Latest / The Innovation Show / Who Killed Nokia? How Fear and Emotion Derail Strategy, Innovation, and Truth-Telling.

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Who Killed Nokia? How Fear and Emotion Derail Strategy, Innovation, and Truth-Telling. · The Innovation Show

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Before we start, I want to thank our sponsor Kyndryl, who runs
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Today's guests have spent years trying to understand one of the most
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dramatic collapses in modern business.
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Nokia's fall from world Leader to also ran in the space of just a few years.
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Their research goes deep inside the organization at the very moment the
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smartphone era arrived, and what they found is not a lack of intelligence
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nor talent, nor even strategy.
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It was emotion.
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Top leaders were gripped by fear of apple, Google, and the judgment of shareholders.
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Middle managers were gripped by fear of something else entirely.
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The reactions of their bosses and colleagues.
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That mix of fears distorted what people saw.
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What they did and what they dared to share.
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Critical warnings were softened or never spoken.
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Optimism trumped honesty.
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The snow was melting at the edges, but the center never felt the heat.
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The result was a company that could not integrate the information it actually had,
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could not face the scale of the threat it faced and drifted into short-term fixes
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while long-term innovation slipped away.
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It is a remarkable story because it shows how organizations don't
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just lose to competitors, but sometimes lose to themselves.
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As they wrote.
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Who killed Nokia?
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Well, Nokia did.
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Today we're joined by the scholars who uncovered this
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emotional anatomy of decline.
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Their work helps us understand not only Nokia, but any organization
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where fear shapes what gets said, what gets heard, and what gets ignored.
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It's a pleasure to welcome the authors of a 2016 paper called
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Distributed Attention and Shared Emotions in the Innovation Process,
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how Nokia lost the Smartphone Battle.
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Chaired professor of strategy at insead.
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Quy Huy, welcome to the show
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Thank you, Aidan, it's pleasure to be on the show
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and Professor of Strategic Management at Alto University
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Timo Vuori, welcome to the show.
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Thanks Aidan great to be here.
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As an overview of what's to come In part one, we're gonna cover how this
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thing emotions affects strategy and decision making inside organizations.
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And in part two, we'll cover the rise and fall of the Telco King Nokia,
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and then finally in part three, we'll cover Nokia's Phoenician rise from the
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ashes, which so few people realize.
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It's a remarkable story.
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Let's get stuck in.
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But first, let's understand this idea of emotions and how it impacts
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strategy in the first place.
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I found that in private interviews, CEOs are very emotional, but they
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have to hide it and to show very calm unemotional postures or even
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passionate when they had to deal with the public of this old employees.
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So I discovered this, double life so, to speak.
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But what surprised me is when I interviewed the middle managers,
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they experienced the same thing.
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So everybody is, hiding emotions from everybody else and using a
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facade of technology, finance talk to people as if that's the only thing.
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And in the end, people were sabotaging each other, so the story which I did in my
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thesis is not very different thesis that we report to Nokia is almost very common.
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it's so common that it's puzzling.
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And even today, when I teach that to, hundreds of executives in
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the last 15 years, they all told me that they're facing the same
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thing, which even more surprising.
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So I think that's how we discover that emotions do matter.
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Not for your love life or your family, it does matter for strategic performance.
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And that's what I and Timo started this, project into researching more to
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discover how and why this could happen.
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why we very often take actions that are harmful or suboptimal for us, even when
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we have access to the best information.
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And in the Nokia case, when I spoke with the CEO, he was saying how
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people told him things that he wanted to hear and he wanted to believe
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in those things that they told him.
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So they ended up making decisions that in retrospect were like very wrong decisions.
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And on the other hand, people told him things that he wanted to hear
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because the middle managers, they fear that if I tell him that his idea that
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will not work, he's gonna punish me.
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So they created these gaps in information flow and thinking, and
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this is how I think emotions often come really central to decision making.
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'cause they make us really like some options and they make us really
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pay attention to some information and hide other information.
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What I found so interesting was where in the interviews, and we'll share
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some of the outputs of those interviews that you did was how the way people
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reported, how they saw things from where they sat inside the company and Quy.
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We mentioned before we came on Air, Joe Bower, who's a hero of the
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show, has been on the show and on his episode he mentioned this thing
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called Miles' Law, which is where you stand, depends on where you sit.
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So your perspective of where you are in the company, flavors your
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decision making, how you see things, your perception of the world.
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But also what I learned from your paper is, so does your emotions
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that are, that come from that.
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So the decision making, the communication channels, et cetera, have a dramatic
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effect on how you show up and the, and where you put your attention.
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So I've a little quote here, you said though the generation of structural
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channels to enable interaction between groups such as top and middle
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managers might foster comprehensive information sharing between them.
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The mere existence of such channels may not be sufficient, as people may
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still avoid bringing up sensitive issues or refuse to listen to others
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during their interaction episodes.
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That echoes what Timo just said because you said several case studies have
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described the challenges of companies using various structural arrangements and
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have alluded to the persistence of poor mutual understanding, between top and
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middle managers in the innovation process.
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One of the really interesting ones was you mentioned President Obama who said,
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I would not have launched healthcare.gov if I had known it wasn't going to work.
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While many managers in his own team seemed to have been long aware that
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the platform had massive problems.
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And that just shows you that when I read your work, I was like
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going, this is still everywhere.
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This problem that the leadership team that goes, we're all over this.
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Maybe they're reporting to the board or shareholders, we're all over this
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Nokia, CEO did, and meanwhile down in the trenches, nothing's been done or
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it's being done poorly, or people are doing other things because they're
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being told that by their managers.
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I'd love you to build on that because that seems to me the crux of so
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many problems in so many companies, in many relationships, even.
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I would start with the huge contribution by Joe Bower which I respect a lot
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as my senior colleague at Harvard.
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And it's true that what is where you sit and what you pay attention to.
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So that's the first step.
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But however, our research point to a second, more addition to that nuance is
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that depending on what may not be reported truthfully to other people who could have
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benefited from that what you have seen.
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Okay?
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Because of many assumptions.
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That every information that you'll be sharing, you make assumptions
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that it may not be appreciated.
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Because you make assumptions that it will be going against the expectations,
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aspirations of the higher up of they have more powerful people.
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It makes it create discomfort among these people.
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So how you feel about sharing to the right people is a huge
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challenge in organizations.
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as a middle manager, you often only see what the supervisor is
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asking and what colleagues in another department are doing.
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But you don't see, for instance, customer preferences or what competitors
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are doing in other companies.
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So for you, the emotions are just related to surviving the company
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internal political game and getting ahead in that and satisfying your
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boss in the middle management.
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While in top management, you often could see the board press or.
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Competitors strategies.
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So you feel very different emotions and feel very different threats.
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And then because you feel these emotions, you also make those assumptions about what
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others wanna hear or what you should do.
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And that creates these mismatches in communication.
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It's a big one because what, you're saying there as well is say, for example,
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the show, so mostly when I get sent a book, for example, and I mostly cover
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books on the show, you also get sent a list of questions to ask the author.
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And I always think about that's the cheat sheet.
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And I would go how does, this person know What I think is interesting
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to me because, and I when you read more and you've read the work of
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Joe Bower, you've studied that work.
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It makes every time you do that.
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It's like a new lens.
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And I literally see your work differently.
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'cause I see it through all the lenses of everything I've read before.
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So their decisions on the questions I should ask are totally different from the
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questions I do ask at the end of the day.
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And what was interesting about reading your paper was then, then
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there's the emotional thing as well because I do understand from being
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an executive in an organization, the emotions of the challenges of you're
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constantly bumping into resistance.
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And I look for little quotes and stories that reflect my
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own experience of that as well.
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So it, it really made sense to me and I thought about how, since Frederick
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Winslow Taylor days, we have broadly considered organizations as machines
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and the people working in organizations as cogs in the machine, and as a
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result, work in general is mechanistic.
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And you were saying this Quy and Timo when you worked as engineers,
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that's what you were valued for.
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But you tell us, while some scholars pointed to the importance of the
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humanistic approach, there lacks a deeper and more holistic understanding of the
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innovation process, including emotions and hence your investigation into how
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both emotional reactions and what's called bounded rationality influence
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the innovation process and its outcomes.
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I thought that was important to just spell out this idea, the joint into
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investigation, first of all, into Nokia, but these two things, the emotional
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reactions and bounded rationality.
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And I like the comparison to the assembly line and emotional dynamics,
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in that era, the work descriptions were very strict, so people were unwell and
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suffering at work, but because their tasks had been mechanically prescribed that
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didn't harm the performance that much.
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But I think now in the innovation process where you need to be creative
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and communicate and you always have some autonomy and expertise, so what you're
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paid for, the emotions have much more room for influencing what engineers and
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managers and innovators end up doing.
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that's why as a leader, when you design the organization and its structures,
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it would be very useful to think about first and foremost, which kind of
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emotions and drive and motivation will this process create because That's what
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drives the people to innovate or not.
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And if I could elaborate on that, I think most managers and leaders are
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implicitly aware of the importance of emotions because because after all,
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we were born with emotions as babies.
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But over time, people learn to to mask this language.
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Under a more let's say politically correct language or more socially acceptable
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language, as identity or culture or leadership or engagement or motivation.
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The the real substrate the real DNA of all these words.
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A huge dimension emotion, people do not want to mention this word because it's
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not politically acceptable, and In our language, in the business language,
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especially in the business language.
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I have have heard one of the top chairman of the board of a big bank
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who told, me because he knew about my my research focus, and he told me
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a few years ago that professor Quy, whoever on the board mentioned word
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emotion will be fired immediately.
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We do not tolerate emotion as a, topic, legitimate topic discussion on the board.
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We have more important things to worry about.
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Right?
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So that, single statement captures a lot of the mindset behind it.
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So people use the word culture?
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Identity, soft stuff all of this one, engagement as a cognitive, they're very
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cognitive terms, know, but they are but they are logical and professional terms,
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There's a great line actually Quy, that you write in the paper, and I
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just thought I'd share it firstly for.
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So many people who are listeners to the show work in, as entrepreneurs say, trying
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to drive change with inside organizations or like many of those Nokia engineers,
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many of the people working there that they were trying to do what they
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thought was best for the organization, but they constantly met resistance.
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And that's because everybody has their competing literally agendas or where their
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emotions are directing their attention.
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And you wrote that innovators are trying to create things that do not
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yet exist by leveraging technological components of uncertain market potential.
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Because of this perspective orientation, future oriented emotions such as hope and
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fear are particularly likely to arise.
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Another reason that we might expect fear to be central to innovation
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is that other past oriented.
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Negative emotions that people may feel dVuoring the innovation process, such
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as shame or envy can turn into fear.
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I thought that was so important to realize because so many people who work
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in innovation feel it's personal that people are attacking them, but it's
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based on the emotions that are driving that, that behavior for the person.
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Yeah.
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And if you allow me you can, put all those emotions in the
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current context of ai, right?
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All the AI about hope and fear and hype and, envy that AI will
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replace us as a profession.
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Envy, shame, guilt are all present, right?
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And all those emotions again facing technical ai and I think that's
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I part explains, I think, I'm not saying it's everything, but
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explains in part why the adoption organizations of AI has been so poor.
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Not I said that.
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There's a recent research that says that 70% of AI initiatives have generated
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zero profit, zero, zero profit.
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And the people have invested money, right?
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And people say, oh it's the usual resistance to change, so I think
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we are, I think we are back to the same thing as Nokia with the
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smartphone and but maybe at the bigger
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scale.
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But that's the point.
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Mark Twain quote, history doesn't repeat, but it often does rhyme.
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And I think like it's one of the reasons why I think this paper should be
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certainly resurfaced, if not made very popular in the first place because it
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has so many e echoes of the past and the future, which is even more important.
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Timo, were you gonna come in there?
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Yeah, I think I agree on the AI point that Nokia really faced a huge
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disruption with digital platforms, and now the same is happening in
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pretty much every company with ai.
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And am again, teaching the Nokia case almost every week in different companies,
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and one of the most important insights.
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For people is that it, really is a structural technological thing
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that generates these emotions.
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So when an individual manager or engineer sees that, hey, it's because of the
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hierarchical structure of the firm that I pay attention to this elements and
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then the of at the industry level, why it feels so threatening that I feel
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these emotions that make me behave in a potential it's optimal way.
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When they realize that it's not personal, it's not problem in me, but
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it's a kind of patterned phenomenon.
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They often are able to talk about it.
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So actually I've seen now many cases where by discussing the Nokia case
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and then asking people reflect on their own emotions and situation.
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This open discussion and modify the emotions.
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As you were both describing this, I was thinking of the old diffusion of
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Innovations curve by Everett Rogers, and I was thinking actually you could easily map
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emotions to that curve to the different type of emotional state of the person.
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But not that they're fixed.
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I think that is probably important as well, that you can be, you
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can show a different emotion in different aspects of your life.
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So you could be a different person in work than you are in
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your private life, et cetera.
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And it also depends on the experiences you have, and I think that's what
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you're getting at here with the past oriented negative emotions.
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Say for example, one of the things I read, which maps to what your
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writing is about is if you experienced your parents losing their job.
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For example, in 2008, 2009 as a younger child, you're gonna be more
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risk averse in the jobs that you pick.
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So you're gonna look for a safer option in the future, and I thought
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that was important to call out that say for example, you tried an
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innovation or you tried a project, it didn't work out as you'd planned.
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The company black marked you in some way, or you felt shame or as
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you said, or envious of somebody else who succeeded with an idea
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that you know you should have done.
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Those things have a dramatic effect then on your decision making and
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how you show up in an organization.
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E. Exactly.
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And then and then if it can build on your point, Aidan, and then
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emotions, they are, will feel it?
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But because of social pressures, it's not cool to talk about.
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It's not, you cannot go.
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It's you said you just keep it to yourself like a very cool person.
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It in your side, you, and you never have time to really process it
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because it's not cool to process it.
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And you can distract yourself.
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All the jobs, all the busy life life goes on.
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But those emotions still stay with you.
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And they will wake up at the moment where you don't like them to wake up.
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And then and then you have to fight with your, call, your own shadow
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of the past, you know, which we all experience it in the sense the
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The Carl Jung shadow of the organization.
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But there, there was another interesting one you, talked
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about, which was your status.
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So again, I'm asking our audience here, think about yourself.
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If you working on an organization, the guy's write here, people's status also
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influences the emotions they experience.
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In particular, low status people may have a hardwired, evolutionary
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based fear of high status people because in the past, individuals with
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higher status would have controlled resources, critical for survival.
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And I thought their Quy of Joe Bower's resource allocation process that,
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that's where this shows up is because higher status people can make decisions
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'cause they have actually resources to, to allocate in the first place.
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Yes I think your point is very relevant and I like to connect it
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to a very common phenomena that affects the most senior leaders.
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And, I call this the trap of power.
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The trap of power that links to to, resources.
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And so how this define power is that power is somebody who has resources
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that other people wish to have either status, money fame, whatever you call it.
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Something that you wish to have, but the other person can give it to you.
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that's what the other person has power.
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Now.
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So how does it link to emotions usually, when you do a major change?
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The high status people, meaning the higher up, are very good, at paying
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attention to the emotions of people who have more resources than they are.
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Meaning higher power, right?
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Meaning that the CEO would pay attention to the prime minister,
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to the minister to to the key board members, to key investors.
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Because they have power, they have resources, right?
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So, so they're very emotionally intelligent.
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Now super emotional, intelligent in behaving, in dealing with
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those higher power people because they can give them resources.
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But But the same CEO can be very dismissive and autocratic and maybe
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brutal inhuman with people who are lower than they are because they
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believe that they have less status and therefore less power and less resources.
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Why should I pay attention to the emotions of people who have who
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have who are, weaker than I am?
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So that's what I say emotional intelligence is not an issue.
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It it's issue of when a person decides to pay attention to emotions or the
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people to achieve a certain goals or not.
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I call that the trap of power but that is a, again, it could be a false assumption
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because most of leaders who implement change do not pay much attention to the
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emotional people who are below them.
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And usually they got the surprise, unpleasant surprise.
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They thought they were not important, but in the end were
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more important than they thought.
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On the other hand, great leadership examples are of leaders who
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really inspired their followers.
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So even if emotions on average are not maybe appreciated that much among
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current leaders there are these positive exceptions who really inspire and
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use the emotional intelligence to, to trigger those emotions that drive action.
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And I always say that emotional skills it's not about making people feel
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good, but , you use emotional skills to really drive action and innovation.
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So you want to generate benefits or instrument emotions among the
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organization members, and that's just as hard or even manipulative as
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any other kind of incentive scheme.
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When I was reading your work serendipitously, I was doing a
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workshop for a senior leadership team on vision, mission, purpose,
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and when I read about this I was like on, because there's a key line here.
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You write just as group members may share similar mental models, they
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may also share similar emotions.
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And I went, actually what part of the whole idea of creating
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a vision, mission, purpose.
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Mission statement for a team is also that evokes an emotion and
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that they share that emotion.
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So it's like a brand, when you look at a brand that brand might evoke a
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certain way you feel or a story in your head about the brand and you don't
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even think about it because that's good marketing or good advertising.
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But this was really important that's what you're trying to
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actually ultimately get in a team.
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But as an organization gets bigger, like Nokia did, different product
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units or different middle managers versus top managers all have different
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emotions, depending again on that Miles' Law, depending on where they sit.
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And it's important that often leaders know that they need to generate inspiring
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emotions and they need to generate mission and vision and manage the culture,
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they, where they fail is that they don't recognize also the formal processes
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and product decisions and resource allocations decisions and communications
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channels generate emotions, and often it's the unintended side effects of
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their other decisions that generate harmful emotions while they at the same
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time try to inspire people with vision and mission and in, and I think where
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our first paper about attention based view, the key insight really is that
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you can think about the whole structure as a mechanism that generates emotions.
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And when you understand that can optimize the structure to generate
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beneficial emotions, but then as a leader, you cannot delegate emotion
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management to HR in some other building.
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But you have to think about it yourself when you think about the
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full heart substance of the strategy.
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I like I to elaborate on Timo's important point and there's a English statement that
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says, actions speak louder than words.
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And then that means that it's not about you making nice speeches about passion,
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vision, and how inspiring we should be, or how aspirational we should be, that
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people will really believe in it because there's too many good speakers these days.
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And then people would like to really and another, the, this statement say, put
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your money where your mouth is, right.
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Meaning, you know that it is in the real actions where actions
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really cost you something,
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Such as putting money in research development when the company cannot
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afford it or could barely afford it.
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But you can still believe that in,
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for the least 400, you should keep the percentage r and d high
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despite, let's say maybe less profit margin those first words, people
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said what's emotional about it?
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But in fact, it's very emotional, right?
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Because people said you are really making a sacrifice.
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So w hen push come to shove, when the sacrifice be made you make decision
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that is painful to you because you'll be losing your, maybe your, bonus.
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No, because you will not get your profit.
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But I said I'm doing that because I believe in it for the long term.
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I would think like 65% of my budget r and d, even though we could only offer 1%.
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So I think those type actions, which looks on the surface, very left brain,
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rational, in fact has a huge, collective emotional impact people appreciate that.
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And then that's an example that the language, that the structure attention,
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what you pay attention to or put your money where your mouth is, right.
28:15
The hard decisions and then also kind of concrete practices.
28:21
One thing that didn't make it to the publication, but what many of the
28:25
Nokia middle managers told was that they weren't allowed to use iPhones
28:31
when they were working at Nokia, where it was strongly discouraged and the r
28:35
and d was in Finland mainly, but you couldn't use an iPhone in Finland in
28:40
the first years, so they didn't have concrete experience of using the iPhone,
28:45
and they were under the IUs on that.
28:48
Nokia phones are just as good as the iPhone the store goes to that Samsung,
28:53
the 100 most important managers were forced to use the iPhone so that
28:59
they would really learn and feel it.
29:02
I've taken this also as a kind of my standard advice in emotion management
29:07
that make your employees or the whole organization use the competitors'
29:12
products daily so that they constantly feel the kind of pressure and wanna
29:18
innovate better in say, in a food company that I worked with, they had
29:24
in their headquarters cafeteria, they were serving only their own products.
29:29
of course the employees were saying, we have make the best food.
29:33
But then I wanted them to, no, you should start serving the
29:36
competitors like the products.
29:39
And then they immediately started understanding that, hey, we
29:42
need to constantly innovate better to up and go further.
29:46
But no one had to say anything about emotion or give any speech as you
29:52
just change the practices to create.
29:55
Structure that channels attention to the information that creates
30:00
the most optimal emotion.
30:02
And from emotional perspective, I guess we all know, you know what
30:07
are the underpinning emotions.
30:09
In that sense fear?
30:11
And envy be very constructive in that, in, in that just example that you just
30:17
Fear of your competitors superiority or advance progress and envy
30:22
that they would do so well,
30:24
yeah
30:24
Those negative emotions.
30:26
We, we don't want to talk about negative emotions, but negative
30:28
emotions managed and channeled can become forced for good, quote unquote.
30:34
indeed.
30:35
And like we say in the paper actually in Nokia, the problem wasn't fear per
30:40
se, but rather that the fear that was generated by Apple was channeled the
30:49
top managers to the middle managers and the middle managers ended up fearing
30:54
the top management rather than Apple.
30:57
So that's why for middle managers it was okay that I will lie to
31:01
the top manager, then I'm fine.
31:03
But of course then they lost to Apple cos they didn't address the true cause.
31:08
Yeah.
31:09
And to elaborate on this point, and maybe the point, it may be
31:12
clear, but sometimes it's subtle.
31:14
The paper is that it's not fear itself.
31:16
That is bad, right?
31:18
It is because fear can be good under certain circumstances,
31:22
as we just discussed.
31:23
In the case of Nokia, it was the misaligned fear was the root cause
31:29
because top managers were fearful of the target with the iPhone and apple.
31:34
While middle managers are not afraid of the iPhone apple, but are
31:38
afraid of the top managers, this is the misaligned target of fear.
31:42
That is the root cause of this whole, this, the whole catastrophe, not fear
31:46
itself, that is a very subtle point, but I think it's a very important
31:49
point.
31:49
Timo, what you said reminded me of that saying that you have
31:52
to eat your own cooking, but don't only eat your own cooking.
31:56
You eat other people's cooking and don't, drink your own Kool-Aid.
31:59
Only drink other people's Kool-Aid.
32:01
But
32:02
Exactly.
32:03
a saying by Jack Welsh, and I know people have mixed feelings about Jack Welsh as
32:07
a leader, but he said, if the rate of change on the outside exceeds the rate
32:11
of change on the inside, the end is near.
32:13
And that quote constantly came to mind because I worked in a very
32:17
archaic organization for a while, and I saw this where the speed
32:23
of change was internally focused.
32:26
By most people.
32:27
And then you had some people who had an eye on the outside world
32:30
and were going uh-oh, We're like, we are way off the pace here.
32:34
And when they shared that back into the internal organization, people
32:38
didn't want to hear it, but also attacked or resisted that message
32:43
and made excuses the whole time.
32:45
And I saw this dynamic play out with this paper when with the different
32:49
interviews, and again, that Miles' Law where you stood depending on
32:54
where you sat in the organization.
32:56
And I thought we'd share a little bit about that because that is
32:59
a dynamic that is everywhere.
33:01
So in fact, I want to share with you that we have been still teaching two
33:04
cohorts of senior executives a year on strategy execution for innovation.
33:10
even after 15 years, I still use the Nokia teach and the
33:13
people could fully relate to it.
33:16
They said people always said that Professor Quy what was of Nokia was
33:21
exactly as our company is today.
33:24
And the same admission was done widely from Chinese executives to European
33:30
executives, to American executives.
33:31
There's no, so no cultural differences in regard to that issue and and then
33:38
so, I think it's a very much this is a problem, but this problem is quite
33:43
classic meaning that it's universal and it's still very much current.
33:48
Yeah, it's a huge challenge.
33:50
And you allow for a kind of analogy, when you read about the Russian invasion of
33:58
Ukraine, one of the reasons behind seems to be that no one has dared to tell the
34:06
President Putin about kind of Russian military limitations in the beginning.
34:13
at least it can be interpret he had a similar illusion of
34:18
capability and greatness as Nokia leaders had to towards Apple.
34:24
and the story said it, it's.
34:26
In many companies that we speak that you have the same thing.
34:31
And I think that's why psychological safety has become
34:35
such an important concept.
34:36
'cause people recognize this constant hindrances in informational flow.
34:44
But where our paper differs is indeed this structural element that the emotions
34:50
are not just because your leader is not behaving in the right way, but
34:55
it's also because where you stand makes you see the world in a different way.
35:01
And what is important for top management that might not be visible to you at all.
35:06
And he hence you just don't understand why they are upset about something.
35:11
And I, like to, elaborate on Timo 's point about psychological safety because it
35:16
has been used now for almost all issues.
35:19
But the fact that we have not been able to implement psychological safety after
35:24
40 years of research, says something about it's not that easy to do point number one.
35:30
And, point number two I said today it may be necessary but not sufficient
35:34
for the following reasons when I interview VP middle managers across
35:40
all the countries they said that professor, is not enough for me to feel
35:44
psychologically safe to say things.
35:48
What I say I feel very safe, but what I say does not really matter.
35:53
The CEO and top leadership team already made a decision.
35:55
So they went through this the ritual exercise says Bob, what do you think?
35:59
So I say things, okay, say Nice.
36:01
Okay, check.
36:02
Okay.
36:03
So Timo, what do you think?
36:04
Alright so Timo can express his things.
36:06
Okay, thank you.
36:07
Check!
36:08
Ladies and gentlemen, thank you for sharing your opinion.
36:11
This is our decision,
36:13
so people said my point, I can feel safe, but my point does not matter.
36:18
It doesn't matter at all, so next time I will not go into that kind of ritual
36:23
exercise because it's a waste of time.
36:25
so to my point, that you feel safe is necessary, but you have to feel valued.
36:31
You have to feel valued expressing your opinion.
36:34
Because more and more people say psychologically safe, you can say
36:37
anything you want, but it does not matter
36:39
that, That's what they say.
36:41
And as a leader then you need to.
36:44
Like really be open to learn about how the reality really is.
36:49
here we again come back to partly to emotion that leaders when they generate
36:56
their vision or decisions, and then they do this mandatory involvement of people.
37:01
But if they have already fallen in love with their own idea, they can
37:05
listen to ideas and then ignore them and just keep pushing the And I
37:11
think, I guess they ignore the ideas when they don't feel threatening.
37:16
if the idea is some that is truly threatening, like the iPhone against
37:21
Nokia then it triggers defensive emotional reaction in the leader and
37:26
they react in a hostile way toward the person who shares the information.
37:31
Like in our paper, the Nokia top managers told how Verbally abused
37:38
the McKinsey consultants who first told them about the iPhone threat.
37:43
So they hired McKinsey to tell them the truth, and then when they told
37:49
them the truth, they kicked their ass.
37:51
I can't remember who this, saying was by, it's like, if I want your
37:54
opinion, I'll give it to you.
37:58
But there's so much in this where Quy, when you were saying about the
38:02
psychological safety being a panacea, there's also Timo you said about you,
38:08
you tell the leader, so you have a forum.
38:11
Your view is welcome, even if it's not what we want to hear.
38:15
You share that.
38:17
And even worse than being aggressively or visibly being reprimanded or seeing a
38:24
resistance to, my suggestion is when, and I've seen this where a leader will walk
38:29
outta the room and go, yeah, I thought Timo was very negative in that meeting.
38:33
Did you think?
38:35
And starts to label you subtly.
38:38
And then of course you don't have people who are gonna stand up and go, no, I think
38:42
he was very right there actually boss.
38:45
Because they're afraid of the power and then they subtly poison that person and
38:50
then that person is excluded or ostracized or eventually removed from meetings, finds
38:56
themselves in a position where they're not doing as much productive work as they
39:00
used to, and they leave the organization.
39:02
That's a subtle version of the same thing that's probably very common.
39:07
Yeah.
39:07
This is very common because when I talk to senior executives there is a belief
39:13
that they compare a strategy, execution, innovation as a war game that you are in
39:20
war at war everybody has to be united.
39:24
You cannot express any doubt so people who express any doubt is perceived as
39:29
being somewhat uncommitted or disloyal.
39:34
Yeah.
39:35
Okay.
39:35
I tell you, we need a very strong team and we have to we have to
39:39
push through it no matter what.
39:41
And and that has been more and more of the mindset to these days because of
39:45
so much uncertainty and so much doubt.
39:48
So dissent is not appreciated.
39:50
And it's what Nokia CEO said, even in the paper, that when he himself doubted
39:57
the Nokia strategy, he couldn't say that aloud and he compared himself to
40:03
a general going into a battle that you cannot say that we have lost this battle.
40:07
You just cheer your troops forward and hope for the best.
40:11
But yeah, there is this kind of, when you're in a battle,
40:15
you need to focus on winning.
40:18
I guess in some situations you need this unified action, but in business often.
40:26
It's not so urgent that you wouldn't have time for a brief reflection.
40:32
So I think this false sense of urgency that we must all act all
40:36
the time in a United Way prevents many organizations actually to fine
40:42
tune the strategy implementation to its optimal level and this way
40:48
of undermining the critical voices.
40:52
In the paper, Nokia had that as well.
40:55
One initiative was called Cancer that is spreading inside Nokia.
40:59
And one software manager, vice president, was labeled as a lunatic
41:05
and when they challenge the management.
41:07
But what I really think it's that goes to ambition level in the end.
41:12
So if you have a leader who is highly ambitious in Strategy execution in
41:17
the sense that they wanna implement the strategy in the best possible way.
41:22
That kind of leader would probably welcome every suggestion that,
41:25
Hey, we can make this even better if we take this into account.
41:30
And, I also elaborate on, now my current research and this has
41:35
been quite a common phenomenon.
41:38
In the last few years is that both the top and middle managers was now playing
41:45
a, what they call a, poker face game.
41:48
Exactly.
41:48
The point.
41:49
Poker face game that you know, that the, top managers is trying to fake
41:53
conviction, enthusiasm about the strategy that, you know, we, if we work hard,
41:57
we sacrifice we cut costs we cut costs, we work faster, then we'll succeed.
42:02
Okay?
42:03
And middle managers, the vp, the vice president, senior vice president
42:07
they knew deep down is not possible, they had to play the poker face game,
42:12
said, yes, boss you are very right.
42:14
We are all with
42:14
you.
42:16
We are very enthusiastic.
42:18
So this is from emotional perspective a a, bubble emotional faking game.
42:23
Both are playing extremely well because both the positions both
42:27
are select very skillful actors.
42:31
From an emotional perspective.
42:32
They're very skillful emotional actors, both of them so, they engage, discuss the
42:37
game to, to try to deceive each other.
42:40
They're not even sure what the other guys, what kind of cards the other guys have.
42:44
You see?
42:44
And in the end, that leads to the Nokia situation.
42:47
In the Nokia case, it was so extreme that it's a kind of relief to hear that.
42:53
So when you are in your own firm that hey, this is happening to us as well.
42:57
And Quy example reminded me of how Olli-Pekka the CEO thought when he was
43:03
in this panel in 2008, so two years before he was fired, and Google, CEO
43:11
said something like, in a couple of years time, these displays and he was
43:16
holding a phone, will add no value, that all the value will be in the cloud.
43:20
And privately Olli-Pekka was thinking that, Oh shit, like Nokia is doomed.
43:26
He, the Google strategy will destroy us.
43:30
because he was in a public panel, he had to maintain the poker face.
43:34
So he was saying like, something that this is gonna be a great value adding internet
43:39
economy and we will all drive together.
43:42
And then the employees had to play along as well.
43:46
But you could actually see evidence that it was really a poker game for everyone.
43:51
'cause when McKinsey did the organization health survey among
43:56
the top and middle management and Nokia, they got the worst result they
44:01
have ever measured in any company.
44:04
So it was really the kind of culture and trust in the future of the company,
44:10
or confidence in the future of the company was super low even though
44:14
everyone was speaking confidently.
44:17
what you were talking about there, about the acting putting on this poker face, and
44:21
I thought about the Greek word persona.
44:23
So it comes from the Greek word of for a mask, and it was the time
44:27
where people wore a mask as they were one actor, and then they change
44:30
masks to change different roles.
44:31
So that's the origin of persona, but I often think about that for.
44:36
Say somebody who is neurodivergent maybe autism for example, that they sometimes
44:42
have to mask and it uses a huge amount of personal energy of life force.
44:47
And I thought about that, where
44:49
Yeah.
44:49
if you're doing that, if you're playing that game, it has a dramatic
44:53
effect literally on your health.
44:54
Not just the organizational health as a, metric, but personally, you carry so
45:00
much weight with that and you cannot be innovative when you're using all your
45:03
energy just to get through the day.
45:05
Yeah.
45:06
And I think you're right about this one Aidan.
45:08
I think one of the puzzle these days, as you can see in much of the developed
45:14
work, but also in, in, China and in South Korea today, there's a, is massive
45:20
number, like up to 30% of people in the age working group who are professionals.
45:26
I'm talking about low level work professionals, managers between 25 to
45:30
40 years old who, can no longer work who said they, they cannot get out of
45:36
bed because they have some kind cannot bring themselves to work because they
45:39
feel completely de-energized, right?
45:43
And maybe a, a hypothesis could be very much due to that emotion masking
45:47
that had been going for so long.
45:48
And I think the young generation can say, how long can we play this faking game?
45:53
And what's the point of it?
45:54
And I think the recent discussions about Toxic positivity's really
46:00
related to this phenomenon.
46:02
So what I hate most when teaching about emotions is that managers
46:09
believe that emotion management is about making everyone feel happy and
46:13
show happiness and positive emotion.
46:15
But that's completely wrong.
46:18
That's like the, and I say it's the kind of positivity in the North
46:22
Korean style if that's allowed here.
46:27
so mental health issues, plus also because it's consuming cognitive capacity,
46:36
you don't have energy for innovation.
46:39
So it's not only that you get ill over time, but you also can't do your best work
46:45
Yeah.
46:45
Because if you feel deep in yourself you, are a fake, you are a fake
46:49
person, and and he said, what's the point of being a fake person?
46:54
Why I'm doing this?
46:56
For money or for career.
46:58
And then that thing start to lose meaning over time.
47:01
And maybe that explains in part why there's such a increasing percentage
47:06
of professional managers, educated highly from universities now who feel
47:12
de-energized they could not even go to
47:14
work.
47:15
I thought when I was reading this about the, conformity studies by Solomon
47:19
Asch in the 1950s and he studied , the phenomenon of conformity in groups.
47:24
So what they did was they had a group of 10 people, nine of them were
47:28
confederates, they were in on the study.. had to look at a set of lines
47:33
and say, what line does this the size of this line conform to on the left here?
47:38
And it would be A, B, or C. And people purposely, 'cause they were
47:41
actors, would choose the wrong line.
47:44
And they were studying one person in this group.
47:46
And the person would, in a majority of cases, say a line
47:50
that they knew was wrong.
47:52
Like they knew the answer was wrong.
47:54
And interestingly then they interviewed them afterwards and
47:56
they go, why did you do that?
47:57
And they were like I didn't want to be the person who rocked the boat, or I didn't
48:02
want to be the person who went against the grain, or I just assumed they knew
48:07
better than me and I just saw it wrong.
48:09
And I saw that in your paper many times where people knew that the information
48:15
they were sharing was wrong up the pipe to people, but they did it anyway.
48:19
And I thought that was an important thing to just call out this, like
48:23
the many reasons and the many emotions that led to those decisions.
48:26
So, I would build on on, on that one as well.
48:29
And sometimes when I teach the case of Nokia to many executives.
48:33
The conclusion is that what you guys describing is what
48:37
happens in organization.
48:39
The only things difference is the outcome is not as extreme.
48:43
That's not the only difference.
48:45
That's it but if it's the same.
48:49
So that's point 1.
48:50
Point.2 is that the I try to relate that this case is much
48:54
more generalizable than you think.
48:56
So I use the case of Boeing 737 max the explosion.
49:00
Boeing seven has a much more, let's say, from the casualties, much more
49:05
serious than Nokia and if you read the US Congress report about what happens,
49:10
Boeing has been knowing exactly the same thing as Nokia for the last 10 years.
49:14
But nothing was being done until we had to sacrifice a few hundred
49:19
people finally to get that.
49:21
So that is a tragic, but it's, but exactly the same kind of emotional mechanism.
49:27
at play against in, Boeing, if you read the case, right?
49:31
Same thing with with Samsung explosion of Note part four.
49:34
You remember at that time some explosion, Note part four did the battery exploded
49:39
and people, but the airport people say, please do not carry your Note
49:42
part four on the airplane because you could have, the whole plane can
49:47
explode and then, so that was something.
49:50
And if you study why same simple situation as Nokia.
49:54
Okay?
49:55
And the last point I have to use just to show that happens in all countries
50:00
is not because of any kind of special situation was the what they call
50:05
the German Volkswagen Dieselgate, you remember Dieselgate where German
50:09
engineers cheated the system, the emission engine and fought for 10 years,
50:14
put the same cheating system to the us.
50:16
went to us, discovered that one 10 years later, and they had to pay a
50:19
huge fine and they had to go to jail.
50:22
Investigation, similar phenomenon of emotion happening there, fear of
50:27
pressure then we cheat and not to count the countless fraud in banks
50:33
pressure to make money and no I'm not going to go into banks because
50:37
there's so many examples of that.
50:39
May maybe, what we should finish on is we'll tee people up for the next episode.
50:45
'cause we said we'd share emotions, then we'll get into the rise and fall.
50:48
And then the rise again is part three.
50:50
when you teach these cases, what you're really trying to do is teach
50:53
these executives and what is maybe one question that you leave them
50:58
with to try and get them to go.
50:59
Now over to you.
51:01
How do you make sure you are not in encouraging this wrong
51:06
culture or a culture where people don't feel they can speak up?
51:10
For me , I said that in my teaching.
51:12
There are two sections.
51:14
This one session is called Bad news like we Do Today.
51:18
That know, because some executives have still asking me to challenge
51:22
me that how much I how much would cost, us if the potential emotion.
51:28
Can you quantify?
51:30
you quantify a business case?
51:31
You know that how much would I lose if I don't pay attention to emotion?
51:35
So that's the said.
51:37
The case of Nokia assets only $100 billion.
51:40
I dunno, it's big enough or small enough for you so it's only 100 billion euros
51:46
today would be worth 500 million euros.
51:47
I don't know whether it's good Quantification is enough that's my no,
51:52
this is my chi maybe cheeky answer,
51:54
Good.
51:55
But I said but more seriously, said that's, today is a bad today
52:02
it's a bad news session and next time I will give you the solution.
52:06
You can, things can be very different.
52:08
actually introduced emotions when I did strategic decision
52:14
making or stretch implementation.
52:17
I actually show the executives how you can reflect on and recognize
52:23
emotions in different parts of the decision making process.
52:28
So we would do like an environmental scanning, what are the major
52:32
shifts in the environment, how they impact us, and then third
52:36
question, how does that make me feel?
52:39
then they start reflecting on them and often they find that super helpful.
52:47
And when they share them out loud, they are surprised that others have.
52:52
Same emotions.
52:53
So it's, I secretly lure them into emotions and then they find it very
52:58
beneficial then they start using it.
53:02
I just want to share something that's similar to Timo.
53:05
I, teach I teach very long session to, to C level on strategy execution so in
53:11
the sense we got trick them that way.
53:14
Said, we are going to go in for execution.
53:16
So they said yes we go to, and we, expect to read about the structure KPI alignment.
53:24
And we just do that.
53:25
And then the day two, you talk about emotions and Nokia and we didn't expect
53:30
that, but in the end we like it but that's not something we expected.
53:34
It asked a course on strategy execution.
53:37
We expect strategy, structure, incentives, KPI, all of this project management
53:42
and I think that's why I was attracted to this work is that I can see that,
53:46
and it's not what many people think.
53:49
So when they think about strategy, they don't think about this stuff.
53:52
But this is almost like the foundation.
53:54
to build a strategy on top of.
53:56
You have to have a solid, emotional, and psychologically safe environment for
54:01
people to be able to perform at their best and be strategic in the first place.
54:04
Guys, for people who want to reach you, where's the best place to find you?
54:08
Quy.
54:09
I think I could be reachable easily on the, INSEAD website so just type
54:13
in my name INSEAD faculty strategy.
54:16
And there's a lot of information about me or just Google, me, . Just
54:20
Google my name INSEAD and there's a lot on written about me and my work.
54:25
And I will share links also to some of the articles and how I found
54:29
you in the first place as well.
54:30
And Timo for people who wanna find you.
54:32
I'm very active on LinkedIn, so Professor Timo Vuori LinkedIn.
54:39
I share videos almost weekly.
54:41
And then I have also my own website, adaptive volcano.com, which
54:47
comes partly from my last name, which in Finnish means mountain.
54:52
Professor of strategy at INSEAD Quy Huy, thank you for joining us and Professor of
54:57
Strategic Management at Aalto University, Timo Vuori Thank, you for joining us.
55:02
Thanks Aidan, it has been great,
55:04
Thank you,
55:04
Aden.
55:05
It's a
55:05
pleasure.
55:06
As always, thank you to our sponsor Kyndryl, who run and reimagine the
55:10
technology systems that drive advantage for the world's leading businesses.
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With a unique blend of AI powered consulting, built on unmatched managed
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service capability, Kyndryl helps leaders harness the power of technology for
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smarter decisions, faster innovation, and a lasting competitive edge.
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You can find our friends at Kyndryl at Kyndryl.com.