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Imagine speaking to the person who
presented to the leadership team about

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the threat of the iPhone and what
it felt like and how the leadership

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reacted because we have that person.

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I found the document, it appeared on the
web about three years ago, the iPhone

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document that a team of strategists and
market intelligence researchers inside

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Nokia presented to leadership team.

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And we're joined today by a
strategy professor from Adelphi

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University just outside New York.

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Timo Partenen.

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Welcome to the show.

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Thank You.

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Aidan I am happy to be here.

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It's great to have you with us,
and thanks for agreeing to do this.

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I know you're friends and you've listened
to the rest of the show with Timo and Quy.

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Maybe let's share the context
of what you're doing now and

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what you were doing back then.

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Before we start to explore the document,

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Well, as you said, currently I'm
a professor in Adelphi University,

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just outside New York City.

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But before that, and the reason why
I'm here is that I worked for Nokia

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in their strategy, in their market
intelligence organization in different

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roles, approximately 2001, 2009.

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So during the period
when iPhone was launched.

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let's share a little bit about
how it felt for you as well.

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I mean, Nokia was doing so well.

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What was bubbling?

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What was happening?

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What was changing at the time when
the iPhone came out, because also,

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you were starting to see the decline
of companies like Blackberry, , but

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it didn't appear all of a sudden.

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So I'd love to really get inside the
atmosphere inside the organization

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because so many people who are in
that position in the company don't

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realize it when it's upon them.

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And I'd love you to share the kind of
conversations that was happening, the kind

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of temperature inside the organization
and just what people were talking about.

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as in your previous shows, it has
become obvious, many people had a

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very different perception there.

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So iPhone didn't come out of blue.

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We had had a signs that Apple
is preparing iPhone, so.

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They had acquired, was it 2005 a company
that developed a multitask interfaces that

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was Finger Works or something like that?

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They had been recruiting wireless
engineers for several years.

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So putting all this together,
it was pretty easy to see that.

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Yeah, they are coming to our
domain we got pieces of information

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from there and there and there.

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So we had been communicating to
top management of Nokia or Nokia's

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different product divisions about the
threat of Apple for several years.

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So as such, the announcement of
the iPhone, the slides said that we

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are probably going to talk to today
more wasn't the big news as such.

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It was very much expected.

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Something like this is coming out one day.

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At the same time, there were other
trends as you names and for example,

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the usability of Nokia phones that had
been of our competitive advantages,

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say earlier five years before
that had been eroding quite badly.

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That was a constant message that
we were getting from customers

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from market research and so on.

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And it was well recognized.

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It was well observed that the, touch
screen devices not only phones but also

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other kind of devices like MP three
players and so on are coming to market and

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they are user friendly and people at them.

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We had, for example, in the last
in the couple of earlier years,

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flat top that screen as our first
competitive issue the coming years.

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We had that sort of the list that
what keeps us awake during the night.

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And touch screen had been like 2005, 2006.

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The top issue for that.

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So when the iPhone was launched the
device itself didn't surprise us.

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What surprised us was the ecosystem
that Apple was able to build around

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it, especially Cingular the American
operator currently known as AT&T

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they were collaborating with
Apple very closely with that.

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And I think you, that's the point
with Nokia's issue with American

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operators in the previous podcasts.

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We had not been able to get into American
operators with our smartphones, and

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then they suddenly go all in with Apple.

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That was a surprise.

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That was a bit of the surprise there, as
well as how I think that Google and Yahoo.

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We're on board with that in, so they
really came up as a big coalition

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rather than a single product launch.

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So that ecosystem perspective was
something that took us by surprise.

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I love that you're sharing
this, and it's so interesting.

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I, I was reading recently and we've
a episode coming soon in the show.

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It's about Steve Jobs NeXT years.

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It's a book by Geoffrey Cain and it
talks about how he failed in a way to

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build an ecosystem around app developers.

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, and what you kind of see is it was
almost like the lessons he learned that

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he paid forward and brought to Apple
when he came back the second time.

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And you can see it there
with stuff like the ecosystem

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it's actually interesting to
notice this there, that initially

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iPhone was closed ecosystem.

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The apple Store was not open for the
outside developers at the beginning,

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but very soon they realized they
need that developer ecosystem there.

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And then as you mentioned
his previous experience and

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connections played well there.

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I'm sure somebody reminded 'em.

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I mean, the, the, the whole idea of
history is written by the victors is

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very annoying for somebody who was there.

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And I wondered about that,
that some of the myths you hear

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and have heard over the years.

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I'm sure it hurts sometimes when
people talked about Nokia as a failure

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and, oh, they didn't see it coming.

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And many, many people make that mistake.

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And that's why it's so great to talk to
somebody who was there because, I have

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a huge amount of empathy for you and
your colleagues at the time because of

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things like the Cingular surprise that.

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You tried to do these things before
and the carriers were pushing

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back all the time, so it wasn't
as if you didn't think about it,

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you thought about so many things.

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nokia's working mentality at that
time was very much about the hardware,

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hardware specifications and so on, and
also in the intelligence functions.

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Primarily our job was to try to
scout that, what kind of the features

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our competitor devices will have,
what kind of the competencies

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they are building and so on.

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So while we saw those things and while we
didn't come, we maybe not surprised about

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the hardware of iPhone and probably we
can talk about that in a second bit more.

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we didn't necessarily understand that
well or the size, a business side of

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the aspects that they were developing,
their partnerships, their collaboration

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agreements and so on, and that that was
a blind spot for us in the intelligence.

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And when you tried to do those
things, was there a resistance?

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Because you mentioned about how
it took Nokia a long time to

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break into America in a way.

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And I read that it, we covered
a book called Losing the Signal

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about Blackberry a few weeks ago,
and it talked about how Blackberry

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basically fooled Nokia with Blackberry
Connect for a long period of time.

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And there was a lot of resources
wasted with that partnership.

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And it kind of, in a way marked Nokia
where you had this bad experience and

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it was difficult to break America.

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I'm not an expert of all the
discussions that were going on

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at that time with the operators.

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And indeed that might have been one of
the challenge for Nokia, that we were

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a very European focused company and
we didn't have a big enough presence

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in America, actually was trying to
relocate some top management and so on

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to America Exactly for that purpose.

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But generally my understanding is that
at that point of time when internet

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was still relatively young thing and
mobile internet was non existing.

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everyone was trying to think how
to strategically position that they

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can control the mobile internet.

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And American telcos were relatively
bigger in the technology industry

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at those days than they are now.

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they wanted to be in control.

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And Nokia being the world leader
in cell phones was seen as a

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threat that if they let Nokia in.

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Nokia is going to take over, is
going to provide different kind

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of the mobile internet services.

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While they're working with relatively
smaller companies in that domain, like

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Blackberry or probably what they assumed
about the Apple was seen as their way

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of bringing in these smaller partners
that they can use to fight Nokia.

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I don't, I haven't done research that
I don't have kind of the evidence.

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I haven't been talking to the boards
of the American telcos in those days,

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but that's my assumption how it went.

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before we get into the document, the
famous document, and I don't want to

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be bringing up old pains in any way, I
wondered about the Symbian investment.

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So had it started at this stage, so
this is the operating system for those

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people that don't know what Symbian is.

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Had it started before Apple or was
it triggered by Apple and the whole

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that whole period of time, because.

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From the three part series we did with Quy
Huy and Timo Vuori What you see is that

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people didn't want to talk about it not
being very good and they knew it wasn't

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very good and you in market intelligence
must have known compared to competitors.

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It wasn't where it needed to be, and
I just wondered what the atmosphere

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was about that inside Nokia.

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Good question.

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So first about the intelligence function,
that we are usually looking outside, we

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are looking the external information.

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I've been wondering afterwards
should we have had kind of the

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internal intelligence, someone who
would been the kind of the truth

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teller about our own competencies.

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So yes, we were telling that
the competitors are coming with

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a certain kind of innovations.

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They are recruiting certain kind
of de competencies and so on.

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We had some sort of vision
that what they might be doing.

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We didn't actively benchmark
that against our own development.

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So while we are presenting that,
say touchscreen is important, and

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it seems that we are not currently
in very good position with that.

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If somebody from the organization
who is responsible about say, touch,

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touch screen UI development, comes
and says that we will fix this.

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We have plans for it.

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We didn't challenge that.

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That's really interesting.

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, That's the thing that comes across
most from the research on emotions is

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that it wasn't safe to be that person.

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It wasn't safe to be the truth
teller, and you suffered from

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the shoot, the messenger bias.

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Is there anything you'd
like to share about that?

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Because it sounds to me like you were that
type of character , especially if you're

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doing strategic work, that you knew these
things, but if you shared them, it was

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almost like a black mark on your resume.

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Now let's think about my previous
role where I was heading our

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long term market forecasting.

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So I go a little bit back
from the iPhone era now.

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There were product categories that Nokia
was trying to pursue in the market, and

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our long-term forecasting team didn't
see really future server that sort of

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the specific products in the market.

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And I, we in the long-term market
forecast, 10 forecasted if not a

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declining or vanishing market, but
at least significantly less growth

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than those business units wanted.

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And that created quite a bit of conflicts
with the heads of those business

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units whose business we were ruining
with our two pessimistic forecasts.

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So yeah, there was that kind of the
using black mark in my CV in those

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days, but that was worth a quantitative
market forecasting, which then

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leads to the planning that how much
we will be able to sell and so on.

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So when I moved to head the market
intelligence function, which is

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more qualitative in that sense
we became easier to ignore.

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So if you are telling messages that
don't resonate with the managers,

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yeah, they listen to us 'cause we
are institutionalized bearer of that

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messages, but they don't act on those.

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So there was some parts of the
organization which perhaps ignored,

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but I think the top management
mostly listened what we said and

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mostly took things quite seriously.

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it seemed to me again, and, and it's,
it's, it's very, it's, it's great

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to talk to you because there's parts
of the documentation where there,

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there're people who shared their
experiences with Timo and Quy, but you

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still don't know what that was like.

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So say for example, you're
presenting to the, to the board,

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to the senior leadership team
about these oncoming threats.

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Okay.

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They think they've made the message
clear to the product managers to actually

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do something about it, but the product
managers aren't doing something about it.

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It seemed to be, get stuck in the
translation of the order to, we,

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we need to do this as priority.

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And people were frozen by fear of,
oh, well we're not gonna do that

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because we control the resources.

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Or was it, we think that's
the wrong thing to do.

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Where did it get stuck in the middle?

230
00:14:26,435 --> 00:14:31,205
That I do not know, but reflecting
what you just said and what you have

231
00:14:31,205 --> 00:14:36,845
been talking earlier with Timo and
Quy is that our communication was

232
00:14:36,845 --> 00:14:42,235
very much targeted to the business
unit boards or corporate boards.

233
00:14:42,425 --> 00:14:46,115
We were target,  we were mostly
communicating up when we were

234
00:14:46,265 --> 00:14:51,185
communicating on the sideways to
the say product planners or product

235
00:14:51,185 --> 00:14:53,225
feature, road mapping teams and so on.

236
00:14:53,645 --> 00:14:59,555
Wasn't maybe that kind of the strategic
message that we need to do big changes.

237
00:15:00,245 --> 00:15:05,405
That was very kind of the operational
checking, are the mega pixels in

238
00:15:05,405 --> 00:15:09,495
our cameras aligned with what we
expect competitor roadmaps to be?

239
00:15:10,205 --> 00:15:13,115
While we perhaps created
that external fear.

240
00:15:13,895 --> 00:15:15,125
To the upper management.

241
00:15:15,185 --> 00:15:17,255
We didn't do that to
the middle management.

242
00:15:19,725 --> 00:15:22,220
So there was no urgency
because they didn't feel it.

243
00:15:22,775 --> 00:15:27,185
I, I think that what's come true also
from the earlier the other research

244
00:15:27,245 --> 00:15:28,575
that you have been talking, I, I, I

245
00:15:28,668 --> 00:15:30,365
haven't researched that myself, so I do

246
00:15:30,373 --> 00:15:31,265
not know what, what

247
00:15:31,475 --> 00:15:33,695
exactly they felt, but
that's my impression.

248
00:15:33,935 --> 00:15:39,965
At least we didn't push that information,
act actively enough to that direction.

249
00:15:40,645 --> 00:15:44,485
that's why it's so useful to share
these messages to help other people

250
00:15:44,485 --> 00:15:49,165
because it's often in your position,
you wouldn't think that was necessary.

251
00:15:49,285 --> 00:15:52,695
But you, what we see more and more
when you study this work is you

252
00:15:52,695 --> 00:15:59,445
see how important it is to listen
down and message down and make sure

253
00:15:59,445 --> 00:16:01,095
all those messages are aligned.

254
00:16:01,125 --> 00:16:04,665
Because you can think you're very, very
clear at the top of the organization,

255
00:16:04,665 --> 00:16:07,035
but the rest of the organization
having a clue what we're doing.

256
00:16:07,035 --> 00:16:09,495
They're just showing up and doing
their work every day because

257
00:16:09,495 --> 00:16:10,605
that's what they're measured on.

258
00:16:11,025 --> 00:16:12,615
And i'm not looking here for blame.

259
00:16:12,645 --> 00:16:16,455
I'm actually trying, , I'm trying to avoid
blame in any way and actually trying to

260
00:16:16,455 --> 00:16:19,425
go, how can we take lessons from this?

261
00:16:19,455 --> 00:16:23,745
'cause that's what I find so interesting
about Nokia is that I, I like when

262
00:16:23,745 --> 00:16:26,685
I was, I was a professional rugby
player for 10 years, and at the end of

263
00:16:26,685 --> 00:16:28,125
my career I started to follow Nokia.

264
00:16:28,125 --> 00:16:30,075
I was like, this is an amazing company.

265
00:16:30,435 --> 00:16:34,785
And it was two, it was November,
2007, and the stock was like up here.

266
00:16:34,995 --> 00:16:36,405
And I was like, this is amazing company.

267
00:16:36,405 --> 00:16:37,395
And then it just dwindled.

268
00:16:37,455 --> 00:16:38,475
I was like, what happened?

269
00:16:38,745 --> 00:16:42,555
So I have huge empathy and
respect for what happened in Noki.

270
00:16:42,555 --> 00:16:45,705
So I don't want to, I'm
not like that with my work.

271
00:16:45,705 --> 00:16:47,685
I don't want to go, oh, idiots.

272
00:16:47,775 --> 00:16:48,375
It's the opposite.

273
00:16:48,375 --> 00:16:53,895
I think the main learnings from
the intelligence era for me is

274
00:16:53,895 --> 00:16:55,880
that in that sort of function.

275
00:16:56,820 --> 00:17:00,840
You need to try to find a fine
balance, that you are not just

276
00:17:00,840 --> 00:17:04,250
a yes man telling the news that
top management wants to hear.

277
00:17:04,520 --> 00:17:07,190
But on the other hand, you
cannot go all in challenging

278
00:17:07,220 --> 00:17:08,930
that everything you do is wrong.

279
00:17:09,740 --> 00:17:11,150
then you are ignored.

280
00:17:11,750 --> 00:17:14,300
So you need to find a
way to communicate there.

281
00:17:14,480 --> 00:17:21,080
Then another thing is that you need
to have institutional support for your

282
00:17:21,220 --> 00:17:26,203
messages, and I think that came very
well what you discussed in the earlier

283
00:17:26,231 --> 00:17:31,841
episodes about the period around 2012
where Nokia changed the management

284
00:17:31,841 --> 00:17:34,151
mode so that it was more data driven.

285
00:17:34,751 --> 00:17:37,781
And what I referred to my market
forecasting period, which was

286
00:17:38,141 --> 00:17:42,611
quantitative, became the market
forecast for the future and we.

287
00:17:42,775 --> 00:17:47,725
were part of the institutionalized
process of planning our finances,

288
00:17:47,725 --> 00:17:49,075
our production and so on.

289
00:17:49,415 --> 00:17:52,655
But the market intelligence function
where we try to wave the flag that,

290
00:17:52,705 --> 00:17:58,835
hey, apple is coming, APPLE is going
to hit us badly if is just a PowerPoint

291
00:17:58,835 --> 00:18:04,085
presentation presented in the management
team meetings that is not doing the work.

292
00:18:04,475 --> 00:18:10,745
It has to somehow get into the operational
process where people are making those

293
00:18:10,805 --> 00:18:13,805
often quite low level decisions.

294
00:18:14,405 --> 00:18:18,935
But that is a link we didn't
build well enough in those days.

295
00:18:19,235 --> 00:18:26,795
Then in this strategic aspect I'm
not sure sure, how to how companies

296
00:18:26,795 --> 00:18:32,705
could themselves for that sort of the
massive disruption that this caused.

297
00:18:33,305 --> 00:18:39,705
I think they need lot of flag
waivers coming with the news.

298
00:18:39,705 --> 00:18:42,705
They need the challengers,
they need to hear that from the

299
00:18:42,705 --> 00:18:44,655
customer, suppliers and so on.

300
00:18:45,305 --> 00:18:51,705
But seeing kind of the fundamental idea of
the top level management that, hey, what

301
00:18:51,805 --> 00:18:56,595
we are, what we should do, what we should
focus on, takes definitely much more

302
00:18:56,595 --> 00:18:58,575
than just the in intelligence function.

303
00:18:59,465 --> 00:19:00,245
That's fantastic.

304
00:19:00,250 --> 00:19:04,980
It speaks to, we did a series, a long
form series with Joe Bower who was the

305
00:19:04,980 --> 00:19:07,080
thesis advisor for Clayton Christensen.

306
00:19:07,080 --> 00:19:10,320
And you're probably familiar with his
work of resource allocation process.

307
00:19:11,190 --> 00:19:14,400
And for me, what you're saying there
speaks to the resource allocation

308
00:19:14,400 --> 00:19:19,080
process because he, he gives a great
example about Intel that when they

309
00:19:19,080 --> 00:19:24,600
moved from DRAM to semiconductors,
they did it 18 months after the

310
00:19:24,600 --> 00:19:26,700
organization did it at the lower levels.

311
00:19:26,730 --> 00:19:30,810
'cause they saw the value of moving there
and then they announced it as a strategy.

312
00:19:30,810 --> 00:19:33,930
And people down the levels are
kinda like we did that ages ago.

313
00:19:34,530 --> 00:19:36,210
So it can actually lag the other way.

314
00:19:36,210 --> 00:19:41,340
And to your point, if you don't get inside
the heads of those middle managers, you

315
00:19:41,340 --> 00:19:43,290
don't change the future of the company.

316
00:19:43,440 --> 00:19:44,580
And I think that's the.

317
00:19:45,330 --> 00:19:50,940
Why I wanted to, to bring you on and
through your lens now as a lecturer

318
00:19:50,940 --> 00:19:55,380
and, and a strategy professor, is
it's, it's easier in a way to see

319
00:19:55,380 --> 00:19:59,760
it in retrospect than it's in the
moment because there's a great saying.

320
00:19:59,820 --> 00:20:02,430
It's hard to read the label
when you're inside the jar.

321
00:20:02,505 --> 00:20:02,895
Oh yeah, yeah,

322
00:20:02,910 --> 00:20:06,750
When it's you and you're, you're
stuck and you're doing the work

323
00:20:06,750 --> 00:20:08,880
and you're rewarded on the present.

324
00:20:08,970 --> 00:20:12,390
It's very, very difficult to
to see yourself in the moment.

325
00:20:12,675 --> 00:20:14,510
And then comes another angle.

326
00:20:14,925 --> 00:20:17,415
'cause if you, if you will now
look the document, finally what

327
00:20:17,415 --> 00:20:21,525
we've been talking, you will notice
that it goes to quite a detailed

328
00:20:21,525 --> 00:20:23,685
hardware specifications and so on.

329
00:20:23,895 --> 00:20:26,475
There's, and actually
this is a short version.

330
00:20:26,505 --> 00:20:29,355
There was a much longer verse
and distributed as well.

331
00:20:29,775 --> 00:20:36,255
But point is that there are lot of
data points and when somebody in

332
00:20:36,255 --> 00:20:41,325
the middle management reads it they
probably read it through tail lens.

333
00:20:41,595 --> 00:20:46,365
And Nokia being hardware focused
company, of the middle management

334
00:20:46,365 --> 00:20:51,465
threat that documented, okay,
iPhone's hardware is not that great.

335
00:20:52,635 --> 00:20:54,525
We are doing well here.

336
00:20:54,795 --> 00:20:57,495
They pick the message, they
want to hear from that.

337
00:20:58,095 --> 00:20:59,940
I love that, that's so, so key.

338
00:20:59,940 --> 00:21:00,930
So let's share it now.

339
00:21:00,930 --> 00:21:03,540
So let's share it and
you take us through it.

340
00:21:03,540 --> 00:21:07,230
I'll, I'll, I'll navigate, I'll,
I'll drive it for us and I'd

341
00:21:07,230 --> 00:21:09,420
love you just to comment on it.

342
00:21:09,420 --> 00:21:10,590
So, where.

343
00:21:10,770 --> 00:21:12,870
Was this, where were you in the meeting?

344
00:21:13,140 --> 00:21:14,700
Like who were you talking to?

345
00:21:14,910 --> 00:21:16,440
If you can, whatever you can share.

346
00:21:16,440 --> 00:21:18,990
I know there's gonna be
some confidential stuff

347
00:21:19,390 --> 00:21:20,220
But this was,

348
00:21:20,415 --> 00:21:20,535
I

349
00:21:20,730 --> 00:21:21,540
who was it to?

350
00:21:21,705 --> 00:21:26,055
So first of all, recalling something
exactly what happened almost 10

351
00:21:26,055 --> 00:21:28,370
years ago be be challenging here.

352
00:21:28,695 --> 00:21:32,925
So as you see already from this, Nokia
was organized quite much in silos.

353
00:21:33,585 --> 00:21:37,785
So all these abbreviations after
our names indicate the different

354
00:21:38,535 --> 00:21:41,475
corporate units we were working on.

355
00:21:42,075 --> 00:21:46,785
And this was a document that
was put together from the white

356
00:21:46,785 --> 00:21:48,165
Intelligence organization.

357
00:21:48,765 --> 00:21:54,495
And that is actually one thing that
perhaps was a challenge that the

358
00:21:54,495 --> 00:22:02,745
different, managers in different parts of
the organizations got different messages.

359
00:22:04,875 --> 00:22:11,265
All right, so this was a document that was
prepared right after iPhone was launched.

360
00:22:12,555 --> 00:22:18,885
And this is a document that, if
I remember was distributed quite

361
00:22:18,945 --> 00:22:22,525
widely also beyond the Nokia's board.

362
00:22:23,125 --> 00:22:29,215
So this is perhaps bit sanitized version
of all the analysis we have done.

363
00:22:29,875 --> 00:22:33,385
This doesn't include references,
for example, to our future products.

364
00:22:33,385 --> 00:22:37,555
It doesn't include speculative
information that we couldn't

365
00:22:37,675 --> 00:22:42,565
been confirming that, but we were
communicating perhaps in other sessions.

366
00:22:43,165 --> 00:22:45,895
Okay, so I'll, I'll
flick onto the next page.

367
00:22:45,955 --> 00:22:47,695
And so here we go.

368
00:22:47,695 --> 00:22:48,625
Executive summary.

369
00:22:48,625 --> 00:22:53,395
So again, were you a presenter of
this knowledge to, to the team?

370
00:22:53,995 --> 00:22:56,395
I, there was so much detail
here that you had Right?

371
00:22:56,395 --> 00:22:57,985
That's what I find so fascinating.

372
00:22:58,105 --> 00:22:59,845
It's not like you didn't know.

373
00:22:59,845 --> 00:23:01,645
It's like you knew very, very well.

374
00:23:01,645 --> 00:23:03,475
You had brilliant market intelligence.

375
00:23:03,720 --> 00:23:03,960
Yeah.

376
00:23:03,960 --> 00:23:08,040
So we had, as, as I said, we had
been following Apple for several

377
00:23:08,040 --> 00:23:10,140
years at that point of time.

378
00:23:10,140 --> 00:23:13,440
So there was not that many big surprises.

379
00:23:14,700 --> 00:23:20,250
This was conclusion that, okay,
what information was confirmed?

380
00:23:20,340 --> 00:23:22,530
What information was me?

381
00:23:23,010 --> 00:23:28,380
And we had had quite a bit of time
to think about the implications well.

382
00:23:28,830 --> 00:23:37,670
And don't think any of the proposals
we make here would be controversial.

383
00:23:37,920 --> 00:23:44,100
So when I presented this, I don't think
anyone in the management disagreed

384
00:23:44,100 --> 00:23:46,680
with the proposals that we are making.

385
00:23:46,680 --> 00:23:49,260
They may prioritize them differently.

386
00:23:50,010 --> 00:23:54,970
may think that something is maybe
not that urgent urgent, and so on.

387
00:23:55,210 --> 00:23:59,455
But overall, I, I think everyone
was nodding here at this point

388
00:23:59,455 --> 00:24:00,985
of time in the top management.

389
00:24:01,585 --> 00:24:11,035
And if I recall some discussions
were around how we could

390
00:24:11,035 --> 00:24:13,335
use the other US operators.

391
00:24:13,575 --> 00:24:14,265
Point four.

392
00:24:14,265 --> 00:24:16,535
How could we collaborate with them?

393
00:24:17,065 --> 00:24:23,055
Is our coming portfolio strong
enough to work with them?

394
00:24:23,055 --> 00:24:26,215
Can we get them on
board with the products?

395
00:24:26,725 --> 00:24:29,755
So you're asking all the right questions
like I'm, I'm asking our audience

396
00:24:29,755 --> 00:24:34,995
here, business people to put themselves
in your shoes and go, you had the

397
00:24:34,995 --> 00:24:39,405
information, you, you thought you were
taking action on that information,

398
00:24:40,005 --> 00:24:44,235
and the, the question you always go
is, did you have the capabilities to

399
00:24:44,235 --> 00:24:45,975
carry the strategy through anyway?

400
00:24:45,975 --> 00:24:51,240
Or had Apple because they were a
computer company and the game had

401
00:24:51,240 --> 00:24:56,070
moved from a mobile phone to actually
a smartphone had they just got such

402
00:24:56,070 --> 00:24:59,170
a headstart that it was so difficult
to catch up Anyway, if you wanted to.

403
00:24:59,785 --> 00:25:00,075
Yeah.

404
00:25:00,510 --> 00:25:00,660
Yeah.

405
00:25:00,660 --> 00:25:06,090
So Nokia was often a quick
second in its actions.

406
00:25:06,300 --> 00:25:10,830
So at that point of time, Nokia
was a still leader in smartphones.

407
00:25:10,890 --> 00:25:12,095
The market was small.

408
00:25:12,425 --> 00:25:16,325
And our Symbian phones now
retrospectively, were not that

409
00:25:16,325 --> 00:25:22,715
competitive, but overall, the feeling
was that yes, this is again, some trend

410
00:25:22,715 --> 00:25:25,415
where we might be a little bit late.

411
00:25:26,015 --> 00:25:31,025
We are not going to touch screens to the
same volume as early as Apple, but if

412
00:25:31,025 --> 00:25:34,835
they become successful, we will flood
the market with the different kind of

413
00:25:34,835 --> 00:25:38,618
the touch screen phones to different
price points, different consumer

414
00:25:38,618 --> 00:25:41,138
segments, different product categories.

415
00:25:41,168 --> 00:25:44,138
That's what we did with the earlier
products that we had missed.

416
00:25:44,168 --> 00:25:49,628
If you remember, for example, before
iPhone, there was a big hype around

417
00:25:49,958 --> 00:25:52,478
Motorola Razr, the very thin phone.

418
00:25:53,078 --> 00:25:58,798
and Nokia was, Nokia had identified
also their, the miniaturisation trend,

419
00:25:59,398 --> 00:26:04,138
but we had a misinterpreted it so that
people want smaller phones while the

420
00:26:04,488 --> 00:26:07,048
thin phone became the absolute winner.

421
00:26:07,648 --> 00:26:08,518
And yes.

422
00:26:08,518 --> 00:26:11,218
Then when we noticed we missed that trend.

423
00:26:12,118 --> 00:26:17,188
We created a portfolio of thin phones
across the different price point.

424
00:26:17,188 --> 00:26:19,228
We had a very cheap thin phone.

425
00:26:19,228 --> 00:26:21,028
We had a very fashionable thin phone.

426
00:26:21,028 --> 00:26:23,368
We had the business focused
thin phone and so on.

427
00:26:23,668 --> 00:26:25,678
Pretty much killed the Razr with that.

428
00:26:25,738 --> 00:26:30,298
And when we were talking about this,
I don't remember, was it in the

429
00:26:30,298 --> 00:26:34,348
management boards or some more informal
meetings or some other occasions?

430
00:26:34,348 --> 00:26:39,298
The atmosphere was very much, okay,
we might be late with this kind of

431
00:26:39,298 --> 00:26:44,768
the product, but we have something
in our pipeline that will have touch

432
00:26:44,908 --> 00:26:47,638
screen, that will come with the music.

433
00:26:48,478 --> 00:26:50,248
That will be a great experience.

434
00:26:50,248 --> 00:26:54,058
We are able to use our
scale, our distribution, and

435
00:26:56,458 --> 00:27:00,875
apple will not be growing
as fast as predicted.

436
00:27:01,475 --> 00:27:07,505
about this slide that you are now
showing probably the third bullet point.

437
00:27:07,685 --> 00:27:18,695
There was something that had most comments
among the higher level of management that

438
00:27:18,695 --> 00:27:26,465
getting really, the Cingular CEO Google,
CEO Jerry Yang from Yahoo on the stage.

439
00:27:27,075 --> 00:27:34,225
That ecosystem that Steve Jobs
was building around, was something

440
00:27:35,215 --> 00:27:37,675
that we didn't understand.

441
00:27:37,765 --> 00:27:39,745
What are they planning altogether?

442
00:27:40,345 --> 00:27:43,465
And the last question there,
Timo on the page as well.

443
00:27:43,855 --> 00:27:47,575
Is this a direct challenge to em's,
multimedia, computer positioning?

444
00:27:47,785 --> 00:27:48,625
What's that in reference to?

445
00:27:49,225 --> 00:27:57,655
M was our multimedia product division that
was responsible for the different kind

446
00:27:57,655 --> 00:28:06,840
of the higher end smartphones and that we
were at that point of time positioning I,

447
00:28:06,840 --> 00:28:12,020
I think maybe in the next slide we will
talk about was it that N700 and N800?

448
00:28:12,060 --> 00:28:19,373
N 800 which was kind of the multimedia
computer product, which we saw, in

449
00:28:19,373 --> 00:28:25,553
principle, targeting to very similar
market, but it was not doing well.

450
00:28:26,513 --> 00:28:32,240
It was not that good product to be honest,
and operators didn't support it that much.

451
00:28:32,480 --> 00:28:36,530
But I think at that reference
in the slide, kind of the refer

452
00:28:36,890 --> 00:28:41,340
that, is this kind of the product
positioning going to work?

453
00:28:41,900 --> 00:28:45,020
Or is Apple going to take
over this part of the market?

454
00:28:45,895 --> 00:28:50,510
There, there's a couple of things that
just came to mind where when I studied

455
00:28:50,510 --> 00:28:53,750
this over the years, the Nokia story,
and it's got, it's got much richer

456
00:28:53,810 --> 00:28:55,640
obviously with conversations like this.

457
00:28:55,940 --> 00:29:01,190
And I think that's one of the pities about
this is that people make a jo a a decision

458
00:29:01,430 --> 00:29:03,200
based on a tiny piece of information.

459
00:29:03,200 --> 00:29:06,380
Like you said, even within Nokia,
everybody saw it based on where

460
00:29:06,380 --> 00:29:07,970
they were inside the organization.

461
00:29:08,420 --> 00:29:12,770
There's a law called Miles's Law,
which is where you stand, depends on

462
00:29:12,770 --> 00:29:14,450
where you sit in the organization.

463
00:29:14,450 --> 00:29:17,450
So marketing sees it different
than r and d, sees it different

464
00:29:17,720 --> 00:29:19,010
than finance, et cetera.

465
00:29:19,670 --> 00:29:23,930
And a couple of things came to mind
where some of the stories you hear

466
00:29:23,940 --> 00:29:29,020
are.Well, Nokia had developed a
touchscreen phone way before Apple did.

467
00:29:29,410 --> 00:29:30,100
That's one.

468
00:29:30,430 --> 00:29:35,770
The other was Nokia also developed an
iPad way before Apple ever had an iPad.

469
00:29:35,770 --> 00:29:38,740
And then the other is that you
also had an app store before

470
00:29:38,740 --> 00:29:40,300
Apple ever even had an app store.

471
00:29:40,540 --> 00:29:44,810
And that they were ideas that
came from within Nokia, but were

472
00:29:45,140 --> 00:29:49,070
rejected or leadership said, no,
we're making progress with this.

473
00:29:49,070 --> 00:29:50,660
This is where we're gonna focus.

474
00:29:50,840 --> 00:29:51,290
And I won.

475
00:29:51,350 --> 00:29:54,650
If you can share or comment on that,
I wonder what your thoughts were.

476
00:29:55,335 --> 00:29:59,835
let's start with the app
store part, for example.

477
00:30:00,075 --> 00:30:04,335
That was something that from my
perspective was identified that,

478
00:30:04,335 --> 00:30:08,685
hey, we have here the app store,
which is not working great.

479
00:30:09,045 --> 00:30:12,675
And Symbian was really bad from
the developer point of view.

480
00:30:13,395 --> 00:30:19,395
And idea of having the external
applications in our phone, building that

481
00:30:19,395 --> 00:30:22,245
sort of platform strategy was there.

482
00:30:22,945 --> 00:30:24,155
Execution?

483
00:30:24,755 --> 00:30:27,785
Yet again the resource allocation
Nokia, being hardware company.

484
00:30:27,785 --> 00:30:32,045
Probably all the software
initiatives didn't get as much

485
00:30:32,115 --> 00:30:33,855
emphasis as they should have had.

486
00:30:34,455 --> 00:30:41,145
I remember telling, prior iPhone that
the, some sort of the benchmark results,

487
00:30:41,145 --> 00:30:44,865
some sort of the market research
results about the usability of our app

488
00:30:44,865 --> 00:30:49,245
store both from the user perspective
and from the developer perspective.

489
00:30:49,690 --> 00:30:51,270
And these issues were flagged.

490
00:30:51,465 --> 00:30:56,055
And when some senior vice president or
vice president, I don't remember, says

491
00:30:56,055 --> 00:30:57,945
that they, we will take action on this.

492
00:30:57,945 --> 00:31:01,155
From my perspective, I can take
the intelligent studies done

493
00:31:01,875 --> 00:31:05,625
and I don't know if anyone ever
then followed up that issue.

494
00:31:06,225 --> 00:31:09,045
Nokia's Innovations Nokia came
up with actually quite a lot

495
00:31:09,045 --> 00:31:10,660
of innovations in those years.

496
00:31:10,880 --> 00:31:15,255
So, for example, one of the response
strategies for iPhone was that looking

497
00:31:15,255 --> 00:31:19,565
out, launch the music phone, or
actually range of the music phones.

498
00:31:19,785 --> 00:31:24,435
'cause we thought that the music is going
to be the killer application in iPhone.

499
00:31:24,765 --> 00:31:26,445
They had the iPod before.

500
00:31:26,775 --> 00:31:30,450
So we launch, launched,
express Music series.

501
00:31:31,680 --> 00:31:36,330
And then I think half a year, year
later, than iPhone was launched.

502
00:31:36,330 --> 00:31:40,680
We launched the service comes with
music, which provided basically

503
00:31:40,680 --> 00:31:45,210
that when you buy a Nokia phone,
you get a free music for a year.

504
00:31:45,270 --> 00:31:48,660
At that point of time, it was not
streaming music, it was downloadable

505
00:31:48,800 --> 00:31:52,950
Mp3s, but you can download all
the MP3s from Nokia Music Store.

506
00:31:53,670 --> 00:31:58,350
So kind of, you can think about
that as Spotifys were some 20 years

507
00:31:58,350 --> 00:32:02,260
ago, and you get that subscription
free for a year with Nokias.

508
00:32:02,834 --> 00:32:03,524
several things.

509
00:32:03,524 --> 00:32:04,664
why it didn't succeed,

510
00:32:07,494 --> 00:32:09,354
inertia of incumbency.

511
00:32:09,554 --> 00:32:14,094
Our biggest customers, operators
didn't want us to go that way.

512
00:32:14,704 --> 00:32:19,214
We didn't have enough resources to
execute that strategy correctly.

513
00:32:19,219 --> 00:32:24,589
We didn't have, enough, probably
capabilities to do it correctly and so on.

514
00:32:24,619 --> 00:32:26,569
So plenty of thinking.

515
00:32:26,569 --> 00:32:32,199
But I think a lot of the issues then
come back that Nokia didn't think

516
00:32:33,429 --> 00:32:39,169
beyond these devices, for example,
for that Nokia didn't think that

517
00:32:39,169 --> 00:32:42,949
this could be potentially a Spotify
type of service that would be

518
00:32:42,949 --> 00:32:46,429
independent from the other services.

519
00:32:46,849 --> 00:32:51,469
We saw it as a tool to sell our phones
'cause that's where we got our money.

520
00:32:51,875 --> 00:32:55,250
and it's very hard not to, I
mean, even it's very useful

521
00:32:55,250 --> 00:32:57,020
now on having the language.

522
00:32:57,020 --> 00:32:59,990
It's one of the reasons I love doing
this work and speaking to people

523
00:32:59,990 --> 00:33:04,490
like yourself is you put a language
on how to think about these things.

524
00:33:04,550 --> 00:33:10,940
And you see that many times when a, an
executive team struggle with the future,

525
00:33:10,970 --> 00:33:12,590
they don't have a way to think about it.

526
00:33:12,590 --> 00:33:16,250
So they don't have a lens to see
what's actually happening here.

527
00:33:16,310 --> 00:33:17,600
Some of the things you were saying there.

528
00:33:18,185 --> 00:33:23,705
We had Paul Nunes on the show before he,
he was the head of research for Accenture.

529
00:33:23,705 --> 00:33:24,395
Brilliant guy.

530
00:33:25,115 --> 00:33:27,825
And he talked about the hidden S-Curve.

531
00:33:27,845 --> 00:33:31,115
So there's the scur of the product,
there's the scur of the industry, but

532
00:33:31,115 --> 00:33:35,855
there's also the capability S-Curve
and the capability S curve starts to

533
00:33:35,855 --> 00:33:40,835
fail as well when it's a jump to a
new curve where you jump from hardware

534
00:33:40,835 --> 00:33:45,815
to software or ecosystem thinking,
which, how could you have that when

535
00:33:45,875 --> 00:33:47,435
you have been a hardware company.

536
00:33:47,465 --> 00:33:50,645
And then one of the ones I just
wanted to ask you about there, you,

537
00:33:50,795 --> 00:33:55,295
you touched on it briefly, was what's
called premium customer captivity.

538
00:33:55,445 --> 00:33:59,795
So your customers actually dictate
where your resources go in the future.

539
00:34:00,095 --> 00:34:03,185
And your customers didn't want the music
thing, so you didn't do the music thing

540
00:34:03,215 --> 00:34:04,835
'cause they were the ones with the power.

541
00:34:05,195 --> 00:34:07,655
And I wondered just what your
thoughts were particularly on that

542
00:34:07,655 --> 00:34:11,705
one, that how much a customer can
dictate where you go in the future.

543
00:34:12,675 --> 00:34:17,355
They definitely dictate a lot because you
need to listen to your best customers, and

544
00:34:17,355 --> 00:34:22,935
especially in this kind of the industry
where in many markets you had only a

545
00:34:22,935 --> 00:34:29,765
few key distributors, the operators,
you don't want to take any initiatives

546
00:34:30,285 --> 00:34:33,405
that would harm your position with them.

547
00:34:33,799 --> 00:34:38,949
So that is often a situation where
outside disruptor can come to the

548
00:34:38,949 --> 00:34:42,924
market and create something that an
incumbent firm couldn't do, Apple

549
00:34:43,054 --> 00:34:46,269
did it for us here, very obviously.

550
00:34:46,802 --> 00:34:48,612
Yeah, because they don't
have anything to lose.

551
00:34:48,882 --> 00:34:50,877
I think that's such an
important thing that you have.

552
00:34:51,477 --> 00:34:52,677
You have so much to lose.

553
00:34:52,677 --> 00:34:57,807
The incumbency problem, the endowment
effect it's called in biases, is that

554
00:34:58,347 --> 00:35:01,857
one of the things Paul Nuno has told
me about Nokia, and I'm, I would love

555
00:35:01,857 --> 00:35:09,477
to qualify it, is that you had massive
mortgages on, on investments in factories

556
00:35:09,477 --> 00:35:14,497
in China to develop the dumb phone,
essentially the normal phone versus

557
00:35:14,587 --> 00:35:17,287
no skills to develop the smartphone.

558
00:35:17,612 --> 00:35:21,302
And because you had made that investment,
it was very difficult to pivot when

559
00:35:21,302 --> 00:35:22,627
you had that hanging it over you.

560
00:35:22,809 --> 00:35:25,869
That's why internally Nokia
was split in the divisions.

561
00:35:26,109 --> 00:35:30,549
So we had the mobile phone division,
which was taken care of, the low end

562
00:35:30,549 --> 00:35:35,439
part, and we were trying to develop the
cheapest possible phone in the world.

563
00:35:35,439 --> 00:35:40,599
And then we had other organizations
that were both physically and

564
00:35:40,599 --> 00:35:45,879
mentally far away from the old
business, which were trying to develop

565
00:35:45,909 --> 00:35:50,499
multimedia products, enterprise products,
gaming products, music products and so on.

566
00:35:50,799 --> 00:35:56,709
So we did recognize this, that the
investments we have made to become the

567
00:35:56,709 --> 00:35:58,294
worldly leader in the low end phones.

568
00:35:58,894 --> 00:36:02,494
May harm our capability to be
innovative at the same time.

569
00:36:02,524 --> 00:36:08,064
'cause it goes very much to the
back to the basic exploration versus

570
00:36:08,064 --> 00:36:11,964
exploitation paradigm the organizations.

571
00:36:11,964 --> 00:36:15,684
That if you want to be efficient or
if you wanna be innovative of the

572
00:36:15,684 --> 00:36:17,184
new need to separate these things.

573
00:36:17,784 --> 00:36:19,269
Because one of the other things.

574
00:36:19,574 --> 00:36:20,774
That from the outside.

575
00:36:20,784 --> 00:36:26,304
So I've spoken to Gary Hamel, Rita
McGrath lots of, lots of consultants

576
00:36:26,304 --> 00:36:29,934
who worked with you and you had access
to the best consultants in the world,

577
00:36:29,934 --> 00:36:31,404
the best thought leaders in the world.

578
00:36:31,704 --> 00:36:36,804
And again, there's a, a notion that
there was arrogance in inside Nokia.

579
00:36:37,164 --> 00:36:41,394
And it, it doesn't appear to me from
talking to people who work there, that

580
00:36:41,634 --> 00:36:44,304
it's not so much individual arrogance.

581
00:36:44,364 --> 00:36:49,584
It's we're, this is working, we're
making profits, the strategy's working.

582
00:36:49,834 --> 00:36:53,014
It's a strategic arrogance
and it's a different thing.

583
00:36:53,614 --> 00:36:55,864
Yeah, yeah, probably very right with that.

584
00:36:56,074 --> 00:36:57,964
Nokia talked to a lot of outsiders.

585
00:36:57,964 --> 00:36:59,824
We heard lot of comments.

586
00:36:59,824 --> 00:37:06,484
We try to apply the best knowledge
we can find everywhere, both for

587
00:37:06,514 --> 00:37:09,964
the product development, managing
the organization, and so on.

588
00:37:10,414 --> 00:37:15,904
But yes when you are one of the
most valuable companies, one

589
00:37:15,904 --> 00:37:19,204
of the most respected brands,
you are having great profits.

590
00:37:19,204 --> 00:37:23,404
Your CEO is named the CEO of the
year for several years and so on.

591
00:37:24,004 --> 00:37:27,634
It's hard avoiding becoming
somewhat arrogant because everything

592
00:37:27,634 --> 00:37:29,404
seems to be working pretty well.

593
00:37:30,004 --> 00:37:33,389
And that, and that's why we're
doing this series is just to see.

594
00:37:33,629 --> 00:37:36,749
It's hard to read the label when
you're inside the jar maybe.

595
00:37:36,749 --> 00:37:39,664
We'll, we're, we're on page four
of the iPhone now, I think you,

596
00:37:39,779 --> 00:37:40,229
back to it.

597
00:37:40,319 --> 00:37:40,559
Yeah.

598
00:37:41,219 --> 00:37:44,129
you mentioned actually at
the, the touchscreen ui

599
00:37:44,294 --> 00:37:44,534
Hmm.

600
00:37:44,669 --> 00:37:50,414
and you mentioned that you could see
the strategic M&A that was happening

601
00:37:50,414 --> 00:37:55,424
inside Apple, that they were buying
companies to piece together capabilities

602
00:37:55,424 --> 00:37:56,444
that they'd build the future.

603
00:37:56,444 --> 00:37:57,499
And you were watching this closely.

604
00:37:57,704 --> 00:38:01,664
Yeah, I think it was probably 2005.

605
00:38:01,724 --> 00:38:07,274
I think I just had started in my
intelligence role when Apple announced the

606
00:38:07,274 --> 00:38:17,949
acquisition of FingerWorks, which was a
multitask UI company that had developed, I

607
00:38:18,129 --> 00:38:22,599
believe some products, some these devices.

608
00:38:22,779 --> 00:38:25,989
Sorry, I don't recall now all the
details, but yeah, it had been on the

609
00:38:25,989 --> 00:38:29,319
radar and we had seen that happening.

610
00:38:29,319 --> 00:38:36,414
We had seen both phones and other
devices getting that screens, if I recall

611
00:38:36,424 --> 00:38:40,414
correctly, the iPod had a simple, that
screen at that point of time and so on.

612
00:38:40,414 --> 00:38:47,884
So yet again, we saw
that coming yet again.

613
00:38:47,944 --> 00:38:53,014
We heard the messages that, that out,
touch screen with our interface is

614
00:38:53,014 --> 00:38:57,154
being developed and in the products
we launched next year, we are going to

615
00:38:57,154 --> 00:39:00,934
have S 60 that screen user interface.

616
00:39:01,264 --> 00:39:05,254
And, well, you have heard the
story, why we didn't have it then?

617
00:39:05,604 --> 00:39:09,324
it's interesting where you said you
were also used to being a second mover

618
00:39:09,324 --> 00:39:14,514
or being a fast second mover, and the
second mouse gets the cheese sometimes,

619
00:39:14,514 --> 00:39:19,694
but here, the second move, you never
caught up just really because you didn't

620
00:39:19,694 --> 00:39:23,234
have the capabilities to do so I can
see why you thought, oh, it'll be fine,

621
00:39:23,234 --> 00:39:27,284
because we've been here before and we've
caught up and actually we've killed that

622
00:39:27,284 --> 00:39:29,024
person, like with the Razr you told us.

623
00:39:29,414 --> 00:39:32,624
So you can see why I can, you know,
when you share these conversations,

624
00:39:32,624 --> 00:39:34,154
you can start to get inside your head.

625
00:39:34,754 --> 00:39:39,634
Here's a typical model you talk
about here , of hardware is to

626
00:39:39,634 --> 00:39:42,334
start at the high end and then
make cheaper and cheaper versions.

627
00:39:42,694 --> 00:39:45,664
And again, you call that out here
because that is what happened

628
00:39:45,664 --> 00:39:46,389
initially with the iPhone.

629
00:39:46,939 --> 00:39:47,419
Yeah.

630
00:39:47,569 --> 00:39:53,899
And here our expectations was then
that mobile phones division, which

631
00:39:53,899 --> 00:39:59,329
is our mainstream phone division that
make those phones that cost 100 euros,

632
00:39:59,329 --> 00:40:02,809
$100 that will get hit the future.

633
00:40:03,559 --> 00:40:06,819
But at that point of time, we didn't
see an immediate threat for that

634
00:40:06,819 --> 00:40:11,049
when we expected that Apple will
launch a mini version of the iPhone

635
00:40:11,529 --> 00:40:16,779
later, and we had plans to that to
with the product that turned out

636
00:40:16,779 --> 00:40:21,759
to be then Nokia 5,800 and, here.

637
00:40:21,759 --> 00:40:26,919
You see also the point that Nokia's mental
model was very much about the hardware.

638
00:40:27,249 --> 00:40:33,039
So, Otto, in the first point, we
highlighted here the user interfaces,

639
00:40:33,039 --> 00:40:36,879
but there comes this kind of the
discussion, the, hey, this is not

640
00:40:36,879 --> 00:40:40,779
any super product from the hardware
perspective, we can do better.

641
00:40:41,079 --> 00:40:41,979
and you totally get it.

642
00:40:41,979 --> 00:40:45,189
I mean, it's like, people
talk about Kodak and Kodak,

643
00:40:45,259 --> 00:40:45,679
Mm-hmm.

644
00:40:45,879 --> 00:40:47,319
model was selling film.

645
00:40:47,589 --> 00:40:49,569
Your mental model was selling hardware.

646
00:40:49,899 --> 00:40:52,059
And it's a totally different skill.

647
00:40:52,059 --> 00:40:53,739
It's a totally different mindset.

648
00:40:53,949 --> 00:40:56,949
It's like even we saw in the
press industry where they

649
00:40:56,949 --> 00:40:58,479
went from analog to digital.

650
00:40:58,539 --> 00:40:58,659
Hmm.

651
00:40:58,839 --> 00:41:02,469
It's a totally different mindset and
a lot of it's given away your content.

652
00:41:02,649 --> 00:41:06,339
And people who sold content
could not understand that.

653
00:41:06,339 --> 00:41:09,679
So you can see why the mental
model shift is, is such an

654
00:41:09,679 --> 00:41:11,029
important aspect of all this.

655
00:41:11,399 --> 00:41:13,549
, And I'm happy to share
this, we're on page six.

656
00:41:14,089 --> 00:41:16,429
For anybody who wants to just
get in touch with the show and

657
00:41:16,489 --> 00:41:19,819
we'll share this document and
I'll put a link on our substack.

658
00:41:20,269 --> 00:41:25,909
But here you predicted how the
market share would play out, and I

659
00:41:25,909 --> 00:41:31,489
wondered how you felt it was versus
actually what happened and when

660
00:41:31,489 --> 00:41:33,679
it didn't go as you'd predicted.

661
00:41:33,889 --> 00:41:37,009
How did that feel and how, how
did they react inside Nokia?

662
00:41:37,609 --> 00:41:40,904
now I have to say that
I don't recall by heart.

663
00:41:41,384 --> 00:41:45,884
Did they reach that 1% market
share in 2008 or did they

664
00:41:45,884 --> 00:41:48,554
already get higher at that point?

665
00:41:48,674 --> 00:41:52,704
I think it was 1% and they weren't
a threat in the early days, and then

666
00:41:52,704 --> 00:41:54,264
all of a sudden you were like, oh.

667
00:41:54,624 --> 00:41:57,144
Because they just took out
the market all of a sudden.

668
00:41:57,201 --> 00:42:00,411
the initial target was
quite modest in that sense.

669
00:42:00,591 --> 00:42:05,151
So this perhaps gave us kind of
the false impression that we have

670
00:42:05,151 --> 00:42:10,791
time and eventually we didn't
have them enough time to catch up.

671
00:42:10,851 --> 00:42:15,461
But if you would have had a product in
the mid rains by the end of 2008, that

672
00:42:15,461 --> 00:42:19,931
would have silenced iPhone, this would
have been perfectly doable for us.

673
00:42:20,531 --> 00:42:26,321
So one and a half year from the
launch, we could come up in the old

674
00:42:26,321 --> 00:42:30,011
world, we could have come up with a
competitive product that we distribute

675
00:42:30,011 --> 00:42:34,841
more widely price a lower price
point, and we kill the competitor.

676
00:42:35,441 --> 00:42:39,551
So we saw that, hitting
the top end of the market.

677
00:42:39,551 --> 00:42:44,621
So we mentioned here 30% share of
the phones more than 300 euros.

678
00:42:44,621 --> 00:42:49,301
So we saw that in that particular
market segment, it is going to be

679
00:42:49,421 --> 00:42:55,271
a killer product that it's scale
down to the lower price point.

680
00:42:55,271 --> 00:42:59,801
So price point is perhaps wrong here
'cause it was sold to operators it

681
00:42:59,801 --> 00:43:05,471
was often given for either free or
for very low price to consumers who

682
00:43:05,771 --> 00:43:09,491
then committed for two years, three
years contract with the operator.

683
00:43:10,091 --> 00:43:13,991
while we had seen of that in
America, that's how the Americans

684
00:43:14,321 --> 00:43:15,971
cell phone market works.

685
00:43:16,931 --> 00:43:24,581
We had seen that we perhaps
beat underestimate that how well

686
00:43:25,541 --> 00:43:30,791
Apple is going to sell this model
or going to sell iPhones to.

687
00:43:31,391 --> 00:43:37,061
Consumers who at that point of time
were spending say $200, 200 euros

688
00:43:37,091 --> 00:43:41,021
for their phones, that they were
suddenly willing to upgrade a home

689
00:43:41,051 --> 00:43:44,741
that is in the ballpark of 500, $600.

690
00:43:45,341 --> 00:43:48,671
And you can see why it's a,
it's an entire ecosystem shift.

691
00:43:48,701 --> 00:43:52,721
It included magnificent marketing
and included the, I think

692
00:43:52,721 --> 00:43:53,951
this is one thing people miss.

693
00:43:53,951 --> 00:43:56,231
It included the
cannibalization of the iPod

694
00:43:56,276 --> 00:43:59,156
because the iPod became the phone
and people were like, kind of

695
00:43:59,156 --> 00:44:02,816
rationalized it and went, oh, well
I'm actually just buying a new iPod

696
00:44:02,816 --> 00:44:04,196
that happens to be a phone here.

697
00:44:04,526 --> 00:44:06,026
And they rationalize it then.

698
00:44:06,236 --> 00:44:10,806
But also the business model was a,
was a big shift where , as you said,

699
00:44:10,806 --> 00:44:15,516
the mobile phone market worked where
you got a device and it locked you in

700
00:44:15,966 --> 00:44:19,386
and it still, it works that way, but
it hadn't, that hadn't come across

701
00:44:19,386 --> 00:44:21,666
Europe at that stage that, that model.

702
00:44:21,721 --> 00:44:22,011
That,

703
00:44:22,026 --> 00:44:23,916
So that was another big shift.

704
00:44:24,006 --> 00:44:24,186
yeah.

705
00:44:24,186 --> 00:44:26,881
In Europe, that was a somewhat new thing.

706
00:44:26,956 --> 00:44:27,016
Yeah.

707
00:44:27,976 --> 00:44:29,056
It wa it was in America.

708
00:44:29,056 --> 00:44:31,906
It was in a few other markets,
but the European America,

709
00:44:31,906 --> 00:44:33,436
wa, wa was Nokia's home turf.

710
00:44:33,616 --> 00:44:39,106
That was something we didn't
expect to happen that quickly.

711
00:44:39,706 --> 00:44:41,521
So I'm gonna skip past a couple of slides.

712
00:44:41,521 --> 00:44:46,101
'cause you go deep into the phone
analysis, which is all so so accurate.

713
00:44:46,101 --> 00:44:50,301
I mean, you, you were so tight on all this
potential position in the handset market.

714
00:44:50,991 --> 00:44:52,641
You were really, really tight with that.

715
00:44:53,241 --> 00:44:56,331
And the exclusivity thing here,
you call out that because that

716
00:44:56,331 --> 00:45:00,911
was a huge blow really, because
this was the big shift I felt.

717
00:45:00,911 --> 00:45:03,641
And also even Blackberry
were struck by this because.

718
00:45:03,776 --> 00:45:07,376
You'd both tried to do things like this
before Nokia and Blackberry had tried to

719
00:45:07,376 --> 00:45:12,866
do things where you could sell essentially
through the phone as an ecosystem, but

720
00:45:12,896 --> 00:45:14,456
that was controlled by the carriers.

721
00:45:14,456 --> 00:45:17,966
And then people think people miss that
because that took everybody's by surprise.

722
00:45:17,966 --> 00:45:19,436
The incumbents by surprise.

723
00:45:20,036 --> 00:45:23,646
it took, and I would love to
hear comments from the Cingular

724
00:45:24,266 --> 00:45:26,636
management at that point of time.

725
00:45:26,906 --> 00:45:29,096
Did they think that will happen?

726
00:45:29,816 --> 00:45:34,466
'cause were afraid of becoming a bit
pipes that they don't control anything.

727
00:45:34,466 --> 00:45:39,246
They are just transferring data
that's what they have become nowadays.

728
00:45:39,566 --> 00:45:43,016
And this was the move
that killed the operators

729
00:45:46,466 --> 00:45:51,686
potential in the mobile
internet application space.

730
00:45:51,896 --> 00:45:54,506
You didn't need any more
similar applications.

731
00:45:54,506 --> 00:45:59,031
T-Mobile, Vodafone applications you
could call with Apple and Google.

732
00:46:01,056 --> 00:46:01,721
It's so true.

733
00:46:01,751 --> 00:46:06,431
'cause I remember buying ringtones
on my Nokia, remember the, the

734
00:46:06,431 --> 00:46:08,411
Imperial march, the death March.

735
00:46:08,411 --> 00:46:09,911
I remember buying the, and.

736
00:46:10,796 --> 00:46:13,556
You, you bought, actually bought
it from the carrier on the phone.

737
00:46:14,036 --> 00:46:18,536
And then of course it's a computer,
a smartphone's, a computer.

738
00:46:18,536 --> 00:46:19,916
So you don't need to do that anymore.

739
00:46:19,916 --> 00:46:24,236
And there's so many back doors to
get content on your phone, et cetera.

740
00:46:24,236 --> 00:46:28,016
So, and, and you think about
these moves that you wonder

741
00:46:28,016 --> 00:46:29,486
sometimes the people regret it.

742
00:46:29,546 --> 00:46:36,386
And where somebody, it's like in
the newspapers allowing Google and

743
00:46:36,386 --> 00:46:38,126
Facebook to crawl their content

744
00:46:38,486 --> 00:46:41,006
versus create actually coming
together and going, going, no,

745
00:46:41,006 --> 00:46:42,326
you're not getting access to this.

746
00:46:42,481 --> 00:46:46,226
And, and really it was a lack of
understanding of what, what floodgates

747
00:46:46,226 --> 00:46:47,403
it would open in the future.

748
00:46:47,403 --> 00:46:49,173
We'll keep, we'll keep
going on the document.

749
00:46:49,173 --> 00:46:49,413
So.

750
00:46:50,013 --> 00:46:55,103
You talked about the marketing here, it
was a cool product to have and you were

751
00:46:55,103 --> 00:46:58,643
defined by the product just like you
were actually with like a Blackberry as

752
00:46:58,643 --> 00:47:02,843
a business person before you talked about
the stock price getting a boost from it.

753
00:47:03,293 --> 00:47:06,443
So I, thought we'd conclude
with this, which is the summary

754
00:47:06,443 --> 00:47:08,513
of recommended Nokia actions.

755
00:47:08,843 --> 00:47:13,943
So what you recommended versus
what happened, and even some of the

756
00:47:13,943 --> 00:47:17,543
recommendations when you read them, you're
kind of going, you were so right with

757
00:47:17,543 --> 00:47:23,003
these recommendations, but it just had,
it was such a different context for Nokia.

758
00:47:23,033 --> 00:47:26,963
It was a different world that you were
entered into here that it was difficult

759
00:47:26,963 --> 00:47:31,043
even to compete even if you followed
all these actions comprehensively.

760
00:47:31,643 --> 00:47:32,933
Yeah, very true.

761
00:47:32,963 --> 00:47:37,223
So there were some accents where
we thought that we would have

762
00:47:38,093 --> 00:47:44,723
competencies where we could definitely
take these accents let's say point

763
00:47:44,723 --> 00:47:51,143
number four, for example, that I
mentioned, how we counter the iPhone

764
00:47:51,293 --> 00:47:53,363
Mini, what we expect it to come.

765
00:47:53,393 --> 00:47:57,533
Yes, we generally thought that we have
a competencies to respond to that.

766
00:47:57,533 --> 00:48:02,273
While then some other points that
we mentioned here, which are more on

767
00:48:02,273 --> 00:48:09,823
this software development UI thing,
like the number two, we aware, aware

768
00:48:10,018 --> 00:48:13,258
of our lack of de competencies, we.

769
00:48:13,648 --> 00:48:16,378
Had communicated that
message for a long time.

770
00:48:16,438 --> 00:48:21,598
I'm not in the position to say we didn't
see enough action happening on that.

771
00:48:22,288 --> 00:48:27,918
I think you had discussed that in the
previous conversations points like six and

772
00:48:28,068 --> 00:48:36,498
eight developing new software solutions,
developing partnership networks.

773
00:48:37,098 --> 00:48:39,498
They were borderline our capabilities.

774
00:48:39,498 --> 00:48:46,338
We were taking actions on this, but
probably we didn't have enough resources.

775
00:48:46,338 --> 00:48:48,678
We didn't have enough
world class capabilities.

776
00:48:49,278 --> 00:48:57,018
When I now retrospectively look this
list, would there have been anything

777
00:48:57,078 --> 00:48:58,993
else I would have recommended?

778
00:48:59,593 --> 00:49:02,653
Let me ask you, would you have
recommended anything else to this list

779
00:49:03,013 --> 00:49:05,323
in those days or now retrospectively.

780
00:49:06,308 --> 00:49:07,258
Great, great question.

781
00:49:07,458 --> 00:49:09,823
I, I, I've thought a lot about this and.

782
00:49:10,738 --> 00:49:12,568
It's why I wanted to have you on the show.

783
00:49:12,568 --> 00:49:14,698
It's why I wanted to do
a deep dive on Nokia.

784
00:49:14,818 --> 00:49:17,308
I'm not finished, by the way,
there's other books like Ringtone

785
00:49:17,308 --> 00:49:19,318
and Risto's book as well.

786
00:49:19,328 --> 00:49:20,468
There's lots of books in Nokia.

787
00:49:21,068 --> 00:49:27,668
I think there was so much you were
doing that was right and it's so hard

788
00:49:27,668 --> 00:49:31,608
to predict the way a market will go,
particularly when it the internet

789
00:49:31,608 --> 00:49:33,463
was such a form factor change.

790
00:49:33,523 --> 00:49:37,093
Like, it, it wasn't, it wasn't what
you were producing on the outside.

791
00:49:37,093 --> 00:49:39,403
It was, it was behind the phone

792
00:49:39,990 --> 00:49:44,040
I just see that as so hard to
understand when it wasn't your DNA

793
00:49:44,880 --> 00:49:50,660
and that you needed really to listen
to people and maybe back ideas.

794
00:49:50,780 --> 00:49:54,500
And when you knew there was an
iPhone coming, maybe develop it.

795
00:49:55,175 --> 00:49:59,945
Develop it at that time and go
kind of develop products knowing

796
00:49:59,945 --> 00:50:01,355
that most of 'em are gonna fail.

797
00:50:01,355 --> 00:50:03,965
I mean, that's the only thing,
like you said, exploit explore.

798
00:50:04,295 --> 00:50:08,415
But it's so much easier to say it in
retrospect, and it's so much easier to

799
00:50:08,415 --> 00:50:11,925
say it, when you weren't the leadership
team, when you didn't have a stock price,

800
00:50:11,955 --> 00:50:16,005
when you didn't have market investors
looking at you kind of going, why are

801
00:50:16,005 --> 00:50:18,315
you wasting our money on these toys?

802
00:50:18,675 --> 00:50:20,685
And you're kinda going, 'cause
those toys could be our future.

803
00:50:20,685 --> 00:50:22,125
So I see the difficulties.

804
00:50:22,575 --> 00:50:22,965
Yeah.

805
00:50:23,085 --> 00:50:23,385
Yeah.

806
00:50:23,775 --> 00:50:28,755
So looking down retrospectively,
what should have been recommended is.

807
00:50:29,100 --> 00:50:34,050
S finding a bigger partner that
comes with the muscles, whether

808
00:50:34,050 --> 00:50:37,710
it is Google or Microsoft
already at this point of the time

809
00:50:40,560 --> 00:50:44,250
compensate our lack of the
software development skills,

810
00:50:44,250 --> 00:50:46,200
our operating system status.

811
00:50:46,200 --> 00:50:50,580
So if you would have, say, been able
to partner with Google to develop

812
00:50:50,580 --> 00:50:55,900
Android and be the first one to work
on Android to replace our Symbian,

813
00:50:58,350 --> 00:51:02,730
well, the question at that time, a
few years later was that, okay, if

814
00:51:02,730 --> 00:51:05,940
they go to Android, are we going
to be able to compete with Samsung?

815
00:51:05,940 --> 00:51:07,440
And now conclusion was no.

816
00:51:08,220 --> 00:51:12,870
Could we have made Android or
Windows Mobile Nokia exclusive

817
00:51:12,930 --> 00:51:14,340
at that point of time?

818
00:51:14,490 --> 00:51:18,330
Probably not because those software
players were also thinking from

819
00:51:18,330 --> 00:51:22,260
the ecosystem perspective and
wouldn't want to commit to Nokia.

820
00:51:22,980 --> 00:51:28,050
But, most of these actions, what we
call here, are quite tactical in nature.

821
00:51:28,830 --> 00:51:35,520
So bigger strategic moves probably
started to emerge only few years

822
00:51:35,520 --> 00:51:39,375
later when we started to see that we
are not able to do this by ourselves.

823
00:51:39,975 --> 00:51:44,345
Which is always the way Timo, it's,
it's, so you have to let it emerge

824
00:51:44,345 --> 00:51:46,895
a little bit, understand a little
bit more, and particularly when

825
00:51:46,895 --> 00:51:48,275
it's not your core competence.

826
00:51:48,275 --> 00:51:50,915
So I think that's the,
that's the difficulty here.

827
00:51:50,915 --> 00:51:52,415
There's a book we're covering.

828
00:51:52,415 --> 00:51:53,645
I'm just gonna grab it from the show.

829
00:51:54,245 --> 00:51:57,185
So next up on the show is
this book Split the Pie.

830
00:51:57,185 --> 00:51:58,425
It's by Barry Nalebuff.

831
00:51:58,445 --> 00:52:02,500
And the reason I'm sharing it is
he talks about a partnership like

832
00:52:02,500 --> 00:52:06,050
you and, Google coming together
maybe to create a phone together.

833
00:52:06,410 --> 00:52:09,560
It's not about, it's difficult to
see, they're gonna cannibalize us.

834
00:52:09,560 --> 00:52:13,880
But you think about, what's the kind
of third part that creates from you

835
00:52:13,880 --> 00:52:15,890
two coming together and you split that?

836
00:52:15,890 --> 00:52:18,530
That's why the idea of split
the pie is the excess that's

837
00:52:18,530 --> 00:52:19,820
created by a partnership.

838
00:52:20,000 --> 00:52:24,440
comes probably partly from the Silicon
Valley culture where a lot of the

839
00:52:24,440 --> 00:52:28,100
companies are working close to each other,
they are talking to each other, and they

840
00:52:28,100 --> 00:52:29,960
have learned the way of doing things.

841
00:52:30,410 --> 00:52:34,970
Then coming from the back woods of
North Europe, a company that is pretty

842
00:52:34,970 --> 00:52:40,490
much there alone didn't develop that
sort of the things that mental culture

843
00:52:40,490 --> 00:52:46,500
that we need to really collaborate
with our competitors or constantly be

844
00:52:46,500 --> 00:52:50,250
figuring out what could we do together
and how could we save this together.

845
00:52:50,850 --> 00:52:51,140
Yeah.

846
00:52:51,140 --> 00:52:54,615
And, and it, again, easy to say in
retrospect, and, and Barry's actually

847
00:52:54,615 --> 00:52:58,605
earlier book is called Co-Opetition,
which is this idea of being a frenemy

848
00:52:58,605 --> 00:53:01,875
that you compete, but you together
create something new, just like you

849
00:53:01,875 --> 00:53:07,125
said, where Google announced that they'd
put their, and Yahoo, that they'd put

850
00:53:07,125 --> 00:53:10,895
their products onto the iPhone and
that was a shock to people in Nokia.

851
00:53:11,325 --> 00:53:13,845
And you get that, 'cause culturally
that wasn't the way you did it

852
00:53:13,845 --> 00:53:16,605
and you were very protective
of your secrets, et cetera.

853
00:53:16,875 --> 00:53:17,085
Yep.

854
00:53:17,205 --> 00:53:18,115
The last thing I, I just wanna.

855
00:53:18,315 --> 00:53:22,515
To ask was one, one thing that
really annoys you, that people

856
00:53:22,515 --> 00:53:25,155
say on the outside, that you
just go, that isn't true.

857
00:53:25,665 --> 00:53:28,815
So there's always one of those
that you just go, that just never

858
00:53:28,815 --> 00:53:34,185
happened, that people say it or throw
away comment or just an irritation.

859
00:53:34,185 --> 00:53:37,755
You're kind of going, oh, we were doing
that because you, you know, often an

860
00:53:37,755 --> 00:53:42,345
innovator, a head of innovation will a,
a consultant will come in and tell the

861
00:53:42,345 --> 00:53:43,965
board, oh, you should be doing this.

862
00:53:44,055 --> 00:53:46,395
And the board are all listening and
they're going, oh, that's great.

863
00:53:46,635 --> 00:53:48,195
And then the, the head
of innovation's there.

864
00:53:48,195 --> 00:53:50,415
I've been telling these
guys this for years.

865
00:53:51,495 --> 00:53:51,885
Yeah.

866
00:53:52,545 --> 00:53:58,875
Probably in those days I was, not so
much irritated by outsiders coming

867
00:53:58,875 --> 00:54:00,885
to tell that Nokia didn't see this.

868
00:54:01,575 --> 00:54:03,615
Nokia should have done this.

869
00:54:03,615 --> 00:54:07,155
Nokia was arrogant ignorant and whatever.

870
00:54:07,425 --> 00:54:10,305
I wouldn't so much irritated about that.

871
00:54:10,515 --> 00:54:14,595
And irritation is probably
wrong word, but frustration.

872
00:54:15,555 --> 00:54:19,575
Frustration internally,
why things don't happen.

873
00:54:20,235 --> 00:54:24,975
Why I thought four years ago about the
importance of a touch screen, I thought

874
00:54:24,975 --> 00:54:29,055
three years ago about the importance
of the App store, why I don't seem to

875
00:54:29,175 --> 00:54:31,075
drive any action with these things.

876
00:54:31,135 --> 00:54:36,255
That was probably the frustration, but
my frustration talk about the feeling.

877
00:54:36,255 --> 00:54:39,855
So my feeling towards the end
of my Nokia era was frustrated

878
00:54:40,455 --> 00:54:42,105
and it was coming internally.

879
00:54:42,705 --> 00:54:46,025
Why , I've been trying to push things,
but I don't see anything happening.

880
00:54:46,535 --> 00:54:50,585
What is blocking that am I
communicating something wrong?

881
00:54:50,620 --> 00:54:56,705
Am I sending wrong message says, I
do, I just don't have enough muscles

882
00:54:56,705 --> 00:55:00,065
being 30 something, mid-level manager.

883
00:55:02,675 --> 00:55:03,155
And so on.

884
00:55:03,455 --> 00:55:06,745
one of the biggest frustrations of so
many people who listen to this show Timo,

885
00:55:07,145 --> 00:55:09,335
you're not, and it hasn't gone away, man.

886
00:55:09,395 --> 00:55:10,205
It hasn't gone away.

887
00:55:10,605 --> 00:55:15,520
and I see it in my current job as well,
the academic industry is going through

888
00:55:15,880 --> 00:55:18,040
massive disruption in the coming years.

889
00:55:18,550 --> 00:55:23,065
And Lot of the universities are going
to have the same experience than what

890
00:55:23,860 --> 00:55:28,265
Nokia or other failed companies have had.

891
00:55:28,575 --> 00:55:31,660
and if they're lucky, they'll be
able to resurrect and become a

892
00:55:31,660 --> 00:55:33,370
networks business like Nokia did.

893
00:55:33,970 --> 00:55:41,425
They had to resurface in some other
form of the higher education experience.

894
00:55:42,450 --> 00:55:42,990
Exactly.

895
00:55:42,990 --> 00:55:44,820
And we look forward to
that coming down the line.

896
00:55:44,880 --> 00:55:48,690
Speaking of which, if people wanna reach
out to you, where's the best place?

897
00:55:48,690 --> 00:55:51,420
Or will I just share your LinkedIn
profile maybe in the show notes?

898
00:55:51,448 --> 00:55:54,535
Share my LinkedIn profile, that's
the easiest way of connecting me.

899
00:55:55,430 --> 00:55:58,420
It's been an absolute pleasure,
professor of strategy at Adelphi

900
00:55:59,060 --> 00:56:01,100
University just north of New York.

901
00:56:01,460 --> 00:56:04,820
If you wanna get in touch with
Timo, brilliant thinker, brilliant

902
00:56:04,820 --> 00:56:07,760
strategist, and brilliant
guest on the innovation show.

903
00:56:07,760 --> 00:56:11,240
It's been an absolute pleasure, Timo
Partenen thank you for joining us.

904
00:56:11,300 --> 00:56:12,515
Thank you Aidan, it's been my pleasure.

905
00:56:13,093 --> 00:56:17,473
Thanks again to our sponsor, Kyndryl and
the Kyndryl Institute, where you can find

906
00:56:17,473 --> 00:56:21,943
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all over the world, including many of the

907
00:56:21,943 --> 00:56:24,073
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908
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909
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