It is time to stop rewarding failure

Silicon Valley (the notion) has become very much like rest of corporate America — it has embraced the philosophy of failing upwards. I have seen many executives get bumped up the ranks, get fancier titles and bigger paychecks, even though they were disastrous at their job. Many have left destruction and dismay in their wake. And yet, there they are getting bumped up — again and again. I was reminded of this disease this morning when I read about Microsoft cutting 18,000 jobs of which 12,500 odd will be at the Nokia division. Microsoft’s board might have eased out Steve Ballmer, but man, why aren’t they thinking about Stephen Elop.

When I met him in his prior gig at Microsoft, Elop seemed to be a nice enough guy, not quite a visionary, but good enough for what was then essentially a monopoly.  The very fact that a middling executive could be brought on for a turnaround of Nokia, and compete with the iPhone/Android onslaught with absolutely zero turnaround experience was one of those decisions that has confounded me and I continue to blame the Nokia board for shooting itself in the head. On his watch, Nokia essentially eviscerated. Android might have been a better decision, but he went with Windows Mobile. The stock tanked, market share shrank and like proverbial Lord Mountbatten he was part of the last days of the Nokia Raj.

And Nokia, the once haloed and peerless brand when it came to phones was sold to Microsoft for relative pittance. Elop heads up Microsoft’s Devices Group. Think of it this way — since Elop took over as Nokia CEO, the company has  cut over 50,000 jobs (if you include today’s announcement.) That is just mind boggling. That bumbling strategy which was the hallmark of Elop’s Nokia tenure still continues — in other words, Microsoft doesn’t really have a Nokia strategy. From Elop’s memo today: “In the near term, we plan to drive Windows Phone volume by targeting the more affordable smartphone segments, which are the fastest growing segments of the market, with Lumia.” That is precisely what Nokia guys used to say — we have the low end and we can grow our share. How did that work out?

Even on that end, Microsoft is going to be embroiled involved in an expensive marketing ground war with Google’s Android One efforts in places like India. Does Microsoft want to go into battle with Google and  Amazon with Elop? I wouldn’t. But then I don’t run Microsoft either. That said, I don’t think Nokia rank-and-file should be the only ones who  get the pink slip.

Don’t get me wrong, I don’t mean to pick on Elop — though he is the latest  and most visible in a string of high-profile executives who defy gravity despite being duds. Silicon Valley needs to look at baseball or football and see how professional sports teams treat their executives and star players. If you fail — you are shown the door. Just like the players. Bobby Valentine was unceremoniously dropped by Boston Red Sox. San Diego Padres fired their general manager. The message is — big dollars means big results. What’s wrong with that — especially in this age of mega-paychecks for executives?

Update: Charles Fitzgerald who worked at Microsoft and doesn’t suffer fools has a brilliant ex-insider take on Elop:

His resume is that of a short-tenured opportunist who has left little mark on his employers except of course Nokia where he presided over the company’s collapse and ultimate exit from the mobile handset business.

Responses

  1. pbreit says:

    July 20th, 2014 at 1:18 am Reply

    The sports analogy is poor. Lousy players and execs stay for years and make tons of money. And most leagues are rigged for “parity”.

  2. Vipul S. Chawathe says:

    July 20th, 2014 at 12:00 am Reply

    Stephen Elop might be better fitted CEO to networking(Cisco) than devices(Nokia). Its unfortunate that the right talent was spotted by the wrong company!

  3. Creon Levit says:

    July 18th, 2014 at 11:58 am Reply

    I think you have a good point: “fail early, fail often” is celebrated in Silicon Valley (the place) to the point that many people feel they are successful, or close enough, even though they have never had any successes at all. And your point about corporate america is of course right on: Big investment bank executives getting bonuses and promotions while simultaneously ruining the economy and incurring the largest fines in history being a case in point.

  4. Steve Banfield says:

    July 18th, 2014 at 11:02 am Reply

    Reblogged this on @stevebanfield and commented:
    While I don’t know if SV has embraced failing upwards, Microsoft, Sony, HP and too many of the tech giants have. The question is how long before the disease reaches Google, Yahoo and Facebook?

  5. Nuno Hipólito (@nunohipolito) says:

    July 18th, 2014 at 7:36 am Reply

    MS is not that dumb. Elop was used to kill Nokia so it would be easy and soft to integrate in the MS mothership. He’s just a pawn.

  6. Farley Duvall says:

    July 18th, 2014 at 7:11 am Reply

    For its time, I still think the Nokia N9 was the GREATEST! And sorry to NOT see how Meego would develop! Now, I am just another iPhone hostage…

  7. RoomPoll (@roompoll) says:

    July 18th, 2014 at 6:35 am Reply

    Not sure why you include Silicon Valley in the “fail upward” philosophy. You are talking about massive global corporations here. Microsoft and Nokia are not what people would consider “Valley Companies”. No where else do you talk about Valley companies in the post.

    You are more likely to “fail outward” than “fail upward” in Silicon Valley. Look at the number of founders and top execs that get pushed out and then go on to lead other organizations or start their own company.

  8. Max (@maxkucheto) says:

    July 18th, 2014 at 12:02 am Reply

    Normally I hate all conspiracy theories, but what if Microsoft doesn’t want Elop talking about the circumstances of the adoption of Windows Phone by Nokia and its subsequent sale to Microsoft? If true, they wouldn’t fire him no matter what.

    Also right now Microsoft is making another monumentally boneheaded decision: they are killing Nokia’s (beloved by many) feature phones. Where do they think all those existing customers will go? Windows Phone? No way: I bet the vast majority moves to cheap Android phones, thus marginalizing WP even farther in the platform race.

    Ted T.
    (sorry to post via my dog’s tweeter account, but every time I see the “allow to post on your timeline” login via Twitter warning, I balk at giving my own credentials. They really need to change that)

  9. David Pat (@Patfactorx) says:

    July 17th, 2014 at 11:21 pm Reply

    If this were sports Elop would have been fired years ago. His strategy from the beginning was flawed. He continues to get paid while people under him keep getting laid off. I think there was a lot of opportunity in Android. Now there will be no windows mobile division moving forward.

    1. Jussi Hagman (@Jussi7) says:

      July 18th, 2014 at 4:18 pm Reply

      I think Elop’s strategy has been spot on, he is doing well. If you refer to Nokia’s strategy, it was chosen by the board, not by the CEO. And the strategy was disastrous under both OPK and Elop. The seeds of the fall were sown in 2004–2006, more errors were done post-iPhone. Errors did not begin in late 2010 when Elop joined Nokia.

  10. Juuso (@juusotwiittaa) says:

    July 17th, 2014 at 11:02 pm Reply

    Ollila would have chosen Vanjoki, but the board (US based shareholders? Dodge&Cox et al.) twisted his arm on this. I can only think this is the reason owners were patient enuf to continue watching Elop burning their money…

  11. Aditya says:

    July 17th, 2014 at 10:29 pm Reply

    Reblogged this on AB's Reflections and commented:
    Scathing for sure

  12. Jerry Voelker (@jvaudio) says:

    July 17th, 2014 at 7:16 pm Reply

    While I am unhappy with what happened to Nokia and consider Elop’s tenure to be a flop overall, I think this speaks to his strategy rather than his ability to execute. It is possible that he is a complete rube, but his execution at Nokia was far from terrible. Only the typical Silicon Valley/tech press sycophants would not agree that Nokia has made the highest quality hardware since the Lumia 920 launched. The camera (and camera software) has been peerless during this time as well. The phones consistently received reviews ranging from very solid to excellent among a technology press crowd that does nothing but fellate companies in California. The apps were/are a legitimate issue for the platform. I think that Microsoft bears more responsibility for the lack of success for Nokia devices and even that is a stretch. The bottom line is the devices are very good – but the public simply does not want them. It’s too bad really.

    PS. I have been a proud Windows Phone owner for years.

    1. Timothy Harris says:

      July 20th, 2014 at 12:58 am Reply

      As a former Nokian, thanks Elop, I can say the peerless hardware you speak of, was designed and engineered for MeeGo. Starting with the N9, which is still my favourite phone. The Lumia line, was basically a hijack job done by Elop and MS.

  13. Daniel Eran Dilger says:

    July 17th, 2014 at 6:37 pm Reply

    It’s easy to blame Elop for Nokia’s 50,000 layoffs, and he certainly didn’t do anything to turn Nokia around (if indeed that was even the plan, rather than Microsoft simply plotting to take Nokia down and buy its remains on the cheap).

    However, that ignores the reality that Nokia failed to execute prior to Elop. For the first three years of iOS, Nokia watched, waited and diddled with several concurrent strategies. It then sued Apple for a patent royalty windfall. Nokia doesn’t actually have a right to exist.

    That said, Elop’s failure to even articulate a strategy for Nokia, let alone implement one, demands accountability from Microsoft’s shareholders. Microsoft paid Elop tens of millions for a “performance bonus” while cutting the Nokia rank and file from getting anything. Sick.

    1. Jussi Hagman (@Jussi7) says:

      July 18th, 2014 at 4:31 pm Reply

      I think *board* should set a strategy, which CEO executes.

      But on other aspects you’re correct. Nokia was the market leader with huge profits, they chose to milk the existing products, and did not have a clear vision for future nor enough software expertise. They saw iPhone, failed to understand it, and finally reacted very slowly and poorly. They saw Symbian partners (Motorola, Ericsson, Samsung) jump the ship for Android, failed to identify the situation and to act accordingly.

      Finally when they understood a next generation OS is needed they dabbled for years, co-operated with *Intel* (whose software track record is not stellar) on Maemo/Meego, which became a disaster of a software project, or multiple disasters.

  14. Wild Semi At Rest (@emersondameron) says:

    July 17th, 2014 at 3:09 pm Reply

    I wonder if a lot of bigger shareholders don’t *want* a Jack Welch-style bully who glories in firing people. Elop hasn’t given them much other reason to trust him.

  15. zato says:

    July 17th, 2014 at 1:51 pm Reply

    “The very fact that a middling executive could be brought on for a turnaround of Nokia, and compete with the iPhone/Android onslaught with absolutely zero turnaround experience was one of those decisions that has confounded me and I continue to blame the Nokia board for shooting itself in the head.”

    Why blame Elop, or the Nokia Board? Microsoft sent Elop. Microsoft/Ballmer was already in control of Nokia when Elop was made CEO. All decisions, including the CEO choice, were almost certainly made by Ballmer. Microsoft is the Brooklyn Mafia of Tech. When Ballmer says they want your company, you don’t argue.

    1. Om Malik says:

      July 17th, 2014 at 2:50 pm Reply

      Do you know that for a fact, Zato?

      1. zato says:

        July 17th, 2014 at 3:17 pm Reply

        I don’t, but the events surrounding the Nokia takeover fit. If you have some other idea about how a Microsoftie, Elop, became CEO of Nokia, the pride of Finland, I’m all ears.

        1. zato says:

          July 18th, 2014 at 4:09 am

          One other way to see the hiring of Elop as Nokia CEO is that Nokia WANTED a Microsoft candidate. Nokia always admired and modeled itself after Microsoft. It mimicked many of Microsoft’s business methods and strategies, including some of the more ruthless ones. Nokia wanted to BE Microsoft, the Microsoft of Europe. Now they are.

  16. mhannigan says:

    July 17th, 2014 at 10:10 am Reply

    Or, maybe it WAS the strategy from the time Microsoft “sent” him to Nokia to make the company affordable!

  17. dineshvadhia says:

    July 17th, 2014 at 9:39 am Reply

    “I have seen many executives get bumped up the ranks, get fancier titles and bigger paychecks, even though they were disastrous at their job. Many have left destruction and dismay in their wake. And yet, there they are getting bumped up — again and again.”

    Your perspective is as an outsider. It is much worse from the inside.

  18. Seth Weintraub says:

    July 17th, 2014 at 9:06 am Reply

    In some alternate universe, Nokia is overthrowing Samsung for the Android title. Google should have tried harder.

    1. Om Malik says:

      July 17th, 2014 at 9:14 am Reply

      Elaborate @sethweintraub

      1. dekuashe says:

        July 17th, 2014 at 11:06 am Reply

        I read that comment as “Nokia makes excellent hardware, was more than capable of building better Android phones than Samsung and/or providing actual competition to Samsung, and therefore Google should have tried harder to pull Nokia in on the Android train.”

        That of course would’ve never happened under Elop, but imagine what Nokia would look like had they simply chosen someone else to lead them?

  19. Edwin (@e_w) says:

    July 17th, 2014 at 9:04 am Reply

    Not defending Elop, but this is not a case of a ‘lone gunman’. The Nokia board and higher ups had to know what they were doing when they handed the keys over to him. Elop’s track records is M&A guy who would navigate Nokia into the hands of Microsoft. He did just that, probably with the hopes of getting the CEO nod. Delivering Nokia probably meant that Elop got immunity from any ousting. No doubt, Elop will be somewhere else in 12 months.

    1. Om Malik says:

      July 17th, 2014 at 9:13 am Reply

      There is no doubt @Edwin that the Nokia board shares equal amount of blame. I think they didn’t really do a good job and can’t duck from responsibility.

      1. Steve Lang says:

        July 17th, 2014 at 11:03 am Reply

        When Nokia choose Elop, they were basically choosing Windows Mobile. Weren’t they essentially tapping him to implement it?

        1. Om Malik says:

          July 17th, 2014 at 12:48 pm

          From what I understand, that was not part of the deal and they instead were toying with some internal options on OS, but nothing really happened to it.

  20. Andrew Dubinsky (@AndrewDubinsky) says:

    July 17th, 2014 at 8:58 am Reply

    I doubt you’re going to see top executives push for the kind of analytics-based decision making that will decide their job status & pay. As Upton Sinclair said “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

    1. Om Malik says:

      July 17th, 2014 at 9:13 am Reply

      Well put @andrewdubinsky

  21. rcadden says:

    July 17th, 2014 at 8:55 am Reply

    I can’t help but wonder what would have happened if Nokia had promoted Vanjoki up instead of hiring on Elop.

    1. Om Malik says:

      July 17th, 2014 at 9:13 am Reply

      Who knows.? @Rcadden

  22. The Roscoe (@77roscoe) says:

    July 17th, 2014 at 7:46 am Reply

    Could not agree more. Elop was and remains to be a disaster for Nokia and should be an embarrassment to Microsoft.

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