What Nokia Needs

Nokia CEO Stephen Elop, with a surprisingly honest assessment of the company’s situation:

How did we get to this point? Why did we fall behind when the world around us evolved?

This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.

Nokia, our platform is burning.

We are working on a path forward — a path to rebuild our market leadership. When we share the new strategy on February 11, it will be a huge effort to transform our company. But, I believe that together, we can face the challenges ahead of us. Together, we can choose to define our future.

It boils down to building products that your consumers want to use in a profitable way. I said it a few months ago:

So many techies get caught up in battles about what’s cooler, easier to use, or more “open.” The products themselves matter, yes, but every mobile platform can be profitable in one way or another, just in the way that Walmart and the local mom and pop shop can both be profitable. They just need to know how their company and operations should look given that business strategy.

Nokia employs as many people to develop its smartphone software as Apple does to develop all its products. That’s not the way to run a company that is rapidly losing market share and has been consistently out-innovated for years.

I keep coming back to Jim Collins’ Good to Great (affiliate link), but instead of embarking on a program of radical change, a revolution, to transform or upend nearly every aspect of the company, jeopardizing or abandoning core strengths, they need to go in another direction. It’s important to “gain clarity about what is core and should be held firm, and what needs to change, building upon proven strengths and eliminating weaknesses.”

Nokia has always been known for building great hardware, but lackluster software compared to iOS and Android. I’ve read that hardware teams drive the software and can nix new features if necessary. That is their core competence. The thing is, other hardware cmopanies have taken that position over – namely, HTC and Motorola.

Nokia, take a step back and stop trying to pretend to be Apple. Look at how HTC as a company is built. Look at their cost structures, how the company is put together. That will give you a glimpse of a future with a successful Nokia, one that’s profitable. You may not be #1 in market share or revenue or profit. You can however be profitable. That’s the most important thing. You were a pioneer for 15 years in the mobile industry. Now you’re just fighting to survive.

Formulate a strategy that’s based on empirical evidence and extensive quantitative analysis. Don’t make bold untested leaps. That’s the key to success. It’ll be hard and requires a lot of discipline, but it’s possible. I’ll be rooting for you.

February 8, 2011