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Outsource magazine: thought-leadership and outsourcing strategy | May 4, 2015

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Innovation: a hoary old scab, or something worth talking about? (Part 4)

Innovation: a hoary old scab, or something worth talking about? (Part 4)
Louise Beaumont

In this series of articles, I have looked at definitions of innovation and answered the ‘why bother’ question – the answer, as you might suspect, is margin – and examined why companies are all talk and very little action when it comes to innovation.  The third instalment got under the skin of what it really takes to drive innovation through an outsourcing business.

Now, I want to focus on a salutary tale.  The tale of a company that got it catastrophically wrong.

Not from the outsourcing industry, true.  A mobile handset company.  Yep – Nokia.  We all had one, and now most of us don’t.

Why?  And what can we learn from their trials and tribulations?

Nokia. A tale of woe.

Nokia handsets used to be ubiquitous – all they did was calls and texts (and a couple of simple, bizarrely addictive games), they sold 160m top-of-the-range handsets in 2000, and their share price was 65 euros.

Now, their latest phones do everything and more – but they expect to sell 9m of them in 2011, and their share price is about 4 euros.

There has been a lot of press about Stephen Elop’s appointment as CEO of Nokia.  He came from Microsoft, and has clearly been a bit of a shock to a very tightly-knit company.

But, arguably, he got the bigger shock when he addressed the workforce for the first time, and asked them how many of them had an iPhone or an Android Phone.  A couple of hands went up, tentatively.  “I’d rather people have the intellectual curiosity to understand what we’re up against,” he said.

Here’s what they’re up against: iPhones hitting the top of the market, Androids hitting the middle market, emerging ‘dumbphone’ markets under attack by the Chinese.

Nokia now have less than 30% of the global market.


What happened?

The highs…

  • Nokia played a big role in creating the GSM standard;
  • they made cheap, reliable, small-but-sturdy handsets, like the 1100, with amazing battery life;
  • they knitted Symbian software, enabling an all-in-one communicator and diary, and thus the set-up for the smartphone;
  • and they delivered sales of 31 billion euros in 2001.

The lows…

  • An invasion of managers – in core, and highly sensitive, design areas. Which ramped up the vision and strategy stuff (and the PowerPoint production), but not necessarily from a standpoint of knowing what they were doing.
  • Corporate confusion – bits of Nokia doing the same/similar things and not sharing.  And some pretty incontinent buying and selling. They even sold Symbian, and then bought it back.
  • Starting things up, killing them off, and then starting them up again – which is exactly what Nokia did with touchscreen technology.
  • Disastrous products – online capability, gaming phones, music stores. The characteristic here would seem to be ‘blind faith’. Nokia believed whatever they were launching was going to work, right up until the point of abject and highly public failure.

What next for Nokia?

Getting into bed with Microsoft is an interesting move. Nokia didn’t believe that Google would let them adapt Android, so they went with Microsoft – where their influence is pretty limited right now, but will (they hope and expect) ramp up over the course of 2012.

But this could just be an interim move.

Elop has created a ‘secret’ engineer think-tank whose remit is to come up with the next big thing.  The thing that blows away Apple, Android, and Microsoft.

Any lessons here for the outsourcers?

Respect know-how.  And don’t stifle it with management. Keep management light.  And keep it on-remit, doing the management stuff.

Have a clear corporate strategy, one that everyone knows. Give the right hand a fighting chance of knowing what the left hand is up to.

Commit, and deliver.  If you’re killing it, kill it. If you’re going with it, go with it. No half-hearted resurrections please.

Market test your ideas. No developing in a vacuum. Have faith, but informed, eyes-wide-open faith.

Post Script

And what do I own? I have an HTC HD7, on Windows mobile.

Is it any good? It works, it does what I need it to do. I’m fond of it, which means I make excuses when life gets a bit too much for it, and it needs a lie down…

I guess the lesson here is; be likeable…

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