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.
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.
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.
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.