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Business - Written by on Wednesday, April 28, 2010 9:29 - 4 Comments

Haydn Shaughnessy
Open management, traditional thinking

The new Nokia N8, announced 27 April and due on sale in Q3 is a phenomenal piece of equipment…. so why is it wrong technically and strategically?

Nokia is a much-to-be-admired company, the global leader in smartphones, feature phones and ordinary mobile phones. The N8 is a superbly engineered product – 12.1 megapixel camera, Carl Zeiss optics, HD video, an onboard editing suite, Dolby Plus surround sound, 16 GB of built-in storage extensible to 48GB., and free Ovi maps and navigation. You get the picture. And it will cost less than $500 unsubsidised.

The strategic issue  for Nokia though is how to get away from its engineering culture and how to connect with the many communities that love mobile phones for very different reasons.

I emphasize the “many communities.” Back in late 2009 there was speculation that the mobile phone world would have to begin  customising its brands more to fit specific user groups – phones for older people with, for example, specialized health monitoring capabilities, phones that do augmented reality better than they do photography, phones that do great social networking, phones that are great apps windows, the Blackberry for business.

The N8′s special claim to fame is as a camera phone and I’ll come back to that. Nokia’s engineers are an exceptional bunch of people but do they and senior management need reminding that the iPhone is phenomenally successful at the same time as being a very poor multitasking phone with a pretty lousy camera and brittle casing?

Just as the auto-industry is fragmenting as it becomes clear the majors can’t satisfy niche demand propelled by personalization, the mobile phone industry knows that the success of Apple’s iPhone is a sign that customization and personalization are now more important than engineering excellence. No manager, executive or designer is unaware of it – though we’ve seen a succession of ultra-high functionality phones launched recently, with a phone-based Sony playstation device to come.

The mobile phone user community has moved on from engineering as an end-in-itself though and Nokia is very aware of that. That’s why in April last year Nokia donated its operating system to the open source movement. It’s also why Nokia has an open innovation strategy and is experimenting with Ideastorm-style consultation in its Design by Community program. Despite ticking all the right externality and consultation boxes, Nokia is marketing the N8 as a bigger-is-better product.

It is built on the Symbian ^3 platform, the  open source version of the Nokia smartphone operating system. In fact it is the first product built on this new open source OS.

The world was not holding its breath to see whether “open” meant different, but for a number of reasons I’m disappointed not to see the values of openness incorporated in the phone or its messaging.

Back in late 2009, Symbian expressed the view that the race to bigger = better probably wasn’t the smartest way to drive an OS platform:

“The major reason for adding more megapixels is the “more=better” algorithm in the mind of many consumers when it comes to the numbers on the box.

What does all this have to do with Symbian? Well, to the extent that the platform could define software for the camera sub-system, should it be optimized for a pragmatic megapixel range and an attempt made to educate consumers about the pros and cons of technology choices?

Or, alternatively, should the OEMs that use that platform to build products decide what they think they can sell and drive the architectural requirements and consumer messaging accordingly?”

In other words OEMs can build clear and easy messages around 12 megapixel cameras but could alternatively help build out the opens source platform in a more balanced and productive way by scaling back on the optical engineering and taking time to interact with the customer base to explain why 6 Megapixels is just as good.

What the N8 represents, if you look at the general movement towards a more personalized relationship between customers and firms, and if you take into account the many values people are now bringing to product choices, is Nokia’s traditional values and strengths. Those values have a powerful presence in the market. After a critical hammering during 2008 and early to mid-2009 Nokia began to grow market share again in late 2009.

But those open innovation and listening projects they’ve set up have to be there for a tangible reason. The N8 though is driven by engineering considerations:

“The team behind the Nokia N8’s camera want to set new benchmarks. Not just for the quality of the still image camera, but the video recording as well. Across both uses, the team have been optimising each specific element of the device’s camera for as many use cases as possible.”

In an April 2010 survey, phonerated.com readers scored the Apple 3GS as the best American camera phone – it’s a 3 Megapixel camera – followed by the Samsung Renown, 2 Megapixel.

Users, in other words, don’t necessarily want bigger and better. Photography is there to share so getting an image from a phone to an upload site or to Facebook at the lowest possible data cost is where the priority might conceivably lie. It’s time consuming and potentially expensive to connect with 12 Megapixel HD imagery which brings us back to values – and the value users put on connectivity.

I’m a supporter of Nokia and felt it was much maligned as the iPhone captured everyone’s imagination – but I have to say that customization, personalization, connectivity, and a broader set of purchasing values are the reason companies like Nokia adopt open management programs. A couple of years back I interviewed a leading concept car designer about his company’s lack of an eco-car. His answer was they hadn’t yet worked out how to express ecological sensibility in a car’s appearance. I sense Nokia is similarly stuck. Executives have mandated an open approach without quite knowing what it means or how to embrace it yet.

How to express opennness in a phone’s functionality and design? How to embrace openness so that the product tangibly represents an output of a new and different approach to management, R&D, production design and marketing? These I think are the questions Nokia and the other OEM’s are yet to ask.



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Notional Slurry » links for 2010-04-29
Apr 30, 2010 2:12

[...] Wikinomics – Open management, traditional thinking "Just as the auto-industry is fragmenting as it becomes clear the majors can’t satisfy niche demand propelled by personalization, the mobile phone industry knows that the success of Apple’s iPhone is a sign that customization and personalization are now more important than engineering excellence. No manager, executive or designer is unaware of it – though we’ve seen a succession of ultra-high functionality phones launched recently, with a phone-based Sony playstation device to come." (tags: business-model engineering-design business-model-failure openness mass-customization) [...]

Stuart Berman
May 17, 2010 14:07

This is the classic issue in manufacturing which is dealt with in Lean Thinking. The manufacturer needs to understand what the customer values rather than trying to sell a ‘more is better’ feature. BMW is used as a similar example in Womack’s book where the BMW engineers lament that their customers simply do not appreciate all of the engineering that goes into the car.

haydn
May 17, 2010 17:57

Hi Stuart, thanks for the comment – I think of BMW as a great example of a number of things. While the engineers have tried to hold on to that core engineering culture the marketing people have drifted far and wide – so much so that the ultimate driving machine is now quite a feminine product. Feminine curves, feminine culture, but going on family brand (with the JOY campaign). BMW shows that a brand can diversify its identity very effectively and be different things to different people. So, I agree with what you say that manufacturers need to understand what customers value (and isn’t BMW great at that!) but I think also they need to be less hung up on traditional brand thinking and realise we customers can cope with a product making an appeal to different types of people.

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Jun 12, 2010 3:55

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