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NYT blames yet another culprit: Nokia’s Culture of Complacency

“I am sure there are things we could have done better and innovations we missed,” Ms. Suominen added. “But that happens to all companies. We have been very successful with some other innovations.”

She cited Nokia’s large patent portfolio and its 770 Internet Tablet, a compact, flat-screen device without a phone, released in 2005. It worked with a pen stylus and was made for Internet browsing but is no longer sold.

via Nokia’s New Chief Faces a Culture of Complacency – NYTimes.com.

If I may suggest a better list of innovations for Nokia to stand behind:

  1. The first GSM call in 1991 was made on a Nokia phone and a Nokia network
  2. The first mass-market smartphone, the Communicator in 1998
  3. First compact smartphone, the 7650 in 2002.

While these innovations and “firsts” happened many years ago, Nokia’s ability to innovate is just as important at the low end. Nokia was the first company to address the lowest tiers of the market with over a billion customers served. This was no small feat and many observers faulted the strategy when it began in the middle of the decade.

I would not discount the difficulty and determination required in reaching those customers. Engineering a profitable low end product is as hard if not harder than engineering a high end superphone. More importantly, you have to find a way to distribute to these hard-to-reach customers and find ways to make the product useful, usable and affordable. Were it not for these efforts, the company would be facing collapse today, similar to the fate of Motorola or Ericsson: squeezed in the mid-range.

Blaming “culture” is nothing more than suggesting bad management. The culture of Nokia did not change between the few years when it was successful and the years when it was not.

The challenge Nokia faces is not complacency. It’s that the business model for selling voice-oriented phones is diametrically opposed to the business model for selling data-oriented phones. In one case you cooperate with and sustain operators, in the other you compete with and disrupt them.  It looks damn near impossible to do both with the same organization. Everything must be done differently. The real problem is that Nokia has not realized this and therefore can’t build its own replacement.

  • darius

    It looks damn near impossible, because Nokia is the only one to have tried, and has so far been complacent.

    Just building a smartphone market in the US where Nokia have no presence would be a start.

  • berult

    Very seldom are reinventive processes and clear-sightedness allowed to mingle with the luring, haven like fog of current successes. Nokia is a peer of the consistency realm; The N.Y.Time being another one. 

    You ride on successes coattails, forsake all sense of perspective, ignore ominous signs from within your bottom-up information flow. We're not talking about managerial comfort zone here although it has a causal impact on it, it is mostly about the dialectical grounds onto which a CEO and sitting members of the Board care to address the shareholder equity's "do or die" mandate.

    For a shareholder, the past is a concrete measure of success and failure; a construct of an uncertain, allegedly promising future sounds little more than whistling in the dark to an inherently shivering investor.

    The problem with the Time's take on Nokia is that they take Apple's success too personally…! Insiders resent outliers, and you can't hide it when you're stuck managing a front page on a daily basis.    

  • MattF

    But one can argue that Nokia's problem is that they believe they have a problem. Do they really need a US/smartphone/iPhone-killer product? And if they do, what exactly does "Nokia Inc.", the giant, low-cost, low-margin supplier cell phones to emerging markets bring to that need?

  • Tom

    The soviet union of Lenin/Stalin appeared to be far less bureaucratic but rather autocratic. When Stalin wanted to nationalize the farms, he commanded it, and the few people who disagreed with him (60 million, some say) were simply exterminated. He wanted it, he got it.
    The reaction against this was a switch to caution and bureaucracy, a political calcification. It took some time, but it collapsed.
    Certainly, politics is a poor parallel to corporations, since strong company leaders don't have people exterminated.
    But everywhere we look, there is a point made for the strong leadership of Steve Jobs at Apple. When he wants something done, it gets done. The light bureaucracy of Apple attempts to keep things legal and up to standards, but no one doubts who is in charge. There is something to be said for the thesis of the article.

  • http://dailyexhaust.com/ Michael Mulvey

    The word 'innovation' gets tossed around a lot these days. It's important to understand the distinction.

    Professor Jan Fagerberg nailed it in a paper from 2004 on the topic:
    Invention is the first occurrence of an idea for a new product or process. Innovation is the first commercialization of the idea.

    So for me, Nokia is great at inventing, they're just really lousy at innovation (read: making money off their inventions).

    *it's also interesting to note that Henry Ford didn't invent the car, but most people think he did. It would be interesting to go through history and see how many other occurrences like this have happened.

    Here's post I did on the whole invention/innovation topic last year:
    http://dailyexhaust.com/2009/07/innovation-vs-inv

    And here's Fagerberg's paper (PDF):
    http://ideas.repec.org/p/tik/inowpp/20031012.html

    Love the site, Horace. Keep up the great work.

    • http://www.asymco.com Horace Dediu

      Spot on. I would say the commonly accepted interpretation is first successful commercialization. Even more precisely the "first massively successful commercialization" gets the credit.

    • famousringo

      That's a good distinction.

      I like to say that the difference between invention and innovation is doing it first versus doing it right. Professor Fagerberg's definition sounds more precise, though perhaps less snappy.

    • FalKirk

      "Invention is the first occurrence of an idea for a new product or process. Innovation is the first commercialization of the idea."

      I am SO stealing this quote.

    • famousringo

      Oh, and I forgot to add that Thomas Edison's "invention" of the light bulb is a good example of innovation. Incandescent electric light had been invented 75 years before Edison started serious R&D on the subject, with 22 inventors having developed such devices before he came along. Edison gets all the credit because he was the first person to get incandescent light right (and tie it in with an entire electric lighting system).

      • http://www.asymco.com Horace Dediu

        Same with aircraft. There were many flying machines before the Wright Brothers’. They just did not have usable controls. The Wrights patented the essential control elements. The problem with the Wrights was that they got tied up in litigation forever after and that’s why we don’t fly in Wright 747s. Aviation innovation took first root with European makers as World War I was looming and belligerent governments spent on R&D and the infrastructure necessary.

      • http://dailyexhaust.com/ Michael Mulvey

        This is such a rich topic, both in industries and history.

        I think we all could keep this thread going forever, but I'll mention one more example -FaceTime.

        I read a post somewhere recently where the author was angry that it's being perceived (according to him) that Apple invented video chat and they didn't. I can only speak for myself, but I feel like most people in our industry know this isn't the case.

        I think this goes back to what @famousringo's said on 'getting it right'.

        It's amazing, the power of getting something right. In the case of FaceTime, it's not only the design that's important, but also the timing. In another decade, FaceTime could have ended up another Newton.

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