In Nokia’s 3rd quarter investor conference call in October, 2007, the CFO was immensely proud that they posted record revenue and profit by achieving record sales of their low end phones. Also, he enthusiastically noted that even though the average price of those phones dropped 10%, they retained the same profit margin. The stock price hit a record $39/share. On that call, the CEO made the incidental comment that they were continuing to watch RIM/Blackberry and Apple/iPhone.
Watch! Is that all? The RIM Blackberry was introduced in 1999 and had 2 million users by November, 2004. It then really took off, achieving 5 million users by May, 2005 and 11 million by 2007. In 2007, Nokia introduce their N95 smartphone, but that introduction was reduced to a footnote as the iPhone was introduced about the same time, and was far superior in functionality.
Basically, from that point on, Nokia has feebly tried to catch up. Today, the stock is in the $6 range, and Nokia has partnered up with Microsoft to try to become competitive. They are also quickly losing ground in low end cell phones to low cost Asian competitors.
If you are the leader of an organization, no matter what the size, here is what you should take from this example:
1. Execute your current responsibilities well.
2. Assign part of your existing staff (no new heads please) to work full time on new/improved products, services, or processes and launch those efforts very early.
3. Protect them from the “status quo” folks.
If Nokia had been doing these things they may have beaten RIM to the market in the late 1990’s with an e-mail device, scooped Apple by launching a smartphone by 2005, and not let low cost Asian knock-offs happen.