Rethinking Nokia - Microsoft

Microsoft : CTRL + X (Cut), CTRL V (Paste) and CTRL Z (Undo)

How Microsoft systematically eroded value for Nokia & itself, losing another big opportunity to make the difference ?

As Microsoft calls curtains on its once prized possession of Nokia, claimed to cure MS of its critical ills of lack of capability and lost opportunity in terms of handhelds. The Brew did get its prediction right about the outcome, given that fault-lines were prevalent with the idea and the concept of Nokia takeover, though to be honest, The Brew was skeptical of the timing of the announcement, but MS finally got some things right, though again in half measures.

In the hindsight, both Nokia and Microsoft are equally culpable for the current state of affairs, with both aiming to placing safe bets in their comfort zones, outlining their respective expectations from the deal.

a) Where Nokia got it wrong:
To identify the fault-lines, The Brew ran Nokia through its Capability Maturity framework, The Brew Framework for Enterprises and found out the following, which were very important from Nokia’s point of view, if it had to see itself making an impact to the handheld story:
1)    The Handheld industry, ranked very high on the external macro factors of the framework, The Rate of Change of Industry and Consumer Fatigue. The Rate of Change of Industry indicates the speed at which industry transitions through Consumer shifts, and the Consumer Fatigue signifies the rate of normalization of the tipping points.

2)    Given that both these driving factors ranked high for the handheld industry, The framework required Nokia to have a Capability Level maturity in at least 3 of the 4 Macro – Capabilities to be relevant in current scenario i.e. The Change Model, The Value Creation Model and The Value Enhancement Model, and the 4th one being, The Purpose is as well important to set the direction with respect to consumer trajectory. However, to live for the day, Nokia had to have to capabilities in at least the 3 of its Macro – capabilities stated earlier.

3)     Given the need of the hour, Nokia lacked Capability levels maturity in all 3 much needed Macro – Capabilities, infact it ranked at an elementary Process level in all these capabilities, which is around 40th percentile as against contemporary players of the industry.

4)    Though this lack of capability would have helped MS as a Negotiation tactic to better the financials, it certainly aint going to get better, as both, MS and Nokia failed to understand the overall macro picture on the Consumer Side of it. Nokia however, got it wrong in accepting its inability to better the situation organically, lacking a larger long term business sense without approving of MS’s vision of being a lone player in Hardware, Software and Platforms (If only MS had one!!)

b) Where Microsoft got it wrong:
     1)    Microsoft, on other hand did not get the Deal Arithmetic right. That 2 Weak products, namely, Nokia Hardware and Windows Mobile OS does not result in to a strong combination, rather it only results in to a further weaker solution for the Consumer.
      2)    Filling up the gaps of Nokia’s Macro – Capabilities was never in MS’s priorities, unless it perceived as a lifesaver for both. Rather MS’s direction was to align the Nokia model to its existing operating model and offerings, leading to a huge underplay and abandonment of Nokia’s strengths (of whatever they had any) combined with MS’s Achilles’s heels.

      3)    Keeping Nokia’s Research and Patent arm off the deal, made Nokia get in to a Comatose with artificial life-support being rendered by MS, in form of liquidity from time to time. Logic gets defied considering that MS, with no prior experience in leading innovations in handheld industry was expected to do one, rather Nokia’s research, with the deal funding should have ideally worked out technological developments, which no doubt would have helped the Hardware side, but would have as well present an opportunity to return to the Handheld business on license expirations.

     4)    Synergies are driven from strong positions: MS would have been able to drive a higher benefit, had it leveraged its Cloud and Office offerings complimenting the Hardware and OS offerings, however this would still have possessed a bigger risk for the leader brands of Office segments. Not sure about MS’s keenness to go that way, giving the Cloud direction to the bundled offering would still have made sense, given that it was in the right direction, though the present outcome still would have been inevitable.

     5)    Could MS-Nokia have gained in the larger perspective?
Absolutely positive. All it required for both was to play on each other’s strength, developing a strong product for consumer over time, while making the smaller compromise of its dream of being an end-to-end solution enabler for the consumers.
On Nokia’s part, it should have ideally carried on research and new developments at a much frenzied pace than earlier, given the funds were available, helping MS with a higher probability to win the markets.

On MS’s front, it should have identified that its Windows Mobile framework because of its proprietary approach, as against Android’s open source innovation model, will only prove to be a constraint to scale up beyond critical mass. Rather MS should have compromised on the OS dream and pushed its Cloud enablement dream for all of Consumer’s needs. That would have been a possible path to re-affirm itself to a unchallenged leadership status, it once enjoyed. Had MS and Nokia had a vision and purpose to look beyond their corporate viewpoints, to Consumer solutions, Connecting People with realizing their potential would have then proved to be their passion.

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