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Telecommunications Policy

Telecommunications Policy 36 (2012) 349–351

doi:10.1

URL: www.elsevier.com/locate/telpol

Book review

Winning Across Global Markets—How Nokia Creates Strategic Advantage in a Fast-Changing World, Dan Steinbock,Jossey-Bass, San Francisco, CA (2010). 291 pp. including notes, acknowledgements, author details and index,Hardback, £18.99, ISBN: 978-0-470-33966-4

It is highly likely that 2011 will be viewed as a pivotal year for Nokia. In February 2011, Stephen Elop, the recentlyappointed chief executive, announced that Nokia had formed an alliance with Microsoft. This alliance, on which Elop hasseemingly pinned his hopes on of transforming Nokia’s fortunes (Thomas & Palmer, 2011), reflected the increasinglyawkward position that Nokia found itself in. Nokia was facing sustained and significant competitive challenges, from Appleand Android-based handsets on the one hand and Chinese vendors on the other.

This provides the context for readers of this book, which is divided into nine chapters over 237 pages. In the first part ofChapter 1 – Success Through Legacy and Globalisation – a brief overview of Nokia, in terms of its origins and growth isprovided. Not only does this highlight the development of Nokia, from its origins in forestry to industrial conglomerate,but it also draws attention to the national context within which this development occurred. The second part of thechapter (pages 26–35), which covers events from the start of the 1990s onwards, then charts how Nokia responded to aseries of challenges to grow through focusing on GSM and embracing globalisation. The chapter concludes, like all of thesubsequent chapters in the book, with a text box containing a series of ‘Nokia’s Lessons’.

In the second chapter – Strategy Through the Executive Team – an eclectic range of issues are covered. The chapterstarts with a discussion of globalisation that the small size of Nokia’s domestic market necessitated and the diversegeographical sources of the company’s revenue. The rest of the chapter then covers a multitude of issues concerning themanagement of Nokia. One aspect that comes to the fore is the strength and character of the senior executive team ofNokia, while another is the culture prevalent within the company. A third aspect of management within Nokia that ishighlighted is its diversity. The inter-relationships between these three attributes are explored in the last two sections ofthe chapter.

Some of the factors identified as contributing to the success of Nokia in Chapter 2, such as culture and diversity, arefurther discussed in Chapter 3, How Nokia’s Values, Culture, and People Contribute to Success. To culture and diversity arealso added other issues such as corporate responsibility, the creation and role of shared values, and the management ofhuman resources throughout Nokia. The final main section of the chapter distinguishes between managers and leaders,with training and development helping to transform managers into leaders.

Chapter 4 – Building a Globally Networked Matrix Organisation – explores the organisational response of Nokia to thechallenges and issues raised in the previous three chapters. The first part of the chapter describes the matrix structure thathas been adopted, while the second part illustrates how this matrix works in practice.

The title of Chapter 5 – Innovating Globally via R&D Networks – aptly describes its contents. After a brief description ofthe Finnish innovation system, the chapter focuses on different aspects of innovation and research and development (R&D)within Nokia. One theme highlighted by the chapter is the global scale and focus of R&D within Nokia, while a second ishow the company’s R&D objectives differ in the short and long term. A third theme of the chapter is how Nokia structuresits R&D activities. Brief descriptions are provided of how R&D is undertaken within Nokia (pages 126 ff) as well as how thecompany works with universities (pages 128 ff). A fourth theme of the chapter is how Nokia develops new products andbusinesses. Although this theme does draw on some of the points made earlier in the chapter, it adds the role of Nokia as a‘venture capital’ investor. The chapter would, however, benefit from greater detail in terms of the financial commitment ofNokia to R&D as well as the outcome of this investment in areas such as tangible products or patents filed.

R&D is just one of the strategic capabilities mentioned at the start of Chapter 6 – Developing Strategic CapabilitiesAcross the World – that have been developed by Nokia. In turn, this chapter addresses the strategic capabilities that Nokiahas developed with respect to supply and demand, distribution and sales, brand management, marketing and obtainingfeedback from customers. As these five areas are covered in 25 pages, there is relatively little detailed discussion into howNokia developed its strategic capabilities. Having said this, the chapter is informative in several respects: the decentralisedyet integrated nature of manufacturing is illustrated, as is the importance of scale economies in manufacturing anddistribution.

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Attention shifts in the following chapter – How Nokia is Growing and Transforming its Business Areas – to the businessstrategies developed by Nokia. The chapter opens by stating that Nokia engages in ‘winning business strategies’ in fourareas (page 169), though these four areas do not exactly map onto the structure of the rest of the chapter. The first area tobe tackled is that of mobile devices, with their evolution and the competitors faced by Nokia being mentioned. The secondarea is that of consumer services, with the online brand/store ‘Ovi’ being briefly described (page 183). The third strategyrelates to solutions, which, the chapter argues, have a different business model to that of devices (page 184 f). To help growits solutions business, Nokia created a dedicated business unit in October 2009 with the aim of developing it into asignificant business – 300 million users and revenues of $2.8 billion – by the end of 2011 (page 187). It is unfortunately notclear from the chapter how much progress the unit has made towards achieving these targets.

Infrastructure is the third area mentioned in the chapter. After outlining the events culminating in the creation of NokiaSiemens Networks, the discussion then moves onto consolidation within the infrastructure market and impact that thishas had on Nokia Siemens Networks. The final part of the chapter emphasises how extensive and important collaborationis within the markets that Nokia competes in. One aspect of this is collaborating across the value chain to create value,while another is the use of joint ventures and alliances to enter new markets or secure access to key assets.

Emerging markets are at the heart of Chapter 8, Competing in Global Markets. Although the chapter does discussdeveloped markets such as Western Europe and the United States, this stretches to just a handful of pages (pages 196 ff,204–207). The rest of the chapter is devoted to emerging markets in general and the BRIC countries (Brazil, Russia, Indiaand China) in particular. The socio-economic characteristics of emerging markets are very different from their developedcounterparts, requiring Nokia to develop new strategies to thrive in these markets.

In the final chapter of the book – How Nokia Seeks to Sustain Leadership – the author asks whether Nokia will be ableto sustain its leadership in the future. The first part of the chapter covers a lot of material; three scenarios of howcommunications may develop in the future are outlined (pages 219–222), as is how competition may develop in the future(pages 223–228). In both cases, a lot of material is covered in not very many pages with the inevitably consequence thatdetail has been sacrificed for scope. The second part of the chapter asks ‘what are the sources of Nokia’s success?’ (pages229–234). It is argued that the success of Nokia is based on several sources – that is, on the development of a costadvantage, differentiation and innovation – and that the company has developed strategic capabilities in five areas. Thesefive areas correspond to some of the themes discussed in the previous chapters.

After Chapter 9, the book continues for another 50 or so pages. After a list of the key executives that were interviewedfor the book (pages 238–243) there are extensive notes (pages 244–270). The book concludes with acknowledgements(pages 271–276), a biography of the author (page 277) and index (pages 279–291).

The first point that can be made is this book is quite short at just 237 pages. An admittedly unscientific estimate isthat the introduction and nine chapters contained within these 237 pages amount to around 80,000 words. As theauthor covers a lot of material, the inevitable consequence is that in many parts of the book depth has been sacrificedfor scope. Too often the reader is left wanting for more detail; the author briefly makes a point before moving onto thenext one.

Perhaps due to this relative brevity, the book offers a largely positive description and analysis of Nokia. While it isarguably the case that Nokia has been highly successful in the past, no such argument can be made today. On page 142, theauthor notes that Nokia is investing in a series of ‘‘global strategic advantages’’ in the hope of maintaining them. Thoughthese advantages are described, they are not critically evaluated. One consequence of this is that someone reading thebook today is likely to question how successful was Nokia in maintaining its strategic advantages. Did Nokia investsufficient sums in the right areas to maintain its strategic advantages? Are the strategic advantages temporary orsustainable over the longer term? Recent events would suggest that it did not appropriately invest and that its strategicadvantages are being undermined, thereby raising another question: how does the Nokia described in the book becomethe Nokia of early 2011 that pinned its future on an alliance with Microsoft? The final section of Chapter 9 does ask whatcould go wrong, but at just one and a half pages this is an insufficient treatment of the threats facing Nokia.

The wider context against which Nokia can be judged is outlined at several points in the book, but its disjointed naturemeans that it is hard for the reader to determine how well Nokia is performing compared to its peers. In other words, whatis missing from the book is a chapter outlining how the mobile telecommunications industry has evolved whichsubsequent chapters could refer to. This chapter would provide the comparative context against which Nokia’s rise and fallcould be judged. At the same time, the potted history of Nokia that is presented in Chapter 1 needs to be replaced by amore detailed description of how the company evolved and its position in its various markets.

One interesting themes raised in Chapter 3 is that of employee diversity. The increasing diversity of Nokia in terms ofemployee nationality reflects the small size of its home market and the global nature of the telecommunications industry.The chapter also alludes to the corporate social responsibility challenges of operating in many different countries. Theextent to which the ranks of middle and senior managers are internationalised (non-Finnish) could have been furtherexplored, as could the link between employee diversity and the globalisation of R&D that is discussed in Chapter 5.

Another aspect of diversity that is underplayed is the relationship between diversity and group think within Nokia. Onpage 62 the author writes that ‘values and culture are seen as the glue that keeps the complex organisation together’, andon more than one occasion uses the term ‘Nokians’ to collectively describe employees within the company. An interestingquestion to ask in light of Nokia’s recent woes is whether Nokia had become so successful in combining its diverse arrayof employees together into a single corporate culture that those who dissented within the company were effectively

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voiceless. In other words, did the company’s self-belief become so great that it misread the market and sow the seeds ofthe challenges that it is currently facing?

After the introductory comments, each of the nine chapters ends with a text box entitled ‘Nokia’s Lessons’. Thesehighlight the main points of the chapter, providing both a summary of the chapter and a means of identifying the keyinsights that other companies may learn from Nokia. As summaries these boxes do highlight the main messages of therespective chapter, but as insights for other companies they are too short. Elaborating the discussion of what they mean forother companies, either at the end of each chapter or in a new chapter towards the end of the book, would have beeninteresting, not least because the author could have commented on the extent to which Nokia’s experience is unique or canbe generalised to other telecommunications companies or different industries altogether.

It is not clear who would buy this book. The book is not a detailed corporate biography in the tradition of Sampson’s(1973) critique of ITT or Lorenz’s (2009) evaluation of GKN. Nor does the book adopt a uniformly macro-level approachwhen describing the evolution of Nokia. As such, it is likely to disappoint those expecting a detailed evaluation of Nokia asmuch as those wanting a macro-level description that could be easily and swiftly digested.

In summary: while it can be argued that the book is easy to read and relatively good value at a book £18.99, it has beenovertaken by events.

References

Lorenz, A. (2009). GKN—the making of a business 1759–2009. Chichester, UK: John Wiley & Sons Ltd.Sampson, A. (1973). The sovereign state—the secret history of ITT. London: Hodder and Stoughton.Thomas, D., & Palmer, M. (2011) Nokia unveils Windows phone, Financial Times, October 27. p. 15.

Jason WhalleyDepartment of Management Science, University of Strathclyde, Glasgow, UK

E-mail address: jason.whalley@strath.ac.uk