Jun 24, 2013 02:30 PM IST | Source: CNBC-TV18

Slow innovation is what really hurt Nokia: Shivakumar

As the market reshaped into the smart device, into other segments which started happening like the touch screen, dual SIM, etc, I think our innovation was slow

From being a market leader to just having 20% market share now, Nokia lost out because of slow innovation, says D Shivakumar, VP IMEA, Nokia. Right in the middle of a very big transition, from the Symbian operating system to the Windows operating system, Shivakumar is calling it a day.

He says it wasn’t an easy decision, with so much emotional stake in the company. He further adds, for Nokia, Indians and India mattered a lot and Nokia mattered to them. It’s possibly one of the few brands that fundamentally altered and impacted individuals in a very big way.

Below is the edited transcript of D Shivakumar's interview with CNBC-TV18

Q: It has been an exciting and perhaps disappointing eight years because you actually helped Nokia catapult to the number one position in terms of the kind of customer satisfaction, brand loyalty, so on and so forth. Towards the end of your tenure, if I could call it that, the company seems to have lost the plot.

A: In the tech industry, you have rapid changes. These things happen quite a lot in the tech industry. All I would say is, every business and every leader needs to look at his own tenure as there are some positives, some challenges and the fight continues and you handover the baton to the next bunch of guys.

Q: What happened? You went from having an almost 70 percent market share down to 40 percent in 2008, down to about 20 percent currently today. You got squeezed at the bottom end from the likes of Micromax, Karbonn, Lava, etc, and at the top end by the likes Apple, Samsung. You are somewhere stuck in the middle. How do you move from here?

A: I would say when markets expand and Nokia drove the expansion of that market, the primary role of a market leader is to grow the market, which Nokia did brilliantly and we absolutely got things right. As the market reshaped into the smart device, into other segments which started happening like the touch screen, dual SIM, etc, I think our innovation was slow. I think that’s what really hurt us.

Q: Is that the curse of market leadership? When we talk about innovation not being able to anticipate the change enough, not being able to respond to consumer preferences, consumer choices fast enough. Is that the curse of the market leader because there is a sense of complacency?

A: I don’t think that it is the curse of the market leader. I think Clayton Christensen says that perfectly when he says the innovator’s dilemma - that’s what it is. Nokia has always been innovative. Nokia has never been arrogant. It has never been a company that has rested on its laurels. In the tech business, you tend to lose some innovations. I always say that if you get 6 out of 10 innovations right in the tech industry, you are fantastic, 3 out 10 is par to the course. The key thing is when you are missing innovation, how quickly do you come back and recoup lost ground - that’s what is critical. If you look at Nokia right now, we are in the midst of a very big transition from a Symbian operating system to the Windows operating system.

That’s a huge transition and I don’t think people recognise the magnitude or the severity of it. It involves building of a completely new eco system and that’s what Nokia is doing right now and it is on its path. So if you look at Windows and how Nokia is doing with the Windows platform, Nokia is doing brilliantly there. The challenge is to grow it and make it more affordable as more and more people in the world move to smart devices at the USD 75-100 mark. I think that’s the critical thing.

Q: There were questions raised when you decided or when your role was moved out of India to an emerging market role. There have been questions now as to why you are quitting Nokia at this time because the company is making an attempt to turn its story around as far as India is concerned, India continues to be one of the growth markets for Nokia, the second after China. Why the decision to quit now?

A: I looked at it and thought to myself - I think Sunil Gavaskar said this best, you should leave when people say why and not why not. So, I looked at it and said I have done my stint, I have done my bit and my best over eight years. I needed to comeback to India, my family is here and I was there, so over a period of time I came to this conclusion and it took me about six months. It is not an easy decision ever. When you have so much of your emotional stake in a company, it is not easy, but then I said okay.

Q: But as you leave, do you feel more reassured about where Nokia stands today and I want to understand where Nokia is going to be positioned over the next 10 years, for instance, in a market like India. You talked about how the move from Symbian to Windows has been a huge transition, a transition that you are in the midst of. You talked about the challenges of smart and affordable, but how would you like to position yourself because again I come back to my point that you are somewhere stuck in the middle and this is where you started getting squeezed from both the bottom and the top?

A: For any company at any point of time, in technology, the only way out is to out innovate everybody else. If you fall behind on innovation, you will always be challenged. That is why, in technology companies, if you look at the big history of turnarounds in technology companies, there have been very few, Apple and IBM, that’s it. So, if you don’t innovate, you will get left on the sidelines.

On Nokia’s position over the next 10 years in a market like India, all I can say is Indians and India have mattered to Nokia and Nokia has mattered to them. It’s possibly one of the few brands that has fundamentally altered and impacted individuals in a very big way. Second, it has impacted society in a fundamental way and third trend that I am seeing right now is informally it is impacting governance. I believe it will formally impact governance, mobile technology and brands like Nokia in the future.

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