microsoftnokia - strategic innovation for the newly merged entity - by noam bernstein
DESCRIPTION
September 2013...Microsoft & Nokia...Microsoft the software behemoth acquires Nokia, the inventor of the mobile phone, for a mere $13B. Are they two dinosaurs trying to mate? Or, does the data point otherwise? In this quick exercise, using strategic frameworks & heuristics,combining both companies' data with macro & category trends, I try to answer that question, and also to guide the spotlight to the best Innovation opportunity areas - where, when & how MicrosoftNokia should InnovateTRANSCRIPT
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 1
STRATEGIC INNOVATION ANALYSIS for A NEWLY MERGED ENTITY OCTOBER 23, 2013
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 2
Created by Noam Bernstein http://www.linkedin.com/pub/noam-bernstein/1/ab0/651 https://www.vizify.com/noam-bernstein
Enjoy!
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
us/default.aspx-http://www.microsoft.com/en
http://www.forbes.com/sites/forbesleadershipforum/2013/09/04/microsoft-and-nokia-a-marriage-made-in-hell/
-microsoft-/why04/09/2013http://www.forbes.com/sites/nigamarora/ phones/-nokias-buy-to-stupid-not-was
/7000020161-quit-or-down-double-was-it-acquisition-nokia-http://www.zdnet.com/microsofts
3
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Innovation Exercise 4
Where should play to win?
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
Assets filter (customers, channels, knowhow)
Core Microsoft
Core Far out
Opportunity trends (size & time)
Time
Size
Capital filter (advantage)
Time to ROI
Cap
ital
Ne
ed
ed
?
Innovation Exercise 5
To sift through hype & rumor, data driven frameworks synthesizing external opportunity with internal capabilities & assets should be applied
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
Customers
Fit to Microsoft Customer
Fit
to N
oki
a C
ust
om
ers
Geographies
Fit to Microsoft
Fit
to N
oki
a
Channels
Fit to Microsoft Channels
Fit
to N
oki
a C
han
nel
s
Innovation Exercise 6
Customers are today, more than ever, at center; channels & regions are still very real, hard won assets; these criteria help filter & focus where to innovate
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Innovation Exercise 7
Microsoft remains a multi-product powerhouse brand in homes & offices of millions of users worldwide, despite recent devices & performance
http://www.forbes.com/companies/microsoft/
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 8
Microsoft led early on in the computer software services arena; Today it competes with giants in many arenas; Apple & Google are strongest
https://www.google.com/finance
1990-today
2008 -today
Microsoft Apple Google
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
qtr.png-2013-June-vendors-smartphone-Windows-/IDC08/2013i.forbesimg.com/chuckjones/files/-http://b
Innovation Exercise 9
Microsoft’s sheer scale affords it patience towards a longer term horizon; Today a mere 3.1% of market, Windows Phone is expected to reach 10.2% in 2017
Today, 8.7 million Windows Phone smart phones make 3.1% In 2017, Windows Phone is forecast to reach 10.2%
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
http://www.forbes.com/companies/nokia/ finan.png113http://allaboutwindowsphone.com/images/news/misc/q
Innovation Exercise 10
Nokia, pioneer of cellular phones, failed to identify the smart phone revolution; No longer leader, Nokia still hold major market share in many global markets
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Innovation Exercise million/-8-5-with-2013-1q-for-revenue-in-billion-7-7-hits-/nokia18/04/2013http://www.engadget.com/ 11
Nonetheless, and far from US hype, the Lumia smart phone sold 61.9 million units (a feat few companies worldwide are capable of)
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Innovation Exercise 12
Heritage, capabilities, assets; driven by a strong user-centered DNA, Nokia’s distinct design & color identity, is produced, distributed & sold worldwide
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Innovation Exercise 13
Windows Phone/ Mobile
Lumia Smart Phones
50% market share of feature phones
Windows
Office (Business)
xBox (Live/360)
Kinnect
SkyDrive Bing Skype
Windows Store
Yammer
Outlook.com
MSN
Azure (Business)
Global Distribution
Nokia Networks
Nokia Equipment
Handset & Hardware
design Low cost Manufacturing
Nokia BetaLabs
“Here” Apps
Windows Explorer
Global User research
Design Identity
Business Channel
Internet Explorer
The Lumia+Windows Phone collaboration represents a fraction of the potential; Smart combinations range over products, services, users, channels & regions
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
“What SHOULD be done”
Industry Analysis
Trends
Products, Assets & Capabilities
Products Assets & Capabilities
“What they CAN do, BETTER”
Innovation Exercise 14
With such a broad portfolio of products, assets & capabilities to work with, an external industry & trend hypothesis is a more pragmatic focus method
Best Innovation Areas External need hypothesis Internal focus filter
1 2
3
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
To be at the right place at the right time should synchronize offerings to users & channels, “on trend”
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
Millenials (& digital natives)
Macro-economic crisis
Emerging economies
The “long tail” Frugal Innovation
Innovation Exercise 16
Macroeconomics, technology & culture are interacting, impacting consumption around the world, and the way companies support it
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
Augmented Reality
Smartphone commoditizing
Big Data hedging (search social & location)
Consumerization of Business IT
Internet of Things
Innovation Exercise 17
Within and near Microsoft’s activity areas, expressions of macro trends pose early signs of potential nascent categories & risky maturing markets
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
Assets filter (customers, channels, knowhow)
Core Microsoft
Nokia Others Lumia
Need New
Core Microsoft
Core Far out
Opportunity trends (size & time)
Time
Size
Capital filter (advantage)
Time to ROI
Cap
ital
Ne
ed
ed Expensive &
long term
Other can do too
Others can do faster
Too risky
Smart phones
?
Innovation Exercise 18
Growing trends attract everyone; however for Microsoft, longer term horizons, requiring larger capital, will filter out & beat constrained competition
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
Customers
Fit to Microsoft Customer
Fit
to N
oki
a C
ust
om
ers
Geographies
Fit to Microsoft
Fit
to N
oki
a
Channels
Fit to Microsoft Channels
Fit
to N
oki
a C
han
nel
s
Winners
Forget about it
Innovation Exercise 19
Leveraging Nokia’s user-centered approach, on Microoft’s huge business & consumer user base, through existing channels, in best regions
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 20
Focus Avoid
When? longer-term macro trend targets short term ‘sprints’
Where? growing, value add markets,
through owned channels commoditized markets
How? leveraging scale & capital arenas where small can win
What? integrated solutions software + hardware
look beyond smart phones
Who? future business workers more of the same
Strategically recommending that Microsoft pair internal strengths & assets to growing long term external trends, avoiding weaknesses
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN .jpg02-13-26-04-featurephones-smartphones-/idc04/2013http://www.blogcdn.com/www.engadget.com/media/ Innovation Exercise 21
While preparing to capture larger cycle patterns, Microsoft should remember to tactically leverage waning markets, such as non-smart phones, to the fullest
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Innovation Exercise 22
To create “own-able” tech platforms & new categories, the best innovation areas cluster large scale HW&SW integration at low cost with global distribution,
Internet of Things Frugal Innovation
Nokia hardware Microsoft Cloud
HW Product & Users Millenials
Augmented Reality ‘Here’ by Nokia
Consumerization of IT Emerging economies
Nokia hardware Business cloud
IT-Net of Business Things Augmented Reality Things Cloud enabled Things
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 23
Things
Atoms
Senses
Nokia, ‘Internet of Things’ & ‘Transplantable Tech’ are self-disrupt opportunities; Microsoft can recreate itself – software & hardware with a ‘twist’
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN INNOVATION EXERCISE 24