windows based smartphones even to announce far less to show or sell - that was manifest calamity. The announcement that Symbian shall not be continued and was to be replaced with Windows - with no Windows smartphones to sell then or very soon, was the repetition of the management blunder by Osborne Computers, ie Elop did an "Osborne Effect" by causing his current line of smarpthones to become instantly obsolete and its sales proceeded to collapse as per the above picture 2.
What was worse, is that Osborne only made one generation of his computers obsolete. Elop committed to millions - 150 million in fact - of promised smartphones to come, and we have seen new Symbian-based smartphones still being introduced literally a year later like the 808 Pureview - that would still be made running on this instantly-obsoleted smartphone OS platform. Elop would later retract the commitment and admit there won't be those 150 million more Symbian based sales. My projections now suggest they may hit half that level. This is a severe unforced communciation error by the CEO. A totally self-inflicted wound.
The Osborne Effect bankrupted Osborne Computer company. Elop's Microsoft announcement has effectively bankrupted the Nokia Symbian smartphone unit which made 20% of Nokia phones, generated 30% of Nokia revenues and produced a whopping 40% of Nokia profits when he took over. He killed his cash cow. Voluntarily. Took his goose that was laying golden eggs, aimed his shotgun like Dick Cheney and shot his goose, in the face. Shot it twice to be safe. Shot it dead. The Nokia smartphone unit started reporting an operating loss immediately in the first full quarter after the announcement (ie Q2 of 2011) and its losses are increasing today, not decreasing.
What might have been? I used all the best published estimates of the biggest smartphone specialist analyst houses, who had issued a Nokia or Symbian related forecast in the year before this February announcement. Every one of them was totally confident Nokia would safely be the biggest smartphone maker through 2012, in fact several of them felt Nokia would safely be the biggest smartphone maker still in year 2015. It is not my conjecture that Nokia's strong growth (see picture 1) would continue - Nokia's lead over Apple its nearest rival was not shrinking - it was (slightly) growing!!! Matters not what Nokia might be in year 2015, but every reputable smartphone expert before that fateful Windows announcement, was certain, that during 2011 and 2012 Nokia would continue easily as the biggest smartphone manufacturer for years to come. Here is the cost of that decision. This is criminal level destruction of Nokia value. Not just abandoning market share, this is huge value stolen from Nokia shareholder pockets
This is not about Symbian. The decision to end Symbian was already a Nokia fact and communicated before Elop was even called into any job interviews by the headhunters. The timing of the announcement of Windows was the issue. When Windows Phone was announced when Nokia had no Lumia smartphones to sell, that caused the Osborne Effect and demolished Nokia sales. This is about timing.
The deliberate, unprovoked public Osborning of his cash cow and main profit engine was a predictable Extinction Level Event, the second such foolish act done by this CEO. If the company CEO starts to play Russian Roulette with his public communications, he must immediately be stopped. Or no, Russian Roulette is not a fair analogy here. In Russian Roulette you have one revolver with 6 bullet slots, and only one bullet, when you aim it at your own head and pull the trigger (the first guy has a 1 in 6 chance of killing himself). No. What Elop did, was as if you put a bullet into each of the six chambers, so the gun is fully loaded, and then pull the trigger. This is Elopian Roulette. No chance of survival. Any ELE action by a CEO is grounds for instant dismissal without any golden parachutes. Elop has to be fired for this. And he is definitely by this reason alone, one of the worst CEO's ever to have run a company.
REASON 6 - MEEGO
Sun Tzu taught us "He wins his battles by making no mistakes. Making no mistakes is what establishes the certainty of victory, for it means conquering an enemy that is already defeated."
MeeGo was the Linux based open source smartphone operating system, that Nokia had developed together with Intel, that Nokia therefore did not have to pay to use. Windows Phone is a closed system, where Nokia has no control, and Nokia has to pay to use. Here is a short table of the main differences between Windows Phone (7.5) and MeeGo
MeeGo Windows Phone 7.5
Nokia own Slave to Microsoft
Intel as co-developer Nokia no say
Linux based Microsoft proprietary
semi-compatible with Android Totally not compatible with Android
Qt compatible Not Qt compatible
New from ground up Development of PC and smartphone Windows
Rated best or second best OS Rated mediocre OS
Called as good as or better than iOS Not considered in same class as iOS
Uses Nokia knowhow Ignores Nokia knowhow
Seems familiar to Nokia users Seems alien to Nokia users
Is designed 'mobile' first Is designed PC first
Is mobile optimized Is mobile compromised/PC optimized
Received enormous praise Received lukewarm support, lots of hostility
No retail refusal Retail boycott because of Skype
Several hardware partners Several hardware partners
Hardware partners increasing Hardware partners decreasing
China Mobile carrier partner No carrier partners
Free to Nokia Pay license to Microsoft for every sale
Huge developer community (Qt) Big developer community
Modest app collection Good app collection
Fastest app development time Mediocre app developer time
Largest installed base (Qt) 400M+ Smallest installed base (12M)
130 carrier support Some carrier support
60+ language support (Ovi) Modest language support
Sister platforms at Nokia No sister platforms compatible
Compatible with advanced tech Not compatible with advanced tech
Compatible with high specs Not compatible with high specs
Current business highly profitable Current business highly unprofitable
Ecosystem owner to be Nokia Ecosystem owner to be Micrsoft
Phones made in Nokia factories Phones made in third party factories in Taiwan
Phones use standard Nokia parts Phones use non-traditional parts
I am not making this up! By essentially every conceivable measure, the MeeGo OS is better for Nokia's best interests than Windows Phone. And as MeeGo is ready to go, fully functional, sold and manufactured today, there is no conveivable reason not to sell it and develop smartphones for it. Because the N9 is currently in production and selling highly profitably (and sister phones such as N950 and N900 have been produced and could be manufactured within weeks of ramp-up time) while total Lumia line prices have collapsed and the line is hugely unprofitable, the only sane decision is to expedite MeeGo smartphones into production and staff and fully support the MeeGo OS and apps teams.
Instead, Elop does the opposite. He has been firing MeeGo staff, and allowed them to leave and cut their resources and delayed their launches and killed phones already designed and ready to sell. The only OS that consistently is ranked as an OS as good or even better than the iPhone iOS. Nobody has achieved that since Steve Jobs brought Apple into the mobile industry! MeeGo is a true winner, a thoroughbred racehorse with racewinning pedigree. Even if the Windows Phone based Lumia was a roaring success, Nokia would be wise to produce several top-end smartphones on MeeGo to cater to the many technical abilities that (early) Windows Phone cannot or could not do, like currently NFC, TV-out, HDMI, high resolution screens, multiple screens, high-resolution cameras, etc etc etc.
June of 2011 Elop told Helsingin Sanomat, the biggest newspaper of Finland, that even if the N9 with MeeGo will be a success, there will be no more MeeGo devices. WHAT? Yes! That was a second Osborning of a Nokia existing smartphone platform! No possible CEO sanity can justify that statement. Imagine if Sony said that about Playstation 4 !!! The CEO is interviewed about the latest hot new gaming console by Japan's biggest newspaper and he says, yeah, no matter how well the PS4 sells, we won't bother to do any more of this Playstation BS... Wot?
Could you imagine Apple saying that about the iPad 3 or the next Macs or whatever? Not conceivable! The CEO would say anything positive they could imagine, hoping they have a hit product on their hands - and if it is a big hit, of course any sane CEO will keep it in production and produce more sister and update products!!! What is wrong with Elop? And why did the Nokia Board allow Elop to remain at Nokia after he said that last summer? This is treason by the CEO. His job is not to kill successful, profitable, loyalty-building, highly loved products. His job was - as Ollila said when Elop was hired - to help with execution of Nokia strategy, make it run better. Not to end Nokia's future product line(s). Separately, no sane CEO would end a highly profitable business, and..
..only a pure madman would end a profitable unit when the company itself is plunged into loss-making.
The crimes against MeeGo by Elop are reason alone why he is not acting in Nokia's best interest. Is he acting in Microsoft's best interests? Microsoft does not want to see an open source Linux based multi-device converged smartphone/tablet/netbook operating system emerge that is more powerful and capable than Windows. Obviously Ballmer wants MeeGo to die, and this is before we consider the long feud Ballmer has had with Intel. If Elop was acting in Nokia's best intersts, he would rush to correct the misunderstanding about MeeGo's end. He would pour resources into the OS, the software, the apps and developers. He'd rush to get Qt fully online and of course he'd want every conceivable MeeGo compatible phone produced and running out of Nokia's idling smartphone factories. Now.
While the MeeGo decision is not an Extinction Level Effect as such (the unit even at its peak was still too small) the crime here is actually worse. Treason. Nokia's CEO acting not only in another company's best interest but against Nokia's own best interest. Here the stock market rules are crystal-clear and this strict: there can be not even the appearance of acting in the interests of another company. So say New York stock market rules and so say Helsinki stock market rules. There needs to be no evidence of 'actual collusion' or conspiracy with say Ballmer when Elop flies to his home most weekends (his home is in Seattle where his wife and kids live and Nokia flies him back and forth). No, just the appearance of acting against the best interests of the company where you are CEO is cause of stock market investigations and if the Board doesn't fire Elop for this - the Board Members themselves too become suspect and may be investigated, it is that bad. Yes. For his troubles so far, this is the biggest crime yet. This alone qualifies him for one of the worst CEOs and is independent cause for immeidate firing, and as this is a breach of Nokia's stock market obligations, obviously Nokia doesn't need to pay - indeed would be an idiot to pay - any promised golden parachutes and termination compensation. I believe Nokia corporation and Nokia shareholders here have action for suing Elop to recover what he has been paid since last June.
REASON 7 - N9
Sun Tzu taught us: "When a general neglects to place picked soldiers in the front rank, the result must be rout."
If there was a bigger crime against Nokia than MeeGo even, it is the N9. The N9 is the first commercially launched and sold MeeGo based smartphone. If you think the Lumia 900 or Lumia 800 look cool - that look was stolen from the N9. Except that the N9 is far more capable and better as a device (partly due to MeeGo and partly just Elop madness and poor Lumia design matters).
There are precious few megahit products in the mobile phone handset industry. The kind of device that sets the whole industry on fire, that change the trends, that are instant icons, and it seems, that everybody wants one. Those kinds of superphones come only once every few years and they are what careers and companies are made on. The kind of phones that build empires and stores cannot sell enough as they rush out the door and consumers stand in line to get. Think original iPhone. Or Motorola Razr. Did you know Motorola was in a desperate market share fall from a peak of over 30% down to 12% by the time the Razr had launched and Samsung had jumped ahead of Moto into second ranking among phone makers and most analysts predicted Moto would be dead soon (Nokia was then the biggest).
Then came the Razr. In the next 18 months Moto leapfrogged ahead of Sammy and chased even Nokia. Motorola's Razr-driven peak was at 23%. Experts and pundits were already widely spreading the story that Nokia had missed the flip-phone trend and would shortly be overtaken by Motorola. That is what one hit phone can do for you. They are few and far inbetween. And unless your name is Steve Jobs, nobody can achieve that 'on demand'. They happen after years of trial and error, at the perfect confluence of the perfect specs, perfect consumer tastes, perfect opportunity and perfect market acceptance. Totally unpredictable and very very rare. They are the single biggest chance to land on a CEO's lap in this telecoms industry, and are so rare, most will never see such an occurance in their company in the their professional careers, not just their tenure as CEO. Currently such a hit phone is the Samsung Galaxy S3, obviously. Nokia has never had such a massive hit phone.
But Nokia did have the N9, and all the signs - all the signs - suggest, that this could have and indeed should have been Nokia's first ever mega-hit-phone. One of the tech reviews of the N9 actually wrote that if the iPhone was the Jesusphone, the N9 is the Godphone. No Nokia smartphone had previously even been suggested to be another Jesusphone as if on par with the iPhone. This was something truly unique to Nokia's long history. I cannot prove to you, this would have been Nokia's Razr but please consider the evidence.
The N9 was released last autumn, and it immediately gained rave reviews. It is the only smartphone Nokia has ever had, that is regularly ranked to be on par with the iPhone and, in many cases, actually beats the current iPhone 4S in side-by-side user tests by the tech press. Never. Never. Never. Has any phone maker's smartphone been so warmly received as the N9 (this side of Apple's iPhones obviously). And obviously this is the best-ever beloved new phone launch by Nokia. Universally loved. The only major qualm is that there aren't that many apps now that Elop has Osborned the OS obviously.
American tech sites that are very hostile towards Nokia have raved about the N9. In Germany, the weekly newsmagazine Der Stern (like Time in the USA) wrote in its N9 review that the phone is so good, Germans should travel to other countries like Switzerland or Austria to buy one - because Nokia isn't selling the N9 in Germany (where they push the Lumia series instead). When do you see that happening? First, how good does the N9 have to be, that the weekly newsmagazine - this is not a techie mag!!! - reviews the phone which is not even for sale in that country? Then how incredibly impressive does it have to be, for Der Stern then that they actually write - so good its worth flying to another country to go get one!!! That REALLY didn't happen except with the original iPhone.
If the Blackberry tablet got this level incredible review as better than the iPad the new CEO would be on the next Boeing to Berlin with a boxload of Blackberries.. And they would not refuse to sell it - they would host the biggest Blackberry bash seen in Bavaria to pour on the beer and smell the Blackberry. Elop? Hides from the story and yes, you read me right - still refuses to sell the N9 in Germany - even as the biggest German carrier/operator T-Mobile recently cancelled its plans to sell the Lumia 900.
I am in tears when I think of this. Germany is Europe's biggest market! Wait - it gets 'better'. The D&AD awards are the 'Oscars' of industrial design. This is the Nobel prize of tech. This is the Olympics of gadgets. This is the Heismann Trophy or the Superbowl or World Series for designers. And there was the N9, won the best design award !! Ahead of whom? Well, the Lumia for one, but get this - ahead of the brand new hot iPad 2. Who beats Apple at design!!!!! And yes, the D&AD awards are given in the UK, so its no silly Finnish or Scandinavian thing where Nokia might have some 'insider' advantage. No, this was fair and square a supreme achievement. And Elop still refuses to let the N9 be sold in England !!!!
If Toyota wins European Car of the Year award, you can bet your bottom dollar Mr Akio Toyoda would be there smiling widely in every major European market,. seen in pictures promising a huge ramp-up of sales of that car, in every European market of course. He'd celebrate that award here in Asia and in America and Australia too. What is wrong with Mr Elop? He .... refuses ... to sell ... the N9 even after this award .... in the major European markets like UK, Italy, Germany, France and Spain. He won't release it in the USA, he isn't even letting it be sold in Hong Kong (apparently 7 million people population is too big, Singapore was small enough as was New Zealand and Norway).
Nokia is bleeding cash right now. The N9 could be the most highly praised, loved, hyped, promoted phone getting massive good will and long lasting strong sales. What would it need? 1, that Nokia promise to continue development of MeeGo (actually, Nokia has done that already, they just relaesed MeeGo version 1.3 a few days ago). And that the CEO release this phone to the major markets and give his support to it, that he is proud of it and of course they'll look into more phones to run on MeeGo as it is so highly loved and praised. What kind of moron doesn't say that?
Elop would rather have Nokia remain unprofitable, and force unacceptable Lumia and Symbian phones to the market, than allow the N9 be sold, while the press and retail and even enlightened consumers crave the phone, and in those markets where it is sold, it is rated a superbly fine Nokia prodcut of exceptional customer satisfaction.
There cannot be any reason why not sell it widely. Nokia is already selling other smartphones in those markets. The N9 is currently being manufactured! In Nokia factories. With Nokia parts and using Nokia regular suppliers (who all complain they are underutilized now that Nokia sales are crashing). The N9 is quite similar in look and feel, its compatibility is closer to the traditional Nokia products on Symbian than the Lumia line. It looks like the Lumias too, so it would only help and benefit from that likeness. For any carriers who were refusing to sell Lumia before (like say Verizon the biggest carrier of the USA (and largest country of the Americas), or China Mobile the biggest carrier of China (and largest country of Asia) - or now are deciding to discontinue Nokia Lumia sales due to the non-upgradability factor about Windows 8 - like T-Mobile the biggest carrier of Germany (and largest country of Europe)) - they could simply take the N9 instead. The form factors, the price, the specs are very similar, roughly between the Lumia 900 and Lumia 800 on outwardly matters, obviously on most specs the N9 is far better - and in most side-by-side user tests, the N9 totally wipes the floor with the Lumia.
I can imagine Microsoft doesn't want to see the N9 running MeeGo anywhere near the Windows Phone handsets, considering that still in Q1 poor old Windows Phone family was still being outsold by the 'obsolete' Symbian on five out of the six inhabited continents, and globally by a massive 3 to 1. This after a YEAR after Elop announced the death of Symbian. So if the dead-man-walking Symbian can crush Windows sales so strongly, imagine what MeeGo powered N9 superphones would do.
Nokia is secretive about N9 sales. That tells us something - The only reason Elop would give us the Lumia numbers eagerly every quarter but hide the N9 numbers, is obviously, that the N9 alone at a higher price in tiny markets, has consistently outsold the whole four-phone Lumia line globally. I estimated N9 sales for Q4 and Q1 as part of my regular quarterly smartphone statistics service here on this blog. The N9 has so far produced 1.1 Billion dollars of revenues and 140 million dollars of profits to the smartphone unit of Nokia (in other words, were it not for the N9, the disaster at the Nokia smartphone business would be far worse yet). This while the N9 has been suppressed and hidden and torpedoed every which way by the CEO. The N9 has not been sold globally which would have been Nokia's best interest, but only because it is in Microsoft's best interest not to see that.
The Nokia CEO has breached his fiduciary duty so obviously, openly, beyond any shadow of a doubt, he must be fired for this and he must be sued for full back pay of all compensation, no golden handshakes or parashutes because this is firing 'for cause' and of course he must be investigated for acts against his fiduciary duty, by the stock exchanges of Helsinki, New York and Frankfurt (as most these actions were taken when Nokia was still listed also on that exchange). He must be found to be so in breach of stock market regulations that he must receive a lifetime ban from ever holding any corporate office again. Yes, the Nokia shareholders must sue him for every penny, his house and whatever possessions he has hidden in Seattle and Canada and wherever. He is a criminal for this action against the N9.
Yes, Nokia Board, shame on YOU! You have seen the numbers! Why do you let this assassination continue? Why don't you fire your CEO instead? Don't you want your company to succeed? Shame on you! You, those of you Board members, who cannot show a dissenting vote in a Board meeting about suppressing the N9 sales - are subject to being fired - and sued - by Nokia shareholders and also investigated for actions against the fiduciary interests of Nokia and if there is more than one such Board member, then also of collusion (conspiracy against Nokia). Shame on you! How could you let him do this and stand idly by?
(Sorry, let me take a short detour here. If there was any 'competition' clause in any Microsoft contract that somehow 'prevents' N9 sales - that clause must be immediately revoked and here Nokia cannot be timid in the face of Microsoft's army of attorneys. Elop is an ex Microsoft lackey, if he as CEO brought Nokia a contract with Microsoft, that actually is in Microsoft's advantage - then that contract's very language is proof that Elop was a Microsoft implant, spy, assassin and anything Elop signed will become instantly null and void. Any court in any land will see that if Microsoft sent its own guy to sign contracts to pretend to be Nokia CEO - lets say, about Nokia patents for example - that is never EVER enforcable. That would be the easiest slam-dunk court case ever. But here, please readers, I do not know of any such contracts or clauses. I only say, there cannot be such a non-compete clause that Elop might have signed as Nokia CEO if it hurts Nokia and helps Microsoft - no matter what Microsoft might have paid - because of the blatant conflict of interest. No court would ever uphold that provision - but they would happily of course let Nokia keep the Microsoftmoney that such a blatantly abusive one-sided clause might have tried to get to the Microsoft side, so yeah, Nokia would not need to pay back the 250 million dollars per quarter its been paid now for 3 quarters. Still - again - this is pure conjecture. But it is so bizarre that even after the Der Stern review, and the British D&AD award, that Elop won't release the N9 to those markets. And - why on earth hasn't the Board fired him for this mismanagement? It may be that the Board is timid, and there is some bogus language the Microsoftians on the Board are now trying to scare the Board into 'remaining contractually bound to'. No court will enforce an illegal contract. Elop as Nokia CEO could not have signed that type of contract so soon after coming from Microsoft itself.)
REASON 8 - N950
Sun Tzu taught us "The general who advances without coveting fame and retreats without fearing disgrace, whose only thought is to protect his country and do good service for his sovereign, is the jewel of the kingdom."
Imagine if Apple had a sister product to the iPad, like say an 'iPad mini' (as the rumors now suggest) - is it conceivable that Apple would manufacture it, but then not sell it? Especially if there is eager wide support and desire for the product. It is not certain, that Apple would forever continue the product, that would depend on longer term how its adoption fares, and how profitably (or not) it can be made. But if the product today is a sister to something Apple already sells, and is coming out of the factory, of course Apple would sell it.. everywhere.
Nokia has a sister product to the N9. Did you notice the Lumia line has no phones at all with slider/folder or other QWERTY keyboards? Like Blackberries or the N97 or E7 or N900? There is a slider QWERTY variant to the N9 !!!! Runs MeeGo. Is even more expensive - thus more profitable - and there is no comparable Lumia product even on offer. So the customer who likes the Lumia looks but wants a QWERTY - like the millions of Nokia loyal Communicator users for example or many millions of E-Series users (business apps users often, with Microsoft office apps too)! But Nokia has the N950 running MeeGo, that is being manufactured. This is not some kind of vaporware or project plans. It is a fully finished product, manufactured at Nokia factories. And powered by MeeGo means no license fees to bleed profits to pay Microsoft.
While the Blackberry sales are collapsing, why isn't Nokia offering the N950 for sale to all those customers who want both a QWERT and a big touch screen? HELLO ? This is effectively having BB 10 OS type of experience, both a great touch screen large size AND a QWERTY in the same phone! Nokia could now swoop in, capture all those disgruntled Blackberry owners in a quandry, should I go iPhone and not have QWERTY or go Blackberry Bold with the tiny screen. No - go Nokia N950 and have both! Its like jumping into the future and having the 'ultimate' business or texting or Facebooking phone!
RIM stock price is in freefall because BB 10 is delayed again. Yet Nokia has almost 1 to 1 the exact solution to that need - and using E-Series branding, all the enterprise/business credentials too - and Elop ... refuses ... refuses ... REFUSES ... refuses to sell the N950 anywhere.
Anywhere? It is only made in tiny numbers for developers. It is so highly loved phone, that many say they'd pay far above the retail price of the N9 just to get the N950!!! You can take those N9 numbers I quoted and instantly double them, if the sane CEO only released this phone for sale, that is being manufactured. Nokia bore all the costs of designing and producing another killer phone, and then - yes - refusing to sell it to anyone. For any price? How utterly mad is this? While the company is so broke, it is selling the crown jewels like Vertu the luxury phone unit, or large chunks of Nokia's patent portfolio. So rather Elop would amputate his company, than swallow his pride and let the N950 be sold? Aha, we see what the priorities are here. Elop is one of the worst CEOs ever and now we see his ego is costing Nokia what? 2.5 Billion dollars of revenues and maybe 400 million dollars of profits he refuses to Nokia per year, because of his Ego? Me thinks this Elop dude is a bit of a egomaniac if thats the cost of his vanity..
REASON 9 - MELTEMI
Sun Tzu taught us "You can be sure of succeeding in your attacks if you only attack places which are undefended."
Nokia's strongest market opportunity is not Europe or advanced, Industrialized countries of Asia. Those have affluent consumers who can easily afford top price iPhones and Samsungs and Sonys and HTCs. Those are markets where no matter which platform, Symbian, Windows, MeeGo (or even Android) Nokia were to use, it will face fierce fights with strong rivals with great phones to customers who can afford them. Nokia's competitive advantage will never be great, and will only occasionally match an 808 PureView or N9 type of situation.
The Emerging World is totally different. There Nokia is often not just by far the best known phone brand, or the most loved tech brand - Nokia is the strongest brand of the country, period. Nokia. Not Mercedes Benz or Rolex or Apple or god-forbid, Microsoft. No. Nokia is utter gold in most Emerging World countries from Uzbekhstan to Uruguay, from Bangladesh to Botswana. Yes. That is where 5 out of every 6 human beings live on the planet and they tend to all have mobile phones. They are not smartphones yet, African smartphone penetration is at 5% and even China is only at about 25% but the smartphone market is growing fast. And if you earn 1 Dollar a day in Dahomey, ie a Buck for your boy in Benin - then the chances of ever being able to save to buy a 650 dollar unsubsidised price iPhone 4S is as impossible a dream as buying a Learjet or chartering a yacht to watch the Monaco Grand Prix. (And dont even start about subsidised smartphones with 2 year contracts like in America and Japan - come on, most of these people don't have ID cards, far less credit cards, bank accounts, a credit rating. Many do not have permanent addresses even!) But they want smartphones! I was just in Sri Lanka last month and saw how many poor youth walk around with Blackberries and cheap Androids for example. They want their smartphones.
Windows is not viable for the sub 100 dollar smartphone market. Even the latest low-cost low-spec Windows Phone release will only let Nokia make Lumia phones in the 200 dollar range, at very low specs like the 610, a Lumia phone so weak, it can't run Angry Birds or Skype.
So enter Nokia's next Billion strategy and the Meltemi low cost smartphone OS. Meltemi is yes, a Linux based open source Qt compatible totally new from ground-up smartphone OS platform optimized for the low cost smartphone market, where most of Nokia's customers are. By contrast, the Windows Phone OS is a proprietary closed non-Qt compatible rehash of generations of old OS that has been designed for PCs and now optimized for 'convergence' and far sub-optimized for phones, and totally not suited for low cost markets (where most of Nokia's customers are). The two have zero overlap. They are not a threat to each other. But Meltemi is in any and every way better to Nokia - did I mention it is of course free to Nokia by license, where Nokia would have to pay a license for every Windows use on phones it sells.
Meltemi was 2 months from launch when Elop just fired its staff last week, and killed the product at the Nokia profit warning. Nokia's open source dream.. died. Nokia's Linux legacy.. died. Nokia's last smartphone play.. died. Nokia's low cost Next Billion project for Connecting People in the less affluent countries .. died. Really? This just when Microsoft screwed Nokia in public by announcing that the whole Lumia line is now Osborned too, because of Windows 8? So Elop chooses to remain loyal to the 'partner' that screws Nokia and its plans, and rather kills the only alternate that was under development. And does it now? Two MONTHS from release? With two smartphones ready to announce? What idiot madman does this when in those Emerging World markets nobody knows of Apple or Microsoft but Nokia is seen as the golden brand. In India they released a movie with Nokia in the title (Nokia sued to get the name changed). And now in markets where HTC doesn't want to go, where the iPhone is too expensive and from where Sony has long since departed, Nokia could have made ultra-low cost, far under 100 dollar smartphones - profitably - and capture a disproportionate slice of this market - where the future of this industry lies - and Elop, the Microsoft Muppet, threw that key to Nokia's next decade of domination, under the bus.
Elop feels as CEO that Nokia is better off, trying to make tight clones of the iPhone but ones that run on a far inferior Windows platform and on cheesy colors and plastics, to focus on the North American market where there is not one domestic rival maker and platform, not even two domestic rivals and platforms, not three even, but FOUR domestic smartphone manufacturers running THREE separate domestic smartphone OS platforms where Nokia is weaker than any of those and so is Microsoft. Yes, Apple iPhone, RIM, Motorola and Dell all make smarpthones, running on iOS, Blackberry and Android OS platforms today. This is somehow the 'wisdom' of Elop's 'strategy' abandon those markets where Nokia is strong, and the competition is weak, and rather shift to that market where Nokia and its partner is weak and the competition is fiercest. Sharp move Sherlock!
Sun Tzu taught us "He will win who knows when to fight and when not to fight. He will win who knows how to handle both superior and inferior forces." Elop takes pride in knowing his Sun Tzu and likes to quote the Master. However, by his actions Elop seems to illustrate that he knows how to go against all teachings of the Master instead. This is yet one more piece of evidence that Elop is incompetent to manage Nokia and is one of the worst managers ever.
RAIZON NUMERO DIX (and third ELE) - RETAIL SALES
Sun Tzu taught us: "We shall be unable to turn natural advantages to account unless we make use of local guides."
Nokia has no (almost no) retail outlets. It cannot survive without retail support, which in most countries is operator/carrier owned stores and in many countries also independent handset stores and electronics stores. Nokia traditionally had a massive lead ahead of all rivals in this area, it was a long-cultivated, highly compensated and rewarded competence inside Nokia. Nokia's carrier and retail channel sales staff were the absolute cream of the crop, with CEO level personal relationships often going for decades. The buying staff who decide which phones will be covered is tiny, very specialized expert, and usually long term career telecoms professionals. That was an area where Nokia utterly trumped Apple and RIM and HTC etc, in large part, because of the sheer volume of Nokia handsets sold - when Elop took charge, Nokia shipped 1 million phones every single day of every week, Saturdays and Sundays included, 365 days a year, 366 days every leap year. DHL shipped Nokia handsets by air, by the palletload, for Nokia. And Nokia covered every market segment, meaning if your store sold phones, it would almost certainly have some Nokia in it come what may. And that, existing retail relationship is a powerful platform whenever Nokia wanted to launch new phones!
Retail sales are very simple proposition. The sales dudes and dudettes want to make commissions (and other sales bonuses and perks, win sales contests to get to that beach vacation etc). They are extremely simple to understand, purely money and transaction-efficiency oriented. If you as their sales manager can help them close on average one more sale per day, they will not fight you on the idea, however silly it might seem to 'normal' people. But if you try to do something that slows their daily sales work down, they will rebel at you immediately - and en force. Simple, easy, logical.
If you have a highly popular smartphone, that is in demand, there will be customers coming in to buy it. If the sales commission is good then the sales guy will want to close that sale immediately. Get the customer to sign on the dotted line, run the credit card, and pack the new shiny Lumia into that store bag and off you go, next customer please.
The absolute last thing the salesdude or dudette wants to see, is yesterday's customer walking towards him holding an opened box with a frown. Now the customer needs your time. That is time you can't sell, and can't make more commissions. In the best case, you just deal with the problem talk and listen to the problem, and hopefully just talking will make the nuisance customer go away (but you are a professional salesgun, you know to keep smiling broadly and not rush the customer in any way). In this, the very best case, this customer now is costing the sales-star time, for no more commissions. Twice the time, for only the same money. Very bad, Nokia Lumia, very bad!
In the worse case, the customer is unhappy and wants to return the phone. Something went hideously wrong, didn't the customer hear you when you said that the Bluetooth on the Lumia series can't do file transfers like all previous Nokia have done, like moving the pictures from older Nokia phones to this one? So now you have to do a second sale, to the same customer, who won't give you more money. You may have to give the customer a slightly more expensive phone just to keep the customer happy - and that is VERY bad, as that eats into your commission because you are getting no more money! Twice the work, no more money. And then the hassle is not over. The package is opened, you have to now take the returned Lumia., take it to the back room, and spend time today from your working hours, to process the return paperwork on that damned purchase! It means you the supersmart supersmooth salesrep of the month, just wasted 3 times the work, for one lousy sales.
The sales staff learn VERY fast which phones have highly satisfied customers and don't get returns, and which phones are hated by customers back home, and get high return rates. Have a guess which phones sell in that store, and which don't. Spoiler alert - Lumia series has the highest return rates in Nokia smartphone history. The sales hit a wall almost instantly in all markets and now many retail outlets don't even stock the Lumia models they still show in their window displays.
That was the worse scenario. Want to see the worst scenario for our salespal? Yes. There is a worst case. The customer comes back, makes a scene, demands a refund, won't accept a replacement. You have to give the customer his money back!!!! This is a nightmare and of course every salersrep instinct rebels against paying back the commission you got paid last week, so they deduct it now from your next paycheck. You are literally in a hole!!!
So this gets ugly. That customer now threatens to sue the company - and sue you the saleshero personally! The angry customer yells at your boss, makes all the customers in the store very nervous (did you see the video of the UK middle-aged man who tore up literally the whole T-Mobile store out of a refund dispute. He literally tore every display case and demo phone out of the walls and smashed the whole store up. When the police came up he smiled and was calm, admitted to the whole thing). Yes, when its not Angry Birds its Angry herds of returns customers. Won't take a replacement, accuse you of lies or misrepresentations and threaten you about their brother who works for the local newspaper or cousin who is a lawyer or uncle who is somewhere in government overseeing telecoms or retail.. Who wants that?
So, now you have to go through first, the irate customer, hear his complaints and try to sell the replacement (double time for no extra commission). After that, he or she is still upset and refuses, demands the refund. Now you have to get your boss, the store manager to approve it. He or she of course won't want to give away store cash (and commissions, also to the manager) so the manager tries yet one more time to get the angry customer to accept a replacement instead. That goes nowhere. Now the store manager comes back to you, tells you to process the refund, gives the appropriate management codes to enter into the system, and your paperwork nightmare starts.
Now the sales hero has spent at least 3 times the amount of time with this same customer, and has to give back the money, and gets no replacement sale, meaning the total sales commission from yesterday is wiped out too. Three times the work for zero money? This is sales rep hell. And it happens every day. What they don't want is the phones that have any risk of such severe disappointment. So if they know its a suspect phone that is often returned and this current moron walk-in came asking for a Lumia, just tell the idiot customer you don't have it in stock, make him or her walk to the next store to try to get it. Or, if the customer is really insistent and saw the phone in the window and is willing to be put on some waiting lists or whatever, then spend time with him or her, Mr Customer-Knows-Best and list EVERY known problem (and all imaginary ones that rumor has it, might also be true) to bombard the idiot customer with the facts, that they really don't want this horrid device. And sell them the Android instead.
Did I make my case? I should know, I've spent most of my professional career in various posts in sales, sales management, pre-sales, marketing, consulting and related activities. Yes, from literally encyclopedia sales early in my career to network equipment sales to such cool customers as the United Nations Security Council. I've set sales records, I've taken top sales reps to international trips as sales contest winners, and I've entertained top CEO clients with wives at international sporting events etc. I know sales. Oh, and I wrote literally 'the book' about sales and marketing in mobile telecoms (3G Marketing, my third book, which just happens to have been the fastest-selling telecoms book of all time, said my publisher back then).
In sales, you have to get to the soul of the sales reps. They are motivated by their commissions and their other sales bonuses. Nokia knows this. Nokia sales knows this. So what of Microsoft? Microsoft's reputation with mobile phone handset sales was horrid. Stingy selfish company, not in the happy corner of the sales staffs' hearts. Nokia since Elop took over? Become every more hostile with carriers, ever more like the Evil Empire, Microsoft. Like I call them, the Evil Twins. Part of the Axis of Evil in telecoms (with partner number 3 obviously being Skype).
So what has Elop been doing? Right from the start, when he saw problems, he blamed sales (yeah, they don't like that). Over at Nokia, Elop was firing Nokia sales reps of very long standing, as scapegoats to hide Elop's own mistakes like the Burning Platforms memo and the premature announcement of Windows. Then came the obvious retail boycott against Nokia. And Elop has been accusing the sales channel ever since. He was feuding with them on minimum purchase limits for Lumia threatening stores would not get any, if they would not buy very large initial orders. Did you see the latest Quarterly results disaster? Who is featured as the head villain? Retail? How about Nokia's shareholders' meeting. Elop blamed retail for not supporting his beloved Lumia sales. What of the profit warning just now? Same thing, the sales channel ain't supporting sales. But what does Elop do? He changed the long-standing distributor in Britain. He ended the long standing distributor deal with the main distributor for Africa. And meanwhile the relationships with the exclusive Nokia 43 store dealer chain in Russia? They got so fed up with Elop, they just switched exclusive deals to.. Samsung of course. Elop has a genuine, global, not just smartphones, all Nokia related retail problem. And he is not fixing it. He is spending his time playing with Microsoft, plotting if they should buy RIM, and selling his Romanian factory and buying a Swedish imaging provider. He likes dealing with the impressive stuff, he does not like dealing with his day job - fixing Nokia's execution probles, the very reason he was hired for.
If your retail channel refuses to sell your product, you die. This is not a 'gray area' matter. This is not in any way open to debate or something with options or alternatives. If your retail channel refuses to sell your product, you die. Nokia's retail problem started last February with the Burning Platforms memo, but it has gotten progressively worse. It was at corporate suicide levels this Spring. That was before the retail channel learned a week ago with Windows 8, that all Lumia series are now Osborned. Now every sales dude and dudette fears seeing customers coming to their stores in the next weeks clutching Lumiaboxes, demanding refunds or replacements. This problem cannot and will not be solved with Windows Phone 8, because salesdudettes and dudes are not dumb. They know, their April sales job, that took 11 minutes to earn them their little Lumiacommission, was rudely revoked by Nokia's Elop and Microsoft's Ballmer that one July afternoon when that old lady walked in and said she wants to return the Lumia. No. These sales reps are burned for good on Lumia and on Elop and on Windows Phone.
If your retail channel refuses to sell your product, you die. Nokia's heart attack started last February, it is now in cardiac arrest and Nokia is dying. Don't take my word on it, the fall of Nokia's smartphone sales has literally set a world record over the past 15 months and the sales collapse is only increasing in its speed. If your retail channel refuses to sell your product, you die. What did Elop recently do to his departed long term veteran Nokia global sales rep? Did Elop replace him with another gold-standard super veteran everybody-trusts-this-guy type, whose blood does not run red, it bleeds Nokiablue? No. Elop brought in his Microsoft Mafiadude who had never sold a phone in his life before Elop grabbed him, as now the global handset sales chief? What The F*ck? You truly take the red flag to the bull and anger these guys with the Micrsosoftie to 'fix' this problem with his game of lies, deceit, bullying and arrogance. Sure, Elop, that will fix the problem! The definition of madness is to continue doing exactly the same thing, while expecting a different result. Can a crazyguy in charge of Nokia be good for Nokia? No.
Stephen Elop is a Serial Strategic Mistake Machine. When your retail channel refuses to sell your product, you die. The Board has heard it loud and clear, past Chairman and former Nokia CEO Jorma Ollila knew this, he heard it, he deplored it, but he did nothing to fix it. The solution - fire Elop's sorry ass. New Chairman and anti-virusdude Siilasmaa is also fully aware that there is an ongoing severe retail problem. He hasn't fixed it? The way to fix this, is to first fire the Microsoft Muppet, and make Elop take his little Microsoft buddy salesguy with him too. When your retail channel refuses to sell your product, you die. Nokia is doing the most rapid death in the shortest period of time ever, for a global market leader Fortune 500 sized company. Ever. This is management failure at its worst. Literally Elop is presiding over the biggest management fiasco ever seen. The point has long since passed that Elop might be able to save this. He can't. If your retail channel refuses to sell your product, you die. The only option left for the Board, if there is to be any kind of Nokia left, is to fire Elop NOW !!!
This is yet another ELE, by this action alone, Nokia's existence was put into threat and Elop must be fired for it and this single fault alone qualifies Elop as one of the worst CEOs ever. We continue with..
REASON 11 - CARRIER RELATIONS
Sun Tzu taught us: "The clever combatant looks to the effect of combined energy, and does not require too much from individuals."
Apart from the retail troubles there are the carrier relations, which are similar and often closely linked but not the same. There are retailers who sell phones who are independent of carriers like Carphone Warehouse or Radio Shack etc. There are carriers who don't even have stores of their own. These are closely linked, but separate issues (and problems for Elop now). Nokia has had poisoned carrier relations in the past, most obviously with the US based mobile telecoms operators/carriers for nearly a decade. Carriers have to authorize phones that are supported in their networks. If carriers subsidise phones like they do in the USA, France, Japan for example, then those 'down payment' prices that are advertised 'with contract' are totally in the control of the carriers. So yes, if you read this in America, and you 'know' the price of the iPhone 4S is 199 dollars with contract, that 'with contract' part is this thing here. The real price is as Apple tells us, 650 dollars. That is what you will end up paying. But AT&T kindly acts as high-commission middleman who sells you a kind monthly payments plan where AT&T charges you interest too. Does that 199 dollar deal now sound as good. They are tricking you, you are charged 650 dollars but they hide the 451 in the fine print.
So obviously, if the carrier subsidises your purchase price (by forcing you to take a contract so they get their money back in monthly payments) of course that carrier has total control which phones to sell and make this sweet deal to which customers they trust. So yes, this decision 'to subsidise' is irrespective of whether those subsidised handsets are then sold through the carrier stores or independent stores. This is a carrier handset strategy, choice and support issue.
So in practical terms, Verizon and Sprint in the USA decided not to take any Lumia phones at this time. T-Mobile was willing to take one, the Lumia 710. AT&T waited until the Lumia 900 became available. In some countries, some carriers have approved all four Lumia phones to their networks, others pick some, yet others still, say no to all, like China's two largest carriers, China Mobile and China Unicom have done. In some countries the carriers have enormous power to decide exactly what phones and in what configurations are allowed into their networks, like in Japan for example. In other countries like often in Emerging World countries the carriers seem to not even care, and any GSM standard phone for example will do, new or old, genuine or pirated.
This carrier decision is for the most part, in most countries an entry-level barrier that either opens or closes the door to that phone model in that market. Even if it technically were to function on the networks with the correct GSM frequencies, on a prepaid SIM card subscription basis, most retailers would not bother to stock any phones that have not been approved by the carriers. In some countries, the national telecoms regulator takes a very strong, pro-active role in testing and approving handsets, independent or in conjunction with the carrier community of that country.
This is a total make or break situation for any new handset model. The iPhone was not originally approved for Japan for example. None of the networks wanted the original iPhone. Didn't matter if some consumers in Japan loved Apple, used iPod Touch and Mac devices, there would be no iPhone sales until the right type of models were offered, that at least one of the carriers would want to approve, as eventually Softbank the smallest of the three carriers did with the iPhone 3G.
To the degree the carriers have their own stores, they then have far more power to influence that sales pattern. They may make phones specials in their consumer advertising, their billing inserts, etc. They can make special bundle offers that certain service packages like say entertainment, music, TV etc might be tied to certain phone models on certain price points. This will typically greatly increas that given phone model market success at that carrier at that time. Then often, telecoms being competitive, such preferred treatment might result in a rival carrier refusing that model altogether - witness AT&T refusing to sell the Lumia 710 because rival T-Mobile already had it.
Two quick case examples. Nokia's N-Gage the original gaming phone. Nokia wanted carriers to sell it but the carriers hated the idea, that Nokia was setting up its own app store and offered sideloaded games that didn't go through the carrier network. The carriers told Nokia to stop it, and started a global slowdown of Nokia sales.Nokia market share that had been near 40% fell by 12% in 18 months. Nokia got the message, changed N-Gage handset design, the app store format, offered carrier support to the games and the carriers (mostly) forgave Nokia and in a few quarters, Nokia's share jumped back to nearly where it had been.
Second example, Microsoft's Kin. Microsoft made the expensive Danger acquisition and pursued its highly funky youth-oriented handset line. They lined carriers around the world to sell it. Then as the launch date came near, carriers suddenly pulled out. Most of the promised carrier subsidy deals vanished and the Kin phones lingered in limbo for a while until Microsoft learned globally that there was nothing to be had. Microsoft shut the Kin project down in 6 weeks as total failure not even attempting the international part of the launch plan. This was a highly expensive purhase, and Microsoft had spent about two years of expensive R&D to develop the phones. Dead in six weeks. A world record in fact. Killed by carrier relations. Microsoft was confused and didn't understand what it takes to win or not lose in mobile. You cannot feud with the carriers. That is a game where you - at least the handset makers as such - cannot win.
So how is the Nokia carrier relations situation now? When Elop took over, Nokia had by far, by a wide wide margin, the world's best carrier relationships. The early commitments and communications from Elop seemed to extend just the right messages and tone that the carriers wanted, and Ollila was also in synch, assuring all that Elop would not make major strategy shifts, he would only help Nokia execute better and faster.
The carrier community was betrayed starting with the February Elop Effect, in small part in the Symbian, MeeGo and Windows statements, but more in the Ovi store, Qt and related ecosystem castration that Elop has pursued relentlessly since, against all complaints and protests from the carrier community. Nokia had been the most open of all handset makers. Nokia had always promoted open standards, openness, Linux, standards, etc. And cooperation. And ever after N-Gage, Nokia had prioritized cooperation with carriers first!
Now with uber-brain Elop in charge, Nokia abandoned all that and went to the most closed, restictive and even punitive system. Where the carriers could not even trust Nokia's word, because there was a dictator in charge, known for its unpredictable and vengeful whims: Microsoft. And Microsoft not only rejects carrier inputs to its system, it even won't let Nokia help develop Windows or allow the Nokia Qt tools to work with theirs.
There are only 600 carriers. About 100 operators have 5 million or more subscribers. The 25 largest carriers control half of the planet's mobile accounts. You really don't have to piss off many of the big ones to ruin the rest of your year. And what Elop has done? He fired his China sales boss. He then sent in a veteran China Nokia sales representative, who quit only months later utterly frustrated, not by his old friends, they had not changed. He quit because of Elop and his meddling and arrogance and contempt of the carriers. Same of the USA top sales guy. Quit. And the top Windows Phone marketing chief - a high profile 'capture' from Samsung to Microsoft. Quit because of the poisoned relations that follow Microsoft everywhere.
Look at this example. NTT DoCoMo the largest carrier/operator of Japan literally invented this mobile/cellular telecoms industry. And since then, they have kept innovating and inventing. They were the first 3G operator, the first mobile internet provider, the first app store provider, the first WiFi phone supplier, the first NFC mobile wallet provider, the first mobile advertising agency, the first.. almost anything you can think of in this industry. What was the operating system that NTT DoCoMo specified for its premium phones? Symbian. As recently as January 2011, mere weeks from Elop Effect, NTT DoCoMo had reassured the world of its long term intentions to develop using Symbian. That meant, that any premium phones that Japanese makers like Sharp, Toshiba, Panasonic, Fujitsu etc wanted to manufacture for NTT DoCoMo's network, would have to run Symbian. Millions of guaranteed sales just there. When Elop killed Symbian, it was only hours that we heard from Japan, that NTT DoCoMo ends Symbian and shifts all its platform to.. Android. Did Elop not tell this important a Nokia 'partner' that he intends to kill Symbian? No. Elop doesn't consider carriers as allies, he thinks like a Microsoftian, he thinks of all others as his slaves. Can you imagine the insult this is to the Japanese? Can you imagine the Japanese ever, EVER forgiving Mr ahem, what did he want to be called, General? Do you think there is the slightest chance, that every one of the 599 other carriers didn't notice this enormous slap in the face from Nokia to the legitimate grand old company of the mobile industry - a company by the way known for enormous kindness and oppennes and helping others (NTT DoCoMo obviously). Domo arigato Stephen-san. What an asshole!
If you are Boeing, then American Airlines and Air France and Singapore Airlines are among the most important possible customers to you. Because Mom and Pop's ice cream shop will not be buying a 787 Dreamliner any day soon, even if the dad has a Cessna monoplane daylight flight pilot's license. Elop came from the Microsoft Way of bullying its little customers and trampled developers and VAR reseller chain. That is not how handsets are sold. The new Nokia global handset sales head, is another Microbrain. Nokia once had the gold standard in carrier relations. Now Elop has been bullying his way to destroy all that and adding the top Ignoramusdude to 'fix' those problems.
Elop has been poisoning every carrier relationship he has found at Nokia. Elop is to sales what water is to fire. By this reason alone, he is most definitely one of the worst CEOs of all time.
REASON 12 - ECOSYSTEM
Sun Tzu taught us: "On the ground of intersecting highways, join hands with your allies."
Nokia had an existing massive global ecosystem. When fully connected and the Qt project is completed soon, it will be by installed base and by new sales far bigger than all of Microsoft's Windows - of every generation and every device from smartphones to desktop PCs and enterprise file servers. When we count Nokia and a dozen partners on Symbian, plus add MeeGo, Maemo, Moblin, Limo, Tizen and then add Blackberry and then add.. Android .. and then add Nokia featurephone environment with S40 - this is by FAR the biggest ecosystem accessable on the planet. Of all Nokia platforms the only one excluded from this electronic eldorado is.. Windows. You think the Nokia 'partner' carriers who signed on this 'dream' had happy thoughts when Elop suddenly out of the blue cancelled their future? The Intel CEO learned of Elop's mad decision via phone call the night before Elop took to the stage with Ballmer!
This is no 'work in progress' some future ecosystem. I am sure you've heard the kind Apple propaganda tell you how massively the iPhone App Store has downloads and apps and makes money. Yeah. Apple from America. Where they speak the English. Now, would it surprise you if I told you that in Finland, where they don't natively speak the English, but speak the Finnish, it is actually Symbian based ecosystem which is biggest by developers, by apps, by downloads and by revenues? No. Probably not surprising in Nokia's home market.
So what would be a fair comparison then? Lets find a neutral market. Where Apple is not at home, neither is Finland. And lets even be so kind, to not use Europe the continent, so lets not consider Nokia's close neighbors either. What of truly neutral markets
In China, the biggest country (four times USA) on the Chinese language the bestselling app store currently even after Elop killed Symbian last year is Symbian Ovi Nokia store, not Apple iPhone App Store. In Russia and the Russian language region, the biggest is Ovi/Symbian. In India with I forget how many dozens of domestic languages but yes, India (over three times bigger than USA in population) the bestselling app store is Ovi Nokia Symbian, not Apple's iPhone App Store. Do I need to go on?
The whole continent of Latin America (Spanish speaking and Portuguese speaking) the bestselling app store is Nokia Ovi Symbian. Yes. Latin America has twice the population of the USA and yes, this even a year after Elop murdered the Symbian path. On the continent of Africa (bigger than North and Latin America combined) the bestselling smartphone app store is Nokia Ovi Symbian not Apple iPhone App Store. Today. A year after the assassination of Symbian. The Arabic language region across North Africa, Middle East, Near East, and Southern and Eastern Europe (thats I think 2.5 times bigger than the USA) - the bestselling app store? Nokia Ovi Symbian. On the continent of Asia. Which is more than ten USA's in size. Which has more people than Australia, North America, Latin America, Europe and Africa - combined. Yes, where literally more than half of the planet lives - the biggest app store is Nokia Ovi Symbian. And for the record, the Windows Phone based app economy and 'third' (haha) ecosystem - does not register in countries where the domestic language is not English.
Yes, I know the Apple reality distortion field is powerful. But I don't deal with imaginary economies here on this blog, I deal with cold facts. The world's continents ranked by population and bestselling smartphone app store currently, over one year after Elop killed Symbian are:
Biggest Asia - Nokia Ovi Symbian
2nd biggest Africa - Nokia Ovi Symbian
3rd biggest Latin America - Nokia Ovi Symbian
4th biggest Europe - Nokia Ovi Symbian
Second from last North America - Apple iPhone App Store
Smallest Australia - Apple iPhone App Store
Nokia's Symbian based Ovi app store today is the bestselling app store ecosystem in every country where the domestic language is not English, or Japanese, or Korean. (and up to the Elop Effect, Symbian also powered the biggest ecosystem obviously in Japan). The part of the population of the planet, whose native tongue is not English, Japanese or Korean is about 91% of the planet. Nokia owned the app store space 'ecosystem' for 91% and Apple and Google Android are fighting neck and neck for that final 9%. This is what the Nokia that embraced open systems, partnerships - and built patiently across languages and - with the help of the domestic carriers - had built.
Every expert in mobile apps and services will tell you, the hardest thing to achieve in mobile is carrier billing. You know who leads in carrier billing. Who had in fact more than three times the carrier billing deals than its nearest rival. This is the biggest key to generating MORE revenue for developers? Nokia Ovi Symbian. Yes. Nokia has produced more millionaires, in more languages, on apps than any other platform. But the Apple reality distortion field is strong, we all hear about the massive free downloads on the iPhone. Go to India, to Nigeria, to Brazil, to Indonesia, to Pakistan, to Germany, to Russia, to Argentina, to Kenya, to Egypt, to ... wherever that they don't speak English (or the two Koreas, or Japan) and find out who are the most successful app developers in their domestic languages, and it is on Nokia Symbian Ovi platform. And why? Because of the painstaking long building process Nokia had fought through to get - over 130 carrier billing relationships!!!!
Nokia Ovi was offered by carriers - not bypassing them like the iPhone or Windows - in localized, national, language-specific, currency-specific, alphabet character/pictogram specific application ecosystems. This was the most 'open' and specifically global, affluence-level-neutral ecosystem ever built. You didn't have to own a Windows PC or Xbox or Macintosh to join. You didn't even have to have a Symbian smartphone to live in the Ovi world. It works even on Nokia featurephones running S40. The carriers had invested enormous time and effort to nurture this world.
Elop spoke eloquently about the need to have a winning ecosystem. Nokia did. Nokia had by far the biggest, strongest and healthiest ecosystem in mobile, stretching across the whole planet and all major languages, continents, carriers. But no, it didn't have as many apps or downloads as the iPhone App Store. Not yet. Shortly after Elop took over at Nokia, the Ovi store became the second bestselling app store on the planet even including Apple's iPhone App Store and including the English-speaking world. How's them apples then? Far FAR ahead of the others, Blackberries and Windows and Androids and Palms etc.. Didn't know that did you? Or that Apple wasn't running away from Nokia, no, Nokia was closing the gap to Apple at that time. Second bestselling app store. And Elop calls this - a burning platform, lets shut this down and join - who was it? The SMALLEST ecosystem. The tiny one. Not second, third, fourth, fifth or even sixth ecosystem. Windows Phone was the seventh ecosystem at the time - and its sales were declining as they did from that point on for the next 9 months straight until finally, Nokia's massive sales organization churned out Lumias for unsuspecting customers. Nokia did not need Windiws. Microsoft desperately needed Nokia just to survive.
Elop knew ecosystems are a key to victory in mobile. He found the strongest. He set it on fire like an arsonist. If this is not grounds to fire the CEO, nothing is. And this is obviously a sign of a pathological psycopath and patently unfit to lead any company. Definitely one of the worst CEOs of all time.
REASON 12a as they say in New York City elevators that have no 13 - CHINA MOBILE
Sun Tzu taught us: "The skillful leader subdues the enemy's troops without any fighting; he captures their cities without laying siege to them; he overthrows their kingdom without lengthy operations in the field. With his forces intact, he will dispute the mastery of the Empire, and thus, without losing a man, his triumph will be complete."
(How poetically appropriate, that the greatest strategist of all time, General Sun Tzu, in his masterpiece the Art of War, in the one part where he describes the pinnacle of strategic military excellence - the very best possible performance of a General, our example should also be specific to China, Sun Tzu's homeland)
So then China Mobile. Nokia's new OS, MeeGo, was developed with Intel and it had a surprising carrier as a partner among the core developer team, similar to how NTT DoCoMo had been with Symbian. This time it was China Mobile. China Mobile is so enormously huge, it alone has more subscribers than... the total population of Europe. Thats two whole USAs from sea to shining sea. China Mobile alone is bigger than seven AT&Ts. China Mobile alone serves telecoms services to literally one out of every 12 people alive on the planet. And Nokia had been courting China Mobile for decades, providing it with everything from custom handsets to networking equipment on the China-only 3G standard called TD-SCDMA (the iPhone doesn't even come in this configuration, Nokia provides many phones on it). China Mobile was so essential to Nokia's future, Nokia built the world's largest handset factory to Beijing, just to serve China's domestic handset needs. Talk about commitment!
And yes, China Mobile loved Nokia and Symbian. In 2010 Canalys reported Nokia's market share of Chinese smartphones was a staggering 77%. Note, China is the world's largest smartphone market too, far bigger than the USA and growing far faster. And this China Mobile had agreed to standardize its future smartphone platform not on iPhone or Blackberry or Android - but on Nokia's MeeGo. In fact, China Mobile rejected both the iPhone and Blackberry altogether!
Think about the power of that relationship. You, Nokia, have such a strong partnership that one customer who alone accounts for 8% global handset sales market share. Apple's current total global handset market share is 8%. All iPhone markets and countries combined. Nokia in one sweet carrier deal with China Mobile through MeeGo had the 'inside track' not just to match MeeGo sales to iPhone today, but also through this warm, trusting, long-term ecosystem-building and Chinese language, currency, character set etc customization, also EXCLUDE the iPhone and Blackberry totally from the world's biggest market. If you were only slightly smart, you know this is the single most customer relationship in the telecoms industry. And somehow his predecessors and carrier relationship geniuses had won it for Nokia. The Nokia China Mobile sales rep is literally your most important person. You, the CEO, will listen to and do 100% exactly what that China Mobile guy says. If China Mobile asks you to join them to watch the take off of the new Chinese rocket to space, and its your 30 year wedding anniversary and the simultaneous birthdays of each of your 17 children and by weird coincidence also your mom's birthday and your very frail grandmom's birthday too and she is now strapped to a bed, ..you cancel all that and take the trip to China.
This one client controls 8% of the planet's phone business. The fastest growing hardware business of all time. The industry that made Apple the most profitable company in the world. The industry that will cannibalize and dominate countless others from music and gaming to PCs, the internet and even payments and money. And, thanks to far-sighted and dedicated customer service, your predecessors had secured this customer - controlling 8% of the planet's phone business, to be your strategic prtner with MeeGo.
Yes, Mr Elop, did you want to tell China Mobile that your Nokia will not continue with MeeGo and you will rather go with Windows Phone, a platform for which no Chinese apps exist. A platform that requires Hotmail to use, a service almost unused in China. A phone that requires you use Zune to make even the simplest picture transfers from your phone, Zune which.. has near-invisibly small usage in China. And one where many benefits come from Xbox360 - a service that is literally illegal in China. Excuse me, Mr Stephen Elop Sir, could you repeat that, my English is not so good: you changed our MeeGo partnership, for what?
Did you really understand what I said? I'm sorry this is a long blog. But let me be blunt. The China Mobile problem alone - means Elop blasted an Apple iPhone sized hole in Nokia's future business from here to eternity. I think this is not a far fetch to say, Elop is the evil-Anti-Steve-Jobs of the industry. Elop is truly starting to sit well in that picture, as the Duhanov to Steve Jobs's Siilasvuo applying our search and analogy from the Battle of Suomussalmi, doesn't he? The greatest business leader ever and the worst CEO of all time. If you are able to somehow achieve in one year the destruciton of an iPhone-sized hole out of your phone business, you must be one of the most detrimental CEO's ever seen (and utterly incompetent to boot). He must be fired now.
REASON 14 - NOKIA SERVICES
Sun Tzu taught us: "What enables the wise sovereign and the good general to strike and conquer, and achieve things beyond the reach of ordinary men, is foreknowledge."
Elop wrote in his Burning Platforms memo that Nokia had fallen years behind. He has since regretted and reversed many parts of the memo. He has for example issued totally opposite statements (this time more accurate) that Nokia is in fact years ahead of Apple, such as the evidence of the massive patents lawsuits out-of-court settlement that Nokia signed with Apple. Nokia pays Apple? Not one red cent. Apple pays Nokia for numerous patent infringements? Yep. For every single iPhone sold. The street has estimated that to be worth about $12.50 per iPhone sold, into perpetuity. So just from Apple, Nokia earns about 450 million dollars per quarter currently. This is all work completed years before Elop came in. It is heroic invention work and meticulous documenting and patents IPR work done diligently by Nokia engineers and R&D staff. Hey? Who WINS against Apple? Who proves Apple stole from their patents? Don't tell me your company isn't one of the dominant ones if Apple - Apple for goodness sake - succumbs and agrees to pay you for ripping your inventions off. Who is better than Apple for heaven's sake? Nokia thats who, from before Elop the Clown brought his Microsoftian Circus to town.
What of the future? The Mobile Advertising industry has passed 10 Billion dollars in value annually, and the advertising industry projects nearly doubling in size this year again. What of money? Visa is one of many financial industry giants who now say the future of money - not just credit cards, money - is mobile as in your mobile wallet on your phone. Kenya will become the first country to pass the point where 50% of its total GDP will transit a mobile phone, That happens by the end of this year. Meanwhile the IT tech industry talks of two giant trends they are witnessing. One is social networking, the other is cloud computing. Both are by wide consensus seen to head directly to smartphones.
So how of our Microsoft Microbrain? Elop has sold Nokia's mobile advertising arm, one of the ten biggest on the planet! Elop quit the Nokia social networking services. Elop sold the Nokia Money project which had alredy taken 12% of the mobile money market of India (the world's second largest mobile market, and one where very few have traditional banking accounts). And Elop, a Cloud Computing Guy, shut down Nokia's cloud project. Elop says 'thank you' and takes all of Nokia's most forward thinking, not experimental projects but fully functional, operational, future-oriented mobile businesses and sinks them all. For what? This is a man with 'anti foreknowledge'. He sees the future as something he can go and destroy. He is the Terminator. He is literally a menace.
This is yet another, independent reason why he is one of the worst CEOs, to take all of Nokia's clear well-established early 'bridgeheads' as he likes to use the word, into the real areas where this industry is going, and far ahead of his rivals - look at Google whose Chairman Eric Schmidt wrote in Harvard Business Review that one of Google's top priorities is mobile money? Google - come on, last year - Google - says they want to own this space and Nokia had a lead of many years. Now Elop abandons all that and why? Because he needs to push unwanted Osborned Lumias down the throats of customers not wanting them and his disasterous actions cost too much. So he sacrifices Nokia's massive lead - who has a massive lead on Google? Come on! Google! Its strategic direction? And Elop throws that away.
REASON 15 (and fourth ELE) - LUMIA
Sun Tzu taught us: "So in war, the way is to avoid what is strong and to strike at what is weak."
Then about his make-or-break product line, the Lumia smarthpones. I wrote in February last year, that I felt the Windows Phone choice as likely to fail and a high-risk venture with very low chance of success. But I also wrote, that it might work, as yes, Microsoft was the biggest software house who had dabbled in phones and failed there. Nokia was the giant handset maker who had for a long time struggled on its software side. If these two got togeher, and 'stick to their knitting' - then yes, it might work. But taking the very long tumultuous and tempestuous relationship Microsoft has had literally with every one of its 'strategic' partners in mobile in the past, gosh, starting from Sendo, a company Microsoft drove straight to bankruptcy and pillaged and rampaged all its assets - or that seemed to be how the press reported from the long Sendo court case at the time (it was eventually settled and the story was that Sendo was found to be 100% right and Microsoft 100% at fault but by then Sendo was kaput). Every single Microsoft mobile venture ends in the tears of the other partner. Microsoft is the cruel, abusive, sadistic, treacherous and thieving widowmaker. Its latest victim: Nokia.
So? Elop said he's going Microsoft. Ok. I yelled and screamed bloody murder for a couple of days on the blog, then settled down, and took a deep breath, and did some analysis. What if this were to - even against the severe odds - work out? What if? Could Elop make this work? I said Elop had a very big ask ahead of him, this new Lumia line would need to be perfect from the start, a very difficult thing to achieve. The Nokia user experience would be disrupted, that was a given. He would have to - in a huge hurry mind you - ensure that the Lumia was seen as fantastic, while not too alien to alienate Nokia fans, and yet simultaneously technically advanced. And unfortunately, the comparison would be to the iPhone and Galaxy, not some old Motorolas and LGs.
The development cycle for mobile phones from a truly clean slate is 18 months. Elop was able to cheat on that with the Lumia 800 by a couple of ways - he stole the form factor specs from the N9 that was coming already in the pipeline and was clearly going to be an iconic phone by its outwardly appearance - not an easy thing to achive in this age of near identical iPhone-a-clones. He also cheated by launching the project in secret already from before the project was revealed, and cut more corners by having the whole first Lumia 800 done by outsiders, at the Compal factory of Taiwan. The last thing he did, was to rush and hurry the cycle, so the testing was left to minimal, or in fact too little as manufacturing and severe software bugs have plagued each of the first four Lumia devices.
But yes, if Elop announced Windows in February, and his first Lumia hit the stores in December, and we'd find out by around say January that it is a total dog failure of a phone because of some peculiar consumer demand things (remember the Motorola Rokr, the supposed first musicphone that was done with Moto and Apple of all companies? A total market fiasco). Yes, so if by January 2012 we find out the Lumia will not gain market success, and Elop now does a total redesign, the next fully tested, honest Nokia-made Lumia model, designed after the problems are identified, would not be able ot be sold until.. July of 2013. That is the reality of this industry.
Nokia might be able to do it. Nokia has given us some truly fantastic phones - look at the sheer multi-purpose-powerhouse that was the N95. It took Apple four years to match most of it in subsequent iPhone updates (and no, I am not claiming the N95 was the better phone, I said the iPhone was the only transformational phone this industry had seen, before it launched, and that we'd measure time in two eras, the time before and after the iPhone. My blog is where the term Jesusphone came from - and this love of the iPhone was confessed in public before ANYONE had touched an iPhone in any store. While its touch screen was cool, the original 2007 iPhone by other specs and abilities lagged the N95 by years. Years).
Look at the E90 Communicator, a pocket palmtop computer if there ever was. A superb machine. A precision instrument. Or the contortionist phone the N93, the phone that broke through so many walls for Nokia from optical (ie real) zoom to TV out, a feature few had even thought to hope for but all fell in love instantly. And the ability to record HD quality video. What? On a phone? Or the N8, the first handset yes mobile phone, used by professional Hollywood cinematographer to shoot a full length movie that was released commerically to theatrical release - not some short film festival, a real movie. Shot with a standard Nokia smartphone! Or now look at the 808 Pureview. If you can see past the ugly appearance of the phone, that camera is simply staggering. Yes, Nokia can do the true state-of-the-art push all boundaries phones, from time to time. And then, it can do the dogs, like the N97 or the N-Gage. Enough said. This was going to be a gamble. A gamble at a different level, because even if Microsoft got all its parts right, and Nokia's resellers and carrier relations issues were fixed, if the first Lumias were received as lousy phones, the whole Nokia new strategy would implode.
Well what do you know? The notorious 101 faults list in the Lumia (now with more Lumia! get yours now with 121 faults). When you read that list as a regular Nokia user of many Nokia phones, you tear your eyes out. It feels like.. how can I possibly explain what this feels like as a lifelong Nokia fan and user. When you start to read that list, it feels like... Now I know. BMW the ultimate driving machine. We've all sat in one, many have driven one. We know, out of 'regular' sedans and cars, excluding supercar sportscars, the Ferraris and Porsches, the BMW is the best car to drive, every model, year in and year out, what BMW excels as ie being the driver's car. You won't find BMW owners letting chauffeurs drive them around haha, like you will often see in a big Mercedes or Jaguar or Cadillac. BMW yes. Now imagine a BMW owner, a lifetime BMW owner eager driver amateour race driver passionate BMW owners club driver - seeing a new specs list of what the next model will feature.
And you find out the next 5 series will have coil springs instead of modern suspension. It will have a live rear axle. It won't have modern fuel injection, it has a carborator. It won't come with power steering, won't even offer it as an option. And then you find out the next BMW 5 series will actually be a badge-engineered car, manufactured at the Lada plant in Russia. Lada, if you don't know, was the old Fiat design, that was then 'improved' in Egypt, and then built by Russian tractor engineers. So designed by Italians, improved by Egyptians and built by Russians. This is a sure receipe for automotive excellence. And now the next BMW won't come from a BMW factory in Bavaria, it comes from that Lada factory where yes, this 1970s monstrosity is still produced today in 2012 and the 'latest model' using the original design of Italy from the 1960s was recently driven by Putin across a new superhighway. He was so afraid the brand new car might break down, they had not one but two of them on a flatbed truck trailing brave Mr Putin on his celebrate Russian driving PR trip. I don't want to suggest that all Russian equipment is bad - they were the first to put a man in space and by almost every generation of jet fighters they have been far ahead of the West and the Tupolev 144 was in commercial prodcution as the world's first supersonic passenger jet well before the most magnificent civilian engineering masterpiece of the West, the Concorde. But the Lada. Designed by Italians, improved by the Egyptians, built by the Russians. You have to drive one to believe how horrid that little car is (and we have some in Finland, I've driven a few in my earlier years..)
Back to Elop. When you, as a loyal Nokia owner, read the notorious 101 faults in Lumia list (now upgraded to.. 121 faults courtesy of your Elop and Ballmer) you become as despondent as a BMW owner seeing the next Beemer will be a Lada. You will feel like calling every one of your friends just to go read the list and don't you dare to buy the Lumia, it is so badly designed! Some of the 'faults' are only matters of preference or choice by the design team, but if its something Nokias have always done, and it is no longer there, that is seen as a huge setback - not for Apple users or first-time smartphone buyers - but for loyal Nokia users.
Alarm clock that won't wake you up from a Nokia phone that was shut off? This is not just a very bad idea, it is going to catch you very VERY badly some important morning when you miss work because the Lumia didn't work like all past Nokias have for years - not just Symbian smartphones - even Nokia featurephones.
Or that you can't save draft SMS text messages? What moron designed this thing? Don't they know in Windowslandia that the most used feature on a mobile phone today is SMS TEXT MESSAGING !!!!!!! Even Americans should know that by now! But some Microsoftie had thought like a PC geek, about his emails and that the SMS thing is really only for kids and they shouldn't care to draft messages, what a silly idea. Yeah right.
So here is the thing. Elop didn't design the Lumia. But his career is intrinsically tied to it. So he's been monitoring it very VERY deeply and you can be sure, Elop has made calls on what goes in and what not, and has cleared development budgets and made executive decisions to ensure his baby, in particular Lumia-One the 800, will be exactly the way he wants it.
And that is a very very bad thing. Not that Elop is a bad person (and he may be). But because Elop is not a handset designer. His Lumia series now illustrates clearly that we get what Elop honestly did think we needed - a USA designed series of four very similar iPhon-a-clones.
Yeah. Now, please any American readers, don't take offense to this. But just lets all be very clear. Apart from the iPhone, what other American smartphone maker is producing hit smartphones now? Hmmmm.. Did you remember Motorola? Yeah, they went bankrupt. How about Palm? They died. How about Compaq? Don't do phones anymore, don't even exist anymore. What of Danger? They are gone. How about those Waterloodudes, RIM out of Canaidia, eh? Haha, they are going bankrupt and nobody wants their current phones until they manage to get their BB 10 out sometime - next year. Well, then there is HP? Yeah. World's biggest PC maker, recently quit making smartphones. And yeah, Microsoft. Tried very briefly for 6 weeks to sell its Kin phones that flopped, shall we say, at a gargantuan level. Yeah. Thats I think all. Except yes, Apple make a wonderful iPhone, on ever longer development cycles and only one very limitedly modified model variant per year. Oh, good luck poaching one of them Appledudes to come design some Nokiaphones for you and leave the ultimate job for any geek. Yeah, that'll happen.
I could explain why it is that American phone makers have a pathetic history in handsets and a dismal one in smartphones. But let me put it simply in this way. There's a company over in .. Japan .. that makes these Sony phones that are often very sexy cool and desirable. Then there is this company in .. Korea .. that has people literally standing in line to get their latest and put them on preorderes called Samsung, you may have heard of them? The world's biggest tech company? Then there is a company in .. Japan .. that has currently a phone out that has a pico projector built in, oh? You don't have one of those yet on your American 'smart'phones? Well surely you must have NFC, the Japanese all have done mobile wallets for five years already, including this nice phone by Sharp? No? You don't really even know how NFC works? Oh, you don't have NFC terminals in all taxis and train stations and 7-Eleven convenience stores then? Well, then there is this company in .. Korea .. that has 3D displays and steroscopic 3D cameras on their phones - and they shoot really REALLY cool 3D HD video staight off the cameraphone. Imagine taking that up the roller-coaster ride at Disneyworld. That company is called LG And then there is this company in .. Japan .. that makes many computer and tech things called Fujitsu and just a standard Japanese Android smartphone will today have 16 megapixel camera - oh, do you still use those silly tiny 8 mp cameras there in America?
Yeah, this phone has a digital TV tuner built in. Yes. Digital TV. Watch your 16 channels anywhere on your phone. Free of course, its over the air Digital TV. Then it has what else, its waterproof of course so you can use your phone in the shower and bath...
None of this is fiction. I have in my pocket the Samsung i8520 Android smartphone. You probably don't know of it by that name, you may have heard of it as the Samsung Galaxy Beam. Yes, that was the world's first smartphone with inbuilt pico projector - I don't have to care about the 'screen size battle' of smartphone or iPad or whatever phablet, I just point it to the wall and I get a 50 inch giant screen projection of my pictures and videos haha.. Hey, this is no protype either. Samsung started selling it in Singapore almost two YEARS ago. I ask you again, in which pocket do you have a phone with a pico projector? Do you still want to insist, the Americans make the most advanced phones?
If Elop was not happy with what his A-Team was doing out of Finland's design offices and wanted to do better, he could have perhaps done that, by buying the design from Japan or Korea. That would perhaps have been an upgrade but I severely doubt that, as Nokia top designers practically live in Tokyo. Previous head designer Jan Chipchase literally did have his primary Nokia office in Tokyo for that very reason. Meanwhile if you want to study the caveman of handset design, you travel to the ice ages, that is California.
And please PLEASE don't say that Google and Apple are different. No they are NOT. EVERY single change that Apple has done to the iPhone since its launch in 2007, that Apple itself has found so 'valuable' that it included that improvement in its press release about the new phone, and every single similar change to the iOS operating system - is a direct copy (often a lame watered-down version even) from what has existed for years in Japan. 3G? iPhone in 2008, done first in Japan in 2001. App store? Japan. Apple revolutionary 70:30 revenue-sharing deal. Japan. Except - get this - Japan its 91:09. Yes, CNN in Japan gets 91 cents out of every dollar their app is charged, as does Disney, MTV etc. Video recording? Japan. High resolution screens? Japan. GPS? Japan. Turn-by-turn navigation? Japan. Second camera? Japan. Whatever it is that you think the new iPhone has that you want - they have already been USING in Japan on their Panasonics and Kyoceras and Citizens and Toshibas for some years now. (incidentially, on Symbian still until quite recently too..)
I totally TOTALLY understand why Elop felt that it was the right thing to do. He came from America, was ex Microsoft, he had been reading in Newsweek and Fortune and WSJ and the Seattle Times regularly that Nokia has fallen behind, that the innovation is coming from Apple and Google and Palm and HP in California and that American trends are the global leaders, just look at the iPhone and obviously, therefore, the the best mobile phone insights have to be now in the USA. And then, that helps explain why its 'blatantly obvious' why Nokia is now failing in America, they had obsolete designs - just look at how their current phones are not as pretty as the iPhone - and obviously therefore, to rescue Nokia, it needs a USA makeover.
That seemed so logical, on the superficial view of the world and is right there in Elop's misguided fantasy he wrote about in his Burning Platforms memo, all the wonderful delusions that Nokia is years behind Apple etc. Elop was misguided and very VERY wrong. Based on that, he made his decision and thus, we now have the first Lumia phones. Phones that the operators in Europe have said are not suited for European consumers? Meanwhile in Asia? Lumia is not suited for Asian consumers, say the operators. Give us Symbian phones instead - come on, China Mobile went so far they actually said, we'll take this Lumia phone but give it to me without the Windows, put Symbian on it instead.
Honest! China Mobile looked at the early specs of the Lumia 800, refused it, and said put these same specs to a Symbian device, and don't leave out the good stuff we get standard nowadays on Symbian either.. Look at the Nokia 801T and compare to 800 Lumia. China mobile essentially forced Nokia to go back and reverse engineer the Lumia to take Windows out and put Symbian in. And its apparently a far better smarthpone for it, too. Top seller on China Mobile. TV tuner, NFC, microSD support, TV out, HDMI out, removable battery, you know, just the basic stuff any 'normal' Nokia phone might have. Plus the 4 inch touch screen, 8 mp camera, 3G WiFi normal stuff you get on the Lumia 800. Go check out the 801T, it is on some English-language websites too. Thats your 'American' design right there!
Here is the scary bit. Nokia was VERY strong in China, Singapore, Malaysia, Italy, South Africa, Brazil, Russia, Germany in smartphones. China alone, bigger than America. In none of those markets, is there a local smartphone manufacturer brand (well, apart from Mi-Fone in South Africa, actually). Then Elop sunk Symbian. Now Nokia needs urgent saving. He could have had his first Lumia phones designed by Nokia's A-Team and be very well received in Nokia's best markets. But no, he decided to optimize them for America. Lets for the moment suspend reality, and assume the Lumia line is widely received, fully supported in America and comes with essentially no birth defect and no bugs. I know, its a tall ask, but lets pretend. In Ameria, Nokia faces still today four domestic brands of smartphone makers! Who run on three DOMESTIC brands of OS. This is like going to India and trying to sell your bland oatmeal as food, where all local food is very spicy. So yeah. Local rivals. Who? Apple. Blackbery. Motorola ie Google and Dell. That enough to sink your 'market domination' plans, Buster? And Windows Phone the Microsoft masterpiece gets to battle it out against iOS, Blackberry OS and Android. Yeah, good luck with that project, b*tch.
Its like Renault - remember that car brand? or hey, Yugo! Returned to America today and promising it will take on Ford and GM and the become a big US brand again. That is just not in the cards. Nokia may make some gains, if all goes well, double their sales in America even, but that will still be utter peanuts. This is never going to be the play where you, Stephen Elop, with the 101-faults-Lumia (now upgraded with more Elop for 121 faults, get yours today) somehow manage to out-Apple Apple. And what is all that 'gain' of a few puny percentage points gonna git you, sucka? It means you sacrifice China, India, Indonesia, Germany, Italy, Brazil, Russia... HELLO. Americans only consume 6% of the world's mobile phone accounts and 8% of its mobile phones every year. You try to gain something in the 8% and you abandon the HUGE lead you had in the 92%. Where did Elop go to school? Don't they teach elementary math at McMaster University up there in Canada anymore? Let me tell you Stevie, 92 is ahem, a 'this much' [holds hands widely apart] bigger than 8.
And am I totally misguided or not? An independent survey of USA users on T-Mobile and AT&T using Lumia 900 and Lumia 710, by Yankee Group, out just now - BEFORE any catastrophic Osborne-effects of one penny prices, found what? That on a scale of 5 (best) to 1 (worst) - 41% of American Lumia users rated their Lumia smartphones 1 (worst) on scale of 5 to 1. Yes. 4 out of 10 US consumers - most of who were not experienced smartphone users so these were not 'afficionados' who might have particularly developed tastes and expectations of years using iPhones etc - rated Lumia 1 out of 5. This is utter total failure fiasco in the market for which the Lumia was expressly designed! Can you understand why those markets where it was not designed for (Europe, Asia..) it fails even worse.
And finally, on the targeting. Imagine you are Ford's illegitimate son(daughter), and a court settlement has just gifted you ten billion dollars and you decide that as its in your genes, you will go into the cars business. You set up your Fard car brand and decide you take it on for maximum market share gain. What do you launch? Lets go get Elop's advice. He says launch a mid-sized sedan, four door, V6. Then a second, almost identical, nearly same size mid-sized sedan, four door, V6. Then launch a third car, a bit cheaper, a small-to-mid-sized four door sedan, this with a 4 inline engine and finally, to really win the total US consumer car market with a bang, your showroom will still feature a slightly smaller car, a four door sedan with a 4 inline engine.
So your heroic USA domination plan has not one SUV (the most common form factor for car today). Not one pickup truck (the form factor of the bestselling car today). Not one small citycar hatchback. You go through the trouble to generate four separate items to sell that are from slight distance carbon copies of each other with barely noticable distinctions? WTF?
Elop certainly was not awake at his Marketing 101 course at college. Even original Henry Ford eventually admitted one Ford Model T in the color black wasn't quite enough variety for the scope of the normal consumers who wander into Ford showrooms. Elop made four iPhone-a-clones. He coulda, he just as well coulda made ONE Lumia phone with a QWERTY slider keyboard and suddenly Lumia is far more appealing to enterprises, to heavily texting youth and miscellaneous Twitterati Facebooki. He could have made one of his four a superslim supersexy metallic beast in the style of the iPhone to kind of outdo the iPhone so the uberglamorous superchick want to be seen with one. Bling it up a bit, for Lady Gaga if nobody else.
He could have made one with with a superduper camera, at least 16 mp as the previous top Nokia cameraphone, the N8 had 12 mp. And with.. a real Xenon flash obviously (like on the N8 and the 808 Pureview). Nokia, you are NOT Apple. You are not restricted to one model per year and you can afford to be versatile, to explore the differing needs of your consumers.
Like Sun Tzu told us, avoid what is strong and to strike at what is weak. Elop takes one of the most powerful lessons of Sun Tzu, then reverses it and does the literally wrong thing not once, but three separate ways in his Lumia launch, the most important phones of Nokia's very survival. He goes where the enemy is strong (America) at the cost where they are weaker (Asia, Europe). Elop focuses his design to go head-to-head against literally strongest rival (iPhone) rather than the weakest (Blackerry) and he designs his phones with staff where the competence is weakest (USA) rather than where it was and still today is far stronger (Finland). This is sheer management madness. The Lumia has been designed to fail and it was doing so already - this before the new collapse due to no Windows 8 upgrade.
Another independent reason why Elop is an incompetent manager and the worst CEO. After his early mistakes, this was now the only lifeline and it had to work. This was the corner Elop had painted Nokia in. He was now sitting blindly on a branch and cutting that branch, not knowing was he on the safe side or is he going to cut his branch of and fall to his death. We now know. Read the 101 list (hey, now with more Elop-pia its up to 121 faults. Buy your Lumia here!). This is total management failure but also, it had become another Existential matter for Nokia. This is Elop's fourth ELE. This alone kills Nokia now, and is independent reason he must be fired immediately and why he must be considered one of the biggest fools ever to sit at a CEO desk.
REASON 16 - iPHONE ENVY
Sun Tzu taught us "He who can modify his tactics in relation to his opponent and thereby succeed in winning, may be called a heaven-born captain."
The way you win against Apple - may I point to exhibit A, Samsung - is you exploit Apple's inherent weakness, their slowness. You can outflank them. You can outmaneouver them. You can modify your tactics far faster than Apple can. You can never beat Apple at its game, making the most loved gadgets in the world. I mean, seriously, if Apple tomorrow announces iPantyhose, then the braves boldest straightest heterosexual males will stand in line overnight to be the first to buy iPantyhose - in white of course - and wear them proudly. You, girl friend, you go back in line and buy your own. These are mine... I mean, when do we get iCola? So yeah The most stupid strategy for a mass market brand company like Nokia is to try to become Apple, even a little bit.
If you are an adult, and have a brain that has evolved at least to the level of a 14 year old, you do understand instinctively, that Toyota the world's largest car manufacturer cannot abandon its total global business to try to become Ferrari who has one highly specialized factory and sells a couple of thousand cars per year at hyperprices and obsceneprofits. This Toyota cannot do, even though they might be able to do a good sports car. Toyota would be utter fools to abandon the family car segment, the outdoors jeep segment, the taxi car segment, the van segment, the hybrid electric car segment etc. And no amount of Toyota sales could sell enough Ferrari-clonyotas to support Toyotas factories, supply chain, sales channel etc. Toyota would instantly collapse if it tried. That doesn't mean Toyota cannot try to make some luxury sports cars to boost their profit lines if they feel like it from time to time. And it does't mean Toyota can't learn from Ferrari's marketing and branding etc etc etc. But no. The more Nokia management pursues the absurd goal to be like Apple, the faster they destroy themselves. Nokia's competitor is not Apple, it is Samsung. Nokia's second biggest competitor is not Apple it is LG. Nokia's third biggest competitor is not Apple its ZTE. All these rivals make smarphones yes, but they also make DUMBPHONES where the vast majority of Nokia's consumers still exist today. Apple is a competitor yes, but not the primary one. Elop still hasn't gotten that lesson into his thick skull.
Elop has been culling Nokia's smartphone product lines and making his phones become ever more tightly clones of iPhones. He has very recently again said, he will still cull the lines more. What does he want? To release one phone every year? No. This is totally the wrong way, I have one item of evidence, your Honor, exhibit A: Samsung. Samsung keeps expanding its offering with ever richer and ever more VARIED range of smartphones some very far from the iPhone form factor and obviously this strategy helps Samsung grow even as the iPhone sales were declining last Quarter and will do again this Quarter. I rest my case.
Elop has damaged Nokia's portfolio with a mad ill-advised destructive and ultimately failing strategy of iPhone Envy and this must be stopped immediately. Obviously this reason alone qualifies Elop as one of the worst CEOs.
REASON 17 - SKYPE
Sun Tzu taught us: "A ruler can bring misfortune upon his army through ignorance of the military principle of adaptation to circumstances."
But at least with Skype we cannot blame Elop, not at all. He did not cause this damage to Nokia (and Microsoft). That was all Ballmer one year ago. But I have to discuss Skype here, because Skype killed the dream. And we have to face facts, and we have to accept the world has changed, irreversably. After Elop announced his Windows vision, which yes, might have worked, and we can certainly accept, that Elop had made his calculations with the best of intentions and pure of heart, and based on all the known facts.
Since that decision was made, the world changed. And after that change, Nokia must adapt to this new change. Adapt? That means change. As it happens, this change destroyed the Lumiadream. This change, totally beyond Elop's control and completely impossible to foresee, this is no fault of Elop at all - this change ended the road for Nokia Windows smartphones. Ended it. That means, the current Window strategy has died. It cannot succeed, ever. And now Nokia must recognize that fact, and adapt to the new circumstances. It matters not one iota what came before, the Windows strategy died with Skype and now the only way forward is to do something 'else'. What is it, that is not Windows? Android? MeeGo? Symbian? Tizen? Meltemi? Blackberry OS.? Palm WebOS? Maemo? Or no more smartphones and only 'featurephones'? Or some combination of the above, or perhaps end phone production and do something else altogether? Maybe go back to tyres? Nokia was once a major European tyre manufacturing brand and I'd just love to see a Kia car with Nokia tyres haha.. (the tyre unit actually lives but had to give up its Nokia name so they now live on as 'Nokian' tyres..)
What is this nonsense about Skype? Good you asked. The very short version is this. Skype is what is called an OTT. Like Blackberry Messenger or Whatsapp or iMessage or Facetime or Facebook or Twitter for that matter. Its a way to bypass SMS text messaging, MMS picture messaging, voice calls and other traditional carrier telecoms services, and do it 'for free' on your smartphone app. Instant messaging for example. We all increasingly are using these.
Carriers hate these of course, because they not only cut into carrier revenues, they slash into carrier profits. 80% of carrier revenues and get this - 90% of carrier profit - is in those two services: voice and SMS. If you start offering a service that 'steals' the traffic where I make 90% of my profits, I'd be pretty pissed off too. There is then a scale issue (Metcalfe's Law and all that) and by definition a bypass service with more users is a bigger threat than one with less users. iMessage is more of a threat than Whatsapp. And so forth. But one service is the ultimate tripple threat and that is Skype. Skype is biggest of them all. They already have almost a Billion registered users and thats before we add Microsoft's Windows 8 integration by which they expand on default to all Windows 8 desktops, laptops and tablets. Then Skype is not only voice, it includes messaging so its also cannibalizing text and still one more - videocalling too. While 3G videocalls are a very tiny niche market today, it is one with growth potential and Skype is taking all of that too.
And thirdly, there is Microsoft as the owner. All of the others have to, to some degree or another, 'sustain' themselves as businesses and thus may not be as intense threats to the operator core business. Think about ads on your Twitter feed, it might discourage some usage away from Twitter and thus perhaps slow them down a bit. Skype has no such drags. Skype was bought by Microsoft to keep Windows relevant on the web and give Microsoft more on mobile. They will bring Skype everywhere and out of Microsoft's deep pockets a few years of subsidising Skype to help it grow is peanuts for the overall gains. So out of all of them, Skype is seen as by far the 'most dangerous' to really continue to devour the OTT opportunity in all areas, now with endless MicrosoftMoney to just keep going and going and going.
So the carriers truly hate Skype. Dont' take my word for it, Elop himself told the Nokia shareholders that yes, Skype is severely disliked by operators/carriers and by some to that extreme degree they have refused to sell any current Microsoft Windows based smarphones - which don't even have Skype preinstalled. This not because of Skype but because Microsoft now owns Skype. It does not matter whether you think this is fair, or illogical, or even you believe it is true. Stephen Elop, the CEO of Nokia, tells the Nokia shareholder meeting, he formally talks as Nokia CEO to the owners of Nokia, and this is on video and in transcript - that the reason carriers hate Windows Phone smartphones is because Microsoft now owns Skype. Not because you and I use Skype on some phone on Android or whatever. Elop says, the reason carriers hate Windows Phone smartphones is because Microsoft now owns Skype - and Elop tells us some have gone as far to stop selling any Windows smarpthones not just Lumias. Go watch the video!
The last thing the carriers want to see, is Microsoft, the owner of the most reviled Skype, getting onto their 'pockets' pretending to be their pal, stealing their business. Not my words, Elop went so far as to patiently explain that it is the revenue threat to operators which motivates them to hate Skype. He admitted not only affecting Nokia branded Lumia sales, but all Windows based smarpthone sales. And Elop said that Microsoft has for a year been trying to negotiate with those 600 carriers to get just one of them to break free and try doing it Microsoft's way and not one has budged. Then they turn to being the Axis of Evil and threaten the carriers - Elop also admits to the the Nokia shareholder that they are now resorting to bullying the carriers threatening them that Skype will come in any case, you cannot stop it (I bet that goes down well in CEO meetings Mr Elop. Why was it that your top Lumia salesdude quit and simultaneously Microsoft's top Marketing guy for Windows Phone quit, just about the the time you admitted all this? How many of the veterans in this industry have to sacrifice their careers for you to take notice?)
Nokia has thrown the biggest wad of cash ever in the mobile industry, into the Lumia launch over the past half year or so. Elop said he budgeted three times the previous top mark. Wait! Wait! Xbox. Wait. I always forget this part. This world's biggest marketing spend in phones ever, by Nokia was then added to by Microsoft by some huge expenditure on their side. They were handing out free Xbox 360 videogaming consoles to buyers of the Lumia 800 for example! In the USA, Microsoft dumped 100 million cash to AT&T so that AT&T staff could buy Lumia 900s as their personal work phones. And so forth. THE biggest smartphone launch evah! EVAH! by a HUGE margin. So where is the awesome results? Not happenin, dude. Our clients, you know, they just don't wanna buy that Lumia crap. Maybe you aint selling it right? Oh yeah? Are you tryin to tell me how to run my biznes? Maybe I am or maybe I aint.
But Elop still complaining in May that retail is not supporting Lumia sales. Elop admitting in June that retail isn't selling Lumia enough. He uses the words now of 'below expectation' when describing Lumia sales. Just a few months ago we heard some Nofactia PR spin doctors promising Lumia outsold the iPhone in Britain and was top seller at AT&T and similar Microtruth spin from China that Windows was outselling the iPhone there haha.. Now? 'Below expectations'. And the perennial problem is retail refusal. I wonder why.
Oh, this is good. Nokia has set an actual army, with secret software and apps, to go fight for Lumia where the enemy is - the retailers. I am not kidding. Elop's military obsession is bizarre and his concept, he would go to war against his own retail channel is beyond comprehension. But yeah, this is the same Elop under which Chinese Nokia branded stores started to sell rival brands! Imagine walking into MacDonalds and the salesguy, in the golder arches hats and all, offer you Burger King burgers and fries, in the BK paper packing etc? Totally mindblowing. That is the reality in the hell that is Nokia retail channel mess. Did I mention the 43 Russian exclusive Nokia stores who now switched and happily sell exclusive Samsung phones? And so forth...
Folks, it doesn't matter why. It doesn't matter how. It doesn't matter when. The CEO of Nokia has spoken, not to some obscure journalist, he was speaking to the Nokia shareholders conference - go watch the video and read the transcript! Skype is huge problem. Elop uses words 'of course' as this is so widely known inside the industry. It is hurting all Windows sales including Lumia so badly, some carriers refuse to sell any Windows based smartphones. And a year of negotiating and bullying has not moved one carrier to become willing euthanasia patients for Dr Microjoy and Partner to kill.
You think operators/carriers are that stupid, they will cheerfully support the assassin that will kill them all in their sleep? That if Ballmer writes 'Yummy, tastes great' on a bottle of cyanide poison, that the carriers will smile and drink it to their death? No way. No f*cking way. Elop is stupid. And Ballmer is both stupid and a bully. Most of the CEOs I've known in mobile - on the carrier side - are not stupid. Most are VERY smart.
So did you hear LG quit the Windows Phone project? Went pure Android. Dell quit Windows Phone, goes pure Android. Why? Because carriers stopped selling Windows (do I need to say, this happened soon after Skype last year)? Did you hear Sony stopped selling Windows Phone? Motorola had abandoned Microsoft already earlier. HTC has long since said they shifted most of their smartphone production from Windows Phone to Android (and will be releasing their first Tizen handset soon). Samsung has been cutting down their Windows projects and I think they are now down to only one remaining Windows Phone device but they keep adding Androids, selling bada and will introduce their first Tizen phones this year...
It is a FACT. A FACT. Reported not by me, but by Elop himself, that carriers hate Skype. So I am telling you, this Windows Lumia project died last summer right after Microsoft bought Skype and Elop's last chance of gaining the trust of the carriers died when moments later, Elop was all over the press promising Windows Phone smartphones from Nokia will have Skype on them too. That is when this unlikely and long-shot risky plan of Nokia shifting to Microsoft died. It is not 'in trouble' or 'on life support' or 'dying'. No. The Windows Phone and Lumia dream and any Windows 8 variant of it, for Nokia - is DEAD. Go read the transcript of Elop's admission to the Nokia shareholder meeting. The Windows path is dead. Nokia's Lumiadream is not dying. It is dead. D-E-A-D dead. It cannot be resurrected.
Imagine driving a car on a mountain road. It is twisting and turning. You suddenly see, that on the road ahead, many miles further, but on this very road, the bridge has collapsed. The road is 100% unpassable just a few minutes further down the line. This is a narrow mountain road, no other roads.You must turn back. Lets also say, you've driven this a hundred times, so you are not there for the scenery, and you can see nobody is injured and there are policemen there stopping traffic near the bridge. So you KNOW this road is a dead end, and you MUST turn back and find another path. Do you bother to drive on, or when do you figure out, this is all now a waste and the sooner you turn back, the sooner you will be on a new path that will get you some roundabout way where you want to go?
The Windows path is dead. It was a bold, brave but high risk operation by Elop. Elop did not kill it, although he caused it some harm along the way. Ballmer killed Nokia's Lumiadreams. They died. You cannot make a dead body come alive. I know when I am looking at a dead parrot and I'm looking at one right now... Every day Elop continues on the dead Lumia trail, the more time and valuable resource is wasted that Nokia needs desperately now on its 'Plan B'.
I am not going to tell you what my preference for Plan B is now, this blog is too long as it is. Obviously ANY plan now is better than spending another day on the road to ruin, his Waterloo, his - still remember it? Suomussalmi crushing defeat. Android, MeeGo, Symbian, Blackberry, Tizen, Meltemi, who cares, Nokia is dying. The doctor has to do something. This road is certain ruin. Turn the car!!!
REASON 18 - SAMSUNG
Sun Tzu taught us: "When a general, unable to estimate the enemy’s strength, allows an inferior force to engage a larger one, or hurls a weak detachment against a powerful one, and the result must be rout."
Only a few words about the company that was the fourth largest smartphone maker when Elop took over and a distant second largest dumphone maker, when Nokia was the clear leader in both. Samsung. Nokia's most dangerous competitor who took the candy from the child that is Elop. I was immediately suspicious of the Burning Platforms memo when I read it the first time that it didn't mention Samsung. He mentioned a lot of Nokia's far lesser competitors, but not to mention the strongest - and fastest-growing rival, was certainly a General being unable to estimate the enemy's strength. But an even more telling sign is this. Lets take another warning from the Master:
Sun Tzu taught us: "He who exercises no forethought but makes light of his opponents is sure to be captured by them."
On February 13, 2012, Stephen Elop was quoted in South Africa's largest business newspaper Business Day talking about the competition. Elop said he was not losing sleep about Samsung. In less than seven weeks, Samsung will have passed Nokia to become the world's largest overall mobile phone handset maker, while simultaneously also passing Apple to become the world's largest smartphone maker. Elop laughs that he isn't losing sleep over Samsung. Yeah. Samsung was one quarter of Nokia's size in smartphones in 2010. It is now four times the size of Nokia and its not even the end of year 2012. There has never been a more total miscalculation of the threat your primary enemy poses.
Sun Tzu told us that this type of general will lose. If you actively ignore the obvious largest competitor of your business - and even as it makes huge gains on you, a YEAR later you still say in public that you don't worry about it - you are textbook incompetent as CEO. No wonder all competent Nokia veterans have jumped off this Titanic when they noticed the Captain is mad. An independent reason to call Elop the worst CEO.
REASON 19 - WINDOWS 8
Sun Tzu taught us: "We cannot enter into alliances until we are acquainted with the designs of our neighbors."
So this horribly long blog is nearing its end. And we have the Win 8 news. Microsoft has evaluated its crippled 'partner' and decided, its a worthless piece of shit, and threw Nokia under the bus. I might say that long ago, I told you so. You dance with the Microsoft, and soon you are merely Micro and Soft (And then shortly thereafter, you usually die). Ballmer decided he doesn't care for Eloping games anymore (perhaps Ballmer became quite upset that Elop goes blabbermouthing to Nokia's shareholder meeting that all Windows phones are facing carrier rejection because of the Skype thing - at least Ballmer was quick to issue some countering statements haha). Now comes news of Microsoft's tablet (at one point this was supposed to be done by Nokia. Who blinked here? Obviously a handset maker tablet project is a moronic idea - ask RIM, ask Motorola, ask LG. The only ones for whom a tablet makes sense are PC makers like Apple, like Samsung etc.)
And then the bombshell that Windows 7.5 smartphones cannot be upgraded to Windows Phone 8. All of Nokia's brand new hot Lumia line - that had the biggest marketing push launch money spent (wasted) ever - is instantly Osborned, not by Elop but by his buddy, his pal, is BFF, his guru, his former boss, the Ballmenator.
Did I mention that sales dudes hate it to see customers walking into stores with recently purchased phones and their opened boxes and that all stuff? Have a guess what various consumer support organizations will urge smart smartphone owners to do with their Lumias? And just how many totally imbecille sales guys and gals might you find on the planet, who haven't decided never ever in my life again, will I fall for the Microsoft trick of ruining my customer happiness again. I will only sell Android from now on...
The Q2 is almost ended, so this wont't really impact Nokia and Microsoft Q2 sales numbers. But Q3 will be .. whats the right word.. not unlike a Lapland cold winter lake one day with a Soviet General facing a firing squad, with his own troops watching. The Lumia sales will happen in discount bins with one penny deals. And the carrier top management decided that never, ever, EVER, will they fall for the old Ballmer con trick again. They said it last time with Windows Mobile (ended up having no upgrade path to Windows Phone) but now that split-tongued snake charmer Elop hoodwinked them with his sweet lies. No. No more Microsoft Mafia in this company. No more Microsoft phones, no more Ballmer, no more Elop, no more Skype, no more Axis of Evil. Be gone Lumia.. and begone Nokia.
All news from Nokia will now be various degrees of disaster wrapped inside a tragedy enclosed in catastrophy, from the market share and revenue and loss reporting shortly about Q2 numbers, to Q2 market shares out in early August to the third profit warning and then of course Elop will have to fire many more thousands of Nokians. Yes. Deadmanwalking. Nokia is now the headless chicken still momentarily moving but already dead. Nokia is the head chopped off the guilliotine where the face still has some twitches for a few seconds. Nokia has already died and the movement we now perceive is merely that of the corpse in its death throws. What I hope is that the Nokia share price might plummet to its 'bottom' and then stay there for a while, so the potential buyers can learn, now it won't be much cheaper next week, now its time to go buy the Nokia remnants and its patents portfolio.
Nokia is dead. Elop is the biggest disaster of CEO of all time. But if someone comes in soon, and buys Nokia, parts of it have good life in them. A quick buy, throw out the Lumia rubbish, and rush out N9, N950 on MeeGo, recommit to MeeGo immediately, and introduce the N900 upgraded to MeeGo, and you have an easy 6 million smartphone sales per quarter with some 3 Billion dollars of revenue and 400 million in profits coming in just out of the Elop madness. Plus some millions of Symbians to sell and the world's second bestselling dumbphone brand. After some sensible comments and soothing words with carriers, these sales can be returned if not to profits, then to loss-neutral state and the modest MeeGo range profits can already bring this sunken Italian cruise ship back to an even keel. Thats before any meaningful redesigns and revisions and updates, to expand the MeeGo offering. Or if the buyer is Intel or Samsung or HTC then obviously, instead of MeeGo, just go straight to Tizen, do not pass Go. Both are Linux based, the port should not be a lengthy process.
FOR THE GRAND CONCLUSION
I wrote my longest blog without sleep the past 48 hours to tell you the story of Sun Tzu and the Art of Nokisoft Microkia. I wanted to argue my case, that Stephen Elop is not just an inept and incompetent CEO, he has acted in numerous ways directly against Nokia's best interest and in countless ways against any logic. I used Sun Tzu quotations to illustrate the main points partly as Elop himself confesses to being a big fan of the Master and partly to prove that the point I am making, is genuinely a 'strategic' blunder by Elop, not just a silly little mistake. This is exactly how Sun Tzu teaches us: wars are lost. It is as if Eop took the very lessons of Sun Tzu, for how to win, deliberately then every time acted directly the opposite way, to actually guarantee defeat. He has been the opposite of perfection. He has been the worst CEO of all time. And if you are truly the worst general in history, or indeed the worst CEO in history, we should commemorate that, loudly and clearly, as a warning to others - do not try this at home. So, I told you of 19 truly strategic blunders in his short tenure of less than 2 years in office. I told you:
1 - Elop delusionally interpreted the opposite of facts to create a fabricated disaster to end Nokia's strategy
2 - Elop communicated to the world that Nokia was in trouble when it was not, then communicated it is fine, when it was in distress.
3 - Elop made massive factual errors and perhaps even deliberate distortions of Nokia's true situation when communicating his first strategy message to all Nokia staff which caused total panic when they saw how deluded he is, thus Nokia morale collapsed.
4 - Elop's Burning Platforms memo caused a Ratner effect to Nokia brand globally collapsing sales
5 - The timing of the Microsoft announcement caused an Osborne effect to Nokia smartphone sales stalling not only current but several still in the pipeline coming smartphone sales
6 - Elop torpedoed MeeGo as a platform
7 - Elop refused to let the N9 be sold in Nokia's biggest markets (who beats Apple in design Oscars?)
8 - Elop refused to let the N950 be sold anywhere
9 - Elop killed Meltemi only two months from launch that effectively destroyed Nokia's future market in the Emerging World where Windows cannot even be sold at those price points
10 - Elop first caused and then for the next 15 months continuously worsened a Retail boycott against all Nokia phones
11 - Elop damaged most of Nokia's carrier relationships including several of the biggest and most strategically valuable including that with NTT DoCoMo the single most advanced carrier/operator of the industry.
12 - Elop preaches ecosystems but then proceeded to poison every part of Nokia's powerful ecosystem he could find
13 - Elop destroyed the Nokia sweetheart deal with China Mobile that Apple would die for
14 - Elop sunk or sold all of Nokia's future service projects that had already become viable including mobile money a project Google prioritizes as one of its top goals (who else manages to beat Google to the future?)
15 - Elop totally botched the only chance Nokia had with the Lumia series launch, inspite of burning a mountain of cash to create marketing buzz for it
16- Elop has pursued a destructive strategy in the portolio management pursuing iPhone envy
17 - Elop is now beholden to beating a dead horse with the Lumiadream as Skype has already killed any chance of Nokia Windows Phone smartphones ever becoming a success
18 - Elop has willfully and publically ignored the true Asian Tsunamiwave threat of Samsung. From one quarter Nokia's size in smartphones to towering 4 times bigger. In less than 2 years. This is the biggest market capitulation of a leader to a challenger in economic history of mankind - my congratulations to Samsung as this was also obviously Samsung's execution brilliance to capitalize on Nokia's failures. You are the true Siilasvuo of this story where Elop is the Duhanov.
19 - and finally, Elop now faces an Osborned Lumia line due to Windows 8 and no future left for Nokia.
Nineteen reasons there, in a period of what is it now, 20 months? 19 strategic blunders. Out of those I need to point out, FOUR are so total blunders they are Extinction Level Events that by themselves are corporate suicide. And worst, two are blatant acts of treason where even the Board is now jeopardized for flagrant stock market rule breaches due to conflict of interest serving the wrong master.
Four ELE's. Wow. Nobody in recorded economic history has even attempted two at the same time. And Elop goes four-for-four. What a hero! So remember the fairy-tale about that the nice Canadian man, what was his name, yes Mr Stevie Eloppie, who told us all about how our secure Platform is apparently burning even though we didn't see any fires, and we had to jump off? Well, there were a couple of precautions Elop took as well. The waters were freezing cold yes, but Elop also kindly poured oil on the water, and set that on fire too to keep us warm. Then he had the foresight to have thousands of man-eating sharks brought to the seas too to help us swim (with friggin lasers on their heads, is that too much to ask?). And then kind lovely fatherly Elop, to made sure we can all swim safely, he also had the foresight to order hundreds of machine guns to start shooting indiscriminately into the waters at any brave Nokians not yet on fire while being devoured by the sharks. And lastly he then released the poison gas so we could breathe better. Four kindly delivered mass suicide pacts for his employees. Lets die together, come on, come on, lets die together. Finnish grandmothers will be telling frightening stories of the evil Elopomonster centuries from now, to get their grandkids to eat their porridge. Mommy mommy I can't sleep, there is an Elop under my bed!
When Elop took over, Nokia's market share was 33% for the full year in smartphones, Nokia was also the leader in dumbphones and Nokia's profits were rising. In the first 5 months of his leadership, as Elop executed the strategy he was given, the Nokia shareholders were so pleased, the Nokia share grew 11% in value. All three ratings agencies were so pleased with Nokia's future, they rated Nokia one notch below perfect as a credit risk in an industry where most other rival full portfolio phone makers (who make both dumbphones and smartphones) were unprofitable. Nokia had tons of cash in the vaults and was twice the size of its nearest competitor. Rarely in any industry, has one company, held so many aces, against so many rivals.
Today Nokia's market share in smartphones is 8% and it will be down to 2% by year-end. Nokia fell behind Samsung already in dumbphones. Nokia generates massive losses and Nokia already warned, Q3 will be worse than this current Q2. Nokia's share price - gosh, gotta check that, yep, fell below 2 dollars on Friday - yes, Nokia share price has fallen 81% since Elop announced his new strategy. Nokia faces not one or two but four sales boycotts. Nokia is seen not just to have Ratnered his products but Osborned them twice as well. Separately Nokia's kind 'partner' Microsoft has also Osborned its products, not to mention the fact Microsoft killed Nokia's Lumiadreams by buying Skype. Nokia's credit rating faced regular frequent downgrades and today all three ratings agencies rate Nokia as junk. To further paraphrase Sir Winston Churchill: Never in the field of economic conflict, has so much been lost, by so many, because of just one man.
A few of those blunders on that list of 19 is enough to suggest Elop is the worst CEO running today. But that list of all those 19 strategic errors? FOUR Extinction Level Events by the same CEO in a period of less than 2 years. Yes, Elop is the worst CEO of all time. And as small solace to the way he used his Elop Effect to demolish a towering dominating giant from the inside, what we have been treated to, as a bizarre once-in-a-lifetime spectacle, live before our eyes, in the news media regularly. In just the past 17 months, Elop has created a world record in management failure, with the obliteration of what was the biggest company of its industry, towering over its rivals at more than twice the size of its nearest rival falling already to one quarter of the size of the new industry leader. Now, what should we do with this clown they call the Microsoft Muppet? He really wants to be called The General? Ok, lets serenade Elop everywhere we find him with chants: Du-Ha-Nov, Du-Ha-Nov. General, my ass.
UPDATE 12 July - this blog article has received the biggest attention of any blog I wrote ever. It has been frequently rated by regular readers of my books, this blog, and my Twitter followers as the best thing I've ever written. I received 34 spontaneous retweets with excerpts or summaries of this blog. After that, I set up a contest on Twitter to find best summarization of 30,000 words into 140 characters. In addition to a total of 93 entries, I also received TWO cartoons inspired by this blog (thank you!). You may want to see this blog, for a lighter treatment of this heavy subject (don't worry, its only 1,400 words in length. Winners of Summarize Ahonen contest are here, see them all here: Winners of Contest.
UPDATE October 10, 2012 - Seeking Alpha has a new article today based in part on this blog and referencing it (thank you). To new readers of this article, this was obviously written in July. I have just today written a new blog posting about Nokia strategic troubles, which updates a little bit some of the points here, is far shorter, and includes a lot of pictures (graphics, not smiling faces) which may help you read the story more efficiently. Please do read also this follow up The 3 Pillars of Nokia Handset Strategy - How They Have All Failed.
Please feel free to report on this story, all the stuff here is free to quote and borrow including the images. And any journalists and media types out there - trust me, this story IS your Pulitzer, go dig the facts about the greatest management failure of all time. Someone has to document this now as it happens. Go interview all those departed Nokia execs who really know what happened and can list his mistakes. You may find some overlap also with my quick view written here in this blog.
And yes who am I? I am an ex Nokia exec (left 11 years ago). I am the most published author of my industry (12 books) and most mid and senior Nokia execs have many of my books - often autographed copies - on their shelves. Nokia used my first book as an official Nokia book. One Nokia exec, Joe Barrett co-wrote one of my books and another Nokia exec Pekka Ala-Pietila (former Nokia President) wrote the foreword to my 6th book. Nokia uses me (or used me until recently) at various Nokia events frequently and even has had me show official Nokia presentations in public conferences on their behalf. I also work with most other major players in our industry from Motorola and LG to Google and Intel to Vodafone and China Mobile to Ericsson and IBM. I am 'independent' to a fault. I lecture at Oxford University's short courses on mobile telecoms and my books are referenced in over 120 books by my peers. I was rated the most influential expert in mobile by Forbes earlier this year. I have been quoted over 400 times in the international press in over 20 languages from Wall Street Journal and Financial Times and Economist and Business Week on down, and every major Finnish media have quoted me on Nokia related matters. This blog has had over 3 million visitors and is rated one of the most influential blogs in mobile, and my Twitter feed has 10,000 followers including most who are highly praised as fellow thought-leaders of this industry. I am not seen as a weirdo, even though obviously I have a ridiculously high opinion of myself and like to write long long stories.
I have no personal gripe with Elop, I was not fired by Nokia and he did not sleep with my wife as someone has suggested. Its not how I roll. I also have no advertising on this blog (you didn't notice that, did you?) and I don't collect your emails and I don't have registration on this blog. What is wrong with me? I am here to share my insights where I possibly can. I have been blessed with a great life in mobile and digital, I love this industry, I try to share though this blog. But I deal with cold facts, I report honestly what I find and I tell truth to power. I was extremely critical of Motorola before they died on this blog, I was critical of Sprint when they tried to fire their customers. I am often now writing for example about RIM's troubles. I have been critical of Nokia before Elop and I have been supportive of Nokia during Elop's tenure, recently for example about the 808 Pureview. I bear no grudge. I only want the truth reported - and the truth is - you cannot argue really against those 19 points, most of them have been widely reported in other media - that Elop is the most incompetent fool to ever take office at any corporation and I want to warn my readers that this is the case. I love Apple, I love Google, I love Samsung but if you cut my wrists, I am a Finn, ex Nokia exec, lifetime Nokia user, if you cut me my blood don't run red, I bleed Nokiablue. I love the company and I want Nokia to thrive. I want the cancer that is Elop removed, so whatever is left, might still be named Nokia and become a beautiful flower of the tech industry once again. I am a near-retirement age grumpy old man whom you simply cannot shut up, and as a kid in Helsinki's Rooperi district, I used to walk in rubber boots with the Nokia brand too...
I will add a few thoughts more after the break here, returning to our theme.
Lets talk about non-Nokiastuff now.
First a few more words about Sun Tzu. The book is truly written 500 BC, before Christ. 2,500 years ago. Now. Think about that challenge. You want to write a textbook about military strategy? And this is before horses were used as cavalry. This is before the 'long bow'. This is before gunpowder, guns, muskets, rifles, machine guns modern artilery. This is before tanks, jet planes, missiles, aircraft carriers and submarines.
So a Chinese master General Sun Tzu puts his thoughts on paper, in really a short booklet or pamphlet, 13 often only page-long chapters in size, the whole book is under 30 pages. This work, The Art of War, is taught in every military academy and used by - I would dare to promise - every 'professional' general on the planet today. By professional general I mean the type who went to school and achieved his rank by serving the army and rising from lieutanent to captain to major etc. There are many more generals who are appointed as political appointees or being family of the rulers etc, who didn't actually achieve series of promotions in an army against rival officers as a natural 'weeding process' to eliminate the incompetents. But yes, you can go pretty well down the line of all the famous generals you can think of - in any language and country, through the past 200 years at least - and they all say they use Sun Tzu, many say its the book they keep with them everywhere and read regularly.
And this is true of naval commanders and air force generals and submarine captains.. And what amazed me the first time I read The Art of War, was that not one line in it - not one line in it - is not relevant today. I think, some of the field manuals of how to run Napoleon's army would be laughed at in say the Desert Storm army that toppled Saddam Hussain. You know for example the part about feeding and caring for your horses? Or how many drums and trumpets you needed per battalion? But before radio, you had to have flags and trumpets etc to communicate in the loud and confusing battlefields. Thats Napoleonic wars, a couple of hundred years ago. He had guns.. Now we go 2,500 years back and General Sun Tzu's classic work, read the Art of War and not one line in it is 'funny' except where some words may be initially odd - why mention princes working for the General? Oh, yeah, at that time it was a feudal system so princes were your Captains.. Except for such few individual words that sound strange, every single sentence in that book is relevant today - and now the scary part. I was 100% sure when I embarked on this mad blog three days ago, that I would not be able to get a Sun Tzu quote to every fault of Elop. Its not possible that a book written about strategy and war 2,500 years ago, no matter how much I like it, can cover every modern management strategy situation. Yet it did !!!! (well, except for the Ratner effect haha)
There is nothing in the Art of War that is not relevant today, yet it covers essentially all truly strategic matters also in modern combat. Blitzkrieg style 'Shock and Awe' massive troop multi-discipline attack mode as invented by Guderian ie using tanks, with Stuka divebombers to create a huge pressure point on one spot in the front and move swiftly through it to the flanks of the enemy, etc.. He didn't call it Blitzkrieg, and he didn't talk about tank and airplane coordination via radio haha, but Sun Tzu talks about concentratoin of forces for pinpointing his attack superiority etc.. Its all there. Astonishing read, 2,500 years old, and even as I re-read Sun Tzu again for probably the 20th time in my life, I learn new and new and new and new. It is definitely one of my fave books obviously and I have a pdf copy of it on my laptop always
Anyway, from heroes to villains. How about them Sun Tzu failure lessons then and the battles I wanted to mention? In addition to Siilasvuo's astonishing victory at Suomussalmi, lets cover a few other cases of famous and remarkable victories of incredible odds, or defeat at staggering incompetence. This is all from my research three days ago as I was writing the prologue part to that blog. Where shall we start?
The US Civil War had several quite lopsided victories by the Confederates (South) such as Fredricksburg in Virginia where Lee had 72,000 men defeating 114,000 Union (North) troops led by Burnside. Thats more than 1.5 against you. Then there is the First Day of the Somme in the First World War, one of perhaps the most pointless slaughters of your own troops by your own commander, when British Douglas Haig together with French Foch had a 3 to 1 superiority in numbers, and attacked repeatedly the German line of von Below. The German lines were protected by machine guns (so were the British and French, so this was no technical advantage) but misguided Haig kept sending his troops to the slaughter, and 19,000 British troops died that day (over 64,000 total casualties British and French, killed and wounded that day to only 8,000 German casualties). This looks like a very good case for Fritz von Below as our early front-runner as the greatest battlefield commander ever. Certainly Field Marschall Douglas Haig, the 1st Earl Haig earned his nickname that day as "The Butcher of the Somme" (as in butchering his own troops).
Sorry, here I have to inject a bit of military warfare accounting. There is an attacker/defender rule in warfare, that military strategists tend to agree quite widely, that holds over the centuries, that 'ceteris paribus' ie 'other things being equal' - if one side attacks and the other side defends, the defender has an advantage. They measure the burden of the attacker at 3 to 1. So if both armies arrive at the same battlefield at the sme time, there is no advantage. But if one army had time to come, prepare their defenses and essentially 'hide' and the other side has to attack that defended position, the attacker needs 3 to 1 superiority to win. Now the achievement by von Below is not that impressive. Yes he did win very clearly in Day 1 of the Somme, but Haig was attacking with 3 to 1 superiority, they were supposed to be roughly tied. This is equivalent to 1 against 1 odds if both arrived to the Somme the same day. Not as impressive a victory we initially thought, horrid as the slaughter of the British lives were on that day.
So lets look at another famous British loss in the First World War, Gallipoli (Canakkale). Almost 600,000 British and French troops led by Sir Ian Hamilton, went against a little over 300,000 Turkish troops led by German general von Sanders. A decisive Ottoman victory but again, they were the defenders, so this doesn't count as quite that dramatic. Oh, where can we find our hero then?
What of older history? Spartans don't count (they ended up losing that famous battle of 300 in the end and the Greek won). Gaucamela ! Ah, yes, also known as Battle of Arbela. Alexander the Great defeated his favorite Persian rival Darius III (Alexander defeated him twice against huge odds). Alexander the Great's Macedonian and Greek army had 47,000 soldiers and defeated an army of one million. Now we are cooking! Thats 20 to 1 odds there! Except hold on. That is folklore 'history' when the winners got to write the history books. The truth was the first casualty in the war, and modern science has corrected that battle to be at 1 against 2 odds only. The Persian army could not have been a million strong, was 100,000 at best, and might have been as small as 50,000 - meaning barely larger. The battle was typical of many major battles of that time both armies travelled to the location - this was in Mosul modern day Iraq. So neither side had an obvious 'defender advantage'. But yes, Gaucamela like Alexander the Great's previous victory over Darius the Third at Issus two years earlier, was only 1 against 2 odds. Impressive yes, but this is similar to several US Civil War battles.
So yeah, if you are the attacker, and the defender has had a chance to settle in and prepare, then its pretty well impossible to find a 'major battle' when we talk Divisions in size (a modern Division is about 10,000 men or more in size) where the attacker was outnumbered more than 2 to 1, and still was able to win. The best ratio I found was that Battle of Singapore at 2.4 to 1 and thus as runner up worst military commander ever is Arthur Percival of the British Army who surrendered to the Tiger of Malaya, Tomoyuki Yamashita of the Imperial Japanese army in World War 2. And then we have Siilasvuo. Wow. Taking on an enemy at 4 to 1 odds and still winning? And it wasn't even close. Soviets with 13,000 deaths to Siilasvuo's 1,000 that is just incredible, the Battle of Suomussalmi.
So first, the obvious - if anyone of my readers is working in Hollywood or knows a friend or relative who is, and is looking for movie concept for a guaranteed blockbuster hero movie based on reality, in the style of say Patton, to win you Oscars and to feature some superstar like say George Clooney - tell them to go read just a short version of what happened at the Battle of Suomussalmi. Because this is a true story, this is an epic movie in the waiting. Because it happened in Finland, its mostly been forgotten and ignored (we have a movie about it and tons of movies about the Winter War etc, but in Finnish obviously). Don't send them here haha, as this is such a hodgepodge mixture of Nokia today and history of war. But here is a short one-page summary on Wikipedia in English on the Battle of Suomussalmi. Send your friend there, and if that short description does not immediately raise the interest of a Hollywood producer or scriptwriter or director or actor, then they are not thinking of an epic hero moview with Oscars and iconic classic best movie of all time list kind of frame of mind haha. But don't you go there to that link now! Let me tell you my version of how this story should be told haha, to end the Elop stuff on some more positive
TOMI TELLS SUOMUSSALMI..
If you have a map nearby, you'll see Finland and Sweden meet up in the North but most of the way there is the sea between them (Russia is of course to the right of Finland). Nearly where they meet, halfway up Finland, on the Western coast is the city of Oulu, the largest city of the Northern half of Finland. As you notice, this is about the narrowest point of Finland. Now if you just took a ruler, directly East, along that narrowest point, you would arrive to the Russian border and the last little town or larger village only a few miles from the Russian border is Suomussalmi. This is strategically vital to understand. The Soviet Union sent 45,000 troops (some estimates as high as 55,000) across the border on the first day of the war they launched without warning, up there in the North, to take this town of Suomussalmi. Why did they have tanks if its walking distance from the border? Because of that 'narrowest point of Finland' thing. The 90 tanks were to drive straight across Finland to capture Oulu, to cut Finland in half, to cut the only railroad that linked Finland to Sweden. And why is that? Because the Soviet navy massively outnumbered the tiny Finnish navy and they intended to blockade Finland so it had to surrender. Vital to this plan, is take Suomussalmi, run your tanks and 45,000 troops across only 110 miles from Suomussalmi to the coast at Oulu and Finland is cut in half. Brilliant.
Now think of this. The total Finnish army had only 30 tanks. And they weren't even up there in the North, they were already committed to the heavy fighting in the South - the main Soviet attack was under way from the Leningrad region (now called St Petersburg) towards Helsinki in the south. Thats another massive heroic battle there with lots of good stories for us to talk about some other blog. But back to our Soviet invasion. The Finnish HQ of Marshall CGE Mannerheim (our greatest hero and later President) was fully aware of the threat from the Suomussalmi region and knew Finland would be severely hurt if that Soviet plan would succeed. Mannerheim sent his often insubordinate, arrogant and troublesome - but tactically brilliant - commander Colonel Hjalmar Siilasvuo to take command of the dire situation.
Then weather. This is near Christmas. Finland is the Northernmost country, and the region is far North still. The Finnish weather tends to be warmer near the coasts and colder away from it, obviously Suomussalmi is on the Russian land border, not near the sea, this is already some of the coldest hell imaginable that December in 1939. And would you know it, this was no ordinary year. 1939 was the second coldest winter on record in Finland. So yeah, if we say 'Winter War' that is a most appropriate description.
But the Soviet Union experiences winters just like Finland. Most Soviets lived far further South but due to geography, all the way to the Ukraine they get severe winters too. Moscow can be far colder than Helsinki due to the sea's influence. So the Soviet HQ created the 9th Army out of two full Divisions, the 44th and 163rd Divisions plus some smaller units. The Soviet HQ knew that Finland had most of its troops in the South and this force was far superior in size to the total Finnish military capability of that front, or anything that could be sent there to reinforce it. And yeah, they also had an air force to support them, several dozen bombers supported by fighter planes. The Finnish air force was in a 'Battle of Britain' style war also fully engaged in the South where the Soviets were running bombing raids on Helsinki and the Southern industrial cities and the Finns with a far smaller force and obsolete fighter planes tried to defend that space
(sorry, gotta brag about this a bit - so we all know the Battle of Britain, right? The famous war fought only in the air, with the Spitfires? Churchill who said never have so many owed so much, to so few. The first victory of the British against Hitler's Nazi Germany? That one? Yeah. German Luftwaffe entered the battle with 2,600 planes against 2,000 from the British side. The Germans lost 1,900 planes, the British lost 1,500 planes. Now how did the brave Finnish air force do in the Winter War against the Russian bear? The Soviets sent 1,500 airplanes to the Finnish front for this war. When the war started, the total combat aircraft capability of the Finnish air force was.. 49. They started with 30 to 1 odds. But Finland was very quick to try to remedy the deficiency and received a lot of support by friends and allies, and by the end of the Winter War four months later, the Finnish air force had raised its combat aircraft numbers to 450 planes. So the Soviets held a at least a 3 to 1 superiority for this war. So lets ignore the aircraft shot down by anti-aircraft guns (also impressive numbers) and only consider the pilots who met in the air - how did this go? The Finns lost a total of 35 fighter planes in combat. Meanwhile the far smaller Finnish air force managed to shoot down .. 218 planes of the Soviet air force in combat..)
Now to Colonel Siilasvuo who has arrived to his ragtag army of just about every ablebodied armed soldier within range of Suomussalmi. He counts his troops and sees its 11,000. He also knows from Soviet formations that there are at least two whole Divisions he is facing, each from 15,000 to 25,000 in size, meaning either one Division could wipe out his whole army. And the other side has tanks. More tanks than have ever entered Lapland..
Why does Siilasvuo know accurately what the enemy has? Because this is wintertime, and this is forested region. If the Soviets could ever want to 'occupy' those forests, then yes, there could be enemy hiding in the immense Finnish forests but obviously not even Stalin would order his armies to go camping in a Finnish forest in the winter just for fun. This army of 40-50 thousand has only one conceivable mission - it is to run through Finland to take Oulu, the only major city this army can be aimed to take, and the size of the Soviet army is about right for that battle and to occupy Oulu.
Thus the only thing the Soviet commander is waiting for, in the burnt remains of what used to be the town of Suomussalmi, is for his full army to get there, and he will then set off to take Oulu. The 44th Division has not yet reached Suomussalmi but is only a day away. So of course, this being viciously cold, General Duhanov kept his troops wisely huddled together seeking shelter and having fires and near cooking gear that ran all night to provide tea and warm soup. Meanwhile, the 44th Division can only move on exactly one narrow forest road that snakes to Suomussalmi through the dense forest with steep snow. So they are in one enormously long line strechging for miles, and moving at essentially walking speed.
The 44th is all visible from the air. Siilasvuo has one reconnaissance airplane only, and fearing the Soviet fighters will shoot it down, he orders it to fly two missions per day, one at dusk, one at dawn only, when its least likely to catch Soviet fighters in the air on their own missions. But just one flight by this plane, gives Siilasvuo the exact size and facts of the horror. A second army, bigger than his own, is only a dozen miles from Suomussalmi and if these two armies ever get to connect, his task becomes impossible.
So Siilasvuo sends a small unit to go delay the advance of the 44th. While the Soviets have nearly 50 tanks and normally could have just set them side-by-side and mowed over the total small Finnish unit, because this is a forest road, the tanks are all stuck one by one single-file on the road, and can never be brought more than one-by-one into any combat situation. Thus the main Soviet attack ability was eliminated because of the terrain. Now all the small Finnish blocking unit needed to do, was to establish small roadblocks, face only small infantry units at a time, fight them and quickly retreat, and let the Soviets move a little bit further, and attack them again.. As the Finns have skis, they are efficient and fast moving in the forest. The Soviet 44th is not from Murmansk. It is an elite infantry unit from the Ukraine, soldiers accustomed to far warmer situations. They were issued skis, but the unit had not yet learned how to use them. The 44th was not equipped with 'heavy' winter uniforms - they had winter gear but not for deep supercold winter, because they were not supposed to fight somewhere in Lapland, they were part of the troops intended to go take the city of Oulu, at the sea, with mild cold temperatures and lots of buildings where to go warm up. This 44th is not capable of sustained battle in the cold, in the forest. So they stay by the roads and don't pursue the Finns in the deep snow. But they are cold, so they set up their cooking gear all along the road and the troops huddle near the big fires to stay warm and eat soup and drink tea, as they wonder what is stopping them - as between 15,000 and 20,000 men are stuck in the longest traffic jam probably of all time, truly single file vehicles stretching back for miles and miles, on exactly only one narrow road.
Meanwhile Duhanov sits with the 163rd Division and his auxiliary other troops in Suomussalmi and awaits his reinforcements. There is isolated fighting with some small units of Finns but nothing to write home about. He is in radio contact with the commander of the 44th, General Vinogradov. So. What does our boy Hjalmar do? He has probably some 10,500 troops left. Siilasvuo knows he has to destroy this Soviet 163rd Division immediately and totally, and then go destroy the 44th. Thus if he moves quickly and is successful, his army does not have to face odds of 1 against 4, rather to fight 'only' 1 against 2 - but then obvioulsy needs to do this successfully two times, and all while the 44th is only a few hours' walking distance away. And so comes the cunning plan.
DESTRUCTION OF THE 163RD DIVISION
He decides to encircle the 163rd. Encirlement, to make a circle, to send your troops all the way around an enemy and prevent him from escaping in any direction. This would seem like a futile attempt. His army will now be so thinly spread, he has about 2,500 troops to the North, 2,500 troops to the South, 2,500 troops to the West and 2,500 troops to the East of Suomussalmi. As Duhanov has some 20-30,000 inside the town, Duhanov can at any one time send his army to any direction - and hold a 10 to 1 superiority and instantly break through the line. This seems like madness. Except for the snow. Oh, and the forest. Duhanov does not know how big is the nuisance force that is out there, and Siilasvuo has not yet engaged the enemy. He is hiding in the forest. The Sovet air force is useless to detect any Finnish troops in white winter uniforms in a winter forest. So Siilasvuo knows his enemy. He knows that Duhanov cannot know for certainty how many troops he faces. Ah, the Grand Master General Sun Tzu would have been proud of this young boy Hjalmar..
So Siilasvuo cooks up a truly cunning plan. He attacks sequentially from all sides. By sequentially, I mean, lets say, he only leaves 1,000 troops to 'guard' each side, that allows him to have 6,000 for this maneuver. Then he divides his heavy equipment to those guarding troops, like machine guns, mortars and artillery, that will keep continuous fire coming from all sides. The Soviet General will know he is encircled but does not know by how many troops. Now Siilasvuo takes his troops on a marathon ski adventure. He attacks from the North with 7,000 troops (the defender 1,000 and his 6,000 mobile troops). Then he quickly breaks off the attack (let the Soviet commander holding the Northern side think that he bravely stopped the Finnish attack) and move quickly in the forest to the Western side, with his 6,000 mobile troops with skis, to the next side, attack from the West again with 7,000 and so forth. Do this one cycle in say, 6 hours, and Duhanov hears, after they count all the combat reports from his commanders, that he was attacked by 28,000 troops and he will truly fear Finland has sent two Divisions to take Suomussalmi back - and that Duhanov is actually outnumbered. Duhanov now believes there is a larger force facing him, and will definitely not attempt breakout, as he knows he has his own reinforecements, the 44th Division is about to join the battle, within only hours, to double his Soviet troop size... (Sun Tzu wrote that all war is based on deception. Siilasvuo managed to use this insight to exceptional ability, he knew almost perfectly how strong the enemy is, and totally fooled his enemy into not knowing.. )
Ah, yes, night war. Siilasvuo of course does most of his attacks at night when the Soviets will be huddling near their cooking gear and are visible because of the fires. The Finns will be particularly invisible at night with their white winter uniforms on skis. And the Soviets will be looking into the direction of the warm fire, so their night vision is destroyed (it takes more than 30 minutes at night time for full night vision to return after bright light). And now.. comes the winter war lesson. You lose energy in winter. All movement in snow is far heavier. The heat escapes you, you need much more nutrition to replenish the body. So Siilasvuo knows the true strategic asset in this battle is the cooking facilities of the Soviet army. Almost any other commander would target the tanks, or the artillery, or the machine guns. Not our Hjalmar. He orders his commanders to always attack the food cooking facilities. He destroys or captures all of those in the next month. As the Soviets lose their ability to feed their troops and to huddle at fires and get warm fluids, they suffer far more intense frostbite. Thousands of Soviets die of the cold in the month of battle.
He also knows that he will need to move his army fast to attack the 44th. And the only road is held by the Soviets. And Siilasvuo does intend to encircle that army next with the same tactic. So to move his army with all army gear, including artillery, mortars, heavier equipment - he sends a small unit to construct a temporary road parallel to the real road where the 44th is now stuck in a massive traffic jam and its advances repeatedly blocked by that dogged little guerilla team. They construct a temporary road over the lakes that are iced over. Now don't worry.. Finnish lakes freeze every year, this is normal to us. The SEA freezes and in the war we built a temporary railroad from Turku to Stockholm over the sea haha.. but yeah, we do this all the time, that is for example how we learn to drive cars (those of us who love cars). The legal driving age is 18. I drove my first car at the age of 14. The cops don't bother to police the temporary roads on the ice, only the real roads, so my mother took our Saab to the ice, let me hop in, and taught me to drive (in a circle, on a temporary slippery ice road, turning left only haha..). We have those races all the time on the ice in the winter, on the lakes. So yeah, we learn the formula in school already, for calculating how thick the ice has to be to withstand a man or car etc.. 5 cm will carry a man, 20 cm will carry a car, if you need to know haha..
Then a word about the Suomi submachine gun. A submachine gun is a very powerful weapon at short range but useless at medium range. If your enemy is on a field, you can't hit him even if you fire the full round of a submachine gun, but if he's in the same room, you can hit him massively. Again.. now forest. The submachine gun is a perfect weapon for fighting in forests and short range from the woods. Soviets had mostly regular heavy machine guns, or rifles. A rifle you have to aim, and fire. A submachine gun you can fire from your waist, you know, like gangers in hollywood movies. And it can still be very effective - at short range.
Siilasvuo had a lot of Suomi machine guns, and rifles. So he made sure his attacking ski troops were given the submachine guns. They would emerge at high speed on skis suddenly from the woods, very near the enemy, and every guy is firing 'machine guns' as these Finnish fiendish ghosts whip by, cause huge noise, lots of death, and then they vanish. By the time the shock has subsided, and your fastest guys still left alive have had time to raise their guns and start to aim, they are shooting at trees with no targets left. These swooping attacks caused large casualties every time and the key was the very rapid speed in, short attack, maximum firepower, and run away and hide, to reload. The Suomi had a round magazine for ammunition that held 71 rounds. Many contemporary World War 2 military submachine guns would have magazines of 30 rounds. So these ski troops would have totally disproportionate firepower and for quick attacks, they could almost afford to fire continuously on that large magazine. They thus caused a lot of panic and fear. Soon the Soviet troops started to imagine hearing ski-ing noises and the fear of the secret sudden Finnish surprise attack added to Soviet terror.
Lastly, by making his attacks rush attacks, in and out, very short duration, he never allowed the Soviet commanders to organize any resistance. A sustained battle would definitely have decimated Siilasvuo's small band of troops, facing so many soviets, but he just rushed in, one quick attack, and disappear. Always causing casualties at Soviet side, to only small damage to his troops. But this was very exhaustive to the Finns who then slept all day of course, as this war was mostly conducted at night. Whereas the Soviets didn't have heated tents - they 'knew' they would soon occupy Oulu and knew they could soon sleep in heated houses, the Finns of course arrived to the battle with their heated tents. That meant the Finns were constantly only a few minutes from warmth, where they could rest, warm up, drink some hot tea, coffee or eat some soup, and then fully warmed up, return to battle very alert and healthy.. Finns did not suffer any significant casualties in this battle from frostbite while Soviets lost thousands who died of the cold here in one of the coldest hells ever to see battle.
As soon as the main force of the 163rd Division was essentially destroyed, Siilasvuo started to move his force to engage the 44th which was now literally a few miles from the town, could hear the battle, yet was hopelessly stuck fighting an unknown number of obstacle troops preventing their passage. The Soviets in Suomussalmi finally attempted a breakthrough, and as the 'encirlement' troops were far too few to really hold the Soviets, these units were able to break through very easily. All along the Soviets had thought that they faced 30,000 troops and this 'final desperate' breakthrough attempt was achieved almost too easily. Obviously the troops now lost what respect they may have had of Duhanov and his command.
DESTRUCTION OF THE 44TH DIVISION
So we get to Raatteentie the Battle of Raate Road, the final culmination of this double-feature carnage of Soviet Divisions. Soviet General Vinogradov has his elite 44th stuck on that damned Raate road. Then the Finnish units attack the last units of his column, and block his retreat. So you understand, this is such a narrow forest road, that two tanks cannot pass each other. The tanks and trucks are in single file. Now that the front has been blocked - you cant move forward, when Siilasvuo blocks the last truck or tank, you can't move back, and you have a forest on both sides, you can't drive there, the Soviet General was stuck in this one long line. Only way forward or back is to break through either roadblock (or abandon his tanks, trucks, artillery and all heavy equipment, if he attempted to go into the deep forests with only his infantry).
As the Siilasvuo's main force now arrives, the Finns split into four units and fortify both ends of the road, including with anti tank mines to make sure the tanks cannot just run over their trucks and try to blast themselves past the roadblocks. Numerous attempts by Vinogradov to break through these blocks fail. And the Finns start a methodical serial attack on the total trapped column, again with the same Siilasvuo rule - destroy the food cooking facilities first. The distance from the edge of the forest to the narrow road is now ever easier for the Finns to appear out of nowhere, suddenly attack fiercely and then disappear, as they are all on skis and this Ukrainian elite combat unit is not familiar with ski warfare. They have no chance whatsoever to give chase to the Finns back into the woods in snow that is waist-deep. The attacks continue until Vinogradov gives a desperate order to abandon the equipment and escape over a lake and make way back to Soviet territory in the East, one day's walk away (under summer time conditions). Without cooking or heating facilities, tents, and clothing for extreme weather, many of these troops now freeze to death as they wander without compasses or maps as the Finns on skis can easily track most of them by their footprints and capture or kill them.
A normal soldier walks about 3 km per hour in the woods with his normal combat equipment. At winter time in deep slow that is less than 1 km per hour and no soldier can continue this for 16 hours without rest, so frequent rest is needed (without tents, digging into the snow). Meanwhile the ski troops can sustain speeds easily of 5 km per hour and mostly move quite effortlessly, nearly as easily as walking during summer time. With good skis and good conditions this is easier than walking. The colder the temperature, the easier it is for the skis to function very well (warm snow is sticky). So the Finnish troops have a huge speed advantage. They can see the footprints in the snow. They have maps. They easily catch and capture large parts of this escaping horde. The snow is also very treacherous in combat for example, if its sand or earth, you can dig holes into it or pile it into obstacles, that stop bullets. You are 'safe' behind a big mound of sand or earth. Snow seems the same way, as its nearly as heavy, but snow - especially early winter snow - is light and is almost no obstacle to bullets. Many Ukrainian troops will try in vain to dig into 'foxholes' in the snow or pile snow to create bulletproof obstacles which seem solid, but the Finns just shoot straight through. And so forth. The Finnish units were fully knowledgable of how to wage winter war, and Siilasvuo devised some clever tactics to fool, delay, distract, attack and destroy his opponent. Part of the secret was of course to divide and conquer. Sun Tzu would have been proud of Hjalmar Siilasvuo, as Marshall Mannerheim was - Siilasvuo was promoted to General (and given yet another Soviet Division to go slaughter, which he was almost done with, when they ended the war). His son, Ensio Siilasvuo would become another famous Finnish General, who served various United Nations peacekeeping missions in the 1960s and 1970s.
The Raate Road part of the battle is considered a textbook classic way to destroy larger units on roads in a forest. The Suomussalmi town encirclement strategem, well, it may have been a one-off stroke of genius that might never quite have the same elements of the weather, temperature, snow, skis, Duhanov having reinforcements only an hour away, to create the opportunity to trick him that Siilasvuo has a huge army when in fact he didn't.
So, if you would like to see the English language Wikipedia entry on the Battle of Suomussalmi it is here. The final culmination of the Raate Road battle is here. An entry in English about the overall Winter War is here. A short biography of Hjalmar Siilasvuo with picture is here. Our main villian General Mihail Duhanov seems not to have an English Wikipedia page but here is the Finnish version.
And then there is this one really nice gem. Leavenworth is the United States military school for senior officers, the 'graduate school' where only senior officers get to go to get strategy training. When you graduate Leavenworth you are a major. For contrast, when you graduate from West Point, you are a second lieutanent. So all US generals have gone to this one military strategy school. And there, for the Combat Studies Institute, a Dr Allen F Chew had written a strategy level study of how to fight the Soviet Union in wintertime which was published in 1981. So remember, this is Ronald Reagan time, the 'Evil Empire' when he said, Gorbachev, tear down this wall! about the Berlin Wall etc. The Soviet Union had the world's largest tank army in Eastern Europe only 48 hours of combat away from the Atlantic coast and both sides were prepared for that attack to happen just about any day. The Soviets were currently in Afghanistan that they had recently invaded. A very VERY real prospect was that the Soviets might attack Europe sooner or later. And it might come in wintertime. And there are lots of situations where Nato units actually face Soviets in winter conditions from Norway to yes, Alaska. This is 'serious' military thinking here. What if the US army is forced to fight the Soviet Union in World War 3, and part of that war is in the winter? Napoleon attempted to march to Moscow, and hit the Soviet Winter. Hitler took his Operation Barbarossa and actually made it to the outward edge of Moscow when winter came. How do you fight the Soviets, in wintertime. This is a good read overall. But I think, it is illustrative also of a nice level of respect the US military has of the feisty little Finns in their little winter squabble with the mightly Soviet army of Stalin..
Dr Chou has divided his analysis to three major winter campaigns all involving the Soviet Union. One is the only time the USA and allies (Britain etc) have actually engaged the Soviet Union in combat. You may not remember this, its such an obscure instance of a marginal war, but right at the end of World War 1, there was an invasion of the Soviets by allies including the USA to try to defeat Lenin and reinstate the Czarist rule. Then there is obviously the Hitler invasion of the Soviets in World War 2 and lessons from that winter war. But the third lesson is not the Finnish Winter War, it is "The Destruction of the Soviet 44th Motorized Division." Yes. Suomussalmi, Raate Road, our Colonel Siilasvuo is the hero in that lesson. Three lessons of war with Soviets in winter. The Allies tried in WW 1, and lost. Hitler took the mightiest land army ever made and failed. And the third lesson is Siilasvuo, the only one of these three who succeeded. This Dr Chou is obviously not a Finn. This is not a story about Finland, this is US senior officer training at Leavenworth, about how to fight Soviets in Wintertime. And one of the three lessons.. is the Battle of Raate Road featuring Siilasvuo. You may want to read this account. It is factual, it is by no means biased to glorify the Finnish side, but it has truly astonishing observations a native from Finland would never think of making.. If you liked my story today, read this too - its not as long - skip the other parts, the story of the Destruction of Soviet 44th Motorized Divisoin starts here.
So that is how you take an army 4 times larger than yours, armed with airplanes and tanks, and you defeat it in a decisive victory and steal all his toys.. :-)
I hope this short journey to heroism helped relax the pain of the Nokiasaga. So how can I ever refuse / I feel like I win when I lose / Waterloo, I was defeated you won the war... Hey, if they can make a song about Napoleon's loss, how about some day a pop or rock song to serenade the greatest fool to take office as CEO, Elop. I want to hear a song that makes fun of Stephen Elop the disgrace that he is.
UPDATE October 10, 2012 - Seeking Alpha has a new article today based in part on this blog and referencing it (thank you). To new readers of this article, this was obviously written in July. I have just today written a new blog posting about Nokia strategic troubles, which updates a little bit some of the points here, is far shorter, and includes a lot of pictures (graphics, not smiling faces) which may help you read the story more efficiently. Please do read also this follow up The 3 Pillars of Nokia Handset Strategy - How They Have All Failed.
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