How Nokia can retake the US Market… and more

I’ve recently chastised Nokia for various failures, some broad and some specific, and I also promised to get out of the negativity rut and start proposing solutions.  So brace yourselves; the ride begins and (inspired by Tomi Ahonen) it’s a long one.

First though for the sake of those who don’t know me: I was a product developer, technician and change management guy who Nokia hired in 2005 to support process improvement activities under the auspices of Quality Assurance in the former US Alliance factory. When the factory closed I moved to a brief stint trying to bring the lessons learned into all American factories, and from there to a global role as logistics business analyst and application specialist.  Even though my last position was eliminated and I fell out of Nokia in 2009, the time spent in various roles helped me get a big picture understanding of Nokia’s challenges, particularly in respect to struggles in the US.  I think it helped that I brought in an outsider’s view– prior to Nokia, I had never even used cell phones!  (for you Nokia employees, I had an internal blog called The Long Tail.) 

With that out of the way, I want to share my perspective on how Nokia could improve its prospects here, for whatever it’s worth.  Few of these ideas are new or original, but they all represent thoughts with which I am in agreement and consolidate some of my scattered-but-related thoughts. 

Presence and Mindshare

I hated seeing the US Flagship store closure announcement, but IF it’s being done to desperately appease carriers I can reluctantly understand.  Nokia has been break-dancing on a very fine line between giving customers features-plus-freedom and getting product accepted by cellular service providers.

But above anything else Nokia needs to decide who its customers are, and target them appropriately.  I have some ideas there, so…

Suggestions:
Your customers are for the most part not the same as Apple’s.  They’re currently Android’s.  And RIM’s.  And Microsoft’s.  Et al.  They’re people looking for more than Apple wants to offer (see below).  Most of them don’t want their hands held, they just want an effective safety net when something breaks.  So get to know these people better.  You’ll find that many are fairly self-sufficient and proudly so.  They’re either technically competent or are willing to become so.  You won’t find them at wine-tasting parties but rather at comics conventions, sporting events and theaters showing action movies.  You won’t win them over with “I’m a Mac” type commercials, but cat-herding videos will find resonance.

You also need to rethink the abandonment of Nokia Theatres.  What were you thinking when you let Verizon have the one near Dallas?  Clearly self-defeating.  Your brand is already a distant memory here– why would you deliberately make that worse?  Undo it.  Start applying the Nokia logo far and wide.

And let’s not forget my personal favorite: community outreach.  Limiting it to virtual and/or European venues doesn’t cut it.  You need global-plus-regional presence.  For the US, that’s New York, California and Texas for starters.  Your offices in White Plains, San Diego and San Francisco will suffice for the first two states, but you really need to beef up Dallas (actually Irving) and start hosting some events!  Mobilize a geek army; the foot soldiers are already waiting impatiently.

Selling Yourself

I have just one thing to say.

Suggestion:
Do It.  Better.  Effectively.  There are plenty of advertising firms who can help.  Hire whoever came up with the previously mentioned cat-herding video.  And quit thinking that listing lengthy feature sets by a product photo does the trick.  Follow Apple’s lead on just this one thing– simply tell customers what your product DOES, not what it can (or might) do.

Product Stratification

Now that Nokia has their latest reorganization out of the way, it’s time to look at product definition.

Nokia has been trying to figure out how to align and present its various mobile device types for some time.  For the most part the N Series + E Series + All Else model works… or should.  There’s just one drawback, at least in the US.

Nokia was so successful selling into the low end here for so long that the name became synonymous with “good and cheap”.  Nokia phones were sturdy but unexciting little things, especially when sealed up in plastic retail packaging and hung on a grocery store end cap.

As a newbie to the cellular world I was impressed when I joined Nokia’s workforce and discovered the higher end.  The E70 alone had so much potential with the youth crowd, I became an after-hours salesman for that and other upper echelon devices.  But to my disappointment, I found that many of the E and N Series devices weren’t fit for the US market.  Some lacked the all-important AT&T bands (something I never understood in an expensive device) and all were out of scope for the average American without subsidy.  When eBay is your only retail face for key products, something might be amiss.

Suggestions:
First, resurrect the E70 with some modernization.  Are you nuts, Nokia?  Even eternal curmudgeon Maddox praises the thing (passionate language warning)!  Over the iPhone!  The device was a teen texting sensation with those who knew about it (my niece wore the numbers off of hers and still loved it).

Beyond that, create some sort of distinct differentiation between the entry level and upper tiers.  Just one line will do the trick– one that makes the low end obvious.  “EntryPhone by Nokia”… with Nokia in smaller type.  Just enough difference to segregate the levels but link them.  Think Vertu here.  Hire the right marketing agency, and maybe they can come up with other ideas.

And while you’re at it, pull your platforming up a level.  Fewer core SKUs, more surface customizations.  You’re killing yourself managing unnecessary hardware configurations.  All you need are three or four engines per year supported by high firmware configurability and a lot of cool industrial design wrapped around them.  Translate lessons learned from E Series design across the company.  It’ll work.

Process

Many pundits moan that Nokia is too late to market with novel products.  Oh if they only knew what went on inside to cause that.

I’m not the sort of disgruntled ex-employee to divulge secret sauce or even the unsavory stuff.  So this advice will be oblique to the world but understandable by Nokians:

Suggestion:
Change your development incentive model if you haven’t already.  It isn’t working.  It encourages rush jobs that force embarassing defects down to the poor souls in the factories to excuse.  I say excuse, because they sure can’t fix them.  It’s too late.

Novel Execution

I’ve said before that Nokia gets in its own way.  For many companies that would be self-destructive.  Nokia however is blessed with resources and momentum that have kept it, so far, plowing through the barriers it self-erects.

But the past two years show the momentum to be slowing.  Nokia needs to scare its bureaucracy into agility.

I’m not the first to say “it’s all about execution” so I won’t belabor the point.  I only have one thought on it.

Suggestion:
Solve the subsidy problem for US consumers.  How?  By financing your own devices… maybe even at zero interest.  Consider: let the carriers have the E71x and any other stripped-down model they want.  Then offer the unlocked, full-featured version direct to end users at a slightly higher price, with you toting the note and allowing small payments.  If people fall behind, disable the device until they catch up.  There’s a cool way to execute.  Try it.  We’ll like it.

Usability

Apple is successful at carving out and cultivating the 10% to 20% of a consumer electronics market populated by a very specific demographic, characterized by customers wanting immediate gratification in both style and service.  For the most part customers don’t want to configure, much less code: they are asking for a provider to read their minds upfront and deliver a fitting solution.

Apple does this… and very well for their select clientele.

But that leaves 80% or so of the population that doesn’t fit into Apple’s boxes.  Many in that remaining set want more control over their experience than Apple allows.  Rich feature sets, easy access to deep configurations and high transparency are enablers of their satisfaction.

Nokia has long excelled in the feature set category.  The other two are debatable.  Sure, Symbian and Maemo both support high configurability but what’s been missing are contextual cues to guide the user into utilizing them.  Too often the Help function is no help.

Suggestion:
Nokia can improve this by enriching the experience.  Accomodate superusers with high configurability, but cater to new and moderate users by offering in-line explanations and examples of functionality.  The latter could even trespass into hallowed iPhone territory, especially if the out-of-the-box experience is improved as well.

This is another need for migrating low end device users up to mobile computers.  (note: there is a meta-project in place to support this for MeeGo)

Make Openness Work

Nokia did the right thing by first releasing Symbian to the open source world and second by making MeeGo its focus at the high end.  There’s no profit in mobile device operating systems and an open source approach can reap huge dividends.

But Nokia still has a problem with candor toward customers.  As a twice-elected council representative for maemo.org, I had a responsibility to act as interface between Nokia and the developer/superuser community.  The benefit to Nokia is a reduced noise level; my four fellows and I acted as both buffer and conduit to focus the issues.  So it was disappointing when I identified a problem with micro USB connectors detaching from the N900 and the communications were mostly one-way.

Then there was what’s become known as the “cherry bomb” debacle.  You slipped it into the N900 PR1.2 update, forcing users to send an SMS to MyNokia at their expense with no way of opting out.  When challenged by our council, your legal team fell back on lame, defensive boilerplate in response.  Not helpful.

Suggestion:
Nokia, when you have people acting as voluntary community representatives, take advantage of them!  Talk to us.  I don’t mean just through community managers (although Quim Gil has been exceptional in the role), but directly.  Especially when the issue is as catastrophic as a hardware failure or betrayal of user trust.

The Internal Army

I get the feeling sometimes that Nokia overlooks its main asset: passionate, educated, motivated people.  Hiring processes work very well there as far as I’ve seen, but effective retention fails.  Nokia is too quick to layoff employees who can often very easily be reallocated.  I say this broadly and anecdotally but based on what I’ve seen I’m betting Nokia can verfiy this with some HR data analysis.  Just check how often employees have been released only to be hired back (or at least re-approached) later into different positions.  I don’t think the numbers are insignificant.  Combine them with a count of ex-employees who have been snapped up by direct competitors (if practical) and you’ll see where you could do better with personnel decisions.  No excuses either– there are plenty of great people in the US and elsewhere who have been released to the wild through no fault of their own.

Suggestion:
Nokia needs to follow the Google recruitment model– reach out to the best and brightest and keep them at all costs.  Quit worrying so much about salaries and degrees, and concern yourselves more with skill, experience, social network reach and bang-for-the-buck.  Steal strategic people from direct competitors, not just personnel in the right roles.

Rational Response and Resolution

Nokia’s worst enemy is Nokia.  The company has a distressing tendency to get in its own way.  It’s too large to be very agile… but that’s not completely insurmountable.

The recent restructuring looks like the right form for the company, but it’s the little things that kill agility and hence success.  Just one example: my experience from the inside AND out is that while Nokia does forward logistics exceptionally well, it’s been doing poorly at the reverse.  I lay the large part of the blame on its outsourcing model.  Those handling customer claims have no real stake in the issues and are too often disconnected from the rest of operations.  Escalation for frustrated customers means moving slowly up the chain of command (if at all) and encountering obstacles along the way.  I recall internal meetings designed to address declining customer retention and this failure was brought up as serious.  That was four years ago… and it’s still a problem.

Suggestion:
Nokia needs to quit arguing with disenchanted customers.  That costs money and destroys goodwill.  It’s much more sensible overall to lean more toward “no questions asked and we will address promptly” than the antagonistic and too-common “prove you have a genuine problem and maybe we’ll look into it for a couple of months”.  Escalation needs to skip immediately and completely past any outsourced service center and straight to the heart of Nokia operations where the pain is felt and thus incentive to promptly and properly act is high.  It would also help if Nokia stopped being so dismissive of individual purchasers; each single voice carries a lot of influence, good and bad.  You’re not just disenfranchising one disappointed customer, you’re killing business with their entire social circle.  Not smart.

Summary

Why is the US market important?  As I’ve said before, I believe that’s the case because as a mature and complex market, the United States shows what can happen once lesser-developed regions are saturated by low end goods and their citizens begin demanding access to those more advanced.  There’s not much preventing other nations from mutating into carrier-driven virtual monopolies and stifling true competition.  Any company that can succeed in the US can succeed almost anywhere.

For Nokia, that means some serious self-examination.  Pride and complacency have gotten in the way of much-needed corporate soul-searching.  Anssi Vanjoki mentions the company as a challenger now, and that’s precisely the proper mindset for recovery.  That will lead to finding the right identity, a critical step to success.

These suggestions are all based on common sense and proven principles.  No surprises in the list above.  Every one should find a welcome reception.

But more than that, Nokia executives need to cut through the thick middle layer and solicit honest feedback from the beleagured troops.  I think there are more roadblocks in the middle than at either end.  Actively listening to the blogging community would be helpful as well– especially if we’re asked to be involved in solution brainstorming.  Time to start Connecting People!

The way I see it, there’s really no reason to replace current CEO Olli-Pekka Kallasvuo IF he can completely regain investor, customer and employee confidence.  But can he do that quickly enough?

best regards,

Randall Arnold