http://www.venturedata.org/?i420312_Nokias-dilemma-high-efficiency-cost-control-to-kill-innovative-thinking
Nokia's dilemma: high efficiency, cost control to kill innovative thinking
Posted ec 2011
The end of September, Beijing International Telecommunications Exhibition flow, such as weaving, Nokia's booth was slightly embarrassing: small size, simply decorated, most of the exhibits are old models, a lot of mold or machine. N9 is an exception only this month's upcoming mobile phone has a cool shape, attract a lot of young crowd, often six or seven together in a circle, only one person can play with only this N9 real machine, other machine can only play mode. "How so Stingy ... ah ..." There are people who crowded into the muttering one does not, then leave.
Nokia booth not far away, including HTC, Huawei, ZTE, Cool other players stand on the "lavish" a lot more real machine, stop those who are more than even the first to release the first batch of ZTE powered by Windows Phone7.5 system smart phone Tania. "era of the smart phone, the slow response mechanisms to develop products and systems listed in the link delay, Nokia has been an unprecedented pressure from competitors." analyst Sun Peilin said.
Other levels of pressure is also spreading. Nearly two months, the media on the "Nokia channels collapse," "clean-up inventory for the WP7 mobile phone market," reports quickly reproduced, and forced Nokia to come forward to clarify. Beijing Di Jin Xin, vice president of ICT also think that some do not withstand scrutiny, Nokia is the world's handset manufacturers to market ability in doing the best business, it's multi-week order management system so that it can predict the product next month sales, and thus control of raw materials procurement and production, clean-up inventory is untenable. "The current nature of the problem is that Nokia is facing a period of product innovation of the merchandise, the lack of heavy-class products." Distributors who have said that Nokia, although Nokia is currently in the low-end market, there are a large number of non-intelligent machines in the sales, but crisis already exists.
In the most brilliant, Nokia entrenched global mobile phone market share of 40% for the Finnish government to pay 21% of the country's total corporate tax. But Xing Yan Bo, the decline sudden fall, since 2007 in just four years, Nokia's market value has plunged 75%, once transferred will be acquired by Microsoft.
Today yesterday because of kinds of fruit. 2007, when Steve Jobs will play the new iPhone, the mystery took off to meet the fans standing ovation when Nokia made such a decision: "We've tried the touch screen, but consumers are not interested. "
In fact, the concept of Nokia smart phones made machine 10 years earlier than the iPhone, Apple's touch technology than three years earlier, Ovi earlier than the Apple App Store for one year. Nokia's former director Juhani Risku innovation department has written that in 5000 Nokia Research professionals, including 500 extremely well, has a "killer of inspiration," Unfortunately, they come up with the innovative program, culminating in the opponent's mobile phone.
What hindered the pace of innovation in Nokia? Why was the king into such a predicament?
The success of failure of the password
In the 1990s, Nokia has once had five divisions: Consumer Electronics (Europe's third largest TV commercial), mobile phones (in Europe, the world's second mobile phone operators), telecommunications (main carrier market), computer and cable equipment and basic industries, business services (the main of rubber, chemicals, etc.), but too wide range of expansion, it was a loss.
The new president took office in 1992, Jorma Ollila (Jorma Ollila) made a correct decision as the challenger to give up mobile phones and telecommunications in addition to other than business, make every effort to main GSM technology and communications standards products, and eventually overtook Motorola to become the dominant 2G era.
Years of ups and downs with the GSM, Nokia and gradually worked out a number of competitive magic: good quality products and communication, which is the most basic products as a mobile terminal elements; developed channel system, strictly control the channel capacity, making its distributors and stores around the world, including some off the beaten track, this is the other brands can not be achieved; extensive product line, Nokia's product line can cover all high low-end price segment, to meet the needs of different market segments; perfect after-sale systems, sales outlets are very widespread.
However, these systems seem to have a successful transition back to bite Nokia. Vice President Tang Mingzhe Taiwan University had written that Nokia is the company's pursuit of high efficiency, cost control, good job, but this "efficient cost control mentality, killing some of the innovative Nokia."
"A price war is a mature industry, the most effective means of competition period, Nokia is the world leader, a model can be quickly sold several million units, a large number of procurement can reduce raw material costs, and it built a large number of manufacturing plants, control the operation of the costs, others can not match its share of profit margins. "responsible person with Nokia distributor, Nokia has also developed a set of standardized and intensive design system hardware components, the shell will be able to change out a new model, but once the product began unpopular, and the large bulk purchases of manufacturing plants operating expenses, and have actually become a burden.
The source also said: "Nokia has not completed the transition to the mobile Internet, more or a manufacturing plant, while the smart phone era of ecological chain, competition, competition not only hardware, but also to fight the operating system and software applications, the latter two is not part of Nokia's strengths. In many cases, the Nokia hardware is king of thinking led the software development and software lag and drag the hardware sales. "
Di Jin Xin, vice president of ICT, said sales of the smart machine before selling 2G phones with completely different hardware configuration has the appearance and achieve a decisive role, the phone could sell out, mainly by the operating system and software applications. Nokia products currently sold in Dixon has been through at 35% by the brilliant, down to about 20%, "Although Nokia's team continue to provide a lot of support, but the general trend of this, how hard is only slightly up."
Rejection of the "value network"
10 years ago, Nokia launched "3G concept phone" model exactly like today's iPhone on straight, soft keyboard, long oval-shaped, 3.5 inch large screen, is Nokia's first mobile information society and put forward the concept of mobile Internet. However, these expected eventually land in someone else's first fruit.
Many critics took aim at Nokia's arrogant, bureaucratic, risk averse culture, and the Harvard Business School assistant professor Clayton Christensen (Clayton M. Christensen) in the "innovator's dilemma," a book stated that "value network" concept, gives another perspective. In his view, as the business in a particular network gradually gained experience, they may form a network in line with the value of the unique requirements of capacity, organizational structure and culture, "good management of the enterprise makes sense only thing, and what is meaningful things by which the value of the enterprise network to decide. "
Simply put, the same face of a new technology trends, the existing dominant technology companies considers the profitability and market size are not attractive, not putting in a lot of resources to support effective, or even its "row differences. "
This also led to Nokia in the field of twists and turns of fate of the operating system. In 1998, the smell of the mobile Internet trend of Nokia, and Motorola, and Ericsson jointly funded the establishment Saipan company to seize the commanding heights of the operating system. When strong, Symbian smart phone shipments up to 100 million, market share was as high as 60%, other mobile phone manufacturers need to pay expensive fees to get access license. But Nokia hardware supremacy and strong desire to control, making the Symbian system innovation is slow, most of the time the system is obsessed by the Nokia hardware equipped with a "quasi-mobile Internet applications," like MMS, ring tones, games and other applications, download data small, Internet time is short, without much innovation will be able to cope.
Nokia "value network" outside the Apple and Google, to significantly faster pace. As to the 3G network is mature, the demand for mobile Internet users are really inspired by, the need for more multi-tasking, running more complex applications and games, Saipan system obviously can not keep pace, even the "do not crash "The most basic requirements have become a problem. And based on Android and Apple iOS system development is more simple, and more smoothly, making the two quickly gather a large number of hardware manufacturers and application developers to form completely different from the Nokia's value network.
Sense of crisis prompted Nokia to do a lot of improvements, such as a wholly-owned acquisition Symbian, announced that its open source, and launched application store Ovi, but the effect is less obvious. In desperation, Intel co-operation with Nokia MeeGo system instead, hoping to win back the starting point of advantage, but both are difficult to ship a large turn around the giant elephant, cooperation unusually slow. Nokia's new CEO, from Microsoft (Stephen Elop) aware of the problem, wore layers of pressure, announced partnership with Microsoft, turned to the Windows Phone lineup.
At this point, Apple and Google are focused on developing an operating system, and Nokia have to complete the trade-offs between the three systems with the transition, which also led to up until May of this year, Nokia had not delivered on time a new smart phone . United States, "Newsweek," the author said, "Nokia's software at best be seen as allowing the hardware development team crafted part of the latest hardware only, its powerful hardware manufacturing capacity is bound to form such a development mindset." .
The burning platform
Value in its own network when close to failure, from outside the company, "airborne" at the helm is the most common way, Nokia has been selected in the Microsoft rules the world's largest, most profitable software business person in charge of Elop.
In the months of investigation, he first made the whole system Nokia employees a memo, the text alert said, "Nokia, our platform is burning", or burned alive or jumped into the icy water. This is almost a rare candid and extremely harsh statement in writing, but not high external evaluation. Nokia channels have not even said Elop should send that letter e-mail, "platform fire to diving, do people are shocked, but it will lead to" Nokia to die "kind of negative word of mouth, not as good as the first drive to Microsoft co-operation, the product early, the product will come up, with market share, not things. "
In the memo incident, Elop immediately announced collaboration with Microsoft. Before that, he has also been seeking cooperation with Google, but the other did not give any preferential treatment, Elop think it shame to Nokia, "Nokia because it only wants to become another of the Android system distributor." And Microsoft is different, Ballmer promised to give more than $ 1 billion in R & D investment, while the WP system, Microsoft will also support Nokia previously developed software.
From an economic perspective, this is almost the best Nokia can make the choice. However, the market still do not appreciate the day Nokia's share price fell 14% against the market trend, but Elop has its own after the move, he will save, and reconstruction of Nokia is divided into three steps, select the WP system, only the first step, this is In order to rapidly stop loss, get rid of Saipan over $ 1 billion per year into the constraints. His second step is to re-invest in emerging economies, real Shazhao is the third step, he called the "new damage (New Disruptions)" by Symbian and MeeGo project from the former top technology talent to a group of fully licensed to develop can be completely defeated Apple, Android system, a new generation of products and WP systems, in order to achieve a new starting line based on the rise.
The problem is, the center of the global smart phone has been to the United States (mainly Apple and Google) transfer, mobile phone manufacturing center already shifted to the Asia-Pacific, especially China, who come from behind, such as Samsung, HTC, Huawei, etc are due to "sub- "assume the hardware manufacturing division, and resigned as leader of the Nokia hardware manufacturing, software development are not their strengths, is now in a vague position of embarrassing situations.
Thus, the layoffs as the main means of enterprise restructuring has become Elop had under choice. October 3, Nokia officially announced that Accenture has fully accepted Saipan, 2,300 Nokia employees also will be outsourced. Prior to September 29, 3500 Nokia announced the layoffs, the end of 2011 closed a factory in Romania, will be more production to Asia, and re-integration of mobile phone manufacturers, such as maps and business operations.
"Now is the era of a flat, for manufacturing enterprises, the most effective way to flatten outsourcing, OEM manufacturing processes will be more out, focus on doing the marketing and brand, Apple is the best example of the same Nokia need to do so, not only the internal organizational structure to be flat, but also will outsource more production processes. "China Fortune Holdings Limited Chairman and CEO Liu Xiaoying that Nokia must continue to accelerate layoffs, can not be soft, to mobile Internet-based big shake-up.
However, Elop had to spend some thought to stabilize this Nokia's management turmoil, including executive vice president, head of the smart phone business around the base Anxi Wan, CTO Richard Green, Vice Chairman Tang, Nokia, Greater China, Korea and Japan, Senior Vice President Liang Mei and other executives to leave, most are derived from the transformation of the direction of the differences.
Nokia CEO Ollila and legendary force after 2005, compared to launch networking strategy Olli-Pekka Kallasvuo, Elop's task was to heavy for a lot: Ollila wave of the year is determined under the direction of the implementation of the GSM great weight, but now Nokia already been submerged new wave of mobile Internet; Olli-Pekka Kallasvuo in the heyday of a series of acquisitions, such as the $ 8.1 billion acquisition of U.S. digital navigation company Navteq, as well as games, advertising and music segments such as the acquisition of start-up companies, he The route is identified, "Nokia on its own can subvert the entire industry," but now have to use more power, Elop had admitted that "the war has now become a device ecosystem of the war, we have to decide how create, birth, or add a ecosystem. "
"Remember, we sold paper products, tires, boots, cable ... we can always correct transformation." Nokia executive vice president of the former base told the media about Anxi Wan said this is the case, but he Elohim general office announced the third day of his departure.
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