Power distance killed Nokia. Not Apple, Microsoft or Android. A recent study investigates just how it happened.

It is almost impossible to believe, but the iPhone isn’t even 10 years old. If you used a cell phone before 2007 you almost certainly owned a Nokia product at some point. They were THE mobile phone company.

But Nokia is gone now. Microsoft bought them in 2013 after the company’s market value dropped by 90% over just six years. Many reasons are given for Nokia’s decline. Most observers blame the iPhone or the fact that Nokia just didn’t have the capacity to keep up.

But those stories don’t add up. Nokia was once worth $150 billion. Nokia had the creativity and the money to keep up with Apple. Nokia’s problem was cultural.

Nokia’s leaders never took Apple seriously until it was way too late. A key reason for this misstep was that mid-level managers did not feel safe confronting their leaders. There was too big a power distance gap between top leaders and other coworkers.

Power Distance in Organizations

Power distance is a concept developed by professor Geert Hofstede to help explain differences between cultures. The basic idea is that some cultures (like Eastern and Latin countries) place a high value on hierarchy and defer to power while other cultures (Western and European countries) do not.

In high power distance cultures lower power people are less likely to confront higher power ones. In lower power distance cultures people are much more willing to confront powerful people. Which brings us back to Nokia.

A recent study interviewed numerous former Nokia employees to learn what caused the company to collapse. The story told over and over by employees at all levels of the company was that top leaders mocked the iPhone. They simply refused to accept that the iPhone would ever threaten Nokia’s products.

This stance from the leaders froze the organization. Nokia became “grounded in a culture of temperamental leaders and frightened middle managers, scared of telling the truth.” In the end this refusal doomed Nokia and probably helped Apple’s product accomplish its meteoric rise.

It’s not hard to imagine. Your company is on top. Your leaders think you’re unbeatable. Competition develops. Top level managers explain away the early signs of trouble. Anybody who suggests that the competitor is a serious threat is mocked or ignored (or even fired). Nobody will buck the leaders. The pattern repeats over and over and communication goes from bad to non-existent. By the time the truth becomes clear it is too late.

This is a power distance gap. It destroys companies. This is why good leaders have a responsibility to bridge the gap. We teach leaders how to do this in our Approachable Leadership Workshop.

7 Ways to Know if You Have a Power Distance Gap

  1. Be on the lookout for power distance. Most leaders with a gap don’t even know it exists – they don’t take the time to notice power distance with coworkers. Step one is to look for it. If you notice power distance issues consider one or more of the tips below.
  2. Note your “baseline” relationship with each coworker. One way to identify a gap is to notice a change in behavior. But how will you notice a change if you don’t have a baseline? Set a baseline for each individual coworker. Some may interact with you a lot – others not much at all. Just try to notice what your “normal” relationship is like.
  3. Notice changes in behavior. Below are a few specifics to look for, but any change from “normal” is worth noting and bringing up. That change could be positive (shrinking the gap) or negative (widening the gap). Either way, mention what you’ve noticed to your coworker – that often leads to a very positive discussion.
  4. Look for evasive behaviors. Do coworkers avoid you? Do they keep at a physical distance? Do they seem reserved or indirect? Do they avoid eye contact? Do they seem uncomfortable? These are all behaviors that can signal a gap. Look for them.
  5. Listen for mitigated speech. Are your coworkers comfortable speaking up around you? Are they direct? Do they use declarative statements or do they beat around the bush? Are they willing to disagree? Do they stand up for themselves or do they seem to give in easily? Do they seem overly formal? These are ways to tell that someone is concerned about directly confronting someone in power.
  6. Create a safe space. Make sure coworkers know it is OK to disagree with you. Ask them to play devil’s advocate or to help you come up with reasons why something might not work. Role play what cold go wrong together. This helps create a more comfortable space where coworkers are more likely to speak up.
  7. Tell a feedback story with a happy ending. Tell a story or two about times other coworkers disagreed with you and how you appreciated and acted on that feedback. Give details that might even be a little embarrassing. This shows you are approachable, and stories often work at a much deeper level than just directly asking for feedback.

You don’t have to be someone’s best friend to be a good boss (in fact that’s a terrible idea). But you do have to make coworkers feel safe and comfortable talking to you about their concerns and dreams. Your coworkers will not talk with you if you aren’t approachable. And that’s a problem.

Just ask Nokia.

What do you think? Do you have any examples of how power distance has caused problems in your company? Have you seen major problems avoided because someone was willing to step up and confront someone in power? Let us know in the comments. Please share this article on your social networks!

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