Is ‘Americanization’ actually bad for Nokia?

Over two years have passed since my job with Nokia was eliminated, and with the passing of time I find myself less and less inclined to expend effort covering the company I loved.  Focusing on the MeeGo venture has meant only peripheral acknowledgement of this key sponsor.  But with Stephen Elop’s ‘state of the company’ address coming up on February 11, I felt motivated to look both backwards and ahead to see if I might discern something not well addressed by the blogging community.  If accurate, the conclusion I’ve reached is a bit disturbing.

My premise: that it’s not as much Finnish conservatism that’s been detrimental to the cell phone giant’s success as it is wanton Americanization.  I find the basis of that conclusion in the extreme trimming of supply chain operations, in risk aversion and in mindshare cultivation failures.  

My Position

Before I actually expound on the thesis, I feel the need to bring readers up to speed on what forms my thinking.

I’m a product guy.  Have been for most of my life.  I’ve invented, improved, implemented, tested and promoted a wide variety of products and related processes in my professional career.  I’ve done it all from one end of the supply chain to the other, and can claim a certain degree of expertise in many areas.

True, in my 3+ years with Nokia I was just one peon in a large sea of peons.  Regardless, I believe I developed a decent enough grasp of its operations… and being an American with an atypical European way of thinking provides me, I believe, a unique perspective on this subject.

I may have been a very small cog in the massive Nokia machine, but my role was still pivotal.  And as position after position was eliminated from supply chain operations, overburdened remaining employees found themselves unable to keep up with demand, I have been told.  Many subsequently left voluntarily.  What has resulted?

Breaking the Supply Chain

An unfortunate American executive trait is the tendency to develop a pathological blindness to the marketing color spectrum, viewing data in black and white and often becoming astigmatic to customer needs while hyperfocusing on some theoretical bottom line.  I believe it was precisely this tendency that led to the closure of the Alliance factory in the US and the Bochum factory in Germany, replacing them with lower-cost centers in Mexico and Romania.

There’s however a hidden price to such drastic moves that may very well offset and even negate such savings gains.  Closing local and regional operations induces a hostility in the affected markets that could very well lead to share loss.  Is it coincidence that since the aforementioned closures, Nokia’s presence has almost completely evaporated in the US, and is declining in Germany?  Granted, there are numerous other factors involved that have all been well-explored by various pundits, but I’m suspecting there’s a common thread.  Is Nokia suffering a “cut at all costs” mentality that ultimately damaged its prospects in key markets?  Might it make more sense to persist at least some operations even in a cost-prohibitive region, if it maintains crucial mind and market share?

Now, an efficient supply chain certainly isn’t a bad thing per se.  Global trend-setter Walmart’s galactic growth has been largely fueled by its ability to turn product distribution into a fine art, admired and emulated by many.

And granted I’m no expert in the field, but it doesn’t take an MBA or PhD to realize that paring logistics down to a lean extreme can lead to gaps and mistakes.  Walmart crossed the rubicon when its process became programmed and abstracted to such a high level that local and regional managers found some of their allotted stocks out of sync with customer needs.  I recall reading a few years ago that a store manager in Florida complained of being stuck with winter clothing they could not sell, and no swimsuits that they could– year-round (Walmart is currently trying to balance their approach). At some point that “efficiency” starts working against your business.

European executives tend to be a lot more employee-oriented than their US counterparts.  Not perfect, mind you, but certainly better.  This translates to being more customer-focused as well.  That in turn means maintaining a demand-supply system that allows a higher degree of flexibility than the segment-starved Walmart model.

Avoiding Risk

Some analysts smugly point to stereotypical Scandinavian conservatism as a significant factor affecting their innovation and product development.  But an examination of Nordic businesses undermines this assertion.  After all, Swedish icon Ikea has enjoyed tremendous success with its often novel products.  And you don’t have to look at Finland’s neighbors to find such examples. Consider Rovio’s wild success with Angry Birds, a runaway mobile game rapidly developing into a multimedia franchise.  Finnish innovation doesn’t stop there, either.  The country’s reality belies the negative opinions of so-called experts in the blogosphere.

Not to mention that risk aversion knows no geographical boundaries.  Indeed, Xerox Parc invented the computer mouse and the graphic user interface (GUI), and failed to capitalize on both.  IBM is notorious for allegedly almost missing the PC revolution entirely.  Even if the latter is untrue, America’s product development history is littered with more examples.  The iconic successes tend to garner disproportionate attention.  Those who think Nokia’s bureaucracy is unique are deluding themselves.  Here in the United States we have long allowed the cancerous growth of innovation-stifling masses in mid- and upper-management.

So my question is, does risk-avoidance on Nokia’s part indicate American emulation run amok?

Missing Out on Mindshare

I doubt many will argue against the statement that Nokia has been truly suffering in the mindshare department.  Google ‘Nokia’ + ‘mindshare’ and you get 375,000 instances of the subject being kicked around the internet.  The fact that Nokia’s name has gone from most mentioned to almost forgotten among US cell phone users, in just a few short years, aptly indicates how far the mighty giant has fallen… at least in some markets.

Nokia has pulled some bewildering moves on this topic.  Closing flagship stores.  Giving up sponsorship of some former Nokia Theaters.  Putting half-hearted effort behind outreach in the very areas it is needed most.

I have to believe some virtual machete-wielding accountant zoomed in on the obvious cost-benefit ratios of these ‘money-suckers’ and concluded they had to be cut.  Surely no marketing executive worth his or her salt would have done so.  Even if these operations lose money in their direct fiscal vicinity, they tend to have a wider, overall positive impact on the big bottom line.  When done right, they generate goodwill that turns immediate beneficiaries into viral, voluntary marketing machines.  The resultant word of mouth is incalculable… and extremely critical to success.

Read the reviews of the closed New York flagship store.  Same for Chicago’s.  Shutting them (and others) down was a slap in the face to loyal Nokia customers, especially those in the area of the US headquarters (in White Plains).  It’s mystifying… particularly since competitor Apple continues to do the opposite of Nokia and open more.

But is this more an American or European tendency?  Consider that Europe’s markets are more open and competitive.  In my overseas travels and work-related activities I’ve witnessed this first-hand.  Nokia prospers in open markets, and stumbles where artificial barriers (like FCC-managed wireless spectrum bidding and market gerrymandering) are the norm.  Thus my take is that we would be seeing a much different picture from Nokia, even without significant (and in some areas admittedly necessary) corporate change, if the US enjoyed a more competitive mobile landscape.

My Conclusion

Granted this is just my amateur analysis and quite likely at odds with the thoughts of far more experienced experts.

Conventional wisdom has had it that Nokia could use a huge infusion of American thinking to break it free of prior constraints.  But this assumption overlooks the fact that US-originated mobile successes like Apple’s iPhone and Google’s Android are anomalies that have so far avoided the sort of traditional traps that have ensnared other American efforts.  And don’t forget that Nokia gave us internationally-accepted GSM networks, while the US focused on the limited CDMA standard.

Adopting an American ‘gotta make this quarter‘ approach to business can produce compelling short-term results, but I find that to be at odds with Europe’s more long-range visions.  I sincerely hope Nokia avoids this pitfall and digs deep to rediscover its cultural roots.  The ones that made it a global success in the first place.  That means reducing the common influences of the US, not cranking them up.  Hopefully CEO Elop lets the Finns be Finns instead of warping them into… us.

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20 responses to “Is ‘Americanization’ actually bad for Nokia?

  1. Pingback: Tweets that mention Is ‘Americanization’ actually bad for Nokia? « Tabula Crypticum -- Topsy.com

  2. I want to say thank you for writing this piece I think it is a great analysis on the business orientation of European/Scandinavian companies vs US expectations. I think an addition to it would be the expectations of wall street and short term gains outway long term development and commitment. I think with Android and WP7 we are seeing a certain open/closed market with manufacturers and OS development but a place where manufacturers want to differentiate themselves with the same OS, but in turn going for eye candy over customer interest (demands are misleading of a term, I don’t like it cause it seems so one sided) where interest is really Nokia engaging with a broader community to see what they would like. For the longest time I was so jealous of the different nokia phones that were not available in the US cause they were amazing designs (from ones that looked like cameras, to lipstick, to latops ). I feel that the different devices that one company offers is not seen as a the way wall street wants it cause they get hung up on Iphone or the same design as the next android or black berry, but the fact that I can go to nokia and buy a phone that has different forms factors into my mind set and why I don’t like the others. Anyway sorry to go on so much but great analysis!

  3. Awesome piece.

  4. Just caught this on twitter via @NokiaUpdate: Is Nokia moving its executive headquarters to Silicon Valley in the US?

    http://www.theregister.co.uk/2011/02/07/nokia_elop_definnistration/?utm_campaign=Nokia&utm_medium=Twitter&utm_source=SNS.analytics

    I can see relocating the White Plains office, but leave “Nokia House” in Espoo alone!

    • I thought the previous article about Nokia’s shift from “an agile, highly reactive product-focused company to one that managed a matrix, or portfolio” was also very interesting:

      http://www.theregister.co.uk/2010/10/14/nokia_dilbert/

      “Maemo and the Nokia Internet Tablet devices were subversive projects that also managed to survive the infighting – and might possibly save the day. (And they must – as I wrote last week, there is no Plan C.)”

      • Wow, thanks for that! I overlooked the article.

        I can vouch for everything written, and it even supports this article as well. The internal fragmentation cited is all too common here in US corporations.

        Funny that OPK is credited with trying to dismantle this bureaucratic beast, though, when he specifically supported our chaotic approach to “platforming”…

  5. As always, insightful and a piece that hopefully makes one think.

    I too, have long held that I do *not* want Nokia to turn into an American company, with American values and American goals. To be American, means short-term QRT results are key. However long-term results are nary a thought. This comes with pros and cons, obviously. I believe the pro here, the one trait I would like to see Nokia pick up, is the ability to rapidly change to the needs and demands of the market. I think that would really be a benefit to them, not only in the US but of course globally.

    I still maintain that Nokia should have a US-focused branch. One that spits out handsets designed for the US market. And not on Symbian. This branch wouldn’t have to be big enough to cripple their whole operation, but as you said above “Might it make more sense to persist at least some operations even in a cost-prohibitive region, if it maintains crucial mind and market share?”

    That is my reasoning to suggest a US-focused branch. Not for sales directly, not for topping Apple. Get your product out there, running WP7 or Android, and make it better than every other device running those OS’s and make people notice. Learn the US market while doing it, learn how to cope and adapt. All skills that can’t be bought.

  6. Interesting read. Few observations from a finnish reader.

    Finnish businesses moved to ‘quarter capitalism’ long time ago. Nokia might have resisted it bit longer, but Nokia basically started thinking only about the last and the next 3 months already during the late Olilla period. OPK made matters worse. Elop seems to be last nail for Nokia’s long tradition of thinking deep outside the box. I seriously doubt that Nokia today, with or without Elop, could do same kinds of amazing transitions it used to able to do (pulp & paper→old tech conglomerate→tv & electronics→mobile).

    The fat years were very fat indeed and there were so many of them. The arrogance and bureaucracy really builds up during periods like that, which I think is the ultimate reason for Nokia’s stagnation during recent years. Once the challenge came, Nokia’s organization had basicly lost the ability to adapt and to be a challenger. There are plenty of similar examples from any culture. Blaming it on finnishness is indeed silly. In fact, I doubt that any ‘normal’ finnish business would have let things slide for so long without a major shakeup.

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  8. I don’t know… What exactly are you calling americanization here?

    Truth is Nokia has been acting too slow, and not quite getting there anymore. I get horrified when I think of all the little problems that surrounded the NIT’s, for example, or how long new development tools are taking to be released. 2010 was all about the four Symbian^3 devices, and here in early 2011 I still have the feeling they are not quite “out there” yet.

    What this has to do with american vs. european thinking? They must start developing stuff faster quicker and Qtier… Anyone would agree on that, many of their own employees do.

    I saw a small documentary the other day talking about XX century design, the Bauhaus school, Le Corbusier and other europeans, and then about american designers that came afterwards. They basically state that europeans had a tendency of trying to dictate people how they should behave, while americans just did their best to please the existing consumers.

    And indeed, there are lots of things Nokia could have done more quickly to please consumers. For example, using mutitouch and doing screen scrolling _just like in the iphone_. Would you say the inability to do that is an european attitude?… And isn’t the solution to grow again in the american market perhaps be having a more “american designer” attitude?…

    In other words, I think the problem has lots of factors… But the most relevant ones have to do with those fiefdoms, to quote the excellent Register article. And here is a traditional European culture, from the middle ages, that we should definitely be fighting against! Let americanization mean the spirit of 1776, 1789, 1848 and other revolutionary years, and let some change happen in the Nokia society!…

    • Admittedly the term ‘Americanization’ is broad, but the context of the article narrows it down– to a tendency for any entity to focus on short-term gains to the exclusion of sufficient longterm strategy. My experience says this is largely an American, specifically US, behavior.

      In Nokia’s organizational changes and directions over the past several years, I’ve seen many signs of this creeping into the culture. I worked at both local US levels and global capacities, and there was a marked difference in employee attitudes between the two. My European colleagues were rightfully mystified by American kneejerking. My US colleagues were amused at European thoughtfulness… which they confused with resistance to change. The latter is not always the case. See the link I provided on Finnish innovation.

      As for design: the tendency of US designers to cater to customer wishes is not always a good thing. Many times proper analysis is not performed to ensure the right demographic was targeted, the right questions asked, etc. As a former product designer I have suffered the results far too many times. I once worked for a consumer products company with multiple divisions. Ours consistently failed to sway consumers with design despite ostensibly focusing on their needs… whereas another division studied Italian industrial design and combined that with sound ergonomic science to produce high-selling, award-winning goods. Many of the ideas implemented would have never occurred to the average customer.

      Apple is often cited as a best-practice design house, and for good reason: they’re not abiding by the run-of-the-mill approach most US companies take. On the contrary, they are succeeding at “dictating design”. Too often, as I have covered here before, consumers don’t really know what they want until someone creates it for them.

      On a broader note, Nokia certainly suffers an abundance of problems that are complex and not easy identified, much less corrected. But the steady drive toward US quarter-by-quarter thinking has been at the root of it. With no effective longterm strategy, they have been doomed to puzzling piecemeal approaches that sour the consumer and more importantly, the carriers.

      Nokia needs an identity more than just about anything. I’m hoping Stephen Elop delivers one Friday.

    • I want to expand on the design topic…

      Nokia has put out some truly innovative ideas, that by all rights should have taken the world by storm. There are many examples to be found in Nseries and Eseries devices. Some very beautiful and unique design concepts.

      There were many impediments to their success, but in a nutshell, they revolved around lack of awareness and lack of corporate vision. One example: device memory. Too many Nseries devices had half the memory they should have. Another: GSM bands. In my opinion all high-end devices should have been quad band (now pentaband), period. Costs could have been lowered via economy of scale, platforming higher, etc. Still another: the decision to use surface-mount microUSB connectors, which we’ve seen has been fatal in high numbers.

      Those examples are not really design decisions at all– they are ultimately foolish business decisions based on a short-sighted approach to the product. THAT is a very American trait… sadly…

  9. with today’s announcements, Nokia just lost alot of steam, and is just “another guy”. Linux may have lost a big partner. I’m saddened by this WP7 BS without guaranteeing a Qt support for devs. Lame as all get out…

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