Surving Nokia?

“They are trying to survive,” said one analyst “They can’t continue like this.”

“This is harder than we thought and we’re having to make deeper changes,” says CEO Elop.

Question is; what would you do?

Preparing this fall’s Strategy courses at BI – Norwegian Business School. And Nokia will be one of the case studies. But rather than using HBR cases, we use the real world. Few cases are better than Nokia and its on-going struggles. This Bloomberg article lays out a great analysis.

Surving Nokia?

Researching news clippings for teaching creative strategic thinking

“In strategic thinking, we have learned that there is no such thing as a mature industry: there is only an industry to which imagination has yet to be applied”
– Steven Denning

I’m researching material for my upcoming strategy class. This spring I also run several executive education programs where strategic management is part of the program. The goal: teach students at all levels more creative strategic thinking.I have excellent books and great case studies, but I am looking for recent, up-to-date material they will recognize. Apple, Amazon, Facebook are easy pickings for good case studies. As are Nokia, Kodak and Sony for the worse stories.The search for the best material is still on-going. So far, I’m reading through this selection… (still on-going)

David Brooks: Competitiveness Vs Creativity: GE vs Apple

How To Succeed Like Apple and Amazon

Strategy Is The Antidote To Complexity, Killer Of Today’s Best Companies
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Apple’s inevitable path to a post-PC era

Apple=Sony: Brace For The Coming Post-Steve Jobs Decline

Apple = Sony? Don’t You Believe It


Here’s Why Google and Facebook Might Completely Disappear in the Next 5 Years

Also worth looking into are these posts on the creative economy and how to teach it.

The Creative Monopoly

Peter Thiel’s CS183: Startup—Stanford, Spring 2012 (PayPal founder, early Facebook investor Peter Thiel, now teaching at Stanford)

Five Days to Change the World – The Columbia Lean LaunchPad Class

And a few on Nokia…

Nokia: Demand Still Falling, The Worst Is Still To Come

Nokia loses mobile top spot. What does it have left?

Footnote, also adding this one…
Be Your Own Bank: Bitcoin Wallet for Apple

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Wow! Another intense day here at WIC2011.

Today saw us deeply engaged in presentations going non-stop from 08:45 to 18:45. Brain food; yes. Mental overload; absolutely.

The morning session had a series of great presentations from GE; presenting the company’s innovation process. Then moving on to Gen3 and a superb panel debate on how companies use customer studies to create strategic foresight.
We ran an active Twitter feed all through the morning, concluding with this statement by Kodak’s senior director: “#Kodak: 12 years ago we had the digital camera. But consumers did not what it. That must be the conclusion of the century. #winovc2011”

Following lunch in 25 degrees and sun (not like Norway these days..), we were delighted to hear Nokia’s efforts on global open innovation. He shared some great insights and left no doubt; Nokia is going through the cultural transition of the century. Personally, I wonder, will I be able to ask students in 2018, “Do you know what Nokia is……..?”………”They used to make phones”………

Using Nokia extensively for our strategy and innovation classes, we are following the company closely these days. History has seen few cases of sudden, brutal disruption like the one Nokia is going through right now.

Paul Isherwood of GSK gave a great talk, titled “The dark side of open innovation – how to avoid the pitfalls”. What stood out in Paul’s great talk today was his question:” how to raise the probability of success?”. His answer: Passion.
Paul is the first speaker so far, who’s really put an emphasis on the engagement side of the innovation equation. Quoting work from Birgitta Sandberg at Turku, “Passion is the key”. Now, as Paul said, Passion has to be generated individually and then bottom-up. He described how GSK uses a peer-to-peer system where people can vote on “the biggest risktakers”, “the innovation maestros”, “the fusionists” and other titles. These titles, in GSK’s operating model, are recognition for being the driving force, the passionate ones, in the innovation engine. This, said Paul, was far more effective and powerful than rewards. “Behaviour for innovation comes from recognition, not rewards”.

Rounding of the day was Open innovation expert Danish Stefan Lindegard. He blended Open innovation and social medias for a thought-provoking and challenging talk. Much like Hamel, Lindegard challenge companies to completely rewire themselves for a truly open innovation paradigm. A paradigm where social media tools are 100 % integrated into the corporate structure. A paradigm not with a single Facebook or Linkedin site, but with an entire digital eco-system; all hyperconnected. This, he believes, requires managers (if they are not already too old) to move from digital visitors to becoming digital natives; i.e. fluent and confident across all digital platforms.

How fluent is your corporate team in your digital eco-system?

Note:

It’s interesting to see how learning happens during such a conference. Today was stuffed with great speakers, leaving limited time for dialogue and interaction. Introduce Twitter. As the day proceeded more and more people logged on to Twitter, using the emerging hashtags #winovc and #winovc2011. Here the exchange of input and creation of shared meaning took place in a digital space, while the physical space was engaged in a one-way monologue. At one point, a Norwegian (one of us), a Dane (Stefan), a Spaniard (Juan) and a Brazilian (Tatiane, of Itau) were silently Tweeting and retweeting, while seated only a few meters apart. I’m bringing this format into my classroom in Norway for some upcoming management courses.

Wow! Another intense day here at WIC2011.

The Burning Platform and other recommended readings in strategy

This October, I start teaching Leadership in Action. This is one of BI’s most progressive educational programs in terms of experiential learning and strategy is a core issue for the participants.

Leadership in Action is BI’s concluding program in the Bachelor of Management degree. Designed for experienced managers, the program makes heavy use of action-reflection-theory as a pedagogical model. Teaching in this model is even more fun, and creates an even stronger learning experience than regular business school programs. Ragnhild Wiik, Irene Grastveit and I hope to put together an amazing program for our students this fall.

For the upcoming November module, strategy and teamwork have the main focus. I’ve dug through the current strategy literature to find an appropriate mix of readings, research and cases. The list, I believe, also serves as a current recommended reading list for any student of strategy looking for some updated material.

Case study: Nokia and its Burning Platform memo

Right now, there are no better cases for teaching strategy than Nokia. The sudden shift in Nokia’s fortune, its abrupt decline in share price and the drastic situation the company finds itself in today makes for a great learning experience.

Asking in my classroom, “go back a few years, how many of you owned a Nokia phone?”, I get some 60 – 80 % yes. The follow-up question, of course, “How many of you own one today”, and I am left with a handful of students; most whom are looking to upgrade to an iPhone anyway. When students look around the classroom, they become amazed at the difference. Well, welcome to Nokia’s world.

Nokia’s in a major turnaround situation. New CEO Stephen Elop described the company’s situation as “Standing on a burning platform”. This is of course what Professor John Kotter describe as “Establishing a Sense of Urgency”, the first of the eight steps in his recommended change process. What makes Nokia so special is the openness with which it (now) communicates with. Few CEO’s have ever been this open and frank about the challenges. This makes a lot of internal material openly available for analysts, journalists and business schools to follow. In turn, making Nokia the current case of choice in my management programs. I believe we will see a number of books, chapters and case studies dedicated to Nokia in years to come.

Strategy as Revolution
Gary Hamel’s 1996 article has long been a hallmark work in the field of strategic innovation. The article describes perfectly what Nokia is being exposed to. On one side Apple’s high-end products are running away with 60 % of the industry profits. At the same time Asian low-cost manufacturers, coupled with Andriod, are fighting its way up from the low-end. Hamel describes “Nine ways to industry revolution”. Reading this in 2011, some 15 years after it publication is chilling, as Apple’s iPhone adventure fits nearly all of the nine steps outlined in the article. Strategy as Revolution is a great read for aggressive strategists.

Playing Seriously with Strategy
When it comes to shaping and creating strategy, Johan Roos, Bart Victor and Matt Statler has written a detailed research paper on “playing with strategy”. The authors state: “if the constraints of strategy processes are changed, the content generated will also change”.

The authors challenge the paradigm of strategymaking as a ‘thinking process’. Using LEGO bricks as the tool, the authors test the process of strategy creation using physical (playful) objects to create shared meaning. The paper – and its subsequent work has led to LEGO bricks becoming an accepted tool into the strategy process. Today, companies can work with specific Serious Play consultants and even buy their own Serious play strategy kits.

Can You Say What Your Strategy is?
Can you and your executive team – no wait. Can you and every single employee summarize your strategy in 35 words or less? That’s the BIG question Collins and Rukstad ask. We love this piece. Words to lead to action. And action is the essence of executing strategy. Problem is, if people don’t really know the what, where and how of strategy, then they are likely to do their best, based on their guesses. As Kaplan and Norton’s research has shown, some 85 % of employees can’t say what their strategy is. Our numbers from Norway, based on research conducted in 2008, indicates a higher number. 55 % of respondents stated “I know and understand our strategy”, but still, that’s half the workforce that don’t. So, yes, like Collins and Rukstad say: It’s a dirty little secret: Most executives cannot articulate the objective, scope, and advantage of their business in a simple statement. If they can’t, neither can anyone else.


The Innovator’s DNA
How can we become more innovative? How do I find innovative people in my organization? If you believe strategy is a creative, innovative process, more than just an analytical process – and we do – then the question begs “how do we become more innovative?”.

The authors – a trio with extensive experience in innovation research – has identified five “Discovery skills” for true innovators. Associating, Questioning, Observing, Experimenting and Networking are identified as the five core skills of innovative leaders.
The article– and more recent book by the same title – is an interesting read in a field that received little attention; what does innovative leaders actually do? We are working on a separate blogpost looking specifically into this. For now, the Innovator’s DNA is strongly recommened into any strategy process.

Science of Serendipity
This gem of an article is sailing to the top of our reading list for courses in strategy, innovation and leadership. Written by the founders of ?WhatIf!?, Dave Allan and Matt Kingdon. The article looks at innovation in a context of strategy and execution.
To outsiders, the pair says, “Nurturing innovation can look like a dark art, but the real secret is that it’s driven by a process any leader can learn”. As such, the article maps out some core ideas for how to build innovation processes; an essential in strategy.

“Innovation, we believe ,….is a fascinating new management science that is still in the early stages of development”. Well said, gentlemen!

How P&G Tripled Its Innovation Success Rate: Inside the Company’s New-Growth Factory
A company that has put innovation at the heart of its strategy process is Procter & Gamble. A ten year process, the company is now bearing the fruits of developing a long-time, deep innovation capability. P&G’s CEO states “We know from our history that while promotions may win quarters, innovation wins decades.”
The article – another well-written piece by the Innosight team – lays out the detailed roadmap P&G used to create its innovation strategy. It is a great read for companies that are looking to expand their innovation agenda. If your firm still does not have a basic innovation strategy, this might be too much of a good thing.

The Burning Platform and other recommended readings in strategy

Nokia’s Burning Platform Memo

Hello there,

There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice.

He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times – his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behaviour.

We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour.

Over the past few months, I’ve shared with you what I’ve heard from our shareholders, operators, developers, suppliers and from you. Today, I’m going to share what I’ve learned and what I have come to believe.

I have learned that we are standing on a burning platform.

And, we have more than one explosion – we have multiple points of scorching heat that are fuelling a blazing fire around us.

For example, there is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.

In 2008, Apple’s market share in the $300+ price range was 25 percent; by 2010 it escalated to 61 percent. They are enjoying a tremendous growth trajectory with a 78 percent earnings growth year over year in Q4 2010. Apple demonstrated that if designed well, consumers would buy a high-priced phone with a great experience and developers would build applications. They changed the game, and today, Apple owns the high-end range.

And then, there is Android. In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high-end, they are now winning the mid-range, and quickly they are going downstream to phones under €100. Google has become a gravitational force, drawing much of the industry’s innovation to its core.

Let’s not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally – taking share from us in emerging markets.

While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.

The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.

We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.

At the midrange, we have Symbian. It has proven to be non-competitive in leading markets like North America. Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements, leading to slowness in product development and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, we will get further and further behind, while our competitors advance further and further ahead.

At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us.

And the truly perplexing aspect is that we’re not even fighting with the right weapons. We are still too often trying to approach each price range on a device-to-device basis.

The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem.

This is one of the decisions we need to make. In the meantime, we’ve lost market share, we’ve lost mind share and we’ve lost time.

On Tuesday, Standard & Poor’s informed that they will put our A long term and A-1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody’s took last week. Basically it means that during the next few weeks they will make an analysis of Nokia, and decide on a possible credit rating downgrade. Why are these credit agencies contemplating these changes? Because they are concerned about our competitiveness.

Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year. That means only 1 out of 5 people in the UK prefer Nokia to other brands. It’s also down in the other markets, which are traditionally our strongholds: Russia, Germany, Indonesia, UAE, and on and on and on.

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.

The burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future. He was able to tell his story. Now, we have a great opportunity to do the same.

Stephen.

Sources:
Wall Street Journal

Endgadet

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Nokia; you’ve got to do better

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Few companies have found themselves disrupted, so hard, so fast. Nokia’s facing unprecedented challenges in reinventing itself. We are busy writing a case study on Nokia and have been using Nokia in several of our Strategic Management classes.

This morning I came across this ad in Oslo. Nokia; you’re going to have to do so much better than this. Innovate. Quickly.

Nokia; you’ve got to do better